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In this weekly update, we summarise the most notable updates in the UK sanctions world. If you have any questions in respect of any of the developments set out below, please do not hesitate to contact a member of our London Global and Government Trade team listed above.
1. Russia Sanctions
- UK Government amends Sanctions List under Russia regime:
- On 10 November, 2023, the UK amended the entry for Vadym Oleksandrovich Tregub under the Russia sanctions regime. This individual remains subject to an asset freeze, transport sanctions and a travel ban. (The UK Sanctions List - GOV.UK (www.gov.uk))
- On 9 November, 2023, the UK delisted Sergey Stognienko from the UK sanctions list. Mr Stognienko had been designated in September 2022 for being a member of the Bank Otkritie management board which carries on business in the Russian financial services sector. (OFSI notice).
- On 8 November, 2023, the UK announced 29 new sanctions designations targeting individuals and entities operating in and supporting Russia’s gold, oil, and strategic sectors. The new designations include: a UAE-based network which allegedly channels gold revenues to Russia (including Paloma Precious DMCC and Howard Jon Baker) and two of Russia’s largest gold producers (Nord Gold PLC and Highland Gold Mining Ltd). (OFSI Notice).
- OFSI amends General Licence relating to Russian travel: On November 10, 2023, OFSI amended General Licence INT/2022/1839676 relating to Russian Travel. The amendment clarifies that the general licence only permits the purchase of tickets from a designated person specified in the licence or one of their subsidiaries for passenger rail or passenger air journeys originating in, or within, Russia. (10.11.2023_Russia_Travel_General_Licence.pdf (publishing.service.gov.uk)).
- NCA warns of abuse of gold to evade sanctions: On November 8, 2023, the UK’s National Crime Agency (NCA) issued a red alert to financial institutions, promoting awareness and bringing about preventative action related to the use of gold to evade sanctions, outlining inter alia: (i) the relevant sanctions measures; (ii) a summary of common circumvention techniques; (iii) certain indicators of sanctions circumvention; and (iv) industry guidance from other organisations. (NCA Red Alert; NCA Press Release)
- UK court refuses interim payment for EuroChem’s benefit from SG and ING in sanctions defence case: On November 3, 2023, the UK High Court handed down judgment rejecting an application by LLC EuroChem North-West-2 (EuroChem) for Société Générale (SG) and ING Bank (ING) to make a payment into court or into a frozen account in the UK or EU. Eurochem’s claim, due to go to trial in 2025, is for money Eurochem says is owed by SG and ING under on-demand bonds. SG and ING refused to make the payments on the basis that that would be prohibited under EU sanctions as implemented in France and Italy respectively (i.e. the place of performance of the bonds). EuroChem is associated with Andrey Melnichenko, who is designated by the EU and the UK. Butcher J rejected EuroChem’s application for a payment into the court or into a frozen account, because he could not say at this stage that the sanctions defence was bound to fail. The risk of SG and ING not paying the judgment sum (if EuroChem were to be successful) was not sufficient to order the interim payment; it was doubtful SG and ING would refuse to honour an English judgment, and even if they did, they have very substantial operations in the UK and the judgment could be enforced against assets in the UK. (Eurochem v SG, ING and others Approved Judgment)
- UK Court refuses summary judgment in UK sanctions case: A UK County Court refused to grant summary judgment in a dispute between XTX Markets Technologies Ltd and Mazars. XTX, a financial technology trading company, alleged that Mazars, which was contracted to provide payroll services, acted in a discriminatory way by refusing to provide services based on the Russian nationality of its (non-sanctioned) owner (who has since revoked his Russian citizenship). Mazars refused to provide services because they had taken the decision not to accept any new clients with Russian ownership. XTX allege breach of the Equality Act 2010. In its defence, Mazars stated that XTX were not treated less favourably than a real or hypothetical comparator, and relied on s. 44 of SAMLA, i.e. a belief that Mazars was acting in the reasonable belief of complying with UK sanctions. The County Court held that there were triable issues which means that the case should go to a full trial. The context of the UK’s sanctions and the Russia Regulations are “front and centre to the issues in this case”, and the following were triable issues: the interpretation of Mazars’ email rejecting the invitation to provide services, the correct comparator, and the s. 44 defence. (XTX v Mazars Approved Judgement)
- Webinar with UK Government on ownership and control test: Registration is now open for a webinar at 11am on 20 November, 2023, featuring speakers from inter alia FCDO and OFSI will take place to discuss ownership and control under UK sanctions and the Government’s statement following the Mints judgment. (Register here)
2. Iran Sanctions
- UK High Court holds that “Brutus Allegations” relating to alleged non-compliance with US sanctions should not be struck out: On 8 November, 2023, the UK High Court handed down judgment in a case relating to sanctions targeting Iran. In particular, four claims were brought by 230 claimants against Standard Chartered (SC) alleging that SC had made untrue and misleading market statements in its prospectuses from 2007 to 2019 relating to non-compliance with US sanctions against Iran. SC entered a settlement agreement with OFAC in 2012 and with various US enforcement agencies in 2019 in connection with inter alia apparent violations of US sanctions targeting Iran. The allegations in this case (the so-called “Brutus Allegations”) allege that SCB’s non-compliance was far wider and more systematic than it had admitted. The Brutus Allegations were dismissed in the US by the US District Court, but the UK High Court has held that these allegations should proceed to trial. (Various Claimants v Standards Chartered plc Approved Judgment)