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
- Australia, New Zealand and Japan endorse UK Government's call to action on Russia's "shadow fleet": On November 28, 2024, it was announced that Australia, New Zealand, and Japan have endorsed the UK Government's policy paper on addressing the risks posed by Russia's "shadow fleet". Among other things, the paper calls on market participants to support the prevention, detection and reporting of "shadow fleet" activities. The recent endorsements increase the total number of countries which have backed the paper to 50. (https://assets.publishing.service.gov.uk/media/67483c8524108edc3c8ceb25/Call_to_Action_-_Shadow_Fleet.pdf; https://www.gov.uk/government/publications/the-shadow-fleet-a-call-to-action#full-publication-update-history)
- UK High Court allows appointment of joint administrators for UK company with sanctioned beneficiary: On November 26, 2024, the UK High Court handed down judgment in Re KRF Services (UK) Ltd [2024] EWHC 2978. KRF was ultimately owned by a company that acts as a trustee of the KR Family Office Trust. Dr Viatcheslav Moshe Kantor, a UK assets freeze target, was settlor of the trust and one of its beneficiaries. In the judgment, it was noted that OFSI regards KRF to be subject to UK asset freeze restrictions. Among other things, Andrew Twigger K.C., sitting as a Deputy Judge of the High Court, considered that the making of an administration order appointing receivers for KRF did not, in principle, breach Regulations 11 to 15 and Regulation 19 of the UK Russia sanctions regulations. (https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/2978)
- UK Government adds two entries to the UK sanctions list and specifies 30 vessels under the Russia regime: On November 25, 2024, OFSI added two entries to the UK sanctions list and specified 30 vessels under the Russia regime. According to the UK Government, the 30 vessels are part of Russia's shadow fleet who are "responsible for transporting billions of pounds worth of oil and oil products in the last year alone". Two leading Russian insurance companies - Alfastrakhovanie Plc and VSK – have also been designated for "enabling the shadow fleet". (https://assets.publishing.service.gov.uk/media/67444f54e26d6f8ca3cb3528/Notice_Russia_251124.pdf; https://www.gov.uk/government/news/uk-imposes-new-wave-of-sanctions-choking-russian-oil-revenues-with-foreign-secretary-arriving-in-italy-for-g7)
- UK High Court dismisses LetterOne challenge to National Security and Investment Act Order: On November 20, 2024, the UK High Court upheld the UK Government's decision to require LetterOne to divest its shareholding in Upp, a fibre broadband start-up, in LetterOne v Chancellor for the Duchy of Lancaster in the Cabinet Office (formerly Secretary of State for Business, Energy and Industrial strategy). LetterOne had acquired the entire share capital of Upp Corporate Ltd ("Upp") in January 2021. Following the entry into force of the National Security and Investment Act ("NSIA") in January 2022, the acquisition was "called in" by the then Secretary of State for BEIS. In December 2022, a final order was issued under the NSIA requiring LetterOne to divest the entirety of its shareholding in Upp. In the first challenge to an NSIA final order, LetterOne submitted that the Secretary of State acted unlawfully by imposing divestment as opposed to letter intrusive measures to mitigate the national security risks identified by the Secretary of State. In upholding the Secretary of State's final order, the court said inter alia that it "will treat as axiomatic that Parliament has entrusted the assessment of risk to national security to the executive and not to the judiciary"... and that in such cases, "the scope for the intervention of unelected judges is limited." (https://www.judiciary.uk/wp-content/uploads/2024/11/LetterOne-v-SSBEIS-OPEN-JUDGMENT-APPROVED-20112024-FINAL-.pdf)
- UK Court grants Google injunctions to restrain enforcement against Russian court orders despite no pre-judgment anti-suit injunctions having been sought: In the recently published case of Google LLC & Anor v Nao Tsargrad Media [2024] EWHC 2212, the English Commercial Court granted anti-enforcement injunctions (AEIs) and anti-anti-suit injunctions (A-ASIs) in relation to Russian court orders. Google had entered into agreements with four different Russian entities for the provision of online services. The agreements provided for either the exclusive jurisdiction of the English courts or London-seated LCIA arbitration. Google suspended or terminated its provision of services on account of sanctions. The Russian parties obtained orders in Russian proceedings requiring Google to restore its services, and sought to enforce the judgment against members of the Google group. In granting the AEIs and A-ASIs, HHJ Pelling KC (sitting as a judge of the High Court) stated among other things that the purpose of the AEIs was to inhibit enforcement of an "obviously exorbitant" penalty, that was increasing at a "frankly alarming rate" (at the date of the applications, the collective penalties stood at $1.8 octillion). (https://jusmundi.com/fr/document/decision/en-google-llc-and-google-ireland-limited-v-nao-tsargrad-media-no-fond-pravoslavnogo-televideniya-nfpt-and-ano-tv-novosti-judgment-of-the-high-court-of-justice-of-england-and-wales-2024-ewhc-2212-monday-19th-august-2024)
Other sanctions
- Botswana and the G7 announce plans to improve transparency in the diamond trade: On November 27, 2024, the G7 diamond technical team and Botswana jointly announced that a new diamond export certification node is due to become fully operational in Botswana in early 2025. The node - developed following close collaboration between the G7 and Botswana - will increase traceability and transparency in the diamond trade and will enhance Botswana's capacity for certifying rough diamonds for export. The G7 diamond technical team plan to continue engaging with other African diamond-producing countries such as Namibia and Angola, and consider setting up additional export certification nodes, in future. These efforts strengthen the effect of the G7's ban on Russian diamonds processed in third countries, which came into effect on 1 March 2024. (https://www.gov.uk/government/news/joint-statement-on-g7-diamond-sanctions)
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