On October 6, 2023, the English Court of Appeal handed down its judgment in the anticipated case of Mints v PJSC National Bank Trust and others [2023] EWCA Civ 1132.

Much of the judgment focusses on the right, or otherwise, of a person sanctioned under the U.K.'s Russian sanctions to have access to the U.K. court system. Here, the Court of Appeal upheld the High Court judgment in finding that Parliament did not intend for a sanctioned person to be excluded from the court system, and that entering a judgment in favour of a sanctioned person is not an exercise whereby the court itself is "making funds available" to a designated person in contravention of the imposed asset freeze.

More importantly, however, the Court of Appeal overturned the first-instance judgment on the issue of whether a Russian state-owned bank, which is not itself listed under the U.K.'s sanctions, was or was not "owned or controlled" by Vladimir Putin, who is sanctioned by the U.K.

The asset freeze under the U.K.'s sanctions operates to freeze anything "owned or controlled" by a designated person. The claimants in this case, and the appellants before the Court of Appeal, argued that PJSC National Bank Trust, which is a state-owned bank in Russia, had to be treated as sanctioned by virtue of being owned or controlled by Putin in his capacity as president of the Russian Federation. In the High Court, this argument had been rejected. The judge had ruled that where control was exercised through a political office, this did not amount to the right kind of "control" for the purposes of the sanctions.

The Court of Appeal has disagreed in a unanimous decision, albeit in a part of the judgment which is obiter. The Court of Appeal analysed the U.K.'s test for control as including a broad litmus test of whether a person can or does "call the shots" over an entity with no requirement that there be a direct or indirect ownership interest.

The effect of this ruling is that, as a matter of English law, every single Russian state-owned entity should be treated as being sanctioned under the U.K.'s sanctions regime. This judgment operates as a significant expansion of the number of entities whose assets are frozen under the sanctions. Any screening should be calibrated to include such entities even though they do not appear in the U.K.'s Consolidated List of Financial Sanction Targets.

Although an appeal is possible, businesses should operate as though it will be an offence (subject to the few statutory exceptions and licences) for any person in the U.K., or any U.K. person, to do business with any Russian state-owned entity or to enable or facilitate such an entity dealing with its assets.

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