Executive Summary
The case involves Celestial Aviation Trading entities seeking interim payments from Volga-Dnper Logistics BV (“the Defendant”), a Dutch company within the Russian Volga-Dnepr Group, under guarantees linked to aircraft leases. The Defendant resists payment citing sanctions compliance risks following Russia’s 2022 invasion of Ukraine, which triggered EU, UK, and US sanctions including designation of the Defendant’s ultimate beneficial owner, Mr. Alexey Isaykin. The High Court ordered interim payments in USD and GBP, but the Defendant seeks to vary this order to delay payments until appropriate OFSI and OFAC licences are obtained, citing potential breaches of sanctions law.
Sanctions Highlights
- Mr. Alexey Isaykin, the Defendant’s ultimate beneficial owner, was designated under UK Russia (Sanctions) (EU Exit) Regulations 2019 (June 2022) and by the US OFAC (August 2024).
- Sanctions restrict the Defendant’s ability to make payments in USD and GBP without licences from OFSI (UK) and OFAC (US).
- The Defendant’s legal fees and payment obligations are subject to licensing regimes; a specific OFSI licence was granted only in July 2024 after delays.
- The Defendant argues that making payments without licences risks breaching UK and US sanctions, placing it in a legal dilemma between contempt of court and sanctions violation.
Emerging Risks
- The Defendant’s inability to comply with payment orders due to sanctions licensing delays may lead to enforcement complications and contempt proceedings.
- The designation of key individuals and entities within the Volga-Dnepr Group increases compliance complexity for counterparties and financial intermediaries.
- Potential for increased litigation delays and costs due to sanctions-related procedural hurdles and licensing uncertainties.
- Risk of asset freezes or further sanctions impacting the Defendant’s operational and financial capacity.
Geopolitical Impact
- The case exemplifies the tangible legal and commercial consequences of Western sanctions on Russian-linked entities post-Ukraine invasion.
- Enforcement of sanctions by UK, US, and EU authorities directly affects cross-border commercial contracts and dispute resolution.
- The UK courts are balancing sanctions compliance with contractual enforcement, reflecting broader geopolitical tensions between Russia and Western states.
- The involvement of multiple jurisdictions (UK, EU, US) highlights the complexity of sanctions regimes and their extraterritorial reach.
Economic Intelligence
- The Defendant’s obligations total over USD 202 million plus GBP 50,000 in costs, indicating significant financial exposure linked to sanctioned entities.
- Aircraft leasing and aviation sectors remain vulnerable to sanctions spillover, affecting asset utilization and lease enforcement.
- Sanctions-induced payment delays and licensing requirements disrupt cash flows and creditor recoveries in international commercial disputes.
- The case signals heightened due diligence and risk management needs for financial transactions involving Russian-related counterparties.
Strategic Recommendations
- Parties should proactively seek and secure all necessary sanctions licences (OFSI, OFAC) before executing payments involving designated persons or entities.
- Legal teams must integrate sanctions compliance assessments into litigation and enforcement strategies to mitigate risks of contempt or sanctions breaches.
- Stakeholders should monitor evolving sanctions lists and regulatory guidance closely, especially relating to Russian aviation and associated corporate groups.
- Consider alternative dispute resolution or escrow arrangements to manage payment risks amid sanctions constraints.
- Maintain robust documentation of compliance efforts to support defenses against potential regulatory or enforcement actions.
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**Source Notes:** Sanctions Intelligence Digest, [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1156.html](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1156.html)