Executive Summary
This case concerns Celestial Aviation Trading Ireland Ltd and others ("Claimants") seeking payment under guarantees from Volga-Dnper Logistics BV ("Defendant"), a Dutch company within the Russian Volga-Dnepr Group. The Defendant resists payment citing sanctions risks linked to its ultimate beneficial owner, Mr. Alexey Isaykin, designated under UK, EU, and US sanctions following Russia’s 2022 invasion of Ukraine. The High Court ordered interim payments totaling over USD 202 million plus £50,000 costs, but the Defendant seeks to vary this order to delay payments until appropriate OFSI and OFAC licences are obtained, citing potential breaches of sanctions laws.
Sanctions Highlights
- Mr. Alexey Isaykin, ultimate beneficial owner of the Defendant, was designated under the Russia (Sanctions) (EU Exit) Regulations 2019 on 16 June 2022 and by OFAC on 23 August 2024.
- Sanctions imposed by the UK, US, and EU following Russia’s invasion of Ukraine restrict payments to or involving designated persons.
- Defendant fears making payments under the Interim Payment Order without OFSI (UK) and OFAC (US) licences would breach sanctions.
- OFSI granted a specific licence only in July 2024 after delays; OFAC licence status remains critical.
- Defendant’s legal fees and payment obligations are constrained by sanctions-related licensing caps and regulatory uncertainty.
Emerging Risks
- Risk of Defendant being caught between contempt of court for non-payment and sanctions violations for making payments.
- Delays in obtaining or renewing sanctions licences could stall enforcement of judgments.
- Potential for increased litigation complexity where sanctions intersect with commercial enforcement.
- Risk of asset freezes or enforcement injunctions being ineffective if payments are blocked by sanctions.
- Legal representation challenges for designated entities due to sanctions on payment of fees.
Geopolitical Impact
- The case exemplifies the tangible legal and commercial fallout from Western sanctions on Russian entities post-Ukraine invasion.
- Highlights coordination and divergence between UK, US, and EU sanctions regimes affecting cross-border enforcement.
- Reflects ongoing geopolitical tensions influencing commercial aviation leasing and asset recovery.
- Demonstrates how sanctions complicate enforcement of international commercial contracts involving Russian-linked parties.
- Reinforces the UK’s role as a key jurisdiction for adjudicating sanctions-related commercial disputes.
Economic Intelligence
- The Defendant faces interim payment obligations exceeding USD 202 million, reflecting significant financial exposure.
- Sanctions have disrupted normal payment flows and contractual performance within the aviation leasing sector.
- The delay in payments and legal costs due to sanctions licensing impacts liquidity and operational stability of affected entities.
- The case underscores the economic ripple effects of sanctions on asset leasing, financing, and guarantees.
- Enforcement uncertainty may depress market confidence in leasing contracts involving sanctioned parties.
Strategic Recommendations
- Parties should proactively seek and maintain all necessary sanctions licences (OFSI, OFAC) before executing payments.
- Litigants and counsel must closely monitor evolving sanctions regulations and licensing regimes to mitigate compliance risks.
- Courts and enforcement agencies should consider sanctions implications when issuing and enforcing payment orders.
- Risk assessments for contracts with Russian-linked entities must incorporate sanctions compliance and potential enforcement delays.
- Legal strategies should include contingency planning for sanctions-related injunctions, licence refusals, or asset freezes.
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**Source Notes:**
Sanctions Intelligence Digest
[https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1156.txt](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1156.txt)