Executive Summary
The High Court of England and Wales ruled on costs in the case Celestial Aviation Trading Ireland Ltd & Ors v Volga-Dnper Logistics BV [2025] EWHC 1394 (Comm). The court dismissed the Defendant’s Variation Application and summarily assessed the Claimants’ costs at £134,484.96, to be paid within 14 days. The Defendant sought to postpone payment pending an OFSI licence due to UK sanctions (Russia Regulations), but the court rejected this, finding no real risk of sanctions breach in making the payment. The Claimants offered assurances against contempt proceedings if payment was delayed, but the court ordered prompt payment.
Sanctions Highlights
- Defendant argued payment could breach UK Russia sanctions regulations without an OFSI licence.
- Court held UK sanctions had limited relevance as payment instructions outside the UK do not breach Russia Regulations.
- No real risk found that receipt of funds in a UK bank or payment would constitute a sanctions breach or criminal offence.
- Claimants offered assurance not to pursue contempt if payment delayed, but court still ordered payment within 14 days.
Emerging Risks
- Potential for parties subject to sanctions to use licence requirements to delay or avoid court-ordered payments.
- Risk of conflicting interpretations of sanctions compliance in cross-border payments, especially involving Russian-linked entities.
- Litigation costs enforcement may be complicated by sanctions regimes, requiring clear judicial guidance.
Geopolitical Impact
- The case underscores ongoing UK legal enforcement challenges amid Russia sanctions.
- Highlights UK courts’ balancing act between enforcing judgments and respecting sanctions policy.
- Reflects broader UK-Russia tensions influencing commercial litigation and asset recovery.
- Demonstrates UK judiciary’s willingness to prioritize rule of law over sanctions-based payment delays.
Economic Intelligence
- Defendant’s liabilities exceed assets, complicating payment capacity.
- Costs assessed at 55% of Claimants’ original claim (£134,484.96 vs £244,518.10).
- Enforcement of costs payments against sanctioned entities remains viable despite sanctions.
- Court’s decision supports creditor rights in commercial disputes involving sanctioned parties.
Strategic Recommendations
- Litigants should anticipate sanctions-related payment challenges and prepare for judicial scrutiny of compliance risks.
- Claimants should seek clear assurances or court orders to mitigate payment delays due to sanctions.
- Defendants under sanctions should engage early with OFSI licensing to avoid enforcement complications.
- Legal teams must monitor evolving sanctions regulations and UK court interpretations to advise clients effectively.
- Consider risk of sanctions in structuring cross-border payment mechanisms in litigation settlements.
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Source Notes: *Sanctions Intelligence Digest* — [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1394.txt](https://www.bailii.org/ew/cases/EWHC/Comm/2025/1394.html)