Preserving Court Jurisdiction under UK Sanctions: The EWCA Decision in Mints v PJSC National Bank Trust

Introduction

The case of Mints & Ors v PJSC National Bank Trust & Anor ([2023] EWCA Civ 1132) addresses critical questions surrounding the impact of the UK's sanctions regime on judicial proceedings. Originating from the Russian invasion of Ukraine on February 24, 2022, the appeal focuses on the interpretation and application of the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA") and the Russia (Sanctions) (EU Exit) Regulations 2019 ("the Regulations"). The appellant banks, designated persons under these sanctions, seek approximately US$850 million from the appellants, who are defendants in a complex commercial litigation alleging conspiracy to engage in uncommercial transactions.

Summary of the Judgment

The England and Wales Court of Appeal (Civil Division) dismissed the appeals raised by the appellants. The primary issues revolved around whether entering a judgment in favor of a designated person violates the UK sanctions and if the Office of Financial Sanctions Implementation (OFSI) possesses the authority to license various financial actions related to sanctioned individuals. The court concluded that:

The entry of judgment in favor of a designated person does not unlawfully breach SAMLA or the Regulations.
OFSI retains the authority to license payments of adverse costs orders, security for costs, and other financial obligations pursuant to Schedule 5 of the Regulations.
The first claimant, PJSC National Bank Trust, was not "controlled" by the designated individuals under Regulation 7.

Consequently, the Court upheld the original judge's order, allowing the litigation to proceed without infringing the sanctions imposed.

Analysis

Precedents Cited

The judgment extensively referenced pivotal cases and statutory interpretations that underpin the current decision:

Ahmed v HM Treasury (Nos. 1 and 2) [2010] 2 AC 534: Established that orders made under the United Nations Act 1946 could be quashed for being ultra vires, highlighting the necessity for effective judicial remedies in sanctions regimes.
R (Belhaj) v DPP [2019] AC 593: Emphasized that fundamental rights, such as access to the courts, cannot be curtailed without clear legislative authorization.
R v R [2016] Fam 153: Underlined that not transposing specific EU Regulation provisions can imply legislative intent to maintain certain judicial freedoms.
UNISON v Lord Chancellor (Nos 1 and 2) [2017] UKSC 51: Reinforced the broad scope of access to justice, ensuring that even unmeritorious claims are heard.
Taruta (2022): Addressed the relationship between sanctions and the ability of designated persons to engage in legal proceedings, affirming the preservation of civic rights.

Legal Reasoning

The court's reasoning was anchored in the principles of statutory interpretation, primarily the principle of legality, which mandates that fundamental rights cannot be curtailed without explicit legislative intent. The judge methodically analyzed:

Definition of Terms: Clarified that "funds" and "economic resources" encompass tangible and intangible assets, but a cause of action does not qualify as a "fund", only as an "economic resource".
Entry of Judgment: Determined that entering a judgment does not equate to "making available" funds, as the judgment merely formalizes an existing obligation without transferring assets.
OFSI Licensing: Affirmed that OFSI can license various financial actions under Schedule 5, ensuring that sanctions do not obstruct the flow of justice through judgements and legal obligations.
Control Interpretation: Concluded that the first claimant was not controlled by the designated individuals under Regulation 7, as control via political office does not fit within the regulatory framework.

The judge emphasized that any amendment or interpretation that would undermine access to justice would be invalid under the principle of legality unless clearly authorized by primary legislation.

Impact

This judgment reaffirms the sanctity of the judicial process even amidst stringent sanctions. Key impacts include:

Judicial Independence: Strengthens the notion that courts retain their jurisdiction and cannot be easily overridden by legislative measures without explicit intent.
Sanctions Framework: Clarifies the boundaries of sanctions, ensuring they target designated assets and individuals without encroaching on broader judicial functions.
Future Litigation: Sets a precedent that civil claims against sanctioned individuals or entities can proceed, promoting access to justice while maintaining the integrity of sanctions regimes.
OFSI Authority: Affirms OFSI's role in licensing, providing flexibility within the sanctions framework to accommodate legitimate judicial and financial processes.

Complex Concepts Simplified

Several legal terminologies and concepts within the judgment necessitated clarification:

Principle of Legality: A doctrine that fundamental rights cannot be impaired by legislation unless there is clear intent from the legislature.
Merger Doctrine: In English law, when a debt or cause of action is satisfied by a judgment, the original cause merges into the judgment, extinguishing the former.
Designated Persons: Individuals or entities subject to sanctions, resulting in asset freezes and prohibitions on financial transactions with non-designated persons.
OFSI Licensing: The Office of Financial Sanctions Implementation has the authority to grant licenses allowing sanctioned individuals or entities to undertake certain financial actions that would otherwise be prohibited.

Conclusion

The Court of Appeal's decision in Mints & Ors v PJSC National Bank Trust & Anor (2023) serves as a crucial affirmation of the balance between enforcing sanctions and preserving the fundamental right of access to justice. By meticulously interpreting SAMLA and the Regulations, the court ensured that sanctions do not impede legitimate judicial processes. The judgment underscores the judiciary's role in safeguarding civil liberties against overreaching legislative or regulatory measures, thereby maintaining the integrity and independence of the legal system within the framework of international sanctions.