within the prescribed list of reasons for which a licence could be obtained, so were not permissible under the RSR. 4. Although C1 was not expressly designated as a sanctioned entity, D1D4 submitted that it should be treated as such because it was ‘owned or controlled’ within the meaning of the RSR by at least two designated persons; Mr Vladimir Putin and Ms Elvira Nabiullina in their respective capacities as the President of the Russian Federation and the Governor of the Russian Central Bank (the ‘control issue’). 5. Consequently, D1-D4 claimed that to continue the proceedings would create serious prejudice to them and so the proceedings should be stayed. The Decision Mrs Justice Cockerill rejected each of these grounds and dismissed D1D4’s application. In so doing she held that the entry of judgment in favour of a sanctioned entity is not unlawful. Although SAMLA and the RSR were intended to curtail some fundamental rights (such as the right of peaceful enjoyment of property), they did not, in the absence of clear wording, operate to curtail other fundamental rights such as the right of access to the court. It followed that if a party was entitled to access the court, they were entitled to pursue its case to a judgment. Although Cockerill J accepted it was arguable when reading certain provisions of the SAMLA and the RSR in isolation that it would be unlawful to enter judgment in favour of C1 and C2, it was also arguable that entering judgment would not be unlawful. However, where the legislation did not clearly express a derogation from the right of access to the court, the principle of legality compelled the answer that judgment can be entered in favour of a sanctioned claimant and that there was no requirement for a licence from the Office for Sanctions Implementation (‘OFSI’) for the entry of judgment. 34 LAWYER MONTHLY MAY 2023 The Judge held that payment of an adverse costs order by a sanctioned entity while prima facie in breach of the RSR, was licensable under paragraph 3 of Schedule 5 of the RSR, which provides that licence may be given to enable the payment of reasonable professional fees and expenses associated with the provision of legal expenses. In particular, Cockerill J observed: (i) there was nothing in the language of paragraph 3 that limited the availability of a licence to the professional fees of the designated party’s own lawyers,; (ii) the legislators were well aware that payments of adverse costs are a routine and necessary feature of litigation; (iii) there was no rational reason why a sanctioned entity could not be granted a licence to pay adverse costs where the effect would be to diminish rather than increase their assets; (iv) OFSI’s Guidance clearly stated that adverse costs payments could be licensed under this ground; and (v) OFSI had in fact issued a licence to enable C1 and C2 to pay a previous adverse costs order. For similar reasons, it was held that payments by the sanctioned claimant for security for costs were also licensable under paragraph 3 of Schedule 5 of the RSR. Cockerill J also held that the scope of the wording of paragraph 3 of Schedule 5 is sufficiently wide to extend to not just to the payment of costs by a sanctioned party but also to the payment of costs in their favour. In support of this, she observed that the making of a favourable costs order does not serve to benefit the designated party; merely to put them back in the same position it would have been in costs wise had it not been for the bad point taken by the other side. If such payments were not licensable, it would leave the door open for abusive conduct by non-designated litigants to make unmerited applications against the designated person without the risk of being threatened with realworld consequences. The judge held that a payment for damages on the cross undertakings given in support of a freezing order is licensable within the scope of Schedule 5 paragraph 5 of the RSR, which permits a licence to be given “to enable an extraordinary expense of a designated person to be met”. While acknowledging that the payment of damages was a possible outcome arising from a claimant giving a cross undertaking, it only arose after a detailed enquiry by the court, the Judge pointed out that anyone who had been involved in a claim for damages on a cross undertaking would likely regard it as out of the ordinary and not an ordinary or routine cost. She also observed that it was unlikely that OFSI would refuse a licence for the payment of such damages where they had been awarded pursuant to a decision of the English Court and had The effect of the sanctions regime is that all the assets or economic resources of a designated person are frozen, and no one can deal with them.
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