Permission sought by trustees to make distributions to Russian bank

Trustees in bankruptcy were concerned that making distributions from the estate to a Russian Bank might breach the Russia (Sanctions) (EU Exit) Regulations 2019 (the Regulations). They applied to court for a declaration that the distributions were permitted.

The Regulations impose financial sanctions and freeze funds owned or controlled by "designated persons". An entity is "owned or controlled" by another if it was reasonable to expect that the person would be able to achieve the result that the entity's affairs were conducted in accordance with their wishes.

President Putin is a “designated person”. The question was whether he owned or controlled the bank by virtue of his political position. According to guidance issued by the Office for Sanctions Implementation (OFSI), the UK government did not consider that, for the purposes of the Regulations, Putin exercised indirect or de facto control over all entities in the Russian economy merely by virtue of his office.

The court held that the bank was not controlled by a “designated person” within the meaning of the Regulations. However, even if that was wrong, an exemption applied here because the distributions related to the discharge of obligations arising before the date on which Putin became a designated person.

The court made clear that as part of their ongoing responsibilities, the trustees should undertake enhanced monitoring of the bank’s position.

Thomas v PJSC National Bank Trust [2025] EWHC 75 (Ch)

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