Varun Zaiwalla

In Beneathco DMCC v R.J. O’Brien Ltd (Commercial Court, 2025), Zaiwalla & Co acts for a Dubai-based petroleum trader seeking recovery of US$16.5 million withheld by a UK broker following the trader’s designation under US sanctions. The dispute concerns whether a UK-incorporated entity, indirectly owned by a US parent, is legally prohibited from transferring funds held in a London account.

Beneathco contends that the broker is not subject to US sanctions jurisdiction and that no legal barrier prevents payment under English law. The case raises important questions regarding the extraterritorial reach of US sanctions, the obligations of UK-regulated entities and the extent to which foreign sanctions may suspend contractual payment obligations before the English courts.

In Virgo Marine Inc and Nixie Marine v Reed Smith LLP and Barclays Bank PLC [2025] EWHC 1157 (Comm.), the High Court refused Reed Smith’s application for £6 million in security for costs against Zaiwalla & Co’s Dubai-based shipping clients. The claim arises from the freezing of approximately US$13.3 million held in escrow following Virgo Marine’s designation under US sanctions. Although Reed Smith later accepted that its London office was not subject to US sanctions and instructed Barclays to release the funds, the bank declined to do so.

Virgo and Nixie commenced proceedings in negligence, breach of contract and breach of trust. Mr Justice Foxton rejected Reed Smith’s security application, holding that there was insufficient evidence that Barclays would refuse to comply with an English court order, describing the contrary evidence as “thin and unpersuasive.”

In a landmark judgment, the UK Supreme Court upheld Sharp Corp Limited’s appeal concerning the correct measure of damages under GAFTA Contract No. 24. The dispute arose after Viterra BV declared Sharp in default under contracts for the sale of Canadian Yellow Peas and Lentils, and secured GAFTA awards of approximately US$6 million based on a notional replacement contract calculated FOB Vancouver.

Zaiwalla & Co, acting for Sharp, successfully argued that damages should reflect the actual value of the goods remaining in the seller’s hands at Mundra Port, where they had already been customs cleared. By the time of resale, Indian tariffs had materially increased the value of the goods, rendering the notional calculation inconsistent with the compensatory principle.

The Supreme Court confirmed that damages must reflect commercial reality rather than a hypothetical substitute transaction and remitted the matter to the GAFTA Appeal Board for reassessment in line with its guidance.