Leigh Crestohl

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 January 2025, the UK Supreme Court heard the appeal of Eugene Shvidler, marking the first challenge to Russian sanctions to reach the country’s highest court. The case raises fundamental questions concerning the proportionality of individual designations and the extent of judicial scrutiny over executive sanctions decisions under the post-Brexit regime.

The appeal centres on whether the interference with Mr Shvidler’s property and private life rights was justified under the proportionality framework established in Bank Mellat v HM Treasury. The lower courts upheld the designation, emphasising the cumulative effect of sanctions and the broad discretion afforded to the government in matters of foreign policy.

The decision is expected to clarify the balance between national security objectives and individual rights, and to define more precisely the role of the English courts in reviewing sanctions designations.