Jersey Court Slams Door on Sanctions Dodge & Forces €213M Payout to Russian Bank's Arm in Ukraine War Fallout!

Synopsis

The case RTI Limited v OWH SE i.L. [2025] JCA 327 involves a December 2025 appeal by RTI Limited (a Jersey company part of the Rusal Group) against a Royal Court decision enforcing a €213.77 million LCIA arbitral award in favour of OWH SE i.L. (a German bank majority-owned by sanctioned Russian entity VTB Russia).

• RTI Limited v OWH SE i.L. 15-Dec-2025 = https://www.jerseylaw.je/judgments/unreported/Pages/[2025]JCA327.aspx

The dispute arose from RTI's failure to meet margin calls under a 2019 currency swap agreement amid sanctions imposed in 2022 following Russia's invasion of Ukraine. RTI argued enforcement violated Jersey public policy, relying on sanctions-related immunity, but the Court of Appeal dismissed the appeal on 15 December 2025, holding that the relevant immunity provision (Article 46A of the Sanctions and Asset-Freezing (Jersey) Law 2019) does not apply retrospectively and no pre-existing public policy barred enforcement.

Briefing

Background and Facts

• Parties and Contract: RTI Limited (Appellant) and OWH SE i.L. (Respondent) entered into a currency swap arrangement in September 2019 under an ISDA Master Agreement governed by English law, with disputes subject to LCIA arbitration. United Company Rusal guaranteed RTI's obligations. OWH is 99.39% owned by VTB Russia PJSC, which became a Designated Person under Jersey, UK, and US sanctions in early 2022.
• Triggering Events: Russia's invasion of Ukraine on 24 February 2022 led to sanctions on VTB Russia and restrictions by German regulator BaFin on OWH, prohibiting payments benefiting VTB. The Russian rouble's depreciation triggered margin calls from OWH starting 25 February 2022 (initial US$43.5 million due 28 February). RTI refused payment, citing potential breaches of Jersey sanctions (e.g., Articles 11 and 17 prohibiting funds to Designated Persons) and risks of indirect benefits to VTB.
• Termination and Arbitration: After failed negotiations, OWH terminated the agreements on 23 March 2022 for non-payment. RTI disputed this, leading to LCIA arbitration. In September 2024, the tribunal ruled in OWH's favour, awarding €213,770,661.77 (later adjusted slightly), rejecting RTI's sanctions defences as the relevant authorities were not "qualifying" under the contract and no timely Illegality notice was given.
• Lower Court: OWH obtained an ex parte enforcement order in the Jersey Royal Court. RTI's set-aside application was dismissed on 22 May 2025 ([2025] JRC 137), leading to this appeal filed on 19 June 2025. Provisional liquidators were appointed for RTI in July 2025, but this did not affect the appeal.

Key Legal Issues

1. Public Policy and Retrospectivity (Ground 1): Whether enforcement contravenes Jersey public policy under Article 44(3) of the Arbitration (Jersey) Law 1998, specifically via retrospective application of Article 46A (added in June 2022 to the Sanctions Law), which grants civil immunity for acts reasonably believed necessary for sanctions compliance.
2. Reasonableness of Belief (Ground 2, Academic): Whether the Royal Court erred in deeming RTI's belief that payment would breach sanctions as objectively unreasonable, including considerations of BaFin restrictions, hindsight evidence, and the applicable test (objective vs. subjective).

Court's Reasoning and Holdings

• On Retrospectivity (Ground 1 Dismissed): The Court applied a strong presumption against retrospectivity, finding no clear legislative intent in the Sanctions Law or its 2022 amendment for Article 46A to apply to pre-June 2022 acts. The provision was forward-looking, aimed at aligning with FATF standards. In distinguishing UK cases, the Court noted the absence of remedial or express retrospective language here. RTI's "unfairness" argument (e.g., windfall to OWH) was rejected as it would undermine contractual certainty. Alternatively, no uniform pre-2022 Jersey public policy on such immunity existed, given gaps in the implementation of post-Brexit sanctions. Enforcement aligned with pro-arbitration policy and did not involve illegality.
• On Reasonableness (Ground 2 Dismissed as Academic): Though moot, the Court upheld the Royal Court's finding of objective unreasonableness. RTI failed to investigate BaFin's impact adequately or to consider alternative payment options, despite resources and legal advice. The lower court properly avoided hindsight bias, focused on contemporaneous actions (e.g., no Illegality notice), and applied an objective test without material errors.
• Evidentiary Matters: Rejected OWH's fresh evidence application as unnecessary; admitted RTI's late materials on pre-2022 policy as they raised pure legal points without prejudice.
• Concurring Opinion: McCullough JA agreed on Ground 1 but expressed reservations on Ground 2, deeming it unnecessary to resolve.

Outcome and Implications

The appeal was unanimously dismissed, confirming the enforcement of the arbitral award. This decision reinforces the presumption against retrospective application of sanctions-related immunities and underscores the pro-enforcement stance for arbitral awards under Jersey law, even in complex sanctions contexts. It highlights the need for parties to promptly and reasonably address sanctions risks in contracts: no costs or further orders mentioned in the judgment.

Web Sources

RTI Limited v OWH SE i.L. 15-Dec-2025 =

• https://www.jerseylaw.je/judgments/unreported/Pages/[2025]JCA327.aspx

Here is a list of relevant web sources related to the case and its background, and providing context on the lower court proceedings and related matters:

1. https://jusmundi.com/en/document/decision/en-united-company-rusal-and-rti-ltd-v-owh-se-i-l-judgment-of-the-jersey-royal-court-2025-jrc-160-monday-16th-june-2025 (Royal Court judgment [2025] JRC 160 on stay application)
2. https://www.bcrlawllp.com/insights/2025-jrc-137/ (Summary of Royal Court decision [2025] JRC 137)
3. https://www.hilldickinson.com/our-view/articles/court-finds-appeal-from-lcia-arbitration-award-out-of-time-and-declines-to-grant-extension/ (English High Court related decision [2025] EWHC 1945)
4. https://jusmundi.com/en/document/decision/en-united-company-rusal-and-rti-ltd-v-owh-se-i-l-judgment-of-the-jersey-royal-court-2025-jrc-137-thursday-22nd-may-2025 (Royal Court judgment [2025] JRC 137)
5. https://www.collascrill.com/articles/sanctions-versus-contractual-liability-in-jersey-law/ (Article on sanctions and the Royal Court decision)
6. https://www.transnational-dispute-management.com/legal-and-regulatory-detail.asp?key=36633 (Summary of Royal Court [2025] JRC 145)
7. https://www.casemine.com/judgement/uk/6889140e327bc74aada5972c (English High Court case report)
8. https://polixis.com/news-and-press-releases/rusalrti-v-owh-cross-border-enforcement-of-arbitration-awards-amid-sanctions-and-fraud-allegations/ (Article on cross-border enforcement)
9. https://www.bedellcristin.com/knowledge/briefings/fy-2425/q4/jerseys-royal-court-rejects-public-policy-challenge-to-arbitration-award-enforcement/ (Briefing on Royal Court's rejection of public policy challenge)
10. https://www.i-law.com/ilaw/doc/view.htm?id=449677 (Lloyd's Rep report on the case)