Sanctions:- Mints, 2 Russian banks, Mr Putin, and the question of control

The following case, CA-2023-000464: Mints -v- PJSC National Bank Trust & Anr, is about a claim filed by 2 Russian banks – against 4 UK-based related individuals (all part of the Mints family), former clients/UBOs of former clients of the banks - against 4 UK-based related individuals (all part of the Mints family), former clients/UBOs of former clients of the banks.

The Appellants/Defendants were:-

• BORIS MINTS
• DMITRY MINTS
• ALEXANDER MINTS
• IGOR MINTS

The banks as Respondents/ Claimants were

• PSJL National Bank Trust (NBT) &
• PJSC BANK OKRITIE FINANCIAL CORPORATION (currently sanctioned by the UK),

Both banks were previously bailed out & nationalised by the Central Bank of Russia (CBR) -.

The case

The claimants have been seeking since 2019 to recover damages worth $850mn, based on allegations of large-scale fraud by these individuals in alleged complicity with rogue bank officers.

One of the points raised by the appellants/defendants) was to argue that both claimants were subject to UK sanctions &; therefore, there was doubt as to whether a UK court could enter a judgment in their favour (this point was dismissed both at 1st instance & on appeal).

The appellants have argued that NBT, which is >99% owned by the CBR, is a sanctioned person, too, because 2 OFSI-designated individuals ultimately control it:

• CBR Governor Elvira Nabiullina & Russian President Vladimir Putin.

Despite the dismissal of the appellants' main point about the adjudicability of the claimant banks' original claim (which effectively made all further debate unnecessary), the Court of Appeal disagreed,

• With the 1st instance judge to say that Mr Putin could effectively be considered to control NBT, given his unchallenged supreme political position within Russia and his unique place atop Russia's de facto "command economy".

On Nov 17, the UK's FCDO & Treasury (OFSI) issued joint Ownership and Control: Public Officials and Control guidance.'

• Ownership and Control: Public Officials and Control guidance - GOV.UK (www.gov.uk)
• https://www.gov.uk/government/publications/ownership-and-control-public-officials-and-control-guidance/ownership-and-control-public-officials-and-control-guidance

The guidance in its sections 1 & 2 restates what has already been known for a long time, namely, that.:-

• Sanctions against CBR Governor Nabiullina do not necessarily entail the same sanctions against the CBR itself & any entities it owns for >50%, e.g., NBT.

The last paragraph of section 3 contains a noteworthy Russia-specific clarification which would have been unnecessary hadn't things gotten this far with Western (in particular, UK) sanctions on Russia:

• "[...] the UK government does not consider that President Putin exercises indirect or de facto control over all entities in the Russian economy merely by virtue of his occupation of the Russian Presidency.
• A person should only be considered to exercise control over certain private entities where this can be supported by sufficient evidence on a case-by-case basis."

The full judgement here: https://www.judiciary.uk/wp-content/uploads/2023/10/Mints-v-PJSC-judgment-061023.pdf

Legal commentary (among others available) here: https://european-disputes-blog.weil.com/england-uk/mints-v-pjsc-national-bank-trust-2023-ewca-civ-1132/

GUIDANCE https://www.gov.uk/government/publications/ownership-and-control-public-officials-and-control-guidance/ownership-and-control-public-officials-and-control-guidance