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Sanctioned Entities: Fortification and Security

07/05/26

While a sanctioned entity is entitled to access to the Court (PJSC National Bank Trust v. Mints [2023] EWCA Civ 1132; [2024] KB 559), the effect of the sanctions may significantly affect its ability to provide the necessary fortification for an undertaking in damages or security for costs.

In February 2026, VTB Bank applied for, and was granted, ex parte, a USD 90 million Worldwide Freezing Order (WFO) over the assets of the defendants, Timur Kuanychev and Alfiya Askar. The Bank gave the usual undertaking in damages and ‘ring fenced’ £100,000 held by it at Barclays Bank in London.

Since 24 February 2022, VTB has been subject to both UK and US sanctions, with the effect that its assets are frozen and it cannot make any payments without UK (OFSI) and/or US (OFAC) approval, meaning that it could not satisfy any order enforcing the undertaking in damages or an order for costs, without the relevant licence.

In VTB Bank v Kuanyshev et al [2026] EWHC 591 (Comm), Mr Peter MacDonald Eggers KC, sitting as a Deputy Judge of the High Court, acceded to an application to vary the WFO to require VTB to provide £500,000 both as a fortification of its undertaking in damages and as security for costs. More importantly, he ordered VTB (i) expeditiously to take “all necessary steps to apply as soon as possible to [OFSI] and/or any other applicable financial sanctions licensing authority for a licence for permission” to provide the necessary fortification / security; (ii) after acquiring the necessary licences, to pay the funds into court; and (iii) to report to the Court on the progress of its applications for a licence.

The Judge accepted that the original fortification was inadequate, that a payment into court was appropriate, and that, while a licence would be required to make the payment in, it should be sought as soon as possible. [46(1)] He left open the issue of whether, were a payment into court to made, a licence would or would not be required to enable a payment out in the event of an order under the undertaking in damages or an adverse costs order. [47]

Further coverage can be found here.

The defendants/respondents were represented by Michael Bools KC and Georgina Petrova, instructed by Fieldfisher.

All members of Brick Court Chambers are self employed barristers. Any views expressed are those of the individual barristers and not of Brick Court Chambers as a whole.