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The interaction between insolvency law and sanctions - Administrative Court rejects VTB’s challenge to OFSI general licence

19/12/25

The Administrative Court (Mrs Justice Collins Rice) has today given judgment in PJSC VTB Bank v HM Treasury (Defendant) and VTB Capital Plc (In Administration) (Interested Party) [2025] EWHC 3359 (Admin) in a case raising issues about the interaction of insolvency law and sanctions.

The Claimant (VTB Bank) is majority owned by the Russian government. It was sanctioned by the UK government in February 2022. The effect of its sanctioning was to freeze the assets of its UK subsidiary (VTB Capital). VTB Capital entered into administration in December 2022 when Teneo Financial Advisory Limited were appointed administrators by the English High Court.

The Office of Financial Sanctions Implementation (OFSI) issued a general licence to facilitate the distribution of assets from VTB Capital’s estate while its assets were frozen. The effect of the General Licence was to decriminalise the distribution of assets to VTB Capital’s creditors, including VTB Bank. OFSI subsequently amended the General Licence to facilitate certain deductions from any distributions to the Claimant. The deductions reflect the value of assets within the VTB Capital estate which are under the Claimant’s control or against which the Claimant had taken enforcement action in Russian courts.

The Claimant challenged the amendment to the General Licence under section 38 of the Sanctions and Anti-Money Laundering Act 2018. The Claimant argued that OFSI had exercised its licensing powers for an improper purpose; that the amendment was irrational; and that the decision-making process adopted by OFSI was unfair and interfered unlawfully with the Claimant’s rights under Article 6 of the European Convention of Human Rights.

The claim was dismissed in its entirety. The court held that the purpose of the amendment was consistent with the statutory purpose of the Russia (Sanctions) (EU Exit) Regulations 2019 (i.e. to encourage Russia to cease its war in Ukraine) and that the decision was fair, rational and lawful.

The judgment can be found here.

Maya Lester KC, Malcolm Birdling and Alastair Richardson acted (together with Ryan Perkins of South Square), instructed by Weil Gotschall, for VTB Capital (acting by its Joint Administrators), who appeared as an Interested Party supporting OSFI in resisting the claim.