Court of Appeal rejects VTB Bank’s challenge to HM Treasury’s amendment of sanctions general licence to stop VTB stepping ahead of other creditors in VTB Capital insolvency

30/10/26

The Court of Appeal handed down judgment today in an appeal raising issues about the interaction of insolvency law and sanctions. The Court () rejected the Bank’s appeal.

VTB Bank is the second largest bank in Russia, and majority owned by the Russian government. It was sanctioned in February 2022 and the assets of its UK subsidiary, VTB Capital, were frozen. VTB Capital entered into administration in December 2022 and Teneo Financial Advisory Limited were appointed administrators. The Office of Financial Sanctions Implementation (OFSI) granted a General Licence to allow VTB Capital to make and receive payments whilst in administration.

The administrators then asked OFSI to amend the General Licence to stop VTB Bank from stepping ahead of other creditors in the administration.  They were concerned that many of VTB Capital’s assets and debts are in Russia, making it practically impossible for the administrators to recover them, & VTB Bank (a major creditor of VTB Capital) has been taking enforcement action against the assets in Russia. OFSI amended the General Licence and VTB Bank challenged the lawfulness of that amendment under the Sanctions & Anti-Money Laundering Act.

The Court of Appeal (Vos MR, Bean LJ and Zacaroli LJ ) upheld the High Court’s judgment rejecting VTB Bank’s claim, finding that:

1. The wide purposes of SAMLA and the UK’s Russia sanctions regulations were broad enough to allow OFSI lawfully to amend the General Licence for the purpose of making the sanctions effective against VTB Bank.
2. The General Licence, including the challenged amendment, was purely permissive, decriminalising conduct that would otherwise be in breach of sanctions. It did not require the administrators to act in a certain way in the insolvency so could not and did not extinguish or materially alter VTB Bank’s rights in the administration process (§141). Those rights would only be affected when the Insolvency Court decided how, under insolvency law, the administration should proceed.

Since the General Licence was only permissive, the Court of Appeal made suggestions for the administrators to use insolvency law to stop VTB stepping ahead through hotchpot and other means.

The judgment can be found here – & a press summary.  See further www.globalsanctions.com for this and all other UK judgments relating to sanctions & insolvency.