Sanctions: Court upholds order for enforcement of LCIA arbitration award in sanctions-related dispute

OWH SE i.L (in liquidation) -v- RTI Limited (in liquidation) & another [2026] EWHC 1015 (Comm)

In an earlier decision relating to this dispute, the Commercial Court found that a challenge to an LCIA arbitration award on the ground of serious irregularity, pursuant to s.68 (2)(i) of the Arbitration Act 1996 (the 1996 Act), had been brought out of time and declined to grant an extension of time: Court: No Extension for Late LCIA Appeal | Hill Dickinson.

The Court has now dismissed a further challenge to the LCIA arbitration award, this time on the ground that its enforcement would be contrary to public policy. In this particular instance, the policy of upholding the finality of arbitration awards outweighed the public interest attaching to the sanctions regime.

The decision is significant for those navigating sanctions regulations, which remain a hot topic, particularly for the Court’s view that different components of the sanctions regime carried different weight from a public policy perspective.

The parties

OWH SE (OWH) is a German credit institution regulated by the German Federal Financial Supervisory Authority, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and has been in solvent liquidation since 1 April 2023. It is an almost wholly owned subsidiary of PJSC VTB Bank (VTB Russia) and, until 1 January 2024, was known as VTB Bank (Europe) SE.

VTB Russia is designated as a sanctioned entity in, amongst other countries, the US, the UK, the EU and Jersey. OWH was designated by the US Office of Foreign Assets Control (OFAC) but subsequently de-listed in April 2024. It has never been designated by the UK, the EU or Jersey.

United Company Rusal IPJSC (Rusal) is the parent company of a Russian aluminium group. It was originally incorporated in Jersey but later re-domiciled to Russia. Rusal has never been sanctioned in either the UK or the EU. It was sanctioned in the US in 2018 but was subsequently de-listed in 2019 after its major shareholder, Mr Deripaska, reduced his shareholding to a minority holding and ceased to control the company.

RTI Limited (RTI) is an indirect Jersey subsidiary of Rusal. It has been in provisional liquidation since July 2025 and in liquidation since January 2026.

The sanctions framework

UK

In respect of UK nationals or entities, the UK’s Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) regulate conduct anywhere in the world. In respect of non-UK nationals or entities, they only apply to conduct within in the UK.

Pursuant to s.12 of the Russia Regulations, it is prohibited to make funds available, whether directly or indirectly, to designated persons. However, pursuant to s.44 of the Sanctions and Money Laundering Act 2018 (SAMLA), an act or an omission that might otherwise lead to civil liability will not attract civil liability if the person concerned held the reasonable belief that they were complying with the Russia Regulations.

Jersey

Article 11 of the Sanctions and Asset-Freezing (Jersey) Law 2019 (SAFL) prohibits the provision of funds or financial services, whether directly or indirectly, to designated persons.

Prior to Brexit, Jersey had implemented EU sanctions regulations, which contained a provision similar to s.44 of SAMLA. Post-Brexit, from February 2021, it implemented UK sanctions regulations, including the Russia Regulations, but not s.44 of SAMLA or any equivalent provision. However, as of June 2022, a provision mirroring s.44 of SAMLA, Article 46A, was inserted into SAFL.

The dispute

The dispute arose out of a series of currency swap transactions. RTI and OWH were parties to an agreement dated 11 September 2019 consisting of a 2002 edition ISDA Master Agreement (Master Agreement) and 11 US dollar – Russian rouble transactions. RTI’s obligations to OWH were guaranteed by Rusal under a guarantee (Guarantee) and indemnity (Indemnity). The Master Agreement and Guarantee were both governed by English law and subject to LCIA arbitration.

Following the Russian invasion of Ukraine on 24 February 2022, wide-ranging sanctions were imposed by the international community on Russian banks, companies and individuals. In particular, on 24 February 2022, VTB Russia became a designated person under UK, Jersey and Gibraltar sanctions legislation and OFAC designated both VTB Russia and OWH.

At around the same time, BaFin took a series of measures (BaFin measures) designed to segregate OWH and its assets from the VTB group.

The Russian invasion prompted a sharp and dramatic fall in the value of the Russian rouble. This led OWH to issue a margin call to RTI under the Master Agreement on 25 February 2022 requiring payment of US$43.5 million. RTI did not pay the margin call nor, indeed, any subsequent margin calls because it believed that to do so might put it in breach of sanctions. While OWH itself was not a designated person under Jersey sanctions legislation, there was a concern that payment to OWH would nonetheless result in funds being made directly or indirectly available to its parent, VTB Russia, which was designated.

Discussions between the parties over the following weeks failed to identify any mutually acceptable mechanism by which the margin calls could be lawfully paid. Eventually, OWH declared an Event of Default under the Master Agreement and sent Notice of an Early Termination Event (Termination Notice) designating 25 March 2022 as the date for closing out the transactions. The close-out amount payable by RTI to OWH on early termination was calculated as some €214 million.

Payment was not made and on 24 June 2022, OWH commenced LCIA arbitration proceedings claiming this amount against both RTI as principal debtor and Rusal as guarantor.

LCIA arbitration award

On 25 September 2024, the Tribunal issued its award (Award) on liability upholding the validity of the Termination Notice and holding the defendants (RTI and Rusal) liable to pay the close-out amount. It issued a second and final award on 29 August 2025 dealing with interest and ordering the defendants to pay some £200,000 of arbitration costs and approximately £3.6 million and €2 million of legal costs.

Jersey enforcement proceedings

In November 2024, OWH obtained permission from the Jersey Bailiff to enforce the Award in Jersey against the defendants. RTI applied to set aside the order on the grounds that enforcement would be contrary to Jersey public policy because Article 46A of SAFL either provided it with a retrospective defence to the claim, or because it was reflective of public policy in Jersey.

In May 2025, the Jersey Royal Court rejected these arguments, finding that Article 46A was not retrospective and did not apply to acts or omissions occurring before it came into force on 8 June 2022. It further held that there was no equivalent public policy prior to 8 June 2022; a defendant either had the defence or it did not.

While not strictly necessary to decide the point, the Jersey Royal Court found that RTI had held a genuine subjective belief that payment of the margin call would breach Jersey sanctions by making funds indirectly available to VTB Russia as a designated person, but that this belief was not objectively reasonable as required under Article 46A. RTI’s appeal to the Jersey Court of Appeal was dismissed, although there were differing views among the appeal judges on whether RTI’s belief was reasonably held. However, they did not need to decide the point.

The Jersey Court of Appeal refused leave to appeal to the Privy Council, but the defendants have applied for permission to appeal to the Privy Council.

English Commercial Court proceedings

In July 2025, the Court gave OWH leave under s.66 of the 1996 Act to enforce the Award. Rusal applied to set aside the Court’s order on the ground that enforcement of the Award would be contrary to public policy. RTI made no application in this regard as it is in liquidation.

Rusal accepted that payment of either the margin call or the Award would not be a breach of the Russia Regulations which did not apply directly to either RTI or Rusal. Nor would it be a breach of sanctions or illegal under Jersey law. Rusal itself was not a Jersey entity and was accordingly not subject to Jersey law.

However, Rusal argued that RTI had held a reasonable belief at the time that payment would breach Jersey sanctions law, and that it therefore had a defence under Article 46A to which the English Court should now give effect as a matter of English public policy.

The Commercial Court decision

The Court accepted that there was at least a good arguable case that the decision of the Jersey Royal Court was open to doubt on the issue of retrospectivity. The wording of Article 46A was materially the same as that of s.44 and the recent judgment of the Supreme Court in Celestial Aviation Services Ltd -v- UniCredit Bank GmbH, London Branch, [2026] UKSC 10 lent some support for the argument that it was to be interpreted as applying to all civil proceedings commenced after its entry into force, without any temporal limitation on the acts in respect of which protection was provided: see Sanctions suspended payment obligations under letters of credit | Hill Dickinson.

46A in civil proceedings commenced after it came into force (i.e., the arbitration), notwithstanding that the margin call had fallen due for payment before that date. It was also plausible that RTI had a reasonable belief that payment would contravene Jersey sanctions law and that RTI had a reasonable prospect of succeeding before the Privy Council.

Public policy

As to public policy, there were competing public interests between (i) upholding the finality of arbitration awards and enforcing them, and (ii) upholding and enforcing sanctions regulations and maintaining pressure on Russia to end the war in Ukraine.

The Court recognised the importance of the immunity provisions in s.44 of SAMLA and Article 46A of SAFL as a critical part of that sanctions regime. By mitigating the otherwise potentially harsh consequences of sanctions on persons who were caught between complying with their contractual obligations on the one hand and the sanctions legislation on the other, they allowed the sanctions net to be cast more widely. S.44 of SAMLA and Article 46A of SAFL both reflected international public policy.

However, they were not primary sanctioning provisions. They were ancillary provisions designed to support the primary sanctions by providing immunity in certain circumstances. Different components of the sanctions regime carried different weight from a public policy perspective. While the public policy underlying the immunity was important, it was not sufficiently important to require enforcement to be refused in this case because:

1. it was not obligatory to take the defence under s. 44/Article 46A. Unlike actual illegality, it did not itself prohibit payment

2. neither payment of the margin call nor of the Award would breach English or Jersey sanctions law

3. the point was not raised before the Tribunal and there was no evidence to support it or, indeed, to explain why it was not raised. While this was not a bar to the point being raised before the Court, it was a relevant factor to be weighed against all the other considerations.

The Court also noted that even if the Award was ultimately held not to be enforceable in Jersey, it could still be enforced elsewhere. Accordingly, there could be no public policy against enforcing it against Rusal as guarantor which, not being a Jersey or an English company, could not itself rely on Article 46A/s.44. The Award still stood and could be enforced against RTI wherever it had assets. Rusal was not a Jersey company and was not entitled to take advantage of Jersey public policy. There was, therefore, no public policy interest in refusing enforcement – even in England – against Rusal as guarantor.

In conclusion, there was no public policy ground for refusing to enforce the Award.

Comment

It will be interesting to see whether the Privy Council grants leave to appeal and, if it does, what it decides on the retrospectivity of the immunity provisions.

In the meantime, the Commercial Court has highlighted that public policy considerations can be very case-specific and previous decisions may be of limited assistance when advancing arguments.

If you would like support in understanding how sanctions may affect your contracts, payments or enforcement strategy, read more about our Sanctions expertise to see how our experts can help.