Reed Smith Client Alerts

On 12 September 2019, the judgment of Judge Pelling QC in Lamesa Investments Limited v. Cynergy Bank Limited1 was published. This decision confirms the position in English law that parties are able to manage sanctions risk contractually, including risks arising from U.S. secondary sanctions. It may also reduce uncertainties in relation to some existing sanctions clauses which excuse parties from non-performance of their obligations where performance may cause the party to become subject to U.S. secondary sanctions.

Autores: Brett Hillis Eli Rymland-Kelly Ray-Shio Ho

Background

Lamesa Investments Limited (LIL) is a company registered under the laws of the Republic of Cyprus. LIL is wholly owned by Lamesa Group Incorporated, a company registered under the laws of the British Virgin Islands, which is in turn wholly owned by a U.S. ‘Specially Designated National’ (SDN).

Cynergy Bank Limited (CBL) is a retail bank registered under the laws of England and Wales. The only connection CBL has with the United States is its U.S. dollar business and the maintenance of a U.S. dollar correspondent account with a U.S. bank. 

LIL and CBL entered into a facility agreement in 2017 (FA) whereby, among other things, LIL loaned £30 million to CBL and CBL was contractually obliged to make interest payments twice each year during the term of the FA. The FA was governed by English law and subject to the exclusive jurisdiction of the English courts.