Reed Smith Client Alerts

Key takeaways

  • Pre-contract and ongoing due diligence is required to assess potential counterparty risks
  • Robust sanctions clauses are ever more important to provide contractual recourse where the law is developing
  • We discussed key elements in a sanctions clause in a recent client alert


The English courts continue to develop precedents on the interpretation of UK sanctions legislation. In the recent case of Vneshprombank v. Bedzhamov [2024] EWHC 1048 (Ch), the English High Court ruled that, as a matter of construction, the asset freeze restrictions under Regulation 11 of the UK Russia (Sanctions) (EU Exit) Regulations 2019 are only engaged if, as a matter of fact, the funds or economic resources in question are owned, held or controlled by a designated person. They are not engaged if a UK person merely had “reasonable cause to suspect” that they were owned, held or controlled by a designated person.

Brief facts

  • A1 is the litigation funder of Vneshprombank (VPB), which has issued a claim against Mr Bedzhamov (B) pleaded in the amount of US$1.34 billion.
  • A1, part of the Alfa Group, was founded by Mr Fridman, Mr Khan and Mr Kuzmichev (the Founders). Up until March 2022, the Founders were the major shareholders, holding 95% together. It was B’s case that these shareholdings formed a “joint arrangement” and therefore (contrary to the default position under UK sanctions law) were to be aggregated.
  • On 15 March 2022, the Founders were each designated by the UK government. Shortly afterwards, the Founders purported to have sold their majority shareholding in the Alfa Group to other individuals involved in the governance of the Alfa Group, such that Alfa Group was unaffected by the restrictions in place against the Founders.
  • This judgment related to an application issued by B seeking a declaration from the High Court as to whether there was reasonable cause to suspect that A1 was owned, held or controlled by a designated person or persons, and if there was, an order that the litigation could not proceed since A1, as the litigation funder of VPB, would financially benefit from any judgment obtained by VPB.