PJSC National Bank Trust & Anor v Boris Mints & Ors
[2023] EWHC 118 (Comm)
Mikhail Fridman, R (on the application of) v HM Treasury
26 October 2023
[2023] EWHC 2657 (Admin)
High Court
A rich guy got sanctioned and couldn't pay his bills. He sued, but the judge said the government was right to stop him because the rules are designed to prevent him from living lavishly.
Key Facts
- •Mikhail Fridman, a businessman with dual Israeli and Russian citizenship, was sanctioned by the UK government under the Russia (Sanctions) (EU Exit) Regulations 2019.
- •The sanctions froze his assets, requiring licenses for any use.
- •Fridman challenged three specific refusals by OFSI (part of HM Treasury) to grant licenses for payments related to the upkeep of his London property, Athlone House, managed by Athlone House Limited (AHL).
- •These refusals concerned a management fee to AHL, a payment to Ideaworks Group Ltd for communication equipment, and staff costs for household services.
- •AHL is owned by Nigina Zairova, also sanctioned due to her association with Fridman.
Legal Principles
Financial sanctions are a tool of governmental policy to achieve foreign policy or national security objectives.
SAMLA and Russia Regulations
The Russia Regulations impose prohibitions on dealing with, making funds available to, or making economic resources available to designated persons.
Russia Regulations
The Treasury may issue licenses authorizing acts otherwise prohibited, if appropriate for a purpose in Schedule 5 of the Russia Regulations.
Regulation 64 Russia Regulations
Even if a threshold condition for a license (Schedule 5 purpose) is met, HMT has a residual discretion to refuse the license if granting it would undermine sanctions policy objectives.
Regulation 64(2) and case law
Judicial review of sanctions decisions under SAMLA is based on the material before the decision-maker at the time of the decision; post-decision evidence is generally inadmissible.
Section 38 SAMLA and case law
Policies relied upon by public bodies in decision-making should be disclosed; however, internal guidance supplementing published guidance is permissible if not inconsistent with published policy.
Administrative law principles and case law
Outcomes
Claim dismissed.
OFSI's decisions were lawful and rational. The court found that the payments were not necessary basic needs and that OFSI correctly exercised its residual discretion. Post-decision evidence was deemed inadmissible.
Refusal of licence for management fee upheld.
Payment would indirectly benefit a designated person (Ms Zairova), violating Schedule 5, para. 8(b).
Refusal of licence for Ideaworks payment upheld.
Insufficient evidence that the payment constituted a basic need; Fridman had other licensed security arrangements.
Refusal of licence for ongoing staff costs upheld.
OFSI rationally exercised its residual discretion, balancing the Prior Obligations Derogation with the overall sanctions policy objective of preventing Fridman from enjoying his pre-sanctions lifestyle. Past due wages were permitted, but future payments were not.
Application to amend Particulars of Claim refused.
Amendments were too late, would require an adjournment, and lacked a reasonable prospect of success.
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