This case focussed on the recovery of funds following the collapse of Vneshprombank in Russia, where the defendant, Georgy Bedzhamov, former President of the failed bank, was accused of and found to have undertaken massive fraud for which recovery should be provided. The recovery litigation centred on various UK-based assets, particularly Bedzhamov’s property in London. The case covers a number of complex issues heavily influenced by the sanctions landscape.

A key aspect of the case was the involvement of A1 LLC (A1) and various sanctioned persons under the UK-Russia sanctions regime. While A1 itself is not directly sanctioned under UK or EU law, it is subject to US sanctions due to its links to the Alfa Group, a Russian conglomerate connected to high-profile sanctioned individuals like Mikhail Fridman and German Khan. This raised questions about whether A1's role in the litigation, as a funder with potential benefits from asset recovery, should be restricted due to its US-sanctioned status.

The Court's decision touched on the concept of "reasonable cause to suspect" in relation to asset freezing and the risk of asset dissipation. Given the backdrop of sanctions, Mr Bedzhamov argued that the claimant’s actions were unjustly influenced by A1’s interests, especially given its US-sanctioned status.

Of particular relevance to sanctions practitioners are sections in the judgement outlining ways in which rules of statutory interpretation should be adopted, including the following:

• When looking at legislative intent in the legislative context, “context” means the entire statutory scheme within which the particular provision is contained.
• The Court should “seek to avoid a construction of a statutory provision that produces an absurd result, since this is unlikely to have been intended” by the legislator.
• “Absurdity” includes “virtually any result which is impossible, unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief”.
• Statutory provisions are presumed not to be otiose or redundant.

Reaffirmation was also provided on the subject of the test of when a person has “reasonable cause to suspect”:

• The test imports an objective element requiring an evidential foundation.
• It must be fact-based and genuinely reasonable.
• It requires that on the available information, a reasonable person would, not might or could, suspect that.
• The question whether there are reasonable grounds to suspect must be considered in the round, in a fair-minded review which takes into account all relevant information including undermining material and initial suspicions may be dispelled by information or evidence which undermines what might otherwise be reasonable grounds.
• It is necessary to guard against making unreliable assumptions and to exercise caution in treating complexity of corporate structures as grounds for suspicion.
• The accuracy and credibility of the sources of evidence relied upon should be evaluated and verified, although such evidence is not limited to that which would be admissible in court.
• Whether a statutory test of reasonable suspicion is met must be carefully considered and the applicant’s presentation subject to rigorous and critical analysis.
• Speculation as to continued control by a designated person over a non-designated entity does not establish a triable case of such continuing control.

Overall, the judgement sheds light on the interaction between international sanctions regimes, asset recovery, and litigation funding in cases involving Russian oligarchs, highlighting the challenges posed by sanctions in complex commercial disputes.

For more details, you can view the full judgement here.