Celestial Aviation Services Ltd v Unicredit Bank GmbH, London Branch [2024] EWCA Civ 628 (11 June 2024)

Celestial Aviation Services Ltd v Unicredit Bank GmbH, London Branch [2024] EWCA Civ 628 (11 June 2024)

Regulation 28(3) of the Russia (Sanctions) (EU Exit) Regulations 2019 applies to financial services or funds provided in connection with arrangements whose object or effect is the supply or making available of restricted goods (including aircraft) for use in Russia, regardless of when the arrangement was entered into. Payment under the standby letters of credit was caught by the regulation, suspending UniCredit's payment obligation until licences were obtained. UniCredit's belief that payment was prohibited was reasonable, entitling it to protection under s.44 SAMLA for the relevant period.

Citation
[2024] EWCA Civ 628
Parties
Claimant/respondent: Celestial Aviation Services Limited; Claimant/respondent: Constitution Aircraft Leasing (Ireland) 3 Limited; Claimant/respondent: Constitution Aircraft Leasing (Ireland) 5 Limited; Defendant/appellant: UniCredit Bank GmbH, London Branch (formerly UniCredit Bank AG, London Branch)
Jurisdiction
England and Wales
Judgment Date
11 June 2024
Procedural Posture
Appeal / Court of Appeal Judgment
Outcome
Appeal allowed
Legal Topics
Standby Letters of Credit, UK and US Sanctions, Aircraft Leasing, Statutory Interpretation, Autonomy Principle, Civil Remedies Under Sanctions
Sanctions Law Banking Law Commercial Law Standby Letters of Credit UK and US Sanctions Aircraft Leasing Statutory Interpretation Autonomy Principle +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 16 Party arguments 2 Amounts and remedies 3
Sign in to unlock

Parties

Celestial Aviation Services Limited

Claimant/respondent

Constitution Aircraft Leasing (Ireland) 3 Limited

Claimant/respondent

Constitution Aircraft Leasing (Ireland) 5 Limited

Claimant/respondent

UniCredit Bank GmbH, London Branch (formerly UniCredit Bank AG, London Branch)

Defendant/appellant

Procedural Posture

Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether payment under standby letters of credit by UniCredit was prohibited by reg. 28(3) of the Russia (Sanctions) (EU Exit) Regulations 2019
  2. 2 Whether UniCredit had a defence under s.44 of the Sanctions and Anti-Money Laundering Act 2018 based on reasonable belief
  3. 3 Whether US sanctions regime was engaged under the Ralli Bros principle due to payment in US dollars

Ratio Decidendi

Regulation 28(3) of the Russia (Sanctions) (EU Exit) Regulations 2019 applies to financial services or funds provided in connection with arrangements whose object or effect is the supply or making available of restricted goods (including aircraft) for use in Russia, regardless of when the arrangement was entered into. Payment under the standby letters of credit was caught by the regulation, suspending UniCredit's payment obligation until licences were obtained. UniCredit's belief that payment was prohibited was reasonable, entitling it to protection under s.44 SAMLA for the relevant period.

Court Disposition

Appeal allowed

Orders

  • UniCredit's payment obligation under the LCs was suspended until completion of the UK licence process.
  • Statutory interest does not accrue for the period before grant of ECJU and OFSI licences.