Clifford Chance

Clifford Chance successfully defends ING in trial on Russian sanctions

Clifford Chance represented ING in proceedings brought by EuroChem Group AG and its indirect Russian subsidiary LLC EuroChem North-West-2 in one of the first Russian sanctions cases to go to trial before the English courts on the question of ownership and control.

ING was one of two banks sued by EuroChem, a Swiss-headquartered company with extensive production facilities in Russia. In 2022, EuroChem's founder was designated as a Russian sanctions target in a number of jurisdictions, including the European Union, United Kingdom and the United States. The founder claimed to have resigned as the ultimate beneficial owner of the company immediately prior to the imposition of sanctions, such that EuroChem was no longer owned or controlled by him. EuroChem's Russian subsidiary initially commenced proceedings alone against ING and its Milan Branch (and another bank who had issued several performance bonds) after ING refused to make a payment under a performance bond by reason of EU sanctions imposed following Russia's war in Ukraine. EuroChem Group AG was joined in the months leading up to trial by reason of the Russian subsidiary having purported to assign to it the proceeds of the performance bond.

After a 4-week trial across June and July 2025, the English High Court handed down judgment in favour of ING and the other defendants, and as a consequence the defendant banks are prohibited from honouring the bonds and paying under them. The ruling is the first English court decision to consider ownership and control for the purposes of EU sanctions. The decision also considers the effect of decisions by the Dutch and Italian sanctions authorities (known as National Competent Authorities under EU law), the application of foreign illegality as a contractual defence under English law (Ralli Bros v Compania Naviera Sota y Aznar and the related line of authority) and public policy as a defence where sanctions affect payment obligations.

The Clifford Chance team was led by partners Kelwin Nicholls and Carlo Felice Giampaolino, Senior Associates Charles Joseph and Alessandro Sciarra, Associate Nicholas Michalakas and trainees Alice Tsui and William Holmes, supported by sanctions specialists Michael Lyons and Carla Lewis.

Kelwin Nicholls, comments:

"The banks defending this case faced a predicament that many banks have faced in the past few years. Sanctions were imposed on an individual following Russia's invasion of Ukraine, leaving banks and other counterparties to determine whether they could lawfully continue dealing with the company he appeared to own and control. This judgment provides detailed analysis on questions of ownership and control, how EU sanctions affect English law contractual obligations and the importance of engaging with national sanctions authorities."

Carlo Giampaolino, comments:

"The decision ensures consistency between the underlying sanction regime under EU law and English law, which is the law governing the bond. It finds the right balance between the choice of the governing law and jurisdiction under the bond, and the national law applicable to the issuing bank."