Author: D C

Establishing Jurisdiction: A High Bar for Claimants

Across all three cases, the English Courts reaffirmed the demanding threshold that must be met for jurisdiction to be established. The starting point remains the requirement for a claimant to demonstrate a good arguable case and a serious issue to be tried. Without these, jurisdiction cannot be engaged.

On 17 January 2025, Mr Justice Bright handed down judgment in Magomedov in the King’s Bench Division (Commercial Court), holding that the US$13.8 billion fraud claim should not be heard in England. The Court held that neither of the conspiracies alleged by Claimant, gave rise to a serious issue to be tried. The Claimants had argued that the Russian state orchestrated both conspiracies to expropriate assets belonging to Mr Magomedov, a former oligarch imprisoned in Russia since 2018. The first, the “NCSP Conspiracy”, involved his stake in PJSC Novorossiysk Commercial Sea Port (NCSP) and implicated Transneft, a Russian state-owned oil pipeline company. The second, the “FESCO Conspiracy”, pertained to his investment in FESCO, a Russian transport and logistics company, and included Ms Mammad Zade along with other Defendants, excluding Transneft. In both, the Court criticised their failure to provide full and frank disclosure and rejected the notion that English jurisdictional gateways had been satisfied.

On 22 January 2025 ICC Chief Insolvency and Companies Court Judge Briggs handed down judgment in Al Saud, which reached similar conclusions, albeit in a different context. In Al Saud, the petitioner sought to enforce a London-seated LCIA arbitral award by pursuing bankruptcy proceedings in England. The key jurisdictional issue was whether Saudi Prince Hussam Bin Saud was resident or domiciled in the UK. The Court held that he was not. His limited visits to the UK and past council tax registration were found to be insufficient. The judgment held that habitual residence requires continuity and substance, not historic or administrative ties. As such, jurisdiction in insolvency proceedings must be grounded in ongoing, meaningful connections to the forum.

Together, the decisions in Magomedov and Al Saud underline the English Courts’ insistence that a speculative link to England will not suffice.

Forum Conveniens and the English Nexus

Even where a serious issue is made out, the English Courts will not assume jurisdiction if another forum is clearly more appropriate. In Magomedov, the Court held that even if the Claimants had succeeded in passing the jurisdictional gateway, England would still not have been the correct forum for the FESCO Conspiracy.

The disputes had little substantive connection to England. The assets were in Russia, the key events occurred there, and many of the defendants were based abroad. The Court concluded that Russia was the natural forum for the claims. And if, due to the political context, litigation in Russia was not possible, then Cyprus – which featured prominently in the relevant corporate structures – would be the next most suitable jurisdiction.

Enforcement, Recognition, and Jurisdictional Limits

The requirement for a strong nexus to England is also playing out in the context of enforcement proceedings. In Servis-Terminal, the Court of Appeal (CoA) addressed whether an unrecognised Russian judgment could form the basis of a bankruptcy petition in England. The CoA held that it could not.

The dispute arose from a judgment obtained in the Arbitrazh Court of Yaroslavl Oblast in Russia in May 2019 by Servis-Terminal LLC, a Russian company in liquidation, against Valeriy Drelle, its former CEO. The Arbitrazh Court awarded Servis-Terminal LLC a sum of RUB 2 billion (approximately £16 million). After Drelle’s appeals in Russia were dismissed, Servis-Terminal sought to enforce the judgment in England, where Drelle had relocated.

A statutory demand was served on Drelle, which he did not satisfy, leading to a bankruptcy petition being filed in October 2020. In March 2023, ICC Judge Burton held that there was no genuine and substantial dispute regarding the debt and issued a bankruptcy order against Drelle in March 2023. However, the CoA reversed this decision, holding that a foreign judgment has no direct effect in England until recognised under common law or statute.

The CoA reaffirmed Dicey Rule 45: enforcement mechanisms such as bankruptcy proceedings cannot be used unless the foreign judgment they rely on has first been recognised. Although insolvency proceedings are a form of collective enforcement rather than direct execution, the Court was clear that they still fall within the scope of enforcement. Recognition is a necessary precondition.

The ruling also clarified an ambiguity in the lower court’s approach. If upheld, that approach would have allowed creditors from non-reciprocal jurisdictions to use bankruptcy to bypass the recognition requirement, creating an uneven playing field compared to creditors relying on judgments from jurisdictions with statutory registration regimes. The Court of Appeal’s decision eliminates that discrepancy and confirms that uniform standards apply.

The CoA’s emphasis on jurisdictional limits echoes the Court’s reasoning in Al Saud, where it held that anti-suit injunctions and contempt findings do not in themselves establish a sufficient connection to England for the purposes of insolvency jurisdiction. While English Courts may intervene to protect arbitration awards, bankruptcy proceedings require clear evidence that the debtor maintains ongoing ties to the UK.

Conclusion

In these cases, English Courts demonstrated a strict approach to jurisdictional disputes, requiring a clear and substantive connection to England. Magomedov and Al Saud highlight the Courts’ reluctance to assume jurisdiction where stronger ties exist elsewhere, while Servis-Terminal confirms that foreign judgments must be recognised before enforcement, preventing creditors from bypassing this step. Together, the judgments point to a broader judicial emphasis on procedural regularity and the importance of substance over strategy.

The judgments discussed here also have implications for creditors seeking to enforce arbitration awards against foreign individuals. The ruling in Al Saud confirms that a debtor’s residence must be established by clear evidence of ongoing ties to England. Creditors will need to explore alternative enforcement mechanisms, such as recognition and enforcement proceedings under the New York Convention in jurisdictions where the debtor holds significant assets.

Authors

• Waleed Tahirkheli
  wt@eldwicklaw.com
  +447903733137
• Bakhyt Tukolov
  bakhyt.tukulov@tks.law
  +77019290493
• Boris Karapetyan
  bk@eldwicklaw.com
  +4402039728469

 

What is the Hague Judgment Convention 2019?

The Hague Judgment Convention provides a framework to allow foreign courts to recognise and enforce the judgments from one jurisdiction to another. Although most countries have rules relating to the enforcement of foreign judgments, the Convention provides uniform policies so parties can benefit from certainty. The element of certainty was recognised as a key for the UK government, which is keen to continue to promote the English Courts as the preferred forum for commercial dispute resolution.

If a judgment falls within the scope of the Convention, courts in contracting nations must acknowledge and implement it.

The Explanatory Notes list the aims of the Convention as follows:

• Enhance the practical effectiveness of judgments by ensuring that the judgments to which the Convention applies will be recognised and enforced in all contracting states.
• Ensure that successful parties to a dispute are better able to obtain meaningful relief.
• Reduce the need for duplicative proceedings in contracting states by removing the need to re-litigate the merits of a claim decided by the courts of another contracting state.
• Reduce the costs and timeframes associated with obtaining recognition and enforcement of judgments.
• Improve the ability of businesses and individuals to ascertain the circumstances in which a judgment will be recognised and enforced in other contracting states.
• Enable claimants to make informed choices about where to bring proceedings, taking into account their ability to enforce the resulting judgment in other contracting states.

How will the Hague Judgment Convention be implemented into UK law?

The Hague Judgments Convention will be implemented into domestic law through amendments to the Civil Jurisdiction and Judgments Act 1982, made by the Recognition and Enforcement of Judgments (2019 Hague Convention etc) which take effect on 1 July 2025. It will only apply to judgments heard after this date.

Will EU judgments be recognised and vice versa?

Yes, the Hague Judgment Convention provides a firm base for the recognition and enforcement of judgments between the UK and EU member states (apart from Denmark) now that the Recast Brussels Regulation and other EU instruments no longer apply to the UK.

What is the process for enforcing a foreign judgment under the Hague Judgment Convention?

Under Article 12, the party seeking to have a judgment recognised or enforced must provide to the Court:

• A complete and certified copy of the judgment (along with the court’s reasoning).
• If the judgment was given by default, a certified copy of a document showing that the defaulting party was notified of the court proceedings.
• Documents that prove the judgment has effect or, where applicable, is enforceable in the country where the case was decided.

• If a judicial settlement was reached, a court certificate stating that the settlement or a part of it is enforceable is required.

A party seeking recognition or enforcement of a judgment can use a court-issued form used in the country where the case was decided if it sets out basic details of the judgment. An example of this is the HCCH Recommended Form, which can be adopted by States and is annexed to the Convention.

If the judgment is in a foreign language to that used by the court where a party is seeking to have it recognised or enforced, a certified translation of the text should be provided alongside the original.

The procedures for recognition, declaration of enforceability or registration for enforcement and the enforcement of the judgment are governed by the law of the country of the party seeking these reliefs (unless the Convention states otherwise). Therefore, if a party wishes to have a foreign judgment recognised and/or enforced in an English court, they must apply using English court processes and procedures.

In countries where special procedures for recognition of a foreign judgment are in place, that procedure must be followed. If no procedures exist, the foreign judgment will be automatically recognised under Article 4.

Getting legal advice

As with all international conventions and treaties, it will take time for the 2019 Hague Judgments Convention to bed in and for the courts to iron out any points that need clarification. In the meantime, if you want to enforce a foreign judgment in a court in England and Wales, contact our Commercial Litigation Solicitors, many of whom hold dual-nation practising certificates and have extensive experience in recognition and enforcement of foreign judgments.

To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

This article does not constitute legal advice. For further information, please get in touch with our London office.

On 24 April 2025, the UK Government lifted sanctions on specific sectors in Syria, including the financial and energy sector. Sanctions were lifted on 12 entities, including the Syrian Ministry of Defence, Ministry of Interior and media companies. This move was made to help facilitate the rebuilding of Syria following the fall of former President Bashar al-Assad.

Why were UK sanctions on Syrian entities put in place?

There has been a civil war in Syria since 2011, following an uprising that included pro-democracy rallies and protests that were put down by force by the Assad regime. It is estimated that over 300,000 civilians lost their lives during the civil war and millions of people became refuges after fleeing the country.

The Syria (Sanctions) (EU Exit) Regulations 2019 were put in place to ensure UK sanctions against Syria remained effective following Britain’s exit from the European Union (EU). Sanctions were aimed at encouraging the Syrian government to stop taking actions that repressed the Syrian people and act in good faith during negotiations to end the civil war.

Asset freezes were put in place on those identified as being responsible for repressing the Syrian people and supporting or enabling the Assad regime.

The current list of designated persons includes advisors to former President Assad, former government ministers, and army personnel.

Why are some sanctions being lifted?

Taking world leaders and the Syrian people by surprise, the Assad regime collapsed in December 2024. Assad fled and is believed to be in Russia.

Foreign Secretary David Lammy met with government representatives from Arab nations in January 2025 to discuss the future of Syria following the fall of the regime. He told reporters:

“The international community must come together to stand behind the people of Syria as they build a democratic future and a diverse and modern country. 

We are united with our key partners from the region and beyond in ensuring the protection of civilians, access to aid and security within Syria and the wider region.

Syrians deserve a bright and prosperous future – we are here today to support that.”

On 6^th March 2025, the British government unfroze the assets of Syria’s central bank and 23 other entities including banks and oil companies.

The government has also pledged £160 million to support the Syrian recovery.

Why is Syrian stability and recovery important to the UK?

Given that the new Syrian President, Ahmed Hussein al-Sharaa has former links with Al-Qaeda and was a militant leader, it is natural to wonder why the UK and other Western countries are so keen to lift sanctions so investment can flow in to Syria. Although the UK government’s press release states the decision is to benefit the Syrian people, which is true, there are major geo-political reasons for western countries to secure Syria.

Russia was a key ally of the Assad regime. According to financial journalist and author, Simon Watkins, Syria is vital to Russia’s geopolitical strategy due to it being the biggest country on the western side of the Shia Crescent of Power, which acts as its counter point to the US sphere of influence in Saudi Arabia and Israel. It also has a long Mediterranean coastline in which Russia can transport oil and gas products. For these reasons and others, it is in the US, the UK’s and the EU’s interests to rapidly secure Syria and its energy infrastructure. This cannot be done if sanctions hamper investment. Notably, the EU suspended Syria sanctions in February and removed five entities (Industrial Bank, Popular Credit Bank, Saving Bank, Agricultural Cooperative Bank, and Syrian Arab Airlines) from the list of those subject to the freezing of funds and economic resources. Changes were also made to facilitate making funds and financial products available to the Syrian Central Bank,

The future of Syria sanctions

At a UN Security Council meeting on Syria, Jess Jambert-Gray, UK Deputy Political Coordinator made clear that the UK is committed to helping Syria rebuild and supports the new regime.

Trading with Syria post April 2025

The lifting of sanctions against specific Syrian entities will affect many UK, Central Asian, and Chinese companies with interests in the Middle East region. Although some sanctions have been lifted, those imposed on members of the former regime and those involved in the illicit trade in captagon will remain in place. The UK government has also made clear it will amend its current policy and impose new sanctions if the situation in the country falls back into repression and corruption.

If you wish to trade with Syria, it is crucial you seek advice on the current sanctions situation to ensure you do not breach UK sanction policies. Our dual-qualified, multi-lingual lawyers can provide expert legal advice and representation if you have any questions regarding the lifting of sanctions against Syrian entities and/or investing in Syria.

To make an appointment with one of our lawyers, please call +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

Background to the case

Following a fully contested hearing before the German Institution of Arbitration (“DIS”) seeking partial payment under an agreement, on 24 August 2023 the arbitral tribunal ordered the Respondents, Pardus Wealth Limited and Gregory Bryce, to pay the claimant €250,000 by way of debt and €54,271.51 in costs (the “Award”). On 2 October 2023, the Claimant successfully made an application in the Commercial Court to have the Award recognised pursuant to section 101 of the Arbitration Act 1996 and for judgment to be entered accordingly. The Claimant then commenced a second DIS arbitration on 26 October 2023, seeking payment of the remaining €2.75 million under the agreement.

During its enforcement of the Award in England, the Claimant discovered that there was a real risk of unjustified dissipation of assets by the Respondents. Accordingly, the Claimant made an application for a freezing injunction in the Commercial Court, which was granted by Mr Justice Bright on 17 November 2023 (the “Freezing Order”).

The Freezing Order restrained the Respondents from disposing of or diminishing the value of their assets up to €3,054,271.51. In addition, the Freezing Order contained disclosure orders in standard terms designed to further and police the Freezing Order by requiring the Respondents to identify assets exceeding £10,000 in value and swear to an affidavit setting out this information.

On 23 December 2023, the Claimant commenced contempt proceedings under CPR rule 81, seeking the committal of Mr Bryce in relation to his breaches of the Freezing Order, including the associated policing disclosure orders requiring him to disclose his assets (the “Contempt Application”). The Contempt Application alleged that Mr Bryce had breached the Freezing Order by diminishing the available equity in the property known as Saffron House; by failing to provide disclosure of his assets; and failing to swear and serve an affidavit setting out his assets exceeding £10,000.

The Contempt Application was heard before Mr Justice Bryan on 30 and 31 October 2024 and the sentencing hearing was heard on 7 February 2025.

Contempt for breaching freezing orders

In order to establish contempt for breaching the terms of an order, such as a freezing order, the following elements of contempt need to be proven: (i) the defendant knew of the terms of the order; (ii) the defendant acted (or failed to act) in a manner which involved a breach of the order; and (iii) the defendant knew of the facts which made their conduct a breach.

The applicable standard of proof is the criminal standard i.e. a breach must be established beyond reasonable doubt. Whilst each of the elements of contempt must be proved to the criminal standard, it does not mean that every fact or piece of evidence relating to each element must itself be proved beyond reasonable doubt. The Court may draw necessary inferences having regard to the whole of the evidence, provided it reaches its conclusion upon the criminal standard of proof.

In establishing whether each of the elements has been proven beyond a reasonable doubt, the Court will have regard to the following established principles:

• In relation to the first element, that the defendant had notice of the order, it is necessary, in practical terms, for the claimant to show to the criminal standard that the order in question was served.
• In relation to the second element, that the defendant acted (or failed to act) in a manner which involved a breach, this is primarily proven by the evidence placed before the court. A defendant is entitled, but not obliged, to give written and oral evidence in his defence. Whilst a defendant has the right to remain silent, the Court may draw adverse inferences from silence.
• In relation to the third element, that the defendant knew of the facts that made their conduct a breach, a lack of understanding of what an order requires, and by extension a lack of intention to breach it, does not prevent an individual from being in breach of the order. Contempt may therefore be committed in the absence of willful disobedience on behalf of defendant, however, intent does have a bearing on the sentence.

In the present case, Mr Justice Bryan in his judgment on the Contempt Application found that all the required elements of contempt were clearly established beyond reasonable doubt.

Sentencing Principles

Once a finding of contempt has been made, a hearing will be held where the Court will consider the appropriate sanction which should be imposed on the contemnor.

The Court has the power pursuant to section 14(1) of the Contempt of Court Act 1981 to impose a sanction of imprisonment of a fixed term not exceeding two years. It is open to the Court to suspend prison sentences or to impose an unlimited fine. In contempt cases, the object of the penalty is both punitive and coercive. The punitive element punishes conduct that is in defiance of the Court’s order and deters others from disregarding court orders. The coercive element holds out the threat of future punishment as a means of securing compliance with order, for example by encouraging the contemnor to purge their contempt.

There are no formal sentencing guidelines for contempt proceedings, with the sanction being fact-specific. However, the Court will adopt an approach analogous to that in criminal cases, assessing the seriousness of the conduct by reference to the offender’s culpability and the harm caused, intended or likely to be caused. If the contempt is so serious that only a custodial sentence will suffice, the Court will impose the shortest period of imprisonment which properly reflects the seriousness of contempt with due weight being given to matters of mitigation. Once the appropriate term has been arrived at, consideration should be given to suspending the term of imprisonment.

Whilst the appropriate sanction is always fact-specific, there have been several cases which have identified the seriousness of breaching a freezing order, including the disclosure provisions relating thereto. The authorities have identified that breaches of this nature “usually merits an immediate sentence of imprisonment of a not insubstantial amount” (Asia Islamic Trade Finance Fund Ltd v Drum Risk Management) and “normally attracts an immediate custodial sentence which is measured in months rather than weeks and may well exceed a year” (JSC BTA Bank v Solodchenko)

In these circumstances, breaches of freezing orders often result in the imposition of custodial sentences.

Judgments

Following a two-day hearing, on 31 October 2024 Mr Justice Bryan handed down his judgment in the Contempt Application (the “Contempt Judgment”). The Contempt Judgment found that Mr Bryce had committed a contempt of court in three ways: (1) Mr Bryce had failed to comply with paragraph 8 of the Freezing Order; (2) Mr Bryce had failed to comply with paragraph 10 of the Freezing Order in failing to swear and serve an affidavit setting out the information required by paragraph 8 of the Freezing Order; and (3) Mr Bryce had entered into a loan extension which incurred additional fees and decreased the available equity in the property known as Saffron House, in breach of paragraph 4(1) of the Freezing Order.

Whilst Mr Bryce had provided an email with lists of assets and an extremely belated filed affidavit, Mr Justice Bryan in the Contempt Judgment found that the list of assets email was “so general as to be useless for the purpose of policing the Freezing Order” with the purported explanation for not swearing an affidavit found to be “a conscious decision not to comply” and “a deliberate breach”. Mr Justice Bryan went on to find that Mr Bryce knew that entering into a loan extension would amount to a breach of a Freezing Order and found that the explanations offered by Mr Bryce as to why assets, most notably a property in Tenerife had not been disclosed, were “not credible”.

On 7 February 2025, following a one day hearing, Mr Justice Bryan handed down his judgment in which he considered the appropriate sanction to be imposed on Mr Bryce (the “Sanction Judgment”).

In his Sanction Judgment, Mr Justice Bryan found that he is in “no doubt whatsoever that Mr Bryce’s offending consisting of three separate serious breaches of a freezing order, in circumstances where there are continuing and unremedied breaches, is so serious that appropriate punishment can only be achieved by an immediate custodial sentence”. In the circumstances, Mr Justice Bryan passed an immediate custodial sentence of 15 months’ imprisonment.

Finally, Mr Justice Bryan granted an indemnity costs order in the sum of £98,314.76.

Conclusions

The recent judgments handed down by Mr Justice Bryan demonstrate the importance of complying with not only the asset freezing provisions within freezing orders but the disclosure obligations contained therein. Disclosure obligations in aid of freezing orders are of great importance as they enable a claimant and the court to police orders of this nature, and enforce them against third parties.

Whilst any breach of a court order is serious, breaches of freezing orders and disclosure orders within freezing orders are regarded very seriously and likely to result in custodial sentences.

A copy of the Contempt Judgment can be found here and a copy of the Sentencing Judgment can be found here.

For more information on the enforcement of arbitral awards and freezing orders, please read the following articles: “How are Arbitration Awards enforced in England and Wales” and “Freezing Orders: A Complete Guide”

 

Impact of sanctions on China

Last month my colleagues, Waleed Tahirkheli, Raymond Xu and I wrote about the impact of UK/EU/US sanctions on China, warning that any retaliatory sanctions made by China could severely impact the world’s economy. It is also important for businesses to consider the introduction of the Regulations on the Implementation of the Anti-Foreign Sanctions Law of the People’s Republic of China and the impact these could have on cross-border commercial dispute resolution. These were launched against the backdrop of Article 33 of the Law on Foreign Relations of the People’s Republic of China, which came into effect on 1 July 2023. It provides that:

“…in response to acts that endanger its sovereignty, national security and development interests in violation of international law or fundamental norms governing international relations, the People’s Republic of China has the right to adopt corresponding counter-measures or restrictive measures.”

It goes on to state:

“…the State Council and its departments adopt administrative regulations and departmental rules as necessary, establish related working institutions and mechanisms, and strengthen inter-departmental coordination and cooperation to adopt and enforce measures mentioned in the preceding paragraph.”

Although we are entering into turbulent times, I can see great opportunities ahead for the East/Central Asia and Eastern European regions. One such opportunity is the upcoming Astana Finance Days conference, taking place on 4-5 September 2025 in Astana, Kazakhstan – a key platform for discussing the region’s growing financial landscape. I hope to see many friends and colleagues.

To make an appointment with myself or one of my colleagues, please call +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

Are Russia and China close allies?

In February, following a video call with Russian President Vladimir Putin, Chinese President Xi Jinping described the two countries as “true friends who have been through thick and thin together.” Shortly after, the Kremlin released a statement supporting that narrative and said that together, the two nations served as a “stabilising force”. Despite this, China has expressed willingness to engage with “all parties” to achieve peace in Ukraine, including Europe.

What sanctions have been placed on Chinese entities and individuals?

• In December 2023, three Chinese entities: Asia Pacific Links Limited, Sinno Electronics Co., Limited, and Xinghua Co., Limited, were sanctioned for supplying goods used by Russia to conduct its war on Ukraine.
• As part of the largest UK sanctions package related to the Ukraine war, in February 2025, specific Chinese producers and suppliers of machine tools, electronics, and dual-use goods for Russia’s military, including microprocessors used in weapons systems were designated. These included:
  • ACE Electronic (HK) Co Ltd – a Chinese company that has exported microelectronics to Russia.
  • GSK CNC Equipment Co Ltd – China-based company that has supplied machine tools to the Russian defence sector.
  • Neway CNC Equipment (Suzhou) Co Ltd– China-based company that has supplied machine tools to Russia.
  • Ningbo Blin Machinery Co., Ltd. – China-based company that has supplied machine tools to the Russian defence sector.
  • Ningbo Oturn Machinery Co., Ltd – China-based company that has supplied machine tools to the Russian defence sector.
  • Poly Technologies, Inc – China-based company and exporter of defence equipment that has supplied common high priority goods and dual-use technology to the Russian defence sector, including radar and radio navigation equipment.
  • Premera (H.K.) International co., limited – China-based company that has supplied microelectronics to sanctioned Russian entities.
  • Rama Group LLC– Kyrgyzstan-based company that has exported microelectronics to Russia.
  • Shvabe opto-electronics – China-based company that has supplied common high priority goods, including electrical components, to the Russian defence sector.
  • Suzhou Parsun Power Machine Co., Ltd. – China-based mechanical and electrical maritime equipment producer that has been supplying equipment and components to the Russian defence sector.
  • TKT-1997 Razvoj Limited – China-based industrial materials supplier that has exported common high priority goods, including microelectronics, to Russia.
• In December 2024, the EU targeted Chinese technology companies accused of bolstering Russia’s defence and security capabilities. These included four companies that supplied sensitive drone and microelectronic components to the Russian military. A full list of the Chinese companies subject to these sanctions can be found here.
• In February 2025, a further 25 Chinese entities alleged to be involved in supplying military goods or components to Russia or circumventing sanctions were designated by the EU. The Chinese Government protested strongly, stating that “normal exchanges and cooperation between Chinese and Russian businesses should not be interfered with or affected.”

US sanctions on Chinese entities and individuals

In January 2025, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Sichuan Juxinhe Network Technology Co., a Chinese cybersecurity company, and Yin Kecheng, a Shanghai-based cyber actor, believed to be directly involved with the Salt Typhoon threat actor and responsible for the recent targeting of the Treasury’s information technology systems.

Salt Typhoon is a threat actor believed to be run by China’s Ministry of State Security. It is responsible for several sophisticated cyber espionage attacks and intellectual property theft. Its primary target seems to be the United States.

The Treasury Department has also sanctioned Sichuan Silence Information Technology Company, a cybersecurity government contractor, and one of its employees, Guan Tianfeng, for their roles in developing and distributing malware used to infect firewalls.

The impact of sanctions on China’s economic interests

China is an entirely different country from other nations such as Iran, Russia, and North Korea, whose entities and individuals have been made subject to international sanctions. The sanctions mentioned above are not going to impact the economy as they have done in the States mentioned above. US tariffs present a far bigger problem for its already ailing economy. In addition, China is a significant player in the growing worldwide sanctions race, and it is its retaliation that could cause global problems because so many countries, including those in the EU and the UK and the US, depend on Chinese imports. For example, as it did in response to President Trump’s 2019 tariffs, it could manipulate the yuan exchange rate, causing market chaos.

So far, China has hit back only with words, and this is likely to be because a) the Government is too busy dealing with a potential US-China trade war and b) relatively few Chinese companies and people have been designated. But, I believe that the UK, US, and EU will have to be much more considered and cautious if they plan to impose more sanctions on Chinese interests. Poke the mighty Red Dragon too hard, and the entire world economy could be torched by its flames.

To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

This article does not constitute legal advice. For further information, please get in touch with our London office.

 

Meet The Authors

• Waleed Tahirkheli
  wt@eldwicklaw.com
  +447903733137
• Rashid Gaissin
  rg@eldwicklaw.com
  +442039728469
• Raymond Xu
  raymond.xu@raymondlegal.co.uk
  +442039728469

United Kingdom: The Largest Sanctions Package Since 2022

The United Kingdom (UK) has issued its largest sanctions package since 2022, targeting 107 additional individuals and businesses to hinder Russia’s war effort, disrupt military supply chains, and cut off financial support to the Kremlin. The UK is also targeting North Korea’s involvement in the conflict, sanctioning Defence Minister No Kwang Chol and other senior officials for their alleged role in the conflict. The UK has condemned Vladimir Putin’s deployment of North Korean military as “cannon fodder” in his conflict against Ukraine.

The sanctions primarily target Russia’s military supply chains, specifically manufacturers and suppliers of machine tools, electronics, and dual-use goods, such as microprocessors used in weapons systems. These suppliers, located in China, India, Turkey, Thailand, and Central Asian countries, are said to play a vital role in Russia’s war machine. China is the major provider of these goods, and the new measures aim to limit its ability to continue supporting Russia’s military.

Crackdown on Foreign Financial Institutions

For the first time, the UK is utilising new powers to target foreign financial institutions that aid Russia in evading sanctions. This includes Kyrgyzstan-based OJSC Keremet Bank, which has allowed financial transactions to help Russia’s war effort. 13 Russian targets have also been sanctioned, including LLC Grant-Trade, its owner Marat Mustafaev, and his sister Dinara Mustafaeva, who have been smuggling superior European technology into Russia.

The UK is also intensifying sanctions on Russia’s energy industry, focusing on Russia’s shadow fleet, a network of boats shipping Russian oil in violation of sanctions. An additional 40 oil tankers have been sanctioned, raising the UK’s total to 133, the most in Europe. These tankers have transported $5 billion in Russian oil in just six months, and the new restrictions aim to further restrict Russia’s access to critical energy revenue.

Targeting Russian Oligarchs and Economic Backers

The UK is cracking down on Russian oligarchs, sanctioning 14 new “Kleptocrats” who play a strategic role in Russia’s economy. Among them is billionaire Roman Trotsenko, worth £2.2 billion. These restrictions target individuals who benefit from and support Putin’s government, separating Russia’s elite from the global financial system.

Financial and Trade Sanctions in European Union

Restricting Financial Transactions and Crypto Asset Providers

The EU strengthened financial sanctions to stop Russian attempts to avoid restrictions. This includes banning transactions with international financial institutions and crypto asset providers that enable sanctions evasion and fuel the Russian war effort. Furthermore, three banks related to Russia’s SPFS financial messaging system have been sanctioned, two in Belarus and one in China.

The energy sector remains a top priority, with further limits on Russian crude oil and petroleum product storage in EU free zones. The package also expands restrictions on Russian crude oil projects, including the Vostok oil project, limiting Russia’s ability to increase energy production. Furthermore, export restrictions on software used in oil and gas exploration make it more difficult for Russia to maintain and expand its fossil fuel industry.

Expanded Trade and Export Controls

Trade restrictions have also been expanded to include direct limits on Russian aluminium imports, which will be phased out by 2026. Minerals, chemicals, steel, glass products, and fireworks that may be used in the military have all been subject to additional export restrictions. The package further tightens dual-use export controls, adding 53 additional organisations to the list of those backing Russia’s military-industrial complex, including 25 in China, India, Turkey, Kazakhstan, the United Arab Emirates, Uzbekistan, and Singapore.

Transportation Industry Sanctions

The transportation industry will face additional constraints, including a ban on third-country airlines conducting domestic flights in Russia and new rules to prevent Russian ownership of more than 25% of EU road transport enterprises, in order to eliminate gaps that could be used to evade sanctions. Furthermore, full transaction sanctions have been imposed on important Russian ports and airports that handle military items, oil, and sanctioned materials.

Combatting Disinformation and Propaganda

The EU has also taken measures to tackle disinformation, banning eight Russian media outlets, including EADaily, Fondsk, Lenta, NewsFront, and Strategic Culture Foundation, for allegedly spreading pro-Kremlin propaganda. These measures are intended to hinder Russia’s capacity to influence public opinion and justify its conflict against Ukraine.

Finally, the package enhances enforcement and anti-circumvention efforts by imposing stronger due diligence requirements on EU corporations and their foreign subsidiaries to prevent them from indirectly supplying prohibited goods to Russia. It also improves information exchange among EU member states and international allies to prevent sanctions evasion.

Conclusion

In what will be seen by many as a complete role reversal, OFAC is likely to relax sanctions against Russia while the UK and EU move in the opposite direction, tightening restrictions. French President Emmanuel Macron’s visit earlier this week and British Prime Minister Keir Starmer’s visit to the U.S. today highlight European efforts to persuade President Trump to maintain the course set by his predecessor. Whether they will succeed remains an open question.

What is certain, however, is that the UK and Europe will continue to adopt a robust and aggressive stance towards Russia. With sanctions being the most forceful foreign policy tool short of military action, they are likely to remain the primary instrument of European pressure. This divergence will have lasting implications for sanctions enforcement, creating new challenges for businesses navigating an ever increasing and potentially contradictory Western sanctions regime.

Business and financial institutions, especially those operating across multiple jurisdictions, must be vigilant in fulfilling their reporting responsibilities and developing more rigorous screening procedures.

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