Barclays Bank v VEB.RF

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Barclays Bank plc v VEB.RF

English Commercial Court: John Kimball KC (sitting as a Deputy Judge of the High Court): [2024] EWHC 1074 (Comm): 10 May 2024

Judgment Available on BAILII @

Peter de Verneuil Smith KC (instructed by Simmons & Simmons LLP) for Barclays

Shantanu Majumdar KC (instructed by Rahman Ravelli Solicitors) for VEB



In making permanent an interim order for injunctions sought by Barclays to restrain VEB from its breach of a London arbitration agreement and its pursuit of legal proceedings in the Russian courts contrary to a swaps agreement, that was also subject to English law, the High Court held that the London arbitration agreement had not been frustrated, even if it had become more onerous for VEB to comply with it. The High Court also held that Barclays’ delay in seeking the injunctions had been justified, given its need to de-risk its Russian exposure before pursing English High Court relief. The High Court also placed emphasis on the need to uphold UK sanctions.

Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and International Contributor to DMC’s Case Notes


Barclays (a British bank headquartered in London) and VEB (a Russian state development corporation) entered into a master agreement in 2005 for currency swap transactions. That agreement included an arbitration clause requiring disputes to be resolved by LCIA (London Court of International Arbitration) arbitration in London subject to English law.

The agreement was amended in 2019 to address the possibility of sanctions being imposed on VEB. VEB was later sanctioned in 2022 by the UK, EU and USA, following Russia’s invasion of Ukraine.

Barclays terminated the agreement in March 2022 due to the sanctions. The parties agreed a final payment amount of USD148m was due from Barclays to VEB. However, Barclays could not pay VEB due to the sanctions.

Contrary to the London arbitration agreement, VEB filed a claim in the Moscow Arbitrazh Court in May 2023 seeking payment of the agreed final payment. Barclays later obtained in February 2024 an interim anti-suit injunction (“ASI”) and anti-enforcement injunction (“AEI”) against VEB in the English High Court.

VEB sought to challenge the interim ASI and AEI injunctions on the basis that the London arbitration agreement was frustrated or inoperable due to the sanctions and that Barclays’ application should be refused due to its delay in seeking those injunctions.

Barclays argued that the London arbitration agreement remained valid and enforceable and any delay in seeking the interim ASI and AEI injunctions was justified under the circumstances and had not caused any significant prejudice or wasted costs.


Having set out the background to the dispute and heard the parties’ arguments, the Judge granted permanent ASI and AEI injunctions in favour of Barclays for the following reasons.

The London arbitration agreement was not frustrated by the sanctions. The practical difficulties faced by VEB (such as a reduced pool of lawyers, potential payment delays to lawyers and to the LCIA and the need for remote hearings for the attendance of Russian party representatives and witnesses) did not meet the high threshold for frustration. These issues made performance more onerous but not “radically different” from what was envisaged when the agreement was made. The sanctions risk was foreseen when the agreement was amended in 2019 and the parties chose not to modify the London arbitration agreement at that time. This implied that the London arbitration agreement remained valid even if sanctions were later imposed on VEB by the UK and other governments.

The delay in seeking the injunctions (between May 2023 and February 2024) was largely justified by Barclays’ need to de-risk its Russian exposure. That de-risking, by taking mitigating steps in relation to assets, operations and commercial relationships in an unprecedented market and political environment, had only been sufficiently achieved by Barclays in early December 2023. While some initial delay for legal advice was not fully justified, the Judge accepted Barclays’ evidence that it needed time to assess and mitigate its exposure before taking legal action. Crucially, the Judge determined that, despite the further delay between December 2023 and February 2024, the delay had not significantly advanced the Russian proceedings or wasted substantial court resources, because the Russian proceedings were still at a preliminary stage.

The Judge emphasised the “strong predisposition” of English courts to uphold arbitration agreements. The burden was on VEB to show “strong reasons” why the Court should not enforce the agreement. However, the Judge considered that VEB had failed to do so on the facts.

In considering the wider context of public policy considerations, the Judge noted that VEB appeared to be using the Russian proceedings to circumvent the effect of the UK sanctions. VEB was seeking to obtain a judgment enforceable in Russia, and possibly elsewhere, against Barclays’ assets. Accordingly, enforcing the London arbitration agreement aligned with the need to uphold UK sanctions as part of English law.

In considering all the factors, the Judge concluded that VEB had not shown strong reasons to justify denying the enforcement of the London arbitration agreement and allowing the Russian proceedings to continue in breach of the arbitration agreement.


This judgment demonstrates that, even if a claimant/applicant for injunctive relief may be open to some criticism for its inaction or delay, in the context of the enforcement of London arbitration agreements and UK sanctions, the English High Court may grant injunctive relief absent strong reasons not to do so.

The Judge was clearly prepared to exercise some deference to the commercial realities and difficulties faced by the claimant/applicant, as the non-defaulting party, in relation to its Russian business. The fact that the Russian court proceedings had not progressed beyond two short hearings and the related costs were modest also tended to outweigh the potential significance of the delay.

This judgment is one of many that have been working their way through the English courts related to the impact of UK and other EU and US sanctions in connection with Russian parties and related business dealings. It is evident so far that just because a Russian party may be subject to sanctions, this will not always or inevitably lead to a favourable outcome for the non-Russian parties.

The one point of note worth flagging in relation to London arbitration is that the LCIA has a general licence to accept payments in respect of arbitrations involving sanctioned parties (albeit subject to compliance checks). This indicates that, leaving aside the position of the LCIA, considerable care should be taken to determine whether or not the arbitration institution or individual arbitrators, in ad hoc arbitrations, are able to act and accept payments for their services if they too do not hold necessary licences when sanctioned parties are involved.