A recent judgment of the English Commercial Court has highlighted the issue of the effect of new sanctions legislation upon contractual obligations, and in particular the importance of considering applications for available licences before seeking to rely on the doctrine of frustration.
In the case of Melli Bank plc v Holbud Limited [2013] EWHC 1506, the Commercial Court (“Court“) granted summary judgment to Melli Bank plc (“Bank“), regarding commitment fees said to be owed to it by a customer, Holbud Limited (“Customer“). The commitment fee was in regard to a facility that went unutilised after the Bank was designated under the prevailing EU sanctions regime and had its assets frozen. The Court ruled that this did not amount to frustration, as the Customer could have applied for a licence from the UK competent authority (“HM Treasury“) allowing payment to be made.
