When will sanctions frustrate an agreement?

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.

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Contractual disputes and practical implications arising from sanctions in the aftermath of the Arab Spring

In the aftermath of the Arab Spring and amidst continuing unrest in the region, the Middle East remains at the forefront of the international sanctions agenda. Craig Tevendale, partner, and Maguelonne de Brugiere, associate, examine the impact that such sanctions have on the contractual arrangements of companies doing business in the region and offer advice on how to mitigate this impact effectively. To read the full article, please click here.

This article was first published in World ECR, Issue 22, May 2013. For more information please contact Craig Tevendale, partner or Maguelonne de Brugiere, associate or your usual Herbert Smith contact.

Craig Tevendale
Craig Tevendale
Partner
+44 20 7466 2445
Maguelonne de Brugiere
Maguelonne de Brugiere
Associate
+44 20 7466 7488