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UK Court Decides DP Doesn’t Own or Control Funds Held in Escrow

UK Court (Credits: Leadership News)

In a recent legal development, the High Court determined that an entity linked to a designated person (DP) lacks the right to reclaim escrowed funds.

This decision emerged from a legal battle between ABFA Commodities (previously known as VTB Commodities, a division of the UK-listed VTB Bank) and Petraco Oil regarding the ownership of a Vacuum Gas Oil (VGO) cargo.

The court had previously mandated the sale of the contentious cargo and required VTB to deposit $30 million directly with the court or into their legal representatives’ client account. This deposit, the “secured sum,” was to be held pending the final decision on the ownership dispute.

UK court judgment (Credits: TheCable)

In January 2024, the High Court ruled in favor of Petraco Oil, affirming its claim to the cargo and concluding that VTB held no legal rights or interests in the secured sum.

Following this decision, a subsequent ruling clarified that this determination effectively nullified any potential claim (right of redemption) that VTB might have had over the secured sum.

Outside UK court (Credits: SaltWire)

Consequently, under Regulation 11 of the Russia (Sanctions) (EU Exit) Regulations 2019, the court found that the secured sum could not be considered as “owned, held, or controlled” by a designated person.

This sequence of judgments underscores the court’s stance on the non-transferability of rights over escrowed funds in cases where the initial claimant is identified as a designated person under applicable sanctions regulations.

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