High Court Rules On The Effect Of Sanctions When Interpreting Contractual Clauses

• Published date: 06 June 2023
• Law Firm: Norton Rose Fulbright
• Author: Ms Lubna Fahoum

On 27 January 2023, the High Court handed down judgment in Gravelor Shipping Ltd v GTLK Asia M5 Ltd & Anor [2023] EWHC 131 (Comm), where it considered the potential implications of MUR Shipping BV v RTI Ltd [2022] EWHC 467 (Comm) in interpreting contractual clauses intended to deal with the effect of sanctions. The case concerned the payment of the purchase price for two ships to an entity that is the target of asset-freeze sanctions.

Background

Gravelor, a company incorporated in Cyprus, financed two ships (the Vessels) via a bareboat arrangement with GTLK Asia M5 Limited and GTLK Asia M6 (GTLK) acting as lenders (the Arrangement). GTLK's ultimate parent company is JSC State Transportation Leasing Company (JSC GTLK), a Russian state-owned entity. Following the Russian invasion of Ukraine in February 2022, JSC GTLK were the subject of both EU and UK asset-freeze sanctions in April 2022 and US blocking sanctions in September 2022 in connection with the financial support and benefits it received from the Russian Government.

The effect of...