In R v R [2015] EWCA Civ 796, the Court of Appeal dismissed an appeal by a Russian citizen against an English court order requiring him to pay an interim maintenance allowance to his UK- resident ex-wife by way of transfer to her Russian bank account.

The husband was a listed individual under the EU’s Russia sanctions, pursuant to Council Regulation (EU) 269/2014 (EU Regulation), as given effect in UK law by the Ukraine (European Union Financial Sanctions) (No.2)  Regulations 2014. The sanctions prohibit persons subject to EU jurisdiction from dealing with the husband’s assets, or participating in his dealing with them, subject to certain exceptions.

Lord Pannick, representing the appellant, argued that, as the wife lived in the UK she would clearly need to remit the money to the UK once it had been transferred to her Russian bank account pursuant to the court order. He argued that the court order, inevitably leading to this series of transfers, was itself both “dealing with funds” and a circumvention because the object and effect of the court order was to prevent the funds from being frozen.

The Court of Appeal disagreed and held that there was no circumvention because the EU Regulation did not have the objective of preventing an English court from ordering a Russian husband to make maintenance payments to his Russian ex-wife in Russia.

The three Lords Justices of Appeal based their decision on slightly different reasoning. Lady Justice Arden, in her leading judgment, held that the court order did not itself transfer funds and therefore could not amount to dealing with funds contrary to the UK Regulation. In her view, the order merely provided for the payment by the husband of monies to a Russian bank in Russia. Lord Justice Briggs stated that the payment, in Russia, of interim maintenance by a divorced Russian husband to his former wife was beyond the scope of the EU Regulation unless it was effected by conduct, or involved assets, within the EU. He further stated that it was not the purpose of the EU Regulation to regulate the making of court orders. In his view, even if the court took an “abnormal” route to achieving that objective, it would simply be taking a lawful route to a lawful objective and would thus be circumventing nothing.

This judgment indicates the English Court’s reluctance to restrict its powers in light of the EU sanctions regime.