In Maud v The Libyan Investment Authority  EWHC 1625 (Ch) Mrs Justice Rose held that the Libyan Investment Authority’s (“LIA”) right to payments due under a guarantee contract was not enforceable on the grounds that making such payments to the LIA would breach the EU’s sanctions regime relating to Libya. The LIA is listed under this sanctions regime pursuant to Council Regulation (EU) No. 204/2011 (“Regulation 204”), as amended by Council Regulation (EU) No. 965/2011.
The LIA had sought to enforce a payment of £17.6 million from Glenn Maud which it claimed it was owed under an overdue guarantee contract. Maud argued that making the payment would be contrary to Regulation 204. The court agreed with Maud. It found that anyone making payment to the LIA in breach of the sanctions would be subject to criminal penalties and it would be unjust to require a debtor to make repayments in such circumstances.
The LIA argued that Maud should have applied for a licence from HM Treasury permitting him to make payments otherwise prohibited by the sanctions. But the court held that Maud, as a debtor, did not have any such responsibility, including because there was no certainty that a licence would be granted. This should be contrasted with cases where the borrower becomes subject to sanctions, such as DVB Bank v Shere Shipping  EWHC 2321 (Comm), in which the courts have held that borrowers need to attempt to procure a licence to repay non-sanctioned creditors.