An attempt to rely on Libyan sanctions as a reason not to pay a debt due fails.
The creditor lent money to a company, guaranteed by the debtor. There was no dispute that the debtor owed the debt, but the debtor contended that to pay it would contravene sanctions in place against Libya. He applied, albeit five months out of time, to set aside a statutory demand served on him for the debt.
At first instance, the Judge granted an extension of time in respect of the set aside application and also set aside the statutory demand, agreeing with debtor’s position.
The creditor appealed to the Court of Appeal who allowed the appeal. The Court of Appeal agreed with the Judge that the debtor’s reasons for the delay in issuing the application were ‘highly implausible’, but that the unusual circumstances of the case and the public interest necessity of ensuring that the sanctions were observed, justified the extension of time application.
However the Court of Appeal disagreed with the Judge on her interpretation of the sanctions and held that the sanctions did not prevent payment of the debt.