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The Court of Appeal ruled that making a UK Court Order for interim maintenance payment does not unlawfully circumvent prohibitions in Ukrainian Sanctions Legislation and the appeal was dismissed.

This appeal raises a short but important point of law about whether the Court can make an Order for payment by a husband in favour of his former wife of interim maintenance into an account in Russia with a Russian bank. Both husband and wife are Russian citizens: the husband lives in Russia and the wife lives in the UK. The Order of Moor J dated 17 October 2014 (the subject of this appeal) provides for maintenance payment by the husband into the wife’s account in a Russian bank in Russia. As the wife lives in the UK, clearly she will remit those monies to the UK. The husband is subject to sanctions imposed by Council Regulation (EU) No 269/2014 (the EU Regulation). The primary effect of the EU Regulation is that his assets are “frozen” in the EU which means no one can “deal” with them in the EU and a person within the EU cannot participate in his dealing with them: it is that primary effect which gives rise to the issue on this appeal.

In most respects the EU Regulation is directly enforceable. However, certain matters require domestic regulations and in the case of the UK these are the Ukraine (European Union Financial Sanctions) (No 2) Regulations 2014 (2014 No. 693), (the UK Regulations). The EU Regulation has primacy over the UK Regulations.

The EU Regulation requires each member to nominate a “competent authority”, which is able to give releases in certain circumstances. HM Treasury is the competent authority nominated by the UK. HM Treasury confirmed that the EU Regulation did not prevent the husband from transferring money in Russia into her Russian account and that the wife was free to transfer money from her Russian account to the UK.

The husband submitted that it was not open to the Court to make an Order for interim maintenance in Russia. The UK Regulations did not contain any provision enabling him to do so. This was rejected by Mr Justice Moor.

The appeal upheld Moor J’s decision, citing two relevant guiding principles:

(1) Each set of Regulations must be construed as a consistent whole and which enables all the Articles or Regulations in question to have effect.

• The basic premise of Article 5 of the EU Regulation is that there can be a valid Court Order, even if it deals with funds, because otherwise it would be pointless for that Regulation to empower the competent authority to authorise the use of frozen funds to meet it.
• The UK Regulations do not transpose Article 11.
• Even if HM Treasury did not give a licence in a particular case, the person entitled to the Court Order would be entitled to enforce it when sanctions came to an end. It would be disproportionate for the EU legislature to invalidate the Court Order and therefore deprive him of that possibility.

(2) Both sets of Regulations should so far as possible be construed consistently with the EU fundamental right to effective judicial protection.

• The right to effective judicial protection includes the right of access to Court. It would be contrary to the wife’s fundamental right of access to Court to prevent her from obtaining the valid and effective decision of the Court in a Member State as to the maintenance to which she was entitled, unless that right was clearly taken away by the EU Regulation.
• The making of a Court Order would only circumvent the EU Regulation for the purposes of Article 9 if the Order itself contained provisions which dealt with funds or economic resources and which were also intended to achieve a dealing with funds or economic resources within the scope of the EU Regulation without the licence of HM Treasury.
• The competent authority can only authorise the use of funds or economic resources of a designated person if certain conditions are met. Where a Court Order has been made, the relevant condition is that the funds are “subject to” the Court Order.
• There is no breach of Article 9 of the EU Regulation or Regulation 10(2)(a) of the UK Regulations as a result of Moor J’s Order. There cannot be a circumvention of a measure by adopting a means which the EU Regulation permits.

[R and R [2015] EWCA Civ 796]