Will the client be responsible for sanctions against the Russian bank?
An interesting case came from the Moscow Arbitration Court. The company Geoinzhservice (Геоинжсервис) demanded from Gazprombank (Газпромбанк, ГПБ) to return 80.55 thousand euros.
Geoinzhservice is a contractor for the construction of the El Dabaa nuclear power plant in Egypt. In order to pay for the services of subcontractors in Egypt, the company sent two payments through Gazprombank. And the payments went through, but were blocked by an intermediary bank – The Bank Of New York (Frankfurt Branch, Frankfurt Am Main, Germany).
Funds were blocked due to sanctions. At the time Gazprombank accepted payment orders for execution (November 13 and 15, 2024) and transferred them to the correspondent bank for execution, there were no US sanctions against the bank, but on November 21, the Office of Foreign Assets Control of the US Treasury (Office of Foreign Assets Control OFAC) imposed sanctions against the Russian financial sector, including including against Gazprombank.
After the money was not returned, Geoinzhservice applied to arbitration. The company’s court refused, and that’s why:
- “The failure to fulfill the obligation to transfer funds to the accounts of the plaintiff’s counterparties was not committed by the Bank, but by a foreign bank involved in the process of making a cross-border transfer…”
- “The Bank did not save the Plaintiff’s funds, does not retain them, there is no unjustified enrichment on the Bank’s side, there is no evidence to the contrary…”
According to Gazprombank, the Geoinzhservice company should apply to OFAC for a special license to unlock funds.
