Russia’s Supreme Court says sanctions not grounds for rescinding lease

We previously reported that Russia’s Supreme Court was to give judgment on an appeal (VTB v Luisa Bikmaeva) brought by the proprietor of office premises in Russia leased to VTB Bank before VTB was subject to US, Canadian, and EU sectoral sanctions. VTB brought the claim for a declaration that it had validly rescinded this lease when sanctions were imposed. The first instance court held that the lease had been validly rescinded because the imposition of sanctions on VTB constituted “an exceptional and unforeseen circumstance…which the parties did not expect while entering into the contract”, and its findings were upheld on appeal to the Court of Cassation.

The Supreme Court has now overturned the findings of Russia’s lower courts, holding that VTB should have anticipated a possible change in circumstances when entering into the contract, and that the imposition of sanctions did not meet the test for a vital chance in circumstances and was not included in the terms of the contract as a factor which would allow a party to rescind it. The judgment (in Russian) is here.

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About Maya Lester QC

Maya Lester QC

Maya Lester QC is a senior barrister (Queen’s Counsel) at Brick Court Chambers with a wide-ranging practice in public law, European law, competition law, international law, human rights & civil liberties. She has a particular expertise in sanctions. The legal directories say she is the...

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