- Court of Appeal confirms sanctions provision operates to bar recovery of interest on arbitral award (Ministry of Defence & Support for Armed Forces of Islamic Republic of Iran v International Military Services Ltd)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Arbitration analysis: The Court of Appeal considered the application and effect of the so-called ‘no claims’ clause contained in most EU sanctions regimes. The court confirmed that the correct interpretation of the ‘no claims’ clause in question—Article 38 of Regulation 267/2012/EU—is that it operates to prevent claimants from claiming interest on arbitral awards (or judgments) where the defendant has been prohibited from paying interest by the imposition of sanctions. In so holding, the court also considered the interplay between various provisions of the applicable EU sanctions regime, ultimately agreeing with the lower court’s broad approach to the ‘no claims’ clause. This decision may encourage parties to contracts affected by EU sanctions—including banks holding funds or debt instruments belonging to designated individuals—to rely on ‘no claims’ clauses in a wider range of situations. Written by Jane Shvets and Patrick Taylor, partners at Debevoise & Plimpton LLP, and Konstantin Bureiko and Tom Cornell, associates at Debevoise & Plimpton LLP.
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