Sanctions, Litigation and the NBT Designation: Practical Implications for Cross-Border Disputes

Introduction

Cross-border litigation involving Russian financial institutions has become increasingly intertwined with international sanctions compliance. While sanctions have long affected banking relationships and commercial transactions, they are now influencing the conduct of litigation itself, from the commencement of proceedings through to settlement and enforcement.

The European Union’s recent designation of PJSC National Bank “TRUST” (“NBT”) illustrates this development. NBT is well known to insolvency practitioners and commercial litigators, having featured in numerous cross-border debt recovery and enforcement proceedings in recent years. Established following the Central Bank of Russia’s restructuring of several failed lenders, NBT was created to manage and recover distressed and non-core assets, resulting in substantial litigation across multiple jurisdictions.

Its designation under the EU’s latest sanctions package therefore raises issues extending well beyond the Bank itself. It serves as an important reminder that sanctions considerations must now form part of the strategic and procedural analysis in any dispute involving designated entities.

The EU’s Latest Measures

On 23 July 2026, the Council of the European Union designated NBT under Council Implementing Regulation (EU) 2026/1843, adding the Bank to the list of persons and entities subject to an asset freeze under Regulation (EU) No 269/2014.

The designation immediately freezes all funds and economic resources belonging to, owned, held or controlled by NBT within the European Union. It also prohibits EU persons from making funds or economic resources available to the Bank, whether directly or indirectly.

The measures do not stop there. From 13 August 2026, Council Regulation (EU) 2026/1848 extends a separate transaction prohibition to NBT under Regulation (EU) No 833/2014. Unlike an asset freeze, which principally restricts the movement of assets, the transaction ban has broader application and may affect the ability of EU operators to enter into or perform a wide range of dealings with the designated institution.

Importantly, NBT is only one of many Russian financial institutions affected by the EU’s latest sanctions package, demonstrating the continuing expansion of sanctions affecting the banking sector.

Litigation Continues – But It Changes

The designation of a party does not generally prevent legal proceedings from being commenced or continued. Courts remain open to designated persons, reflecting the fundamental principle of access to justice. However, sanctions fundamentally alter the practical operation of litigation.

For claimants pursuing designated entities, obtaining judgment may represent only part of the challenge. Assets located within the European Union may be frozen, meaning that enforcement action is likely to require prior authorisation from the relevant national competent authority. Recovery strategies should therefore anticipate additional procedural requirements and potential delays.

Where the designated institution is itself the claimant, equally complex issues arise. Although proceedings may continue, any payment of damages, settlement sums or legal costs in favour of the designated party may be prohibited unless an applicable derogation or licence is available. Matters that would ordinarily be resolved as part of routine litigation management may instead require careful sanctions analysis before funds can lawfully change hands.

Settlement negotiations also require particular attention. Parties should consider sanctions compliance at an early stage when structuring payment obligations, escrow arrangements and completion mechanics. A settlement that is commercially agreed may nevertheless prove incapable of implementation if the necessary authorisations have not first been obtained.

 The Significance of the Transaction Ban

While asset freezes are familiar to many practitioners, the introduction of a separate transaction prohibition presents additional complexity. Depending on its interpretation, the prohibition may extend beyond the payment of money to encompass broader commercial interactions with a designated institution. This raises questions about whether particular litigation-related activities, including settlement agreements, funding arrangements or other contractual steps taken during proceedings, could constitute prohibited transactions.

Although much will depend upon the precise scope of the legislation and any available derogations, practitioners should avoid assuming that litigation-related conduct falls outside the sanctions regime simply because it occurs within court proceedings. Each stage of the dispute should therefore be assessed individually to determine whether authorisation is required before proceeding.

Divergence Between the EU and UK

The designation of NBT also highlights the increasingly fragmented nature of international sanctions regimes. Although NBT has featured prominently in English litigation, including Mints v PJSC National Bank Trust and the more recent Thomas v PJSC National Bank Trust proceedings, it has not been designated by the United Kingdom. Consequently, advisers acting on disputes involving NBT may find themselves navigating materially different legal obligations depending upon whether EU or UK sanctions apply.

This divergence reinforces the importance of conducting jurisdiction-specific sanctions analysis rather than assuming consistency across allied sanctions regimes. Issues such as the location of assets, governing law, payment routes, financial intermediaries and the residence of legal representatives may each determine which sanctions obligations are engaged.

Practical Considerations for Practitioners

As sanctions increasingly intersect with dispute resolution, legal advisers should ensure that sanctions compliance forms part of their litigation strategy from the outset.

Practical considerations include:

• confirming the sanctions status of all parties throughout the life of the proceedings, recognising that designations may change without warning;
• identifying relevant jurisdictional connections, including the location of assets, payment routes and financial institutions involved;
• considering licensing requirements before agreeing settlements, making payments or enforcing judgments;
• reviewing funding arrangements, insurance and costs recovery mechanisms for sanctions implications;
• maintaining a clear record of sanctions checks, legal advice and compliance decisions throughout the matter; and
• coordinating advice across jurisdictions where proceedings or assets extend beyond a single legal system.

Early consideration of these issues can significantly reduce the risk of delay, regulatory exposure and unintended breaches.

Conclusion

The designation of NBT reflects a broader trend rather than an isolated development. As sanctions continue to expand, they are reshaping the conduct of cross-border litigation in ways that extend far beyond traditional compliance functions.

For litigators, insolvency practitioners and asset recovery specialists, sanctions analysis is no longer confined to banking transactions or due diligence exercises. It now influences decisions concerning litigation strategy, settlement, funding, costs and enforcement throughout the life of a dispute.

The practical lesson is straightforward: sanctions compliance should be embedded within case management from the earliest stages of proceedings. Firms that proactively identify sanctions risks, monitor developments and integrate compliance into their litigation planning will be better placed to protect both their clients’ interests and their own regulatory obligations.