The English Court of Appeal handed down judgment in the case of Lamesa Investments Limited v. Cynergy Bank Limited  EWCA Civ 821 on 30 June 2020.
The Court of Appeal upheld the High Court’s decision that U.S. sanctions targeting Lamesa Investments Limited’s (LIL) ultimate owner justified Cynergy Bank Limited’s (CBL) withholding of interest payments on a £30 million loan from LIL.
While this case was decided in the context of a loan agreement, the case is of interest to anyone drafting or interpreting a provision of an agreement that grants a party rights if another party is affected by some form of illegality, including illegality clauses and sanctions clauses. In particular, it illustrates the court’s approach to interpreting such clauses in the context of U.S. secondary sanctions: measures which do not directly prohibit certain conduct by non-U.S. persons but which allow U.S. authorities to take severe action against such persons if they engage in that conduct. It is therefore of relevance to the shipping industry.
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