Ministers must walk a careful tightrope in Abramovich case
A fortnight after Russia invaded Ukraine, Liz Truss, then foreign secretary, announced sanctions against seven of the wealthiest Russian oligarchs. On her list was Abramovich, who at the time owned Chelsea FC. His assets were frozen, a prohibition was placed his on transactions with UK individuals and businesses, and he was subjected to a travel ban.
Having owned Chelsea since 2003, Abramovich was granted a special licence to sell the club, provided he could prove that he would not benefit from the deal. In May 2022, Todd Boehly led a consortium, later known as BlueCo, which bought Chelsea — and the sale proceeds remain frozen in a UK bank account linked to Abramovich. While he cannot gain access to the money, it legally belongs to him.
This month the government threatened legal action to ensure that the frozen £2.5 billion is ring-fenced to fund humanitarian causes only in Ukraine. Issuing a joint statement, Rachel Reeves, the chancellor, and David Lammy, the foreign secretary, said: 'While the door for negotiations will remain open, we are fully prepared to pursue this through the courts, if required, to ensure people suffering in Ukraine can benefit from these proceeds as soon as possible.'
• Roman Abramovich: government threatens to sue former Chelsea owner over sale
The three-year delay in the funds being released centres on sustained disagreement between the UK government and Abramovich. Through his lawyers, the oligarch argues that a much wider set of beneficiaries should receive money, with proceeds being donated via a foundation 'for the benefit of all victims of the war in Ukraine'. That would include Russian soldiers and other charitable causes outside Ukraine.
After three years of fruitless discussion, the government is now seeking to break the impasse. But after the threat of legal action against Abramovich — intended to force his hand as Reeves and Lammy have outlined — the government must now walk a legal tightrope in proving its case. They must be careful not to set a precedent for asset-freezing cases that undermines the rule of law, or invites future legal challenges from other sanctioned parties.
An attempt by the government to force a release of the sale proceeds will risk a legal confrontation with the established sanctions framework.
Legally, they must be dealt with under the terms of the licence granted by the Office of Financial Sanctions Implementation. However, it is conceivable that if ministers proceed down this road, other legal avenues might be considered, such as those under international investment treaties, depending on the circumstances.
Manifestly, turning a high-profile Premier League transaction into a High Court test case for sanctions enforcement will not be straightforward — there are no easy games at this level.Mark Hastings is a partner at Quillon Law
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