UniCredit Bank GmbH, London Branch v Constitution Aircraft Leasing (Ireland) 3 Ltd and another [2026] UKSC 10 (25 March 2026)

Executive summary

The Supreme Court considered whether UniCredit’s London branch was prohibited by Russia sanctions from paying under letters of credit connected to leases of civilian aircraft to Russian airlines, and whether section 44 of SAMLA could shield it from civil liability. It held that regulation 28(3)(c), as amended from 1 March 2022, did prohibit the payments until licences were obtained, and it also addressed the scope of section 44 in relation to debt, interest, and costs.

Key points

• Parties: UniCredit Bank GmbH, London Branch v Constitution Aircraft Leasing (Ireland) 3 Ltd and Celestial Aviation Services Ltd
• Core sanctions issue: whether payments under letters of credit were prohibited by amended regulation 28(3)(c) of the Russia (Sanctions) (EU Exit) Regulations 2019
• Holding on sanctions: the Court of Appeal had held payment was prohibited and suspended until licences were obtained; the Supreme Court judgment concerns that issue and section 44 SAMLA
• Reasoning: the amended rule extended from military goods to restricted goods, including aircraft, and covered financial services or funds in connection with arrangements making such goods available to persons connected with Russia or for use in Russia
• SAMLA issue: section 44 protects acts done in reasonable belief of sanctions compliance, and the dispute included whether that protection covered debt claims, interest, and costs
• Additional angle: the Bank also relied on US sanctions for part of the interest period, but that issue was not appealed further

Why it matters

This is a sanctions-enforcement case about how broadly UK Russia measures can reach ordinary trade finance instruments when aircraft are tied to Russian counterparties and use in Russia. It is also relevant to sovereign and geopolitical risk because it shows how sanctions can suspend payment obligations and complicate recovery, interest, and litigation exposure.

Implications

For compliance teams and lenders, the case underscores that sanctions analysis must track not only the underlying asset transfer but also financing instruments 'in connection with' the prohibited arrangement, and licences may be needed before payment. For litigation strategy, parties will focus on whether sanctions truly suspend enforceability, whether interest accrues during the blocked period, and how far SAMLA section 44 can be used to resist civil claims arising from non-payment.