CPR 25.20(6) | Interim Payment Order Variation Application Denied

CELESTIAL AVIATION TRADING IRELAND LIMITED AND OTHERS V VOLGA-DNPER LOGISTICS B.V. [2025] EWHC 1156 (Comm)

Celestial Aviation Trading Ireland Limited and Others v Volga-Dnper Logistics B.V. [2025] EWHC 1156 (Comm) concerned a Defendant’s application to vary an interim payment order under CPR 25.20(6). The case arose from aircraft leasing disputes following Russian sanctions, with the Claimants seeking interim payments totalling USD 202,811,264 and £50,000 in costs. The Defendant sought variation of the order, arguing potential sanctions breaches and inability to make payments without OFAC and OFSI licences. Deputy Judge Nigel Cooper KC declined to vary the interim payment order, applying principles from Tibbles v SIG plc regarding court discretion to modify orders. The judge considered key factors including: no material change of circumstances since the original order, the Defendant’s delayed licence applications, minimal sanctions risks, and the availability of funds subject to Dutch court garnishee orders. Critically, the judgment found that the interim payment order itself did not breach sanctions, and the Claimants had provided assurances against contempt proceedings. The court maintained the original interim payment terms, rejecting the Defendant’s application for variation and confirming the enforceability of the initial order despite potential licensing complexities.

...it is common ground that the only funds available to the Defendant to make payments under the Interim Payment Order are the ING Funds, which are subject to the garnishee order issued by the Dutch court. While I have no evidence of Dutch law before me, it seems to me to be reasonably obvious that the Claimants' prospects of obtaining an order from the Dutch court for payment out of those funds are better if they have an immediately enforceable order for payment to them rather than an order which makes payment contingent on the Defendant obtaining licences from OFSI or OFAC

Citations

Tibbles v SIG plc [2012] EWCA Civ 518, [2012] 1 WLR 2591 The court’s power to vary or revoke an order is normally exercised only where there has been a material change of circumstances or a misstatement of facts; considerations of finality and fairness limit its scope. Orb a.r.l. v Ruhan [2016] EWHC 850 (Comm) A party must raise all relevant points at the earliest opportunity; serial applications on grounds that could have been advanced earlier will be discouraged to preserve the efficacy and finality of court decisions. PJSC National Bank Trust v Mints [2023] EWCA Civ 1132, [2024] KB 559 The court may lawfully make a payment order against a designated person under sanctions, and enforceability need not be deferred pending an OFSI licence—licensing is a matter for the Treasury under separate powers. R v R [2015] EWCA Civ 796, [2016] 2 WLR 127 A court may make a financial order enforceable against a designated person even if satisfaction of that order requires a sanctions licence, as the order itself does not constitute a prohibited dealing with frozen assets. Re VTB Capital Plc [2022] EWHC 1106 (Ch), [2022] BCC 1049 Where administrators cannot discharge their functions without offending sanctions, the court may withhold making the appointment until the necessary licence has been obtained, to avoid futile or unlawful compliance. Re KRF Services (UK) Ltd [2024] EWHC 2978 (Ch) In administration proceedings affected by sanctions, the absence of a licence is a factor relevant to whether immediate or deferred court orders should be made, depending on the risk of unlawful acts by appointees. O v C [2024] EWHC 2838 (Comm) When deciding whether to make an order potentially engaging sanctions risk, the court must weigh the likelihood of prosecution and comparative enforcement consequences, with low risk and procedural efficiency favouring an immediate order.

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Key Points

In determining an application to vary an interim payment order under CPR 25.20(6)(b), the court applies principles analogous to those governing revision of orders under CPR 3.1(7), requiring a principled basis such as a material change of circumstances or a misstatement of facts material to the original decision. [24]
The power to vary an interim payment order is discretionary and should be exercised sparingly, having regard to the importance of finality in litigation, the risks of re-litigating matters already decided, and whether the applicant acted promptly in bringing the variation application. [22, 24, 48]
The inability of a party to comply with a costs order due to sanctions or licensing restrictions does not compel the court to vary the order but is one of several relevant factors to be considered when deciding whether to exercise its discretion. [28, 33]
Where an order requiring payment does not itself breach sanctions legislation, and compliance is dependent on third-party licences or approvals, such external enforcement issues do not automatically justify variation or suspension of the payment obligation. [27, 28, 54]
A party seeking to avoid compliance with an interim costs payment order due to sanctions must demonstrate both that enforcement would create a real legal risk under the relevant sanctions regime and that the issue was not already considered or apparent to the court when the original order was made. [25, 33, 44, 49]

“...given that the interim payments to be made in US dollars exceed the amount of the ING Funds and the Claimants have requested that any dollar funds are paid to a bank account in Ireland, it would seem unlikely that any part of the ING Funds will be paid into the UK. In any event, for the reasons given above, I do not accept that there is a real risk that by paying funds into a UK bank account nominated by the Claimants, the Defendant or indeed the Claimants would breach the Russia Regulations. In particular, even if there were any realistic prospect of the Defendant making such a transfer, the transfer would have to be into an account which was frozen pending approval from OFSI for any dealing with the funds.”

Key Findings In The Case

The Defendant failed to establish that the effect of UK and US sanctions on its ability to make payments under the Interim Payment Order was overlooked by Bryan J., who was aware of the sanctions regimes and the potential difficulties they posed when making the order. Therefore, no material error or oversight justified varying the order. [17], [49]
The Defendant did not act promptly in applying to vary the Interim Payment Order: it waited until the final day for compliance to issue the application and only applied for licences from OFAC and OFSI weeks later, on 7 April 2025. This delayed action undermined any assertion of procedural unfairness. [19], [50]
The Defendant’s only known assets available to satisfy the Interim Payment Order are US dollar funds held in an ING bank account in the Netherlands, which are frozen under Dutch court control subject to garnishee proceedings, and cannot be released without OFAC licensing and/or Dutch court permission. [18], [54]
The Court accepted that the Interim Payment Order itself does not breach UK or US sanctions laws and that any funds subsequently transferred would only be released where doing so is legally permissible, either with required licences or under supervision of the Dutch judiciary and ING bank’s sanctions compliance assessment. [27], [33], [53], [55]
There was no real risk that payment of funds into a UK account would constitute a breach of the Russia (Sanctions) (EU Exit) Regulations 2019 or Serious Crime Act 2007, and thus no sufficient basis for concluding that enforcement of the Interim Payment Order would expose parties to a sanctions-related prosecution. [40]–[43], [56]

“Finally, the Defendant briefly raised in the second witness statement of Mr. Botiuk two respects in which it submitted that the Claimants had failed to comply with their duty of fair presentations before Bryan J. Those respects were (i) it was suggested that the Claimants had changed the basis on which they were seeking interim payments at the 11 February hearing and (ii) that the Claimants had overstated the minimum amounts of their claims by a margin of several hundred million US dollars. Only the second of these was addressed in the Defendant's skeleton argument and neither point was addressed orally by Mr. McLaren KC. There is in my view no merit to the Defendant's case on breach of a duty of fair presentation."

Background

The case concerned an application by Volga-Dnper Logistics B.V. (the Defendant) to vary an interim payment order made by Bryan J on 11 February 2025. The order required the Defendant to make payments totalling USD 202,811,264 to Celestial Aviation Trading entities (the Claimants) by 25 February 2025, plus a £50,000 payment on account of costs. The Defendant sought to vary the order so that its payment obligations would only commence after obtaining licences from OFSI (UK) and OFAC (US) sanctions authorities.

The dispute arose from aircraft lease agreements between the Claimants and two Russian airlines, with the Defendant providing guarantees. Following Russia’s invasion of Ukraine in February 2022 and subsequent sanctions, the Claimants terminated the leases and demanded payment from the Defendant under the guarantees. When payment was not forthcoming, proceedings were issued in May 2022.

The procedural history included delays due to the Defendant’s difficulties in securing legal representation under sanctions regimes. The Defendant’s ultimate beneficial owner, Alexey Isaykin, was designated under UK sanctions in June 2022 and US sanctions in August 2024. After various adjournments, Bryan J heard the Claimants’ interim payment application on 11 February 2025, making the order now sought to be varied.

Costs Issues Before the Court

The key costs-related issue was whether the court should vary the interim payment order to make payment conditional upon the Defendant obtaining sanctions licences. The Defendant argued that without such variation, it faced an impossible choice between complying with the order (potentially breaching sanctions) or being in contempt of court for non-payment.

The court had to consider: (1) the principles governing variation of interim payment orders under CPR 25.20(6)(b); (2) the impact of UK and US sanctions legislation on the Defendant’s ability to comply; and (3) whether the circumstances justified varying the original order.

The Parties’ Positions

The Defendant submitted that variation was necessary because:

Complying with the order without licences would breach UK and US sanctions
The original order was made without full consideration of sanctions implications
It had promptly applied for necessary licences (though only after the payment deadline)
It faced potential contempt proceedings despite being unable to comply lawfully

The Claimants opposed variation, arguing:

The court was aware of sanctions issues when making the original order
No material change of circumstances or misstatement justified variation
The order itself did not breach sanctions – compliance was the Defendant’s responsibility
Variation would prejudice their ability to enforce against the Dutch-held funds
They would not pursue contempt proceedings while sanctions prevented compliance

The Court’s Decision

The court refused to vary the interim payment order, finding:

Variation principles: Following Tibbles v SIG, variation requires a material change of circumstances or misstatement. Neither was established here as the court was aware of sanctions issues when making the original order.
Sanctions impact: While sanctions created practical difficulties for the Defendant:
- The order itself did not breach sanctions (following Mints and R v R)
- UK sanctions were unlikely to be breached as the Defendant was Dutch and funds would go to Ireland
- US sanctions concerns were mitigated as ING would not release funds without OFAC approval
- The Serious Crime Act 2007 offence risk was not made out
Practical considerations:
- Variation would weaken the Claimants’ position in Dutch enforcement proceedings
- The Defendant delayed both its variation application and licence requests
- The Claimants’ assurance against contempt proceedings addressed the Defendant’s key concern

The court emphasised that while sanctions created compliance difficulties, this did not automatically justify varying the order. The original order remained appropriate as it did not itself breach sanctions and preserved the Claimants’ enforcement position.

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