UK Supreme Court backs UniCredit in Russia aircraft leasing sanctions dispute

LONDON, March 25, 2026 — The UK Supreme Court on Wednesday dismissed appeals by aircraft lessors Celestial Aviation Services and Constitution Aircraft Leasing entities, holding that UniCredit Bank GmbH’s London branch was prohibited by UK Russia sanctions from making payments under letters of credit until government licences were obtained.

The case arose from standby letters of credit tied to leases of civilian aircraft to Russian airlines AirBridge Cargo and Aurora. After Russia’s full-scale invasion of Ukraine, the UK expanded Regulation 28(3)(c) of the Russia (Sanctions) (EU Exit) Regulations 2019 from March 1, 2022, to cover certain civilian goods, including aircraft. The lessors argued the provision did not stop UniCredit from paying Irish beneficiaries because the payments did not cause aircraft to remain in Russia.

In a unanimous judgment written by Lord Stephens, the court rejected that argument. It said the sanctions rule required only a factual connection between the funds and an arrangement whose object or effect was making aircraft available to a person connected with Russia or for use in Russia. The leases qualified as those arrangements, and payments under the letters of credit were made “in connection with” them.

The court said the regime was intentionally broad, with licences acting as a safety valve to address unintended consequences. It held UniCredit’s payment obligation was suspended until UK licences were secured on Oct. 13, 2022. That meant statutory interest did not accrue during the blocked period.

The justices also allowed UniCredit’s cross-appeal on Section 44 of the Sanctions and Anti-Money Laundering Act 2018, finding the provision would protect a party acting in the reasonable belief it was complying with sanctions from civil liability for debt claims, interest and associated costs. That point was not necessary to decide the outcome, but the court addressed it because of its wider significance.

The ruling upholds the Court of Appeal’s interpretation of the sanctions measure and is likely to be closely watched by banks, lessors and sanctions lawyers assessing payment risk, licensing strategy and civil exposure in Russia-related disputes.