David Quest KC acts for successful respondent in UK Supreme Court case on aviation-related sanctions against Russia

On 25 March 2026, the UK Supreme Court handed down judgment in the linked cases of UniCredit Bank GmbH v Celestial Aviation Services Ltd and UniCredit Bank GmbH v Constitution Aircraft Leasing. The judgment can be found at https://www.supremecourt.uk/cases/uksc-2024-0103

Between 2005 and 2014, Celestial and Consitution, which are Irish companies, entered into civilian aircraft leasing agreements with Russian airlines. As security for the lessors’ obligations, UniCredit, a German bank acting through its London branch, advised and confirmed letters of credit issued by a Russian bank in favour of the lessors.

Following the Russian invasion of Ukraine in February 2022, the UK amended the Russia (Sanctions) (EU Exit) Regulations 2019/855 Regulations to expand the scope of the sanctions it imposed on Russia to include civilian aircraft leasing arrangements.

The leases all terminated for default in March 2022 and Constitution and Celestial made demands to UniCredit for payment under the letters of credit. However, UniCredit considered that the amended Regulations, in particular Regulation 28(3), prohibited it from making the payments until it obtained a licence from the UK authorities.

Constitution and Celestial each brought claims against UniCredit. After the first instance hearing but before judgment, UniCredit obtained a licence and paid the principal amounts due under the letters of credit. The dispute was thereafter confined to interest and costs. The High Court found in favour of Constitution and Celestial. The Court of Appeal allowed UniCredit’s appeal. Constitution and Celestial appealed to the Supreme Court.

In a unanimous judgment, the UKSC dismissed the appeal, holding that Regulation 28(3) prohibited the payments even though the leases pre-dated the amendment of the Regulations, the payments did not have any effect on the supply of aircraft to Russia, and the leases were terminated before payment fell due. It was sufficient that the payments were connected with an arrangement to make aircraft available in Russia.

The UKSC also allowed UniCredit’s cross-appeal, holding (obiter) that UniCredit had a complete defence under section 44 of the Sanctions and Anti-Money Laundering Act 2018 for as long as it reasonably believed that payment was prohibited by the Regulations. It would therefore not have been liable for interest and costs in any event.

David Quest KC appeared for UniCredit, leading Rachel Barnes KC and James Sheehan KC, instructed by Davina Given and Karina Plain at RPC.