Attempts to sanction Russian oligarchs slowed by fears over historic £1.3bn payout

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One government source said: “If an oligarch is going to sue over sanctions, then the one place it is going to happen is here.”

Another that warned taxpayers’ money could go into the pockets of Russian oligarchs if the legal case constructed for sanctioning them falls down in court.

Bank Mellat, one of Iran’s biggest banks, had quashed a 2009 ban on trading with the UK over alleged links to Tehran’s nuclear program. It always denied wrongdoing.

The Supreme Court ruled that the sanctioning had been “arbitrary and irrational”. After the decision, Bank Manat sued the UK Government for damages.

Originally, it had sought £3.2 billion against the Treasury but the figure was reduced, according to press reports at the time. The settlement ended up being around £1.3 billion. A senior government source confirmed the figure.

For context, £1.3 billion amounted to more than half of the Department of the Environment’s total budget in 2019.

The huge payout helps explain the caution with which the Foreign Office has moved as it looks to sanction Russian individuals and entities.

Officials working on the sanctions have stressed that banning an individual from ever coming to the UK and freezing their British assets is a major step that needs to be carefully considered.

Building the legal cases to sanction those believed to be helping the Kremlin and Vladimir Putin, the Russian president, can take weeks or months.

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