Background
Anna Okroyan purchased a high-value residential property at Dorchester House, Virginia Water, Surrey, in March 2020. In October 2022 she refinanced using a short-term bridging loan of £4,550,000 from West One Loan Limited, secured by a first legal charge over the property. The loan was interest-only with a nine-month term, subsequently extended by twelve months on the same core terms — making the final Repayment Date 13 July 2024. Interest was handled through a “retained interest” mechanism under which the full interest due over the loan term was incorporated into the gross loan amount and applied monthly by the lender from a separate account.
On 6 December 2023 the Office of Financial Sanctions Implementation (OFSI) designated the Defendant as a sanctioned person under the Russia (Sanctions) (EU Exit) Regulations 2019, effectively freezing all her assets — including the property — and prohibiting any financial dealings between the parties. The lender notified OFSI of the relationship and, in January 2024, issued formal notice of alleged Events of Default, asserting that the Designation had rendered the Defendant in breach of multiple obligations under the Loan Agreement and had immediately accelerated all sums due. A possession claim was issued on 21 March 2024.
Both parties subsequently sought OFSI licences. West One obtained a licence (originally April 2025, amended June 2025) permitting it to apply retained interest, take possession, and sell the property subject to a court order. The Defendant obtained her own licence (August 2025) to sell the property herself, having identified a buyer at a price sufficient to discharge the mortgage. Despite this shared commercial goal, the central legal dispute — whether West One’s right to possession had legally arisen — remained contested and proceeded to a two-day trial before Mr Justice Edwin Johnson in March 2026.
The Court’s Holding
The court held that West One was entitled to an order for possession of the property. The most fundamental ground was the Defendant’s undisputed failure to repay the Mortgage Loan by the contractual Repayment Date of 13 July 2024, in breach of clause 6.1 of the lender’s standard terms. Under clause 9 of the Mortgage Deed, the security became immediately enforceable upon any failure to pay a Secured Liability when due, and clause 9.2 thereafter conferred an absolute discretion on the lender to take possession. The court examined, and rejected, the Defendant’s argument that the Russia sanctions regime suspended her repayment obligations for the duration of the Designation, finding that the Regulations froze the Defendant’s assets and prohibited the mechanics of payment but did not extinguish or defer the underlying contractual obligation to repay.
The court also addressed the Defendant’s reliance on section 44 of the Sanctions and Anti-Money Laundering Act 2018 — which provides a civil liability shield for acts done in compliance with a sanctions designation — concluding that this provision did not operate as a defence to a possession claim where the right to enforce the security had independently arisen through the Defendant’s failure to meet her contractual obligations. The court further upheld Events of Default under the illegality and material adverse change provisions of the loan’s standard terms, each independently triggering the lender’s right to accelerate and enforce. Because West One held the Claimant’s Licence from OFSI authorising possession and sale, enforcement of the order did not contravene the Regulations.
The judgment drew on, and distinguished, Michael Green J’s analysis in Fortenova Grupa D.D. v LLC Shushary Holding [2023] EWHC 1165 (Ch), where a non-sanctioned debtor was relieved of default interest because it was legally unable to pay a sanctioned creditor. The court found that case inapplicable to the present facts: here it was the borrower, not the payee, who was designated, and the inability to perform arose from the Defendant’s own sanctioned status rather than from restrictions on the counterparty.
Key Takeaways
- A borrower’s designation as a sanctioned person under the Russia (Sanctions) (EU Exit) Regulations 2019 does not, of itself, suspend or extinguish the borrower’s contractual obligation to repay a mortgage loan by its Repayment Date; the Regulations prevent the mechanics of payment but leave the contractual breach — and the lender’s enforcement rights — intact.
- Section 44 of the Sanctions and Anti-Money Laundering Act 2018 does not shield a sanctioned borrower from a possession claim where the lender’s right to enforce its security arises independently from non-payment and Events of Default.
- Lenders in analogous positions should seek an OFSI licence promptly: the court’s possession order is a necessary precondition to the licence permitting enforcement, but the Regulations themselves do not bar the grant of the order.
- The Fortenova Grupa principle — that a non-sanctioned party forced to withhold payment by the sanctions regime may be excused from default interest — does not extend to protect the designated person who is themselves the source of the compliance problem.
Why It Matters
This is one of the first English High Court judgments to squarely address whether Russia-related financial sanctions suspend a designated borrower’s mortgage repayment obligations, and the answer — that they do not — has direct implications for lenders holding security over UK assets owned by sanctioned individuals. The decision clarifies that the statutory freeze on dealing with a designated person’s assets is not equivalent to a force majeure or frustration event that relieves the borrower of her contractual duties; the debt and its contractual consequences continue to accrue.
The case also provides practical guidance on the interplay between OFSI licensing and court proceedings: lenders need not wait for a licence before commencing or succeeding in a possession claim, but they do need one before enforcing any order obtained. For solicitors advising either sanctioned borrowers or secured lenders with exposure to the Russia sanctions regime, this judgment defines the landscape within which all future negotiations — and any litigation strategy — must be conducted.