UK sanctions and the Global Majority

Earlier this year, we collaborated with the leading Nigerian law firm, Olaniwun Ajayi LP in delivering a seminar at London International Disputes Week. We looked at the reality of international sanctions and the Global South – the Global South being shorthand for the majority of the World not officially subject to the jurisdiction of the sanctions regimes implemented by the G7. It has been fairly put to us that we were actually referring to the Global Majority; we have reflected this reality in the change of title.

On 27 June 2025, the UK's Foreign, Commonwealth & Development Office (the "FCDO") issued new sanctions guidance addressed to non-UK businesses: the catchily entitled "UK sanctions guidance for non-UK businesses" (the "New Guidance"). Specific to the UK sanctions targeting Russia, its stated aim is to help businesses in third countries (not in the UK or Russia) that are seeking to avoid circumvention of UK sanctions. Refreshingly, the New Guidance is available in a number of languages.

The New Guidance is published to help businesses in third countries to be aware of:

the risks of losing access to services and goods provided by the UK and other international banks and suppliers; and the
practical steps that businesses can take to manage the risks of disruption to their businesses.

The New Guidance explains that the UK does not generally take civil or criminal enforcement action for breach of UK sanctions against non-UK Persons (UK Persons being generally defined as UK nationals, UK incorporated businesses and their overseas subsidiaries if, in respect of the latter, they are conducting any part of their business in the UK or are buying services in the UK market but then using them overseas).

However, it goes on to warn that non-UK businesses which facilitate the circumvention of UK sanctions may still face significant risks including:

being subject to UK sanctions (i.e. designated) themselves if they are involved in activities that could contribute to Russia's invasion of Ukraine or its major revenue generating industries. We had flagged this as a key risk to non-UK financial institutions in our seminar, and it was on this basis that the Kyrgyzstan-based Keremet Bank was designated; and
UK and other international suppliers being unwilling to support non-UK businesses' commercial activities because of the risk of becoming embroiled in allegations of circumvention, because of reputational concerns or through straightforwardly de-risking.

The FCDO is to be commended for the accessibility of the New Guidance. It explains in clear language the main features of financial and trade sanctions, including the vexed issue of ownership and control in respect of the former and the main sectors of industries of concern in respect of the latter.

The practical steps section is particularly interesting, drawing heavily from the G7's guidelines for preventing Russian export control and sanctions evasion and the UK's guidance for exporters. We have previously noted that whilst the black letter of the main sanctioning authorities can be very different, there is an increasing convergence in the soft law of published guidance. For example, the EU has imposed a requirement on EU businesses involved in the export of restricted goods and technologies to include a no-export/re-export to Russia clause in their contracts. There is no such requirement in the UK regime but, as with the G7's guidelines and the UK's guidance for exporters previously mentioned, the New Guidance strongly advocates for the inclusion of such contractual clauses in the contracts of non-UK businesses along with a host of other clauses designed to protect non-UK businesses from the consequences of breaching UK and other international sanctions.

The New Guidance is helpful but not a complete answer. We have advised a number of non-UK clients who have performed appropriate due diligence at the outset of their relationships with counterparties but find themselves on the horns of a dilemma when those counterparties are subsequently designated prior to the conclusion of their contractual relationships. They may have contractual obligations to pay their counterparties but are exposed to the risk of being designated themselves if they do. That risk may be reduced by including the New Guideline's suggested contractual provisions in future transactions, but there is nothing to help them right now.

The New Guidance may well be a jurisdictional extension of UK sanctions by stealth. The problem with that approach, however, is that there is no regulatory authority which non-UK businesses in similar positions to our clients can approach for guidance and/or permissions, because none of the main UK regulators (OFSI, OTSI, ECJU) has any jurisdiction over non-UK Persons or businesses.

Leaving that major issue to one side, however, non-UK businesses wishing to remain in compliance with UK and indeed other international sanctions, would be well advised to adopt the practical steps suggested in the New Guidance, including:

regular risk assessments;
counterparty and goods sanctions screening;
end user certification and enhanced contractual protections; and
a regularly reviewed comprehensive sanctions policy which reflects the risks and records agreed mitigations.

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