Currency transfers have been blocked abroad: who’s to blame and what’s to do?

In 2022 many Russian companies were faced with the fact that their currency transfers in favour of foreign counterparties were blocked in the accounts of foreign correspondent banks.

One of such companies filed a lawsuit to the Arbitration Court of the Moscow District against its servicing bank, Alfa-Bank JSC, claiming damages. The company justified its claim by the fact that the bank had written off money from the foreign currency account, but the claimant's foreign counterparty had never received it.

The courts of the first and appellate instances allowed the claim and recovered the losses from the bank. The cassation court, however, overturned their decisions and remitted the case for reconsideration. The Court of Cassation indicated that the plaintiff itself should have asked the OFAC for the license to unblock the funds. The actions of the intermediary banks were beyond Alfa-Bank's reasonable control.

In practice, Russian companies which are not under sanctions normally manage to obtain OFAC licenses and return the funds blocked in the accounts of intermediary foreign banks. However, the waiting time might amount up to one year from the date of submission of the relevant application to OFAC.