The U.K.'s sanctions measures against Russia's financial elite are set to be scrutinized by London's courts in one of the first major tests of the regime.

Boris Mints, the controversial Russian tycoon accused of stealing hundreds of millions from the private lender that he founded, is being chased through the city's courts by the country's authorities.

But on Tuesday, his lawyers sought to pause the litigation arguing that the Russian government-controlled lenders, one of which is sanctioned, could not lawfully collect potential damages of $850 million.

"The claimants maintain that they are entitled to use the English courts," for the "benefit of the Russian State," Laurence Rabinowitz, Mints' lawyer, said at the London hearing. If the court were ultimately to award damages "it could fairly be said that the U.K. sanctions regime is not fit for purpose."

The case highlights how the imposition of sanctions could frustrate the attempts of Russia to enforce against exiled businessmen, and how those same measures could make life easier for the pursued. The lenders argue that for a judge to prevent them from collecting an award would effectively see them cut off from access to justice.

In 2019 Russian lender National Bank Trust PJSC together with Bank Otkritie, owned by the Russian Central Bank, obtained a worldwide freezing order on the assets of Mints and his sons. They allege that Mints, the founder of Bank Otkritie, defrauded the lenders, before their collapse and bail out by the government.

The attempt to halt the litigation was "opportunistic and ill-conceived," lawyers for the lenders said in a filing. Mints was trying to "exploit" the government measures to exclude sanctioned people from "access to the U.K. courts."

"No such judgment will exist until late 2024 or 2025, by which time the sanctions position may well have changed," said Nathan Pillow, a lawyer for the lenders.

Jonathan Browning reports for Bloomberg News.

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