UniCredit Bank v Celestial Aviation

When sanctions law is unclear, do you pay and risk breaching sanctions, or refuse and risk being sued for breach of contract?

In this episode we unpack the landmark case of UniCredit Bank GmbH v Celestial Aviation Services Ltd. We explore what happens when businesses find themselves caught between sanctions legislation and contractual obligations, and how a series of court decisions ultimately overturned the market’s understanding of how Letters of Credit operate and when payments could lawfully be made. The case raises fundamental questions about sanctions clauses, legal uncertainty and who bears the risk when compliance and commercial obligations collide.