Sanctions, service, and presence

The Court of Appeal has re-affirmed that the common law requirement of presence within the jurisdiction is a substantive jurisdictional requirement, and has not been displaced by the CPR’s modernisation of service methods (Mikhail Fridman v Agrofirma Oniks LLC and another [2026] EWCA Civ 139). 

The court held that it had no personal jurisdiction over Mr Mikhail Fridman because his leave to remain had been cancelled under the sanctions regime and he was no longer permitted to enter the UK. In reaching this conclusion, the court disagreed with the Commercial Court, which had treated his absence as temporary and accepted that service at his usual or last known address was valid. 

Background Facts

Mr Mikhail Fridman, a wealthy businessman, relocated to London in 2013, and in 2016 purchased Athlone House in Hampstead as a substantial family residence. By January 2019, he had been granted indefinite leave to remain in the United Kingdom. 

On 15 March 2022, Mr Fridman was designated under regulations 5 and 6 of the Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) and Part 1 of the Sanctions and Anti-Money Laundering Act 2018. The designation carried two significant consequences for Mr Fridman: 

• His assets were frozen and subject to strict financial restrictions; and
• He became an ‘excluded person’ under section 8B of the Immigration Act 1971, resulting in the cancellation of his leave to remain and the imposition of a travel ban, prohibiting his entry into the UK. 

In August 2023, during the course of a commercial dispute, the Claimants sent a letter before action to Mr Fridman at Athlone House and he did not respond. On 27 September 2023, Mr Fridman left the UK. He nevertheless remained the beneficial owner of Athlone House, which continued to be staffed and managed on his behalf through Athlone House Limited (“AHL”). 

The Claimants issued proceedings on 9 February 2024, identifying Athlone House as the address for service of the claim form. Mr Fridman disputes that he was present or resident there at the relevant time. The Claimants attempted service through several methods: 

• Postal service: first class post to Athlone House on 20 March 2024;
• Personal delivery: a paralegal physically delivered the documents to security staff at the property on 28 March 2024; and
• Alternative addresses: further attempts were made at AHL’s registered office, at the offices of Mr Fridman’s solicitors (who were not authorised to accept service), and at his company LetterOne. 

The Commercial Court decision

At first instance Bryan J held that Mr Fridman had been validly served with the claim form at Athlone House. Mr Fridman had not ceased to be a resident of the jurisdiction, despite the travel ban, and on that basis, the court retained jurisdiction over him. The Claimants had a good arguable case that Athlone House constituted Mr Fridman’s ‘usual residence’ at the time of service. Even if that conclusion were incorrect, Bryan J held that Athlone House was Mr Fridman’s ‘last known’ address. The Claimants had taken reasonable steps to determine his current residence, by making enquiries at several addresses associated with him and therefore, service at Athlone House was valid. 

The Court of Appeal decision

The Court of Appeal allowed the appeal. 

Presence remains a substantive jurisdictional requirement

The Court reaffirmed that presence within the jurisdiction is a ‘substantive jurisdictional requirement’ that derives from the principle of territoriality and international comity. Although the CPR has modernised the methods by which service can be effected, it does not remove the common law requirement that a defendant must be present within the territory to be subject to the jurisdiction of the court. In other words, compliance with CPR Part 6 does not, by itself, establish effective service; the substantive jurisdictional requirement must also be met. 

The Court relied heavily on the reasoning in Barclays Bank of Swaziland Ltd v Hahn [1989] 1 WLR 506, where it was accepted that presence within the jurisdiction was a substantive jurisdictional requirement, and it had not been altered by the introduction of postal service. The Court of Appeal observed that later authorities had treated this principle inconsistently and, in some instances, had overlooked or understated its importance. 

The court also endorsed Collins J’s analysis in Chelleram v Chelleram (No 2) [2002] EWHC 632 (Ch), [2002] 3 All ER 17, emphasising that the requirement of presence is a fundamental rule of English procedure and jurisdiction.

Ultimately, the Court held that Mr Fridman was not present within the jurisdiction in any meaningful sense. 

Mr Fridman’s absence was not temporary 

The principle factual question concerned whether Mr Fridman’s absence could be characterised as temporary, thereby affirming his presence for jurisdictional purposes. It was held that it could not. The term must be understood in its ordinary sense and, in this context, be “kept within relatively narrow bounds” (at 81). It cannot include an absence that is indefinite, imposed by operation of law, and incapable of bring brought to an end by the individual concerned. Ultimately, determining whether a particular place is someone’s residence or usual residence is a “multi-factorial evaluative judgment”, or a “question of fact and degree” (at 83). It would be legally incoherent for the state to prohibit a person from entering the country, while at the same time asserting that the person remains present within its territory for the purposes of jurisdiction. Mr Fridman may wish to return, but he could not act on that wish unless sanctions were lifted and he subsequently obtained permission to re-enter the country.

Ultimately the court held that if the Claimants wished to pursue their claims, they must seek: 

• Permission to serve out of the jurisdiction under the Practice Direction 6B gateways; and
• If appropriate, an order of substituted service at Athlone House. 

Key takeaways

• The decision is of particular significance for claims involving sanctioned individuals who previously resided in the UK but now are abroad for an indefinite period. A stated intention to return in the future will not be sufficient to establish that their absence is temporary for the purposes of service.
• Claimants should give early and careful consideration as to whether permission to serve out of the jurisdiction is required, particularly where a defendant’s ability to return is either restricted or uncertain. Relying on domestic service in such circumstances may later be held ineffective, which can result in delay and unnecessary expense.
• The concept of temporary absence has defined limits and cannot extend to a situation in which a defendant is legally barred from entering the UK.