Woman with a Gain: How Sanctions against Potanin Will Influence His Divorce

11 July 2022

Vladimir Potanin, a co-owner of Nornickel, and his ex-wife Natalia have been litigating for more than eight years now. In 2021, the woman succeeded to get the case to be considered in London whose courts are known to be loyal to ex-spouses of big businessmen. Vladimir Potanin challenged the decision at the High Court of London on June 27, 2022 according to which Natalia can get one half of his share in Nornickel (which share is now estimated at about $9.1 billion) and one half of all the dividend paid since 2014. The United Kingdom included Vladimir Potanin in the sanction lists on June 29. How much did it increase Natalia Potanina’s chances for success in one of the most expensive divorce proceedings in the world?

Many things have changed in the life of Russian billionaires over the last few months. Dearly beloved villas on the French Riviera are abandoned and unoccupied, yachts cruise along the Turkey coast instead of the habitual Mediterranean, and luxury super jets stay idle in airports.

But there is something invariable. Wives of Russian businessmen continue to divorce them in London. And while British lawyers may not represent interests of sanctioned persons without a special license, they can easily do so for their former wives. However, their services are rather expensive. For example, Russian billionaire Farkhad Akhmedov agreed to pay £150 million ($207 million) to his ex-wife Tatiana Akhmedova, and the woman paid £74.7 million ($103 million) out of them to Burford Capital which represented her interests in courts.

The divorce of Natalia Potanina and Vladimir Potanin could become the most expensive one among divorce proceedings. The co-owner of Nornickel is rated second among the richest people of Russia in 2022 with his assets estimated at $17.3 billion.

The mutual exchange of claims could continue if the UK authorities hadn’t imposed sanctions on Vladimir Potanin on June 29. What will happen to the proceedings now?

The first sanctions in respect of Russian businessmen were imposed in 2014 after the accession of Crimea. Arkady Rotenberg’s divorce case was then considered in the UK and he could continue the trial successfully, in spite of the restrictions imposed on him. His interests were represented by a big British company, as recalled by Philipp Ryabchenko, a managing partner of law firm BIEL who worked with the billionaire.

The attitude to sanctioned persons has now become tougher, especially on the part of big law firms, continues the lawyer. Working with Russian clients in the current situation for British lawyers implies reputational risks and, possibly, more scrutiny from regulators. Moreover, more control of the reasonableness of spendings on lawyers should be expected from the regulator.

“The regulator may have questions whether or not the lawyers help the sanctioned person get money out,” Ryabchenko explains. In such a situation where the lawyer not only bears reputational risks but can also be limited in the amount of the fee, it will be very difficult to hire the best-known British divorce lawyer, such as Baroness Fiona Shackleton nicknamed as “Steel Magnolia” who represented Potanin’s interests earlier.

It may become more difficult to pay bills. Until recently, a sanctioned person would transfer money to an account with a Russian bank and then a foreign company which had an account with the Russian bank would transfer the money to the UK. It is getting more and more difficult now because major Russian banks have been sanctioned and Western banks are leaving Russia. Maybe, accounts will be opened in friendly jurisdictions, for example in Dubai, Hongkong, etc. to transfer money.