Sanctions vs. Equality: A Court Clash That Could Change How Businesses Handle Russian Clients

Case Analysis: XTX Markets Technologies Ltd v Mazars LLP (2025, Central London County Court)

XTX Markets Technologies Ltd v Mazars LLP (2025, Central London County Court)

• Centres on a potential conflict between
• Anti-discrimination laws under the UK's Equality Act 2010 (EqA) and
• The need for businesses to comply with international sanctions regimes, particularly those imposed following Russia's invasion of Ukraine in February 2022.
• UK’s Equality Act 2010 (EqA)is a key piece of UK legislation that consolidates and strengthens protections against discrimination based on protected characteristics such as race, nationality, age, disability, gender, and more. It applies to areas like employment, services, and public functions.

THE OUTCOME

• While Mazars "won" on a technicality, the judgment critiques blanket nationality-based policies.
• This decision underscores the tension between over-cautious sanctions compliance and anti-discrimination obligations.
• Overall, the case promotes proportionate compliance: Sanctions are strict, but they don't justify discriminatory shortcuts.
• Regulated businesses should integrate EqA considerations into their risk frameworks to mitigate dual legal exposures.  

BELOW IS:-

• An analysis that includes  details from the full judgment (handed down on 16 October 2025 by HHJ Bloom), to outline the key facts, legal issues, the court's reasoning, and
• Practical compliance lessons for regulated businesses, such as financial services firms, accountancy practices, and others subject to sanctions and anti-money laundering (AML) obligations.

Background and Facts

• XTX Markets Technologies Limited (XTX) is a UK-based algorithmic trading firm with global operations, owned by Dr. Alexander Gerko, a dual British-Russian citizen (who later renounced his Russian citizenship).
• Mazars LLP (now Forvis Mazars) is an international accountancy and advisory firm.
• In early 2022, XTX sought proposals from Mazars to outsource its global payroll functions.
• Following the Ukraine invasion, the UK, EU, and US introduced sanctions under regimes like The Russia (Sanctions) (EU Exit) Regulations 2019, prohibiting dealings with designated Russian individuals, entities, or those with Russian assets.
• Neither XTX nor Dr Gerko was a sanctioned entity or person.
• Mazars declined the engagement, citing an internal policy against accepting new clients owned by Russian nationals or with Russian connections, to avoid potential sanctions violations.
• XTX sued Mazars under the EqA, alleging direct race discrimination (specifically on grounds of nationality, which is protected under "race" in s.9 EqA).

Additional context from the judgment:

• XTX initially requested services for its entities in France, India, Singapore, the UK, and the US.
• However, by the time of refusal in May 2022, the focus was on French and US payroll only.
• Mazars' refusal was explicitly based on Dr Gerko's Russian citizenship, despite XTX having no direct Russian operations or assets.
• Mazars conducted initial due diligence but implemented a group-wide policy post-invasion that discouraged new Russian clients, with decisions escalated to a central committee.

Legal Issues

• The core question was whether Mazars' refusal breached the EqA, and
• if so, whether exemptions or defences applied due to sanctions compliance needs.

Key provisions:

• EqA s.29: Prohibits service providers from discriminating against persons requiring services by refusing to provide them (applies to UK-based providers for services in the UK).
• EqA s.13: Defines direct discrimination as treating someone less favourably because of a protected characteristic (here, nationality as part of "race").
• Sanctions Defence: Under s.44 of the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), no civil liability arises for acts done in the "reasonable belief" that they comply with sanctions.
• Broader exemptions under EqA Schedule 23 (for compliance with other laws) were raised but not determinative.

XTX argued associative discrimination:

• As a company, it could claim protection based on its owner's protected characteristic (nationality), per precedents like EAD Solicitors LLP v Abrams [2016] ICR 380.

Mazars countered that:

• No UK services were refused, so s.29 wasn't engaged; (2) The refusal wasn't based on nationality but on opaque ownership (e.g., Cayman Islands structures) and sanctions risk; (3) SAMLA s.44 provided a defence.

Court's Findings and Reasoning

The judgment dismissed XTX's claim on procedural/jurisdictional grounds but provided significant obiter dicta (non-binding observations) on the substantive issues:

• Jurisdictional Issue (EqA s.29): The claim failed because Mazars only refused services to XTX's French and US entities, not its UK entity. EqA s.29 requires the discrimination to relate to services provided (or rejected) in the UK by a UK provider. Since no UK services were sought or refused at the point of decision, the UK court lacked jurisdiction over the claim against Mazars UK. This was the primary reason for dismissal.
• Direct Discrimination (EqA s.13): Obiter, the court held that if UK services had been refused solely because of Dr Gerko's Russian nationality, this would constitute direct discrimination. The judge emphasised:
• Mazars' emails explicitly cited "ownership by a Russian citizen" as the reason, not other factors like ownership opacity.
• Motive (e.g., fear of sanctions) is irrelevant; the "because of" test focuses on the protected characteristic as the causative factor.
• Nationality is not a criterion under sanctions regimes—sanctions target designated persons, assets in Russia, or specific connections, not citizenship alone.
• A hypothetical comparator (e.g., a company owned by a non-Russian) would have been treated differently.
• Sanctions Defence (SAMLA s.44): Rejected. Mazars provided no evidence from the decision-makers (e.g., the Group Independence and Acceptance Committee) to prove a "reasonable belief" that accepting XTX would breach sanctions. The court noted that, even if the evidence were to be admitted, the defence would likely fail because sanctions don't prohibit dealings based on nationality per se. Dr Gerko and XTX had no Russian assets or designations.
• EqA Exemptions: Not applied. Schedule 23 allows discrimination if "required" by another law, but the judge found sanctions didn't require refusal here. The policy was precautionary, not mandatory.

Outcome

• Claim dismissed; no declaration of discrimination.
• No damages awarded (though not sought; XTX wanted a declaration for reputational reasons).
• Costs likely followed the event (Mazars as the winner), but were not detailed.
• The obiter comments signal risks for similar refusals, potentially influencing future cases.

Conclusion

• This decision underscores the tension between over-cautious sanctions compliance and anti-discrimination obligations. While Mazars "won" on a technicality, the judgment critiques blanket nationality-based policies.

Compliance Lessons for Regulated Businesses

Regulated entities (e.g., banks, law firms, accountants under FCA/PRA oversight or AML rules) must balance sanctions compliance with EqA duties.

The case highlights that sanctions don't provide a blanket shield against discrimination claims.

Here are key lessons, drawn from the judgment's implications:

1. Avoid Blanket Policies Based on Nationality: Refusals tied explicitly to nationality (e.g., "no Russian owners") risk direct discrimination claims. Instead, base decisions on specific sanctions criteria: designation status, asset locations, or verifiable Russian connections. The court stressed that citizenship alone isn't a sanctions trigger.
2. Conduct Thorough, Documented Due Diligence: Perform enhanced KYC/AML checks for high-risk clients (e.g., those with geopolitical ties). Document findings clearly—link refusals to evidence of sanctions risk (e.g., opaque structures or Russian assets), not assumptions about nationality. In this case, Mazars' lack of evidence from decision-makers undermined its SAMLA defence. Use tools like ownership charts, sanctions screenings (e.g., via Refinitiv or Dow Jones), and escalate to compliance committees with audit trails.
3. Communicate Reasons Precisely: When declining business, avoid language implying nationality as the sole factor. Frame communications around objective risks (e.g., "potential exposure under sanctions due to ownership structure"). This reduces "because of" causation arguments in discrimination claims.
4. Leverage Derogations and Exceptions: Sanctions regimes often include licenses or derogations (e.g., OFSI general licenses for non-prohibited activities). Explore these before refusal. For Russia-related risks, confirm if the client qualifies for humanitarian or wind-down exemptions.
5. Train Staff on Intersection of Laws: Provide training on how EqA interacts with sanctions/AML. Emphasise that "reasonable belief" under SAMLA requires evidence, not just caution. Tailor risk assessments to individual cases—avoid overreach that could be seen as discriminatory.
6. Monitor for Associative Discrimination: Companies can claim EqA protection via owners' characteristics. For multinational groups, could you clarify which entities are involved to avoid jurisdictional pitfalls (as is the case with non-UK services)?
7. Review Internal Policies Post-Judgment: Audit client acceptance policies for bias. In a post-Ukraine sanctions environment, nuanced approaches (e.g., case-by-case reviews) are safer than zero-tolerance rules. Consider legal advice for high-profile refusals.
8. Prepare for Litigation Risks: Even if claims fail procedurally, obiter comments can harm reputation or invite scrutiny from regulators like the FCA (which enforces both AML and diversity rules). Track emerging case law, as this may appeal or inspire similar suits.

Overall, the case promotes proportionate compliance:

• Sanctions are strict, but they don't justify discriminatory shortcuts.
• Regulated businesses should integrate EqA considerations into their risk frameworks to mitigate dual legal exposures.  

SOURCES

1. JERSEY VIBERTS - https://www.viberts.com/news-insights/case-note-xtx-v-mazars-llp-2025-judgment-of-the-central-london-county-court/
2. Sanctions: all things equal – analysis of XTX Markets Technologies Ltd v Mazars LLP Published: October 30, 2025 URL: https://www.fieldfisher.com/en/insights/sanctions-all-things-equal-analysis-of-xtx-markets-technologies-ltd-v-mazars-llp
3. UK sanctions: summary judgment is denied in Russian sanctions dispute. Published: November 28, 2023 (note: this is an earlier procedural ruling in the case) URL: https://www.womblebonddickinson.com/uk/insights/articles-and-briefings/uk-sanctions-summary-judgment-denied-russian-sanctions-dispute
4. UK court judgment in Equality Act sanctions discrimination case – XTX v Mazars Published: October 17, 2025 URL: https://globalsanctions.com/2025/10/uk-court-judgment-in-equality-act-sanctions-discrimination-case-xtx-v-mazars
5. When sanctions policies collide with Equality Law: What Compliance Teams should learn from XTX vs Mazars Published: N/A (LinkedIn article) URL: https://www.linkedin.com/pulse/when-sanctions-policies-collide-equality-law-what-xtx-timur-fleaf
6. County Court rejects discrimination claim on procedural grounds but finds refusal of financial services because a company is Russian-owned would amount to direct discrimination. Published: November 11, 2025 URL: https://www.hsfkramer.com/notes/bankinglitigation/2025-11/county-court-rejects-discrimination-claim-on-procedural-grounds
7. XTX discrimination case against Mazars over billionaire Russian owner dismissed. Published: October 20, 2025 URL: https://www.ft.com/content/e7e2a290-1ba8-41ac-b6e5-ab82f18e4bcd
8. Mazars wins XTX discrimination case over Russian owner Published: N/A URL: https://www.accountancydaily.co/mazars-wins-xtx-discrimination-case-over-russian-owner

These sources provide a balanced view from legal firms, sanctions experts, and financial news, representing perspectives from both sides of the case.