Cubit Semiconductor Limited, an Irish enterprise based in Dublin 6, alleges that it has been unjustly targeted by sanctions levied by the President of the United States, Joe Biden, due to its business dealings with a Russian corporation. In response to these sanctions, which it says have resulted in the freezing of its bank accounts by Allied Irish Bank (AIB), the company has begun proceedings in the High Court.
The company, overseen by directors Jae Sik Ban and Joung Ok Houng, who although initially from South Korea are currently Irish nationals, is in the trade of buying and selling fresh and second-hand semiconductor machinery. In 2023, the firm reported a turnover of €4.9 million. Its relationship with the Russian company Mikron KSC – which has been trading successfully since 2011 and also reported a €4.9 million turnover in 2023 – brought it under the spotlight and ultimately led to the sanctions.
The claim states that in March 2022, a courier was organised to collect Mikron’s goods from Cubit’s Korean base, however, the goods were not retrieved until April 4, 2022. Shortly before this, on March 31, 2022, Mikron was added to a sanction list formulated by the US Department of Treasury’s Office of Foreign Assets Control (OFAC), in light of Russia’s Ukraine invasion.
Following the transaction, which is presumed to have occurred subsequent to OFAC’s sanction designation of Mikron, the plaintiff faced US-imposed sanctions. They seek to contest this decision stateside, despite acknowledging the financial strain and lengthiness of the process.
The reverberations of this sanction have shaken the company to its core, causing a hiatus in trading. The firm insists that this “secondary sanction” has no legal weight in Ireland or the EU, and it is noteworthy that the company has not been sanctioned by either the EU or Ireland. The directors wish to discontinue the company, but the frozen bank accounts prevent them from taking essential steps towards liquidation.
Cubit contends that due its inability to transact with AIB bank, they are unable to deal with debtors, pay their suppliers, or the wages of their five staff members. They are represented by Gary McCarthy SC and Michael Devitt BL, guided by Ogier LLP, and have been making efforts to settle the situation with the bank. However, Cubit’s situation isn’t remedied by AIB’s proposition to let them pay the €232,000 sum to ease its appeal against OFAC’s decision and to provide a bank cheque for about €2m still owed.
The bank isn’t allowed to move these funds to another bank and its executives are barred from opening private bank accounts with other banks because of US sanctions, explained the counsel. Although the counsel concurred that the bank’s fears based on the sanctions are relatable and it’s justified to shut down the accounts if it wants, the sanctions aren’t enforceable in this locality. They argue that the bank has a contractual obligation to their client.
Adding that Cubit does not trade with Russia or the US, the counsel clarified that the firm has not participated in any dealings with sanctioned bodies. Their operations do not support the Russian military sector.
Cubit, in their legal action against AIB, is seeking a host of orders, including edicts barring the bank from persisting to freeze or suspend the accounts or shutting them down. They’re also pursuing the court’s affirmation that AIB incorrectly suspended or froze the accounts, and damages for an alleged breach of contract and duty by AIB.
While legal action has been initiated, Mr McCarthy added that his client remains optimistic that an agreement with AIB might be achieved without the need for judicial intervention. The issue was presented before Mr Justice Rory Mulcahy last Friday, who gave Cubit the go-ahead to serve short notice of the proceedings to the bank. The approval was issued on an ex parte basis, and the case will be back in court next week.