UK may fight Abramovich in court to get £2bn from Chelsea FC sale for Ukraine

UK ministers are preparing to take Roman Abramovich to court in a final attempt to free up more than £2bn from the sale of Chelsea FC to spend as aid in Ukraine, the Guardian has learned.

Officials say ministers have become increasingly frustrated by the failure to reach an agreement with the Russian oligarch about how the money should be spent and are now ready to fight him in the courts.

No final decision has yet been taken but the British government is so desperate to access the money that it is ready to fight a public court battle with one of the world’s richest people in order to do so. Ministers are looking for ways to keep money flowing to Ukraine after Donald Trump decided to freeze US military aid to the country and cut off intelligence sharing.

One source said: “The sense within government is that we are heading towards the courts over this. There is a fundamental disagreement with Abramovich himself over where the money can be spent, and it seems the law is going to be the only way to resolve that.”

A Foreign Office spokesperson said: “This government is working hard to ensure the proceeds from the sale of Chelsea FC reach humanitarian causes in Ukraine as quickly as possible. The proceeds are currently frozen in a UK bank account while a new independent foundation is established to manage and distribute the money.

“UK officials continue to hold discussions with Mr Abramovich’s representatives, experts and international partners, and we will double down on our efforts to reach a resolution.”

Abramovich’s representatives did not respond to a request to comment.

The Russian billionaire sold Chelsea in 2022 for about £2.5bn under pressure from the British government after the Russian invasion of Ukraine.

Abramovich was under sanctions at the time and was granted a licence from the government to sell Chelsea as long as the money was spent supporting the victims of the Ukraine war.

Since then, the government has been in deadlock with Abramovich over whether the money should be spent exclusively in Ukraine, as ministers want, or whether it can go outside the country as well.

The proceeds, which are now worth an estimated £2.7bn, were placed in a UK bank account controlled by Abramovich’s company Fordstam.

The government has promised to establish a foundation to disburse the money, headed by Mike Penrose, the former head of Unicef UK, but has not yet done so.

Keir Starmer is under mounting pressure to free up the money as a way to make up for his recent decision to slash the aid budget to pay for defence spending instead. The Labour MP David Taylor told the Commons on Thursday: “The sooner we can get [the Chelsea money] into Ukraine and humanitarian aid the better, because it should, in theory, free up ODA [Official Development Assistance] money for other situations around the world.”

Members of the House of Lords European affairs committee last year described the failure to spend the money as “incomprehensible”.

Sources say David Lammy, the foreign secretary, has now invited Penrose to a meeting in Whitehall for the first time since Labour entered government, to discuss freeing up the money.

Lammy has been advised that a court case is likely to be the only way to break the impasse with Abramovich, though he has not definitely decided to go ahead with legal action. Sources say any decision to do so would have to be taken in conjunction with the chancellor, Rachel Reeves.

Government officials say the decision has not yet crossed the desk of Richard Hermer, the attorney general, who has been criticised by some for holding up government decision-making, though it is likely to do so soon.

Ministers are differentiating between the Abramovich money and a broader pool of Russian assets that have been frozen across Europe and are worth about $350bn.

Lammy has been pushing to seize the assets and then use the money elsewhere, such as for aid for Ukraine or to buy weapons from the US.

However, France and Germany oppose such a move over concerns that it would break the legal principle that sovereign assets should remain untouched. The Treasury is understood to share those concerns, with officials warning that seizing the assets could also deter future investment from other countries.

Some in government believe they could still win a legal case to seize Russian assets by arguing they should be treated as proceeds of crime and therefore used as reparations for the victim of those crimes – in this case, Ukraine. However, such a legal argument is relatively untested and could involve a lengthy legal process.

Starmer told the Commons this week: “We are using the interest on the assets to help fund Ukraine and we are looking, with others, at whether it is possible to go further.”