A recent ruling by the U.S. Court of Appeals for the D.C. Circuit has upheld sanctions against Axel Diegelmann and his son Fritz, both German nationals, for their involvement in the metals and mining sector of the Russian economy. The court's decision, made on July 14, 2026, clarifies the interpretation of U.S. economic sanctions and their application to foreign nationals. This ruling is significant as it reinforces the U.S. government's authority to impose sanctions on individuals and entities that engage in activities with countries deemed threats to national security.

The case, titled Axel Diegelmann v. Scott Bessent (Docket No. 24-5277), arose after the Office of Foreign Assets Control (OFAC) blocked the property of the Diegelmanns and their companies in 2024. The sanctions were based on allegations that they were involved in trading precious metals with Russian companies, which violated U.S. sanctions put in place in response to Russia's actions in Ukraine.

The dispute centers around whether purchasing finished precious metals, such as gold bars, constitutes operating in the metals and mining sector of the Russian economy. The court's ruling confirms that such purchases do fall under the sanctions regime, impacting how businesses and individuals engage in international trade with Russia.

Background

Axel Diegelmann and his son Fritz are involved in trading precious metals. In 2024, OFAC determined that they, along with three companies owned by Axel, were operating in the metals and mining sector of the Russian economy. This determination led to the blocking of their property under Executive Order 14024, which was issued by President Biden in 2021 in response to various harmful activities by the Russian government.

OFAC's investigation found that the Diegelmanns were assisting Russian metals companies in circumventing international sanctions by facilitating the buying and selling of precious metals. Following the sanctions, the Diegelmanns filed a lawsuit challenging the legality of the OFAC's actions, arguing that their activities did not fall within the scope of the sanctions.

The Ruling

The D.C. Circuit Court reviewed the case and ultimately upheld the sanctions against the Diegelmanns. The court ruled that the term 'procuring geological materials' includes the purchasing of finished precious metals. The opinion stated, "The regulation thus prohibits any act of getting by special effort, obtaining, or acquiring geological materials." This interpretation aligns with OFAC's guidance on the metals and mining sector.

The judges, including Circuit Judge Katsas, emphasized that the Diegelmanns' argument that they did not engage in procuring was without merit. The court noted that the ordinary meaning of 'procure' is to obtain or acquire, which applies to their actions of buying precious metals from Russian clients. The court also dismissed the Diegelmanns' claim that refined metals do not qualify as geological materials, stating that they had forfeited this argument by not presenting it during the initial proceedings.

Impact

This ruling has significant implications for international trade and sanctions enforcement. It reinforces the U.S. government's ability to impose sanctions on foreign nationals and entities that engage in activities with sanctioned countries, particularly in sectors deemed critical to national security. The decision also clarifies the interpretation of what constitutes operating in the metals and mining sector, potentially affecting other businesses involved in similar trades.

The ruling may deter other foreign nationals from engaging in trade with Russian companies, knowing that such actions could lead to sanctions. This case sets a precedent for how the courts interpret economic sanctions and the scope of activities that fall under these regulations.

What's Next

The Diegelmanns have the option to appeal the court's decision to the Supreme Court, although it is unclear if they will pursue this route. There are no related cases pending that directly address this issue, but the ruling may influence future litigation involving economic sanctions and international trade.