Court declares that Russian court proceedings aimed at circumventing arbitration agreements are vexatious and oppressive

JP Morgan Securities PLC & others -v- VTB Bank PJSC [2025] EWHC 1368 (Comm)

This case is interesting for those who are dealing with: (i) trading contracts (including derivatives); (ii) arbitration agreements; and (iii) international sanctions regimes.

The various contracts in this dispute incorporated LCIA arbitration agreements. Due to sanctions, events of default were declared under the contracts. The parties disagreed on the calculations of balances due under the contracts.

Notwithstanding the arbitration agreements, the defendant Russian state-owned bank commenced Russian court proceedings against the contractual counterparties and their affiliates, all of whom formed part of the same banking group.

The English Court held that the proceedings in the non-contractual forum were either in breach of the contractual agreements to arbitrate and/or vexatious and oppressive. They should, therefore, be restrained by anti-suit injunctions (ASIs).

The background facts

The nine claimants are international companies that form part of the JP Morgan banking group. The defendant, VTB Bank PJSC (VTB) is a majority state-owned Russian bank.

The contractual framework

Unallocated metals account agreement

In 2002, JP Morgan Chase Bank N.A (JPMCB), an American company, entered into an unallocated metals account agreement (UMAA) with VTB. The agreement was signed by JPMCB London, an authorised London branch. The UMAA provided for an account for precious metals to be opened for VTB with JPMCB London. The UMAA was governed by English law and provided for LCIA arbitration.

Client Agreement

In March 2021, JP Morgan Securities PLC (JPMS), an English company, and VTB entered into a contract by which JPMS opened a futures and options account for the execution and/or clearing of exchange listed or over-the-counter clearing products in the name of VTB (Client Agreement).

Among other things, the Client Agreement excused JPMS from performing due to any cause beyond its reasonable control, including the acts or regulations of governmental or supra national bodies or authorities. It also provided for English law and LCIA arbitration.

ISDA Master Agreement

In June 2015, JPMS and VTB entered into an ISDA Master Agreement on the 2002 Master Agreement form (ISDA MA). The ISDA MA provided for LCIA arbitration.

JP Morgan Standard Client Terms of Business

There was disagreement between the parties as to whether the JPM Standard Client Terms of Business (Terms) applied as between VTB and any of the JPM entities and, if so, which version of the Terms applied.

The Terms were stated to apply to JPMC, JPMCB London (and, therefore, JPMCB) and JPM Ltd. However, they also stated that any “Affiliate” could rely on and enforce the Terms, with “Affiliate” being defined widely. The English Court subsequently held that the definition was wide enough to encompass all the claimant JPM entities.

The Court found that the applicable set of Terms was the 2017 Terms and that VTB was bound by them. The 2017 Terms provided for LCIA arbitration.

Correspondent bank account

VTB also held an account with JPMCB in New York, which was subject to account terms that were governed by New York law and the exclusive jurisdiction of the courts of New York State.

The background facts

As a result of sanctions imposed on VTB following the Russian invasion of Ukraine in February 2022, JPMS notified VTB that it was closing out VTB’s transactions under the ISDA MA, the Client Agreement and a Futures and Options Agreement on the basis of a contractual event of default. The ISDA MA was terminated on the basis that the event of default under the Client Agreement triggered the cross-default provisions in the ISDA MA.

JPMS and VTB did not, however, agree on the calculations of the amounts outstanding under the ISDA MA and the Client Agreement following closing out/liquidation of the relevant transactions.

In July 2022, JPMCB closed VTB’s New York account but held on to the balance in the account pending the lifting of sanctions or approval from the relevant authorities to release the funds.

In October 2022, JPMCB London informed VTB it was terminating the UMAA with effect from 18 November 2022 and that any residual balance in the account that was blocked by sanctions would continue to be held by them until sanctions were lifted or appropriate authorisations for release of the balance were obtained.

Russian court proceedings

On 17 April 2024, VTB commenced Russian court proceedings against JPMCB and other JPM entities, including JPM Russia, in relation to the correspondent bank account. It sought freezing order relief pending determination of the claim, which was subsequently granted.

On 18 April 2024, JPMCB commenced NY court proceedings against VTB and obtained temporary anti-suit relief in respect of the correspondent bank account.

On 24 April 2024, VTB sought an anti-anti-suit injunction (AASI) in the Russian courts against the NY proceedings. This was granted on 25 April 2024.

The JPM entities failed in their attempts to challenge the AASI and so JPMCB took steps to have the NY proceedings discontinued, which they were.

On 7 October 2024, VTB commenced two sets of proceedings in the Arbitrazh Court of St Petersburg and Leningrad Region, in respect of the UMAA and the Client Agreement, against nine JPM entities (the parties to the Commercial Court proceedings), including JP Morgan Bank International OOO CB (JPM Russia). The Arbitrazh Court made freezing orders in respect of both claims.

In December 2024, JPMS and JPMCB, as JPMCB London, commenced English court proceedings and obtained interim ASIs on a without notice basis. The ASIs prohibited VTB from pursuing proceedings in relation to the Client Agreement and the UMAA otherwise than in accordance with the contractual arbitration clauses and also preventing VTB from seeking interim or conservatory relief that was inconsistent with the arbitration agreements.

The other seven JPM entities were subsequently joined to the English court proceedings and the ASIs were continued. However, JPM Russia, although a party to the proceedings, did not seek ASI relief in its own right.

In March 2025, VTB issued a jurisdictional challenge to the English proceedings and issued a further claim in the Arbitrazh Court in relation to the ISDA MA.

At the return date, the claimants sought to make the ASIs final and also sought anti-enforcement injunctions.

The Commercial Court decision

The applicable arbitration agreements

The Court noted that the UMAA, Client Agreement and ISDA MA were all governed by English law. Further, the Russian court proceedings brought under the UMAA and Client Agreement were in clear breach of the arbitration agreements contained in those contracts. Even if, as it was argued, the claims brought under those two agreements were claims in tort under Russian law, the applicability of the arbitration agreements did not depend on the type of cause of action advanced.

The Court also held that, on their true construction, all nine of the JPM claimant entities were parties to the 2017 Terms and that the relevant claims fell within the arbitration agreement in the 2017 Terms.

However, the 2017 Terms arbitration agreement did not displace the arbitration agreements in:

1. The UMAA as far as claims against JPMCB under that agreement were concerned;

2. The Client Agreement as far as claims against JPMS under that agreement were concerned; and

3. The ISDA MA as far as claims against JPMS under that agreement were concerned.

As far as VTB’s claims against the non-parties to those agreements were concerned, the arbitration agreement in the 2017 Terms would apply.

In respect of the ISDA MA, JPMS did not seek to enforce that agreement because it did not wish to fall foul of the Russian ASI. It sought instead to apply for final ASI relief by reference to the Client Agreement and also on the basis that the Russian court proceedings were vexatious and oppressive.

The Court accepted that where parties entered into a number of agreements that existed alongside each other, each with its own dispute resolution clause, it was possible for a dispute under one agreement to fall within two arbitration agreements in two separate contracts.

In this case, however, the Court found that the dispute as to the termination of the ISDA MA and the resultant balance fell squarely within the ISDA MA and did not fall within the Client Agreement.

Third party claim obligation

The Court stated that the principles applicable to the grant of anti-suit relief in relation to proceedings brought in a non-contractual forum against a contracting party were well-established.

The more complicated issue was whether VTB was in breach of the various contractual arbitration agreements by commencing Russian court proceedings against JPM entities that were not expressly stated to be parties to the contracts incorporating those arbitration agreements (i.e. the “Affiliates”).

In some cases, it was appropriate to imply a negative obligation on the parties not to bring proceedings against a third party in a non-contractual forum if the purpose of doing so was to circumvent the parties’ arbitration clause. The Court referred to Renaissance Securities (Cyprus) -v- Chlodwig Enterprises [2025] EWCA Civ 369, in which the Court of Appeal acknowledged that the defendant had brought “artificial” claims against the claimant’s affiliates in Russian court proceedings, notwithstanding an LCIA arbitration agreement in the parties’ contract. However, the Court of Appeal had also cautioned that it was important to construe the agreement that the parties had actually reached rather than imposing a different agreement on them.

In this case, there was nothing in the UMAA and Client Agreement arbitration agreements to suggest that they limited one party’s right to bring proceedings against certain third parties and/or for certain types of claim.

In respect of the 2017 Terms, the Affiliates had been granted rights and there was a strong argument that, on its proper construction, the arbitration agreement in the 2017 Terms involved a promise by VTB to the direct JPM parties not to sue other Affiliates.

However, the Court concluded that, on their true construction, none of the arbitration agreements in this case included a third-party claim obligation as an implied term.

Vexatious and oppressive basis

Nonetheless, the Court decided that the commencement and pursuit of the Russian proceedings in respect of the UMAA and Client Agreement claims should be restrained by ASIs.

Among other things, the pursuit of those claims in Russia was intended to circumvent the relevant arbitration agreements and, more generally, the English law sanctions regime. In doing so, VTB was seeking to obtain an illegitimate juridical advantage and was undermining the efficacy of that regime. Furthermore, the provisions of Russian law used to impose liability on non-parties to the two Agreements did not accord with generally recognised principles of civil law.

The Court concluded that the UMAA and Client Agreement claims were vexatious and oppressive both as regarded JPM and JPMCB, and also as regarded the other JPM entities joined to them.

The Court further found that the commencement of Arbitrazh court proceedings in relation to the ISDA MA was also vexatious and oppressive for similar reasons to those stated above.

The Court dismissed VTB’s various arguments as to why the Court should not exercise its discretion to make the interim ASIs final or to grant additional ASIs in respect of the Arbitrazh Court proceedings relating to the ISDA MA. Among other things, the Court rejected the argument that there was delay in the JPM entities seeking anti-suit relief. It also thought that Russia was not the more appropriate forum and highlighted that the contractual rights in issue were governed by English law.

Anti-enforcement injunction

The Court also granted the anti-enforcement injunctions sought. In doing so, it highlighted that it had become increasingly common for relief of this kind to be granted in ASI cases concerning proceedings in Russia, because of the risk that the Russian Court would not permit proceedings to be discontinued even if the party who had commenced those proceedings sought such an order.

In conclusion, the Court dismissed VTB’s jurisdictional challenge.

Comment

The Court made it clear that it disapproves of improper attempts to circumvent an exclusive jurisdiction clause or arbitration agreement in a freely negotiated commercial contract. It also highlighted more than once the effect of Russian laws developed in response to international sanctions that purport to change English law obligations.

These issues were amongst a number of ‘hot topics’ at London International Disputes Week in June 2025. Certainly, there has been increasing use of the Russian Arbitrazh courts by Russian litigants who have agreed to have their contractual disputes dealt with in foreign courts or international arbitration but who feel that, due to international sanctions, Russian court proceedings will produce a more favourable outcome for them.