Russian court proceedings circumventing arbitration agreements are 'vexatious and oppressive'

JP Morgan Securities Plc & others -v- VTB Bank PJSC [2026] EWCA Civ 589

In this case, the Commercial Court granted anti-suit injunctions (ASIs) in relation to Russian court proceedings that it decided were vexatious and oppressive because they were brought in breach of contractual arbitration agreements: see our earlier article (Russian Proceedings Vexatious and Oppressive | Hill Dickinson).

The Court of Appeal has now dismissed the appeal of the injuncted Russian bank. In doing so, it has highlighted the way in which an entity that is not a direct party to a contract incorporating an arbitration agreement may nonetheless be able to rely on that arbitration agreement to restrain court proceedings brought against it in respect of related non-contractual claims on the ground that those proceedings are vexatious and oppressive.

The background facts

The contracts

The relevant contracts were as follows:

1. An Unallocated Metals Accounts Agreement (UMAA) dated 22 April 2002 between the Russian bank, VTB Bank PJSC (VTB), and J.P. Morgan Chase Bank, N.A. (JPMCB).

2. An agreement for derivatives trading executed on 11 March 2011 (Client Agreement) between VTB and J.P. Morgan Securities PLC (JPMS).

3. An ISDA Master Agreement dated 18 June 2015 between VTB and JPMS.

4. JPM Standard Client Terms of Business 2017 (2017 Terms). These were stated to be applicable to JPMS, JPMCB and JP Morgan Ltd.

All these agreements were governed by English law and incorporated LCIA arbitration clauses. The 2017 Terms also entitled any “Affiliate” of the JPM companies to rely on and enforce the 2017 Terms including the LCIA arbitration clause.

Sanctions

Following the Russian invasion of Ukraine in February 2022, UK and US sanctions were imposed on VTB. JPMCB and JPMS invoked their rights under the ISDA Master Agreement, UMAA and Client Agreement respectively to close out positions and accounts they held for VTB in the UK, resulting in balances in VTB's favour. Those balances remain frozen in the hands of JPMS and JPMCB respectively by reason of the sanctions.

In October 2024, VTB commenced two sets of proceedings in the Arbitrazh Court of St Petersburg and Leningrad Region against not only JPMS and JPMCB, but also against six other entities bearing the JPMorgan name, five of them respondents to the appeal, the other being JP Morgan Bank International OOO CB (JPM Russia), a company incorporated in Russia. One set of proceedings related to the Client Agreement (Client Agreement Claim), and one related to the UMAA (UMAA Claim).

VTB's claims were brought in tort against JPMS and JPMCB respectively as the principal defendant and those claims alleged unlawful action in relation to VTB's property, including retention of monies due. In each claim, the other JPM entities were joined as joint and several tortfeasors, invoking laws developed by the Russian courts in response to sanctions. Those laws imposed liability on all companies in a corporate group, disapplied applicable foreign law, and applied Russian law. Additionally, jurisdiction was asserted under Article 248.1 of the Arbitrazh Civil Code, giving Russian courts exclusive jurisdiction over disputes involving sanctioned Russian individuals or entities or which concern sanctions, regardless of any contractual choice of forum.

In December 2024, JPMS and JPMCB issued two sets of English court proceedings, one in relation to the Client Agreement Claim and one in relation to the UMAA Claim, seeking declaratory relief and final ASIs against VTB. At or about the same time JPMS and JPMCB applied, without notice, for interim ASIs. The ASIs were granted and subsequently the other six JPM entities were joined in both sets of proceedings, those companies also seeking final ASIs and anti-enforcement injunctions (AEIs).

In March 2025, despite having previously accepted JPMS's calculation of the balance owed by VTB under the ISDA Master Agreement, VTB commenced further proceedings in Russia against JPMS as principal defendant and the other eight JPM entities on a joint and several liability basis, claiming that it was owed EUR 108,636,829.56 (ISDA Claim). The Russian Court granted an ASI in those proceedings, as a result of which the JPM entities have not relied on the arbitration clause in the ISDA Master Agreement.

In May 2025, following the ASI in the ISDA Claim, JPM Russia discontinued its claim in each set of these proceedings, but the other JPM entities continued to include claims against JPM Russia in the ASIs and AEIs they sought.

The Commercial Court decision

In June 2025, the Commercial Court held that the various LCIA arbitration agreements were valid and binding on VTB and were governed by English law. The Court also granted final injunctions restraining VTB from pursuing its claims in Russia (or commencing new claims), including against JPM Russia, or enforcing any order or judgment obtained in its favour in the Russian proceedings.

In summary, the Commercial Court found that:

1. The Client Agreement Claim and the UMAA Claim in Russia were being pursued against JPMS and JPMCB respectively in breach of the arbitration clause in the relevant agreement.

2. Those claims were also brought against all the JPM entities in breach of the arbitration clause in the 2017 Terms. In the case of JPMS, JPMCB and J.P. Morgan Ltd, that was because they were each party to those Terms. In the case of the other five JPM entities, that was because they were "Affiliates" entitled to the benefit of the arbitration clause. JPM Russia had not, however, applied to enforce the arbitration clause.

3. The various arbitration clauses did not entitle the parties to those agreements to restrain proceedings against other companies in the JPM group, either as a matter of interpretation or as a matter of implication.

4. However, the Client Agreement Claim and the UMAA Claim were vexatious and oppressive to JPMS and JPMCB, both directly, but also by pursuing their affiliates (including JPM Russia).

5. Although JPMS did not seek to enforce the arbitration clause in the ISDA Master Agreement, and although the Court held that the ISDA Claim was not a breach of the Client Agreement arbitration clause, nevertheless the commencement of the claim against JPMS and the other seven JPM entities in relation to the ISDA Master Agreement, was also vexatious and oppressive.

6. It was appropriate to grant injunctions as a matter of discretion.

The appeal

VTB did not challenge the Court’s finding that the Client Agreement Claim and the UMAA Claim were pursued in breach of the arbitration agreement as against JPMS and JPMCB, but argued that the Court was wrong to find that the claims against the other JPM entities were vexatious and oppressive (Grounds 1 and 2) and wrong to find they could invoke the arbitration clause in the 2017 Terms (Ground 3).

VTB further argued that, had the Court made the correct decision on those issues, it should further have exercised its discretion not to grant injunctions to restrain Russian proceedings against any of the JPM entities, including JPMS and JPMCB (Ground 4).

The Court of Appeal decision

Dealing with Ground 3 first, the Court of Appeal upheld the Commercial Court’s decision that the affiliate members of the JPM group were entitled to rely on the LCIA arbitration clause in the 2017 Terms.

The JPM entities could not invoke the arbitration clauses in the Client Agreement and the UMAA because they were not party to them. However, as they had been made the subject of tortious claims under those agreements, they were entitled to take the benefit of the arbitration clause in the 2017 Terms that referred to arbitration of "any dispute" including "non-contractual liabilities arising in any way out of, in relation to or in connection with our relationship".

Reliance on that clause, which applied clearly and directly to the claims against the JPM entities who were not parties to the Client Agreement or the UMAA, in no way conflicted with the provisions of those contracts which did not apply to such claims. The wide wording of the 2017 Terms was designed to avoid VTB circumventing the clause by simply claiming against any JPM Affiliate in tort.

Given that Ground 3 failed, the question of vexation and oppression (Grounds 1 and 2) only arose for decision in relation to JPM Russia, as all other JPM entities had sought to enforce their contractual right to LCIA arbitration of the claims against them.

The Court of Appeal concluded that the Commercial Court had been entitled to find that the claims against JPM Russia were vexatious and oppressive and to include proceedings against that company in the injunctions it granted. The judge had been well aware of the principle of comity and the fact that an ASI would interfere with the process of the Russian courts. He had nonetheless taken the view that the interest of the English Court in the proceedings outweighed any such concerns, highlighting that the Russian proceedings were an attempt to circumvent London arbitration agreements and to enforce rights governed by English law.

VTB sought to characterise the claim against JPM Russia as "Russian centric". However, JPM Russia was part of an international group and was being sued for debts of its non-Russian affiliates that were subject to English law and London arbitration clauses. Although JPM Russia did not itself rely on the arbitration clause in the 2017 Terms, the Commercial Court was right to recognise that, as a Russian company with assets in Russia, it had little choice but to submit to the jurisdiction of the Russian courts in the face of Russian ASIs.

The appeal was dismissed.

Comment

This is yet another example of Russian litigants invoking Article 248.1 of the Arbitrazh Civil Code and commencing Russian court proceedings in the face of international sanctions, in the hope of achieving a more favourable outcome. The English Court has sought to restrain attempts to circumvent valid arbitration agreements and jurisdiction clauses by issuing ASIs and AEIS as appropriate.

To discover how our team can help you protect your position in complex cross-border disputes, get in touch with our International Arbitration team.