JPMorgan, Russia’s VTB Bank sue each other

JPMorgan Chase sued VTB Bank in Manhattan on Thursday to stop the Russian state-owned bank from trying to recover $439.5 million from an account blocked due to sanctions violations following Russia’s invasion of Ukraine, court documents show.

VTB had filed a lawsuit Wednesday in Saint Petersburg, Russia to recover the funds. According to JPMorgan’s complaint, this was a “blatant breach” of the banks’ agreement — in place since VTB opened a U.S. dollar correspondent bank account at JPMorgan in 2008 — to have issues addressed in New York.

Specifically, VTB agreed that its account “would be governed by U.S. law; JPMorgan could freeze the account if required to comply with U.S. sanctions laws; any dispute would be adjudicated only in New York where the account is located; and any dispute over JPMorgan’s actions must be brought within two years of the challenged action,” according to court documents.

VTB sent a pre-litigation letter demanding the return of funds from JPMorgan, but U.S. law prohibits JPMorgan from releasing VTB’s money, according to court documents.

If VTB is allowed to proceed with its suit in Saint Petersburg, it will likely succeed in collecting a judgment against JPMorgan, the U.S. bank said.

“Thus, JPMorgan is immediately facing a certain Russian judgment exposing its assets to seizure, without timely or assured recourse, simply because it is abiding, as it must, with U.S. law,” its lawsuit said.

VTB declined to discuss its lawsuit in Russia with Reuters and provided no comment on JPMorgan’s lawsuit.

JPMorgan declined to comment on the lawsuits to Banking Dive.

The Justice Department in February charged VTB CEO Andrey Kostin with sanctions violations related to his ownership of two yachts valued at more than $135 million and a home in Aspen, Colorado.

Kostin, who was charged with two counts of violating the International Emergency Economic Powers Act, two counts of conspiracy to violate that law, and one count of conspiracy to commit international money laundering, told Russian media the charges were “groundless.”