What happened
VTB’s German subsidiary bank, which is in liquidation, and VTB as its majority shareholder entered into a settlement agreement governed by English law with an arbitration clause providing for HKIAC arbitration. Despite that clause, on December 1, 2023, the Russian bank brought proceedings in a Russian court under Article 248.1 of the Russian Arbitrazh Procedure Code, and that court issued a judgment for the full settlement amount. On September 24, 2024, Justice Mimmie Chan of the Court of First Instance of the High Court of Hong Kong granted a final injunction restraining the Russian proceedings and the enforcement of the Russian court’s judgment, rejecting VTB’s objection that commencing the proceedings in Russia was an “act of state.” Although the Hong Kong judgment is anonymized, the parties are publicly known.
Why it is notable
A key case in Asia concerning Article 248.1 of the Russian Arbitrazh Procedure Code: for the first time, a Hong Kong court granted a final injunction restraining both the Russian proceedings and the enforcement of a Russian judgment already issued, and separately rejected the “act of state” argument. Justice Mimmie Chan also expressly noted Hong Kong’s neutrality toward foreign sanctions.