Russian court has banned the consideration of a dispute with Deutsche Bank abroad

In the dispute concerning the Sberbank’s claim against Deutsche Bank AG, the Arbitration Court of Moscow has sided with the claimant not only satisfying the request for recovery of funds, but also recognizing its exclusive competence to consider the dispute.

Sberbank has filed a claim against Deutsche Bank AG to recover EUR 7,224,534.89 plus interest on the debt.

Deutsche Bank AG notified the plaintiff of the closure of its correspondent account on March 10, 2022. Despite the closure of the account, the defendant did not remit the amount in the account to the plaintiff, citing EU Regulation No. 269/2014, which prohibits the defendant from returning the funds to the plaintiff. The defendant's position was that it now simply had no obligation to the plaintiff to return the funds and that the plaintiff had no right to claim them back.

The case was complicated by the fact that all issues arising in connection with the use of the account and/or service were governed by German law. At the same time, the agreement did not limit the right of either party to initiate legal action against the other party in the courts at its location.

Since the basis of the dispute was the restrictive measures imposed by the European Union on Sberbank and Russian legal entities, the court applied the provisions of Article 248.1 of the Arbitration Procedure Code of the Russian Federation, which established the exclusive jurisdiction of Russian arbitration courts with regard to these disputes. Pursuant to the said article, the plaintiff is entitled to apply for resolution of the dispute to the arbitration court of the subject of the Russian Federation at its location or place of residence, if the grounds for such disputes are restrictive measures imposed by a foreign state.

The court thus protected the rights and legitimate interests of the Russian organization in respect of which restrictive measures were imposed, effectively depriving it of the opportunity to defend its rights in court outside the Russian Federation.

Interestingly that having found no legitimate grounds for non-fulfilment of the plaintiff's claims, the Court nevertheless agreed with Deutsche Bank's objections of improper calculation of interest and reduced the penalty claimed by the plaintiff from EUR 308,199.09 to EUR 188,409.30.

Source: Resolution of the Moscow Arbitration Court of 23.06.2023 in case No. A40-84574/2023-83-488.