A Russian court sided with state-run lender VTB Bank in its efforts to recoup $439.5 million from JPMorgan Chase that the American lender froze in U.S. accounts after the Ukraine invasion.
The court ordered the seizure of funds in JPMorgan’s Russian accounts and “movable and immovable property” including the bank’s stake in a Russian subsidiary, according to a court order published Wednesday.
The order came after VTB filed a suit last week in a St. Petersburg arbitration court, seeking to be made whole for funds frozen in the United States, and asking for relief because JPMorgan has said it plans to exit Russia.
The next hearing in the Russian case is July 17.
JPMorgan declined to comment. VTB didn’t immediately respond to a request to comment.
The order was the latest example of American banks getting caught between the demands of Western sanctions regimes and overseas interests. JPMorgan is the biggest U.S. bank by assets and run by veteran CEO Jamie Dimon.
Two years after Russia invaded Ukraine, the Biden administration has mounted an unprecedented set of sanctions, oil price caps and trade restrictions designed to weaken Moscow’s military machine.
On Wednesday, President Joe Biden signed into law a sweeping foreign aid bill that includes new powers for U.S. officials to locate and seize Russian assets in the United States. It also boosted an ongoing American effort to convince European allies to release Russian state assets to assist Ukraine.
In its own lawsuit against VTB last week in the Southern District of New York, JPMorgan sought to block VTB’s effort, noting that U.S. law prohibits the bank from releasing VTB’s $439.5 million.
This leaves JPMorgan exposed to a nearly half-billion-dollar loss, for abiding by U.S. sanctions.
The American bank, seeking to block VTB’s effort, said the Russian company broke its contractual promise to seek relief in American courts, instead finding a friendlier venue in Russia.
JPMorgan said that Russian courts have enabled similar efforts by Russian lenders against American or European banks at least a half dozen other times.
JPMorgan said it faced “certain and irreparable harm” from VTB’s efforts.
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