Barclays Bank PLC vs VEB.RF

This case concerned the enforcement of an arbitration agreement between Barclays Bank PLC and VEB.RF in the context of international sanctions imposed on VEB.

TLDR:

• Barclays sought to enforce an arbitration agreement against VEB.
• VEB argued the agreement was frustrated due to sanctions.
• The High Court ruled in favor of Barclays, upholding the arbitration agreement.

Barclays Bank PLC ('Barclays') and VEB.RF ('VEB') were parties to an International Swaps and Derivatives Association Master Agreement ('the Master Agreement') which included an arbitration clause requiring disputes to be resolved under the Rules of the London Court of International Arbitration (LCIA).

In 2022, following the imposition of sanctions on VEB by the UK, US, and EU, Barclays terminated the Master Agreement and calculated a final payment amount due to VEB. Disputes arose regarding the payment and interest calculations, leading VEB to initiate proceedings in the Arbitrazh Court of Moscow, which Barclays claimed breached the arbitration agreement.

Barclays obtained an interim anti-suit injunction ('ASI') and anti-enforcement injunction ('AEI') from the High Court, preventing VEB from pursuing the Russian proceedings. VEB challenged this, arguing that the arbitration agreement was frustrated due to the sanctions, making it inoperative or incapable of performance.

The High Court, presided over by John Kimbell KC, considered the arguments and evidence, including expert opinions on Russian law and the practical impacts of the sanctions on VEB's ability to arbitrate. The court found that while the sanctions made performance more onerous, they did not render the arbitration agreement radically different or impossible to perform.

The court also addressed VEB's claim of unjustified delay by Barclays in seeking the ASI and AEI. It concluded that Barclays had acted reasonably in taking time to assess the risks and de-risk its operations before seeking relief.

Ultimately, the High Court upheld the arbitration agreement, making the interim ASI and AEI permanent, and emphasized the importance of enforcing arbitration agreements and upholding sanctions as part of English law.

Legal representatives: Peter de Verneuil Smith KC (instructed by Simmons & Simmons LLP) for the Claimant/Applicant, Shantanu Majumdar KC (instructed by Rahman Ravelli Solicitors Solicitors) for the Defendant/Respondent.

Judicial Panel: John Kimbell KC (sitting as a Deputy Judge of the High Court)

Case Citation Reference: [2024] EWHC 1074 (Comm)