The KK&P team successfully defended the interests of a major Russian bank in a dispute over its joint liability for the debts of a foreign affiliate

For over a year and a half, the KK&P team, including Managing Partner Maxim Kulkov, Associate Dmitriy Biryulin and Junior Associate Diana Akulova, represented the interests of a Russian bank affiliated with one of the largest US banks (Client).

A Hong Kong subsidiary of a large Russian logistics company (Claimant) filed a claim for debt collection from a foreign bank and the Client in the Moscow Commercial Court. The debt arose as a result of the blocking of the Claimant’s bank accounts due to sanctions against it and its parent company.

The Claimant based its position on well-known case No. A40-167352/2023 (Citibank Case), as well as on the importance of the Claimant’s parent company for the Russian economy and the state’s participation in its capital. However, when the Citibank Case reached the Supreme Court, the approach changed somewhat.

The task of the firm’s team was to apply this approach for the first time, refute the erroneous interpretation proposed by the Claimant, and convince the court to refuse to hold the Client jointly and severally liable.

Supporting our arguments, the Court dismissed the claim against the Client. The court’s decision confirmed that a Russian affiliate of a foreign company should not be liable for its obligations a priori, even if the execution of a court decision at the expense of the Russian company’s property is the only option for the plaintiff to collect funds under sanctions.

It is worth noting that in another case back in 2024, our team convinced the court to refuse to hold a Russian bank liable for actions to block a payment by a foreign affiliate: the dispute arose from a claim by a large distributor of branded equipment in Russia, whose payments in foreign currency were blocked due to US sanctions.