Jersey court upholds €214 million award against Rusal in favour of former VTB subsidiary
The Royal Court of Jersey has ruled to enforce the award by the London Court of International Arbitration (LCIA) for the recovery of €213.8 million from RTI (the Jersey subsidiary of Russian aluminium company Rusal) in favour of German company OWH (a former subsidiary of VTB Bank in Europe). The Jersey court rejected RTI's request to set aside the bailiffs' order to enforce the arbitral tribunal's award. This was stated in the Jersey court's ruling of 22 May 2025.
Rusal disagrees with the Jersey court's decision and plans to appeal, Kommersant reported, citing the company. In addition, RTI intends to seek annulment of the LCIA award in a British court of law.
The dispute arose from a currency swap agreement concluded in 2019. In order to hedge risks of ruble exchange rate fluctuations, RTI entered into 11 currency exchange transactions with the then VTB Bank Europe. The agreement entitled the bank to demand additional collateral from RTI (guaranteed by Rusal) to cover its potential maximum exposure. Due to the crash of the ruble following the launch of the military operation in Ukraine, the bank notified RTI on 25 February 2022 that it must come up with additional collateral of $43.5 million within three days. RTI refused to hand over the money, citing the risk of secondary sanctions. OWH (the former VTB subsidiary renamed itself OWH in January 2024) within a month sent RTI 18 more demands for additional funds to be paid.
In March 2022, OWH notified RTI that it was in default under the agreement and issued an invoice for €214 million. RTI, however, claimed that payments to OWH could violate the sanctions laws of Jersey (a British Crown dependency) or trigger secondary US sanctions, since the Russian VTB bank (at that time the parent of OWH) had been added to the sanctions lists of the United Kingdom and the United States on 24 February 2022. And meanwhile, the German financial regulator BaFin prohibited OWH from making payments to VTB or to companies of the VTB group. In April 2022, BaFin took control of OWH and effectively expropriated the company.
The swap agreement had contained a dispute resolution clause referring disputes to the LCIA. In June 2022, RTI initiated arbitration, claiming that OWH had wrongfully terminated the agreement and declared RTI in breach of its obligations. The arbitral tribunal rendered its award in September 2024, finding that RTI could not cite the sanctions as grounds for non-payment and that OWH had lawfully given notice of early termination of the currency swaps. The arbitral tribunal awarded OWH €213.8 million.
Following this, Kommersant reports, OWH initiated proceedings for the recognition and enforcement of the arbitral award in the Royal Court of Jersey. RTI opposed this, again insisting that enforcement of the award in favour of the bank on the island would violate the sanctions and be contrary to Jersey's public policy. OWH, in turn, proposed ways that it believed would mitigate the sanctions risk, including transferring the funds to a special OWH account at the German Central Bank. In addition, OWH stated in a letter to RTI in March 2022 that US lawyers had described the risk of secondary US sanctions being imposed on RTI in the event of payment of the margin call collateral as "very remote".
In separate legal proceedings, RTI also asked the Jersey court to suspend an order for it to disclose information about its global assets. RTI believed that such disclosure carried the risk of confidential information being leaked, which could allow VTB, as the former parent company of OWH (VTB officially still owns 99.4% of the German company), to file its own claims against RTI's assets in Russian courts under the "Lugovoi Law" (Articles 248.1 and 248.2 of the Arbitrazh (Commercial) Procedure Code) if VTB considers that RTI owes €214 million to itself rather than to OWH.