Freshfields to pull out High Court 'tuna bonds' dispute

Freshfields to pull out High Court 'tuna bonds' dispute

After receiving criticism last week, a UK Magic Circle firm has taken action to stop advising VTB

In response to a long-running dispute in the London High Court, Freshfields Bruckhaus Deringer withdraws its advice to Russian bank VTB on a $535 million dispute.

Earlier this week, the UK Magic Circle firm came under criticism for continuing to represent the bank despite Russia's invasion of Ukraine.

The firm declined to comment at the time, citing the need to maintain 'strict confidentiality of its clients. However, it stressed that it was acting 'swiftly and responsibly' in respect of ongoing mandates in light of this conflict.

But today, the firm announced that it was taking immediate steps to terminate its litigation mandate with VTB.

An international law firm with significant Russian operations and clients in responding to Russia's invasion of Ukraine by discontinuing their Russian activities, even if they do not directly violate escalating sanctions.

Norton Rose Fulbright announced earlier today that it would shut down its 50-person Moscow office and cease Russian work related to the Putin regime as soon as possible. In addition, the organization promised to donate to appropriate humanitarian and charitable causes any profits it made from ongoing work it cannot immediately discontinue. Linklaters has announced it will close its Moscow office on Friday.

The soon-to-be former client of Freshfields', VTB, is seeking repayment of a $535 million loan following the 'tuna bonds' scandal, in which the government defaulted on $2 billion of sovereign bonds issued to support Mozambique's fishing industry.

Among the Freshfields partners who advised VTB Capital and VTB Bank (Europe) are David Railton QC, Timothy Howe QC, Adam Sher, and Ian Bergson of Fountain Court.

Fountain Court's Railton told the High Court last week that the UK government had granted a license allowing VTB to pay Freshfields' legal fees and expenses, and that Freshfields' legal team thought the hearing was a matter of professional obligation.

Freshfields today has expressed 'strong' condemnation of the Russian government's actions and 'solidarity with all those affected.

As far as ongoing and new client mandates are concerned, the company has been responsive and responsible from the start, according to the statement. "We terminated, suspended, or refused mandates immediately and are clear that we won't act for companies/individuals with close ties to the Russian state, with connections to the Russian leadership, and/or who play a role in supporting or facilitating the present military action.

It said its decision to end its litigation mandate with VTB was in accordance with the firm's clear stance.

In spite of freezing assets of Russia's second-largest bank on the day of the invasion, the UK government granted it a 30-day license so it could wind down its operations and pay staff.

However, the bank is expected to be excluded from Swift this week, and on Sunday, the Financial Times reported that it would withdraw from Europe due to the sanctions.

It is scheduled for next year in London's commercial court that the tuna bond litigation will be heard in full.

Fountain Court did not respond to a request for comment.