UK High Court Says Sanctioned Bank Doesn't Own Funds Held in Escrow
The U.K. High Court of Justice on March 27 ruled that VTB Commodites, the commodities wing of sanctioned bank VTB Bank, doesn't have "any right of redemption" in escrow payments in a dispute over the ownership of vacuum gas oil (VGO) cargo.
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The dispute is between petroleum company Petraco Oil and ABFA Commodities Trading, formerly VTB Commodities, over the VGO cargo. The court previously ordered VTB to sell the $30 million worth of cargo either "into court, to be held to the order of the court," or to the company's "solicitors to be held to the order of the court" while the case played out. The court later sided with Petraco in the dispute and awarded it the VGO cargo.
In the most recent judgment, the court said that by selling the cargo, VTB had no "right of redemption" to the $30 million, meaning it was not "owned, held, or controlled by" a sanctioned party. As a result, the court said that the $30 million payment couldn't be used as an asset available to the commodities trading firm's creditors "in the event of insolvency," and that VTB Commodities had no "equity of redemption over the funds which might, if the court so ordered, be paid out."