Law Firms Defend Sberbank, Arguing: It's a Russian State Bank - Bloomberg Law

Law firms White & Case and Debevoise & Plimpton have already said they plan to stop representing Russia-owned Sberbank in a lawsuit over a 2014 attack on a civilian jetliner in Ukraine.

But before the firms leave, last week they again asked a federal judge to dismiss their client from the case for a simple reason: It’s a Russian state-owned bank and has sovereign immunity from lawsuit in the U.S.

The parents of Quinn Schansman, a U.S. man who died in the downing of Malaysia Airlines Flight 17, are suing Sberbank and others in a federal court in Manhattan. They allege that Sberbank provided financing to the Donetsk People’s Republic, which they say is a terrorist group responsible for the attack that killed 298 people.

Many U.S. law firms, including White & Case and Debevoise, have dropped Russian clients since the country’s invasion of Ukraine led to sweeping sanctions against state-owned institutions. The Sberbank argument highlights the thorny task firms face in unwinding those relationships. Efforts to distance themselves from Russian clients can be complicated by the fact that leaving cases typically requires a judge’s sign-off.

In the Sberbank case, the law firms were required to file the motion by an April 21 deadline. That meant they had to argue that the very connections that led them to cut ties with the bank also provided it shield from the lawsuit.

“It’s a good example of the tension that can arise when you have a client that may be viewed as politically unsavory, but you’ve made an agreement to represent them and you’re in court,” said Jan Jacobowitz, a legal ethics consultant in Miami. “Once you’re in court, you have to do what’s right for your client until the court lets you withdraw.”

White & Case and Debevoise have yet to formally request a withdrawal, having said they are waiting to do so until they find substitute counsel for Sberbank. The firms delcined to comment on the case.

White & Case has said it will cease all representations of Russian and Belarusian state-owned clients in accordance with its professional responsibilities. The firm closed its Moscow office and donated $1 million to the Ukrainian Red Cross Society, while its lawyers are offering pro bono support to Ukrainian refugees.

Debevoise said it would terminate several client relationships stemming from Moscow, where it closed its office.

Latham & Watkins represents another sanctioned bank in the plane bombing case, VTB Bank. The firm’s lawyers last week asked the judge to grant a withdrawal request, noting that they were still preparing a letter opposing the Schansmans’ request for discovery production.

White & Case and Debevoise lawyers in December raised the argument Sberbank should be dismissed from the charges because of the Foreign Sovereign Immunities Act, which provides immunity from U.S. litigation to foreign state-owned entities.

The filing last week says even the plaintiffs agree that since at least April 2020 Sberbank has been “an agency or instrumentality of the Russian Federation.” Expert witnesses in the case have said Sberbank’s primary function is to support the Russia’s currency and that i’ts required tourn over t 75% of its annual profit to the Kremlin.

White & Case and Debevoise told a judge last month they were ending their relationship with Sberbank and would withdraw as soon as they found substitute counsel. They asked the judge to pause the case until the bank found new lawyers.

In response, lawyers from Jenner & Blockrepresenting the Schansmans asked the court to move ahead. They called the effort to pause the case a “strategic benefit” for Sberbank.

The lawyers seek to “selectively work for Sberbank of Russia where it would benefit their client, and to seek relief from Sberbank of Russia’s obligations that would not benefit their client,” the Schansmans’ lawyers wrote.

The case is: Schansman v. Sberbank of Russia, S.D.N.Y., No. 1:19-cv-02985.

To contact the reporter on this story: Roy Strom in Chicago at [email protected]

To contact the editors responsible for this story: Chris Opfer at [email protected]; John Hughes at [email protected]

source: https://news.bloomberglaw.com/white-collar-and-criminal-law/law-firms-defend-sberbank-arguing-its-a-russian-state-bank

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