Russian bank loses bid to pause U.S. case over sacred Jewish texts

(Reuters) - A U.S. appeals court on Monday said it will not pause a legal proceeding involving sacred Jewish texts against Russian bank VEB while it tries to replace a major law firm seeking to withdraw as counsel amid the invasion of Ukraine.

VEB's lawyers at London-founded Freshfields Bruckhaus Deringer had asked the U.S. Court of Appeals for the D.C. Circuit on March 8 to hold the dispute in abeyance as the bank finds new counsel. VEB also asked the court to pause the case to allow it to take an appeal to the U.S. Supreme Court.

The court declined both requests in a brief order that did not provide any detailed reasoning. Circuit Judges Sri Srinivasan, Judith Rogers and David Sentelle issued the unsigned order.

A Freshfields spokesperson did not immediately comment on the order. No new attorney has appeared for the bank.

Freshfields was among a group of global law firms that said they were taking steps to end work for some Russian clients after the country's late-February invasion of Ukraine.

In the underlying court case, a Washington, D.C., federal judge punished Russia in 2013 for its refusal to return thousands of sacred letters and manuscripts to Agudas Chasidei Chabad of United States, the umbrella organization of the Hasidic Chabad-Lubavitch group.

U.S. District Judge Royce Lamberth held Russia in contempt and imposed a $50,000 daily fine. Russia earlier participated in the litigation but withdrew in 2009. The judgment now exceeds $150 million.

Plaintiffs in U.S. court cases can pursue a defendant's assets in instances where a party has refused to comply with a judgment.

VEB was not a party to the underlying lawsuit. The bank is contesting a subpoena from Chabad that seeks information about the location and identity of VEB assets that might be seized to satisfy the judgment against Russia.

Chabad's lawyers at Rothwell, Figg, Ernst & Manbeck had opposed Freshfields' effort to pause the case.

"VEB was doing everything that it possibly could to delay Chabad's case. This order closed that door for VEB," said Rothwell Figg partner Steven Lieberman.

Freshfields had been preparing to ask the U.S. Supreme Court to block Chabad's subpoena. VEB has asserted in court filings in the case that it is immune from the process and reach of the U.S. courts.

The case is Agudas Chasidei Chabad of United States v. Russian Federation, U.S. Court of Appeals for the D.C. Circuit, No. 20-7080.

For plaintiffs: Robert Parker and Steven Lieberman of Rothwell, Figg, Ernst & Manbeck

For VEB.RF: David Livshiz of Freshfields Bruckhaus Deringer

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