Freshfields Bruckhaus Deringer is advising JP Morgan on an $875m (£660m) lawsuit brought by the Nigerian Government in a dispute over payments relating to a disputed oil deal.

In documents filed in the High Court, the Federal Republic of Nigeria alleges that JP Morgan was "grossly negligent" and that $801.5m in government funds was "improperly dispersed".

The funds were sent to a company in which Dan Etete, a former minister of petroleum in the Nigerian Government, held a controlling interest. According to the lawsuit, Etete has previous convictions in a French court for money laundering.

Freshfields is advising JPMorgan on the dispute with a team led by financial services litigation partner Sarah Parkes.

The Nigerian Government is being represented by Anthony Igbiniyesu, a senior solicitor-advocate at northwest London firm Verdant Solicitors, working alongside Nigerian firm Johnson Solicitors, with Andrew Mitchell QC and Richard Power of Fountain Court Chambers instructed as counsel.

The dispute dates back to 1998, when the Federal Government of Nigeria awarded oil exploitation rights a newly established company named Malabu, in which Etete held a controlling interest.

This award was rescinded the following year following a change in government, prompting a series of disputes over the ownership of the rights in the ensuing years.

In 2011, a deal was agreed that would see Shell and Italian oil company Eni acquire the rights, with payments made via an escrow account managed by JP Morgan.

However, the Nigerian Government claims that the account was used to disperse money "to persons who had no lawful right to the said sums" and that this was carried out without the appropriate due diligence.

The claim alleges that JPMorgan "failed in its duty of care" and should have noted that the transfer was an attempt to "misappropriate" funds from the state.

The Nigerian Government has brought a separate money laundering charge against Etete, which is still pending.

Freshfields previously advised JPMorgan in 2012 when the bank sued the former boss of trader Bruno Iksil – better known as the 'London Whale' – after the bank incurred losses of $6bn (£3.7bn) based on transactions he had made.

Freshfields and Verdant declined to comment.