Unable to litigate against a counterparty in the EU due to sanctions. What should I do?

Circumstances of the Dispute

The partnership agreement concluded between the administrations contained a jurisdiction clause stipulating that disputes under the agreement were to be resolved in a Lithuanian court. Furthermore, the contract was also governed by Lithuanian law.

The matter escalated to litigation, but the Russian municipality could not file a claim in a Lithuanian court. The Russian side utilized the only remaining legal recourse available and applied to a Russian court.

Three lower courts refused to hear the case, citing the jurisdiction and applicable law clauses. Only the Supreme Court was able to assist the claimant.

Position of the Supreme Court

The Supreme Court indicated that since litigation in a foreign court is impossible, the dispute must be considered in a Russian court. In essence, the court recognized the right of access to justice as a more significant value than adherence to an unenforceable contractual provision.

Key Takeaways from the Ruling

Two key conclusions can be drawn from the Ruling:

1. If a contract stipulates that a dispute is to be heard in a foreign court, but sanctions make this impossible, the Russian party has the right to file a claim in a Russian court. The enforcement of the Russian court's decision abroad is a separate issue.

2. The Supreme Court recognized sanctions as a fact that does not require proof. This means that when drafting a statement of claim, there is no need to cite specific acts and restrictions; the court will proceed from the fact that sanctions are commonly known.

Practical Significance

The Supreme Court's decision is controversial but important. It establishes judicial practice that recognizes access to justice in Russia as a priority, even if the contract provides for foreign jurisdiction and foreign governing law.