Support for international arbitration against Russian counterparties

Risks and Limitations in Arbitration with Russian Parties

Conducting an arbitration proceeding against a Russian company involves a number of legal and practical risks related to existing restrictions.

Since 2020, Articles 248.1 and 248.2 of the Arbitration Procedural Code of the Russian Federation have been introduced, establishing the exclusive jurisdiction of Russian arbitration courts for disputes involving Russian entities subject to sanctions or in cases where the case cannot or is difficult to be heard in a foreign jurisdiction. In such circumstances, a Russian court may declare the arbitration clause inapplicable and prohibit the continuation of the proceedings in international arbitration.

Furthermore, Russian courts may issue an order prohibiting the continuation of the dispute in international arbitration (anti-suit injunction). In the event of non-compliance, compensation can be demanded or measures can be applied to the assets of the foreign party within Russia.

These provisions apply in the presence of foreign economic sanctions and in cases involving specific industry sectors (energy, logistics, IT, defense contracts). As a result, even when an arbitration clause formally exists, there is a risk of it being blocked in practice.

Foreign companies must assess the risks of challenging the arbitration clause in Russia in advance and develop alternative strategies for protecting their interests.

Conducting International Arbitration Against a Russian Counterparty

Preparation for arbitration begins with an analysis of the arbitration clause, applicable law, and the procedure for dispute resolution stipulated by the contract. A legal position is formed, taking into account the specific circumstances and potential jurisdictional objections.

Evidence includes contractual documents, business correspondence, payment confirmations, acts, technical conclusions, and other materials. If necessary, experts from the relevant industry are engaged.

When choosing an arbitration institution, the rules, language of proceedings, composition of arbitrators, and location of arbitration are evaluated. Typical venues for disputes involving Russian companies include ICC, LCIA, SCC, SIAC, VIAC, HKIAC, and PCA.

Under Articles 248.1–248.2 of the Arbitration Procedural Code and sanctions restrictions, parallel proceedings in Russian courts may be possible. This requires preparing procedural defense against claims of invalidating the arbitration clause and presenting the position on the international arbitration’s jurisdictional competence.

Recognition and Enforcement of Arbitration Awards Against Russian Companies

The recognition and enforcement of foreign arbitration awards in Russia are governed by the 1958 New York Convention, to which the Russian Federation is a party. The basis for enforcement is a petition to the arbitration court at the location of the debtor or their assets. The petition must include the original award, the arbitration agreement, and their certified translations.

A Russian court may refuse to recognize an arbitration award on a limited number of grounds outlined in Article V of the Convention and Article 36 of Federal Law No. 382-FZ. These include improper notification of the party, violation of Russian public policy, exceeding the arbitrator’s jurisdiction, or the inadmissibility of the dispute for arbitration.

In cases involving a Russian party under sanctions or claims invoking Article 248.1 of the Arbitration Procedural Code, additional objections may arise aimed at blocking enforcement.

If the debtor’s assets are located outside of Russia, the award may be enforced in another jurisdiction, based on its domestic law and international commitments. In the EU, UK, UAE, Switzerland, and a number of other countries, the practice of enforcing awards against Russian companies remains stable, but may be supplemented with measures to protect against Russian court blockages.

Services of KDpartners

The specialists at KDpartners assist in international arbitration disputes against Russian counterparties at all stages. We develop arbitration strategies taking into account applicable law, analyze arbitration clauses, prepare legal positions, and assemble evidence.

We represent clients in cooperation with local partners in the jurisdictions of arbitration institutions, including ICC (Paris), LCIA (London), SCC (Stockholm), SIAC (Singapore), VIAC (Vienna), HKIAC (Hong Kong), PCA (The Hague), and also at ICAC under the Russian Chamber of Commerce and Industry (Moscow).

We coordinate the filing of statements, participate in proceedings, ensure the preparation of procedural and supplementary documents, and interact with arbitrators and secretariats.

An additional area of focus is supporting the recognition and enforcement of arbitration awards within Russia and abroad, including preparing procedural motions, representing clients in Russian courts, and liaising with enforcement authorities.

Services are provided in Russian, English, and Chinese.