In early December 2021 the Russian Supreme Court will hear a case addressing the reach of the Russian law that seeks to provide additional guarantees to Russian persons affected by foreign economic sanctions and restrictions. In summary, under the law the affected persons, in certain circumstances, benefit from the rights to resort to Russian courts to resolve their disputes with foreign counterparties as well as to seek, in effect, anti-suit injunctions restraining such counterparties from pursuing proceedings abroad.

The issue before the Supreme Court is whether these remedies are available to the Russian parties (i) only where the economic sanctions introduced in the respective State, in effect, deny the Russian party access to court (e.g. where it is unable to retain counsel), or (ii) where the respective State has introduced any economic sanctions against the relevant Russian party.

In Uraltransmash v PESA Bygdoszcz the respondent, a Polish producer of tram cars agreed to design and supply tram cars to the claimant, with the contract providing that any disputes between the parties to be resolved by a tribunal seated in Stockholm under the SCC Rules. PESA commenced arbitration claiming that the buyer violated the contract. The claimant is subject to EU ‘sectoral’ sanctions that prohibit provision of certain types of financing to the affected parties. Despite the sanctions, the claimant has been able to participate in the arbitration, retain counsel and EU-based experts. Nevertheless, it applied to a Russian court for an anti-arbitration injunction – an order that PESA Bygdoszcz should refrain from pursuing the SCC arbitration.

The amicus curiae brief filed with the Supreme Court by a working group of the Russian Arbitration Association provides a summary of the effect economic sanctions have on arbitration in various key jurisdictions, including England, France, Italy, Switzerland and the US. The text of the amicus is available here (in Russian).

Please do not hesitate to contact Sergey Usoskin at su@usoskinarbitration.com if you have any questions.