Published 19 December 2023
(Minor revision 21/12/2023) In June 2020, Federal law No.171-FZ on the exclusive jurisdiction of Russian state courts in disputes involving sanctioned parties was adopted. The introduction of the law was justified by the government by the need to protect the rights of Russian companies and individuals, on whom the US, EU and the UK have imposed a range of sanctions in connection with the Russian annexation of the Crimea and Russia’s involvement in a military conflict in Ukraine since 2014.
This law provides that disputes involving parties subject to international sanctions may only be heard by Russian state courts, regardless of any existing arbitration or foreign jurisdiction agreements between the parties.
The law applies to disputes involving Russian individuals and legal entities that are subject to sanctions imposed by the European Union, the United States and other Western countries, as well as to disputes arising from transactions or agreements involving such parties.
The adoption of this law has led to Russian courts, including the Supreme Court of the Russian Federation in the case of Uraltransmash v Pesa Bydgoszcz (No. A60-36897/2020), holding arbitration and foreign jurisdiction agreements involving Russian sanctioned parties unenforceable and allowing the Russian courts to exercise jurisdiction over disputes with foreign parties, despite existing arbitration/foreign jurisdiction agreements.
This article explores recent judgments of the Russian courts, as well as whether the Russian sanctioned parties’ access to justice has been impeded or whether they can continue to participate in foreign arbitration and court proceedings, and be represented by qualified counsel in those jurisdictions, subject to them obtaining licenses from relevant authorities to pay counsel fees.
This paper will be part of the TDM Special Issue on "Sanctions and International Arbitration: Impact on Substantive and Procedural Issues". More information here https://www.transnational-dispute-management.com/news.asp?key=1960