Sanctions have affected the way in which international arbitration is conducted, and in particular where Russian parties are involved. The response to sanctions in Russia has led to complications in the validity of arbitration agreements, and in enforcing arbitration awards. Sanctions may also affect the availability of arbitrators, as licences or exemptions may be required for arbitrators to receive fees from parties subject to asset freezes.
Overview of the impact of sanctions on arbitration
The Queen Mary University of London / White & Case survey on International Arbitration 2025 found that geopolitical or economic sanctions caused 30% of respondents to the survey to choose a different arbitral seat in their arbitration. Often Dubai, Hong Kong, and Singapore were preferred seats for disputes impacted by sanctions.
The survey also found that 27% of respondents to the survey faced administrative and payment challenges. 25% encountered difficulties in finding counsel for the dispute, or arbitrators that were able to participate.
How sanctions on Russia have affected arbitration
After Russia’s invasion of Ukraine in 2022, Russia became the most sanctioned country in the world.
In June 2020, Russia changed its laws to introduce a new provision into Article 248 of the Russian Arbitrazh Code (APC) to establish the exclusive jurisdiction of the Russian state in disputes involving Russian-sanctioned parties.
In other words, any dispute involving a sanctioned Russian entity or individual can be referred to the Russian commercial courts, regardless of whether or not there was a previously-agreed arbitration clause, or other jurisdiction clause in the contract.
This has meant that Russian courts have refused to enforce arbitration clauses in some disputes. For example, in Case No A56-26171/2024, the Commercial Court of St Petersburg and the Leningrad Region refused to enforce an HKIAC arbitration clause and upheld claims by RusChemAlliance against German Linde’s group of companies.
The rise of anti-suit injunctions
Russian sanctioned parties have taken advantage of Article 248 of the APC to seek a tactical advantage in disputes and refer disputes to the Russian courts. In response, their opposing parties have applied for injunctive relief from other national courts (generally at the seat of arbitration).
One particularly notable dispute was A40-92702/2025 in which the Commercial Court of Moscow issued a series of unprecedented interim anti-arbitration injunctions. The injunctions purported to restrain a number of parties from continuing an Energy Charter Treaty (ECT) arbitration against the Russian Federation. The parties that it sought to restrain were:
- a German investor,
- its legal counsel,
- the Permanent Court of Arbitration (PCA) as the administering arbitral institution, and
- the arbitrators.
The decision marked the first time that a Russian court has restrained either foreign arbitrators, a party's counsel or an arbitral institution from proceeding with an arbitration. It demonstrates the wide-ranging nature of the Russian court’s perceived powers.
There are various examples of Russian courts applying article 248.2 of the APC to issue anti-arbitration injunctions against claimant parties. Now it appears to extend to claimant’s counsel and the arbitrators.
Opposing the enforcement of awards
Russian courts have relied on Article 248.1 of Russia’s APC when refusing to enforce foreign arbitral awards. The Russian position is that restrictive measures against Russia are politically motivated, and they create justifiable doubts over a fair trial of the dispute in foreign jurisdictions.
On that basis, an award from a foreign-seated arbitration is deemed to be unenforceable because the Russian-sanctioned entity did not get a fair hearing (so the argument goes).
Penalties for continuing with anti-suit injunctions
There have been occasions in which anti-suit injunctions granted by the UK courts have been discharged in response to Russian court rulings.
In UniCredit Bank GmbH v RusChemAlliance LLC [2025] EWCA Civ 999, the Russian court held that the bank should take all measures within its control to cancel the anti-suit injunction, or pay €250 million in penalties. See our article on this here.
The bank had requested the injunction, which was granted by the Court of Appeal and upheld by the Supreme Court. However, it later applied to discharge the injunction in order to avoid the risk of a €250 million penalty threatened by the Russian courts.
Providing legal services to sanctioned parties
In the UK, those representing sanctioned individuals cannot accept payment for legal services (due to asset freezes), unless they have received a specific license to do so, or are covered by a general licence.
The sanctions regime may include exemptions and carve outs for lawyers to provide services without prior authorisation. However, if it doesn’t then the party’s legal representation, and the appointed arbitrator(s) will need a licence or an authorisation before they can accept payments from individuals or entities who are subject to asset freezes.
Arbitrators should be told at the outset if one or both of the parties is subject to sanctions. They then have time to obtain any licences or authorisations that they may require to act and to receive payment.
