The Ticking Time Bomb Has Exploded: Russian Anti-sanctions Law and the Avoidance of Arbitration - ARIA - Vol. 34, No. 2

Noah Rubins KC has over two decades of experience in investment and commercial arbitration, advising and representing clients as counsel in over 120 arbitrations, and serving as arbitrator in almost 50 cases. He is the author of dozens of publications on international arbitration, including four books. Originally admitted in New York and Texas, Mr. Rubins is a barrister and King’s Counsel in England and Wales and admitted to the Paris bar. He speaks English, French and Russian fluently, and has a working knowledge of Spanish and Hebrew.

Maxim Pyrkov has a broad practice advising and representing international clients in complex corporate, banking, construction and general commercial arbitrations in LCIA, ICC, SCC, SIAC, VIAC, ICSID and ICAC across various sectors, as well as investment arbitrations. He also has extensive experience in domestic and cross-border commercial and regulatory litigation, as well as asset-tracing and sanctions. He speaks Russian and English.

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Originally from The American Review of International Arbitration (ARIA)

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I. INTRODUCTION

Since February 2022, political pundits have debated the extent to which the Russian Federation and its highest echelons of power anticipated the intense and immediate world-wide reaction to the Russia-Ukraine conflict. Given the relatively muted response after the Crimean action in 2014, many observers suggest Mr. Putin and his inner circle were surprised by the massive wave of United States, United Kingdom and European Union-led sanctions that swiftly followed the recent Russian military action in 2022. However, modifications to the legislative framework, including in relation to arbitration, which were taken well in advance, suggest the contrary.

In 2020, Russia adopted provisions establishing the exclusive jurisdiction of Russian courts regarding parties affected by sanctions, irrespective of any contractual dispute resolution clauses that would otherwise direct disputes to foreign courts or international arbitral tribunals. Moreover, the new provisions entitled the affected party to seek an injunction from Russian courts to prevent the adversary from initiating or maintaining foreign proceedings, under threat of potentially draconian penalties. Sanctions imposed after the Crimean action in 2014 were comparatively light and had remained relatively stable in the years since. As a result, the international legal community has wondered what triggered such an unusual step this time around, and whether the new provisions would be widely invoked. Indeed, there were a few examples of the “anti-sanction” rules applied in practice for nearly two years. However, since the Russia-Ukraine conflict began in February 2022, Russian parties (and courts) have been using these measures both frequently and expansively, creating an additional unpredictable factor in Russia-related disputes.