Since the start of the war in Ukraine on 24 February 2022, a number of States and regional organizations, including the UK, the US, and the EU, have imposed extensive sanctions on Russia or significantly augmented pre-existing measures established following the 2014 annexation of Crimea. Cited from a detailed report by Hogan Lovells, these sanctions continue to reverberate throughout international trade, provoking considerable reevaluation of business relationships.
Moreover, these constantly evolving sanctions are causing a rise in legal disputes that might necessitate arbitration in international courts. As Russia has been a common place of arbitration for disputes involving CIS (Commonwealth of Independent States) countries, the imposition of recent sanctions prompts questions about the sustenance and operational aspects of these arbitration centers.
Although many arbitrations involving Russian parties are conducted in Russia, a significant number are also heard under the rules of well-known international arbitration institutions, such as the ICC, the LCIA or the SCC. The sanctions can affect these arbitrations, particularly where issues arise around payment of legal fees, enforcement of judgments, or the logistics of holding hearings. It is important that all stakeholders, lawyers, and arbitration institutions continue to monitor the developments and assess the arising legal and practical implications accordingly.
These developments might push stakeholders to look for alternate jurisdictions for arbitration. Among several potential implications, it can be anticipated that the sanctions would likely make it more challenging to enforce an award in Russia following any successful arbitration claim.
The sanctions against Russia, combined with the conflict’s unpredictability, underscore the necessity for corporations and law firms alike to maintain a rigorous monitoring process, evaluate continually the legal implications of the sanctions and formulate strategies to minimize the potential adverse consequences.
The evolving situation bears close watch, as it invites reevaluation of arbitration proceedings and push legal professionals to navigate through new waters in international law.