By: Nicholas Gould, Partner; Alex Atherton, Trainee Solicitor; and Jake Marouane, Paralegal
One of the many consequences of geopolitical tensions surrounding the Russian Federation has been the impact on jurisdictional challenges arising in disputes between Russian and non-Russian contracting parties, as well as difficulties surrounding enforcement of arbitral orders or awards. This has been especially exemplified in a 2024 decision from the Russian Supreme Court[1] which sought to restrict the enforcement of international arbitration awards against parties based in Russia if the arbitrators providing the award are based in a politically “unfriendly state”. The ruling is based on the presumption that countries imposing sanctions on Russia carry a political bias which extends to determinations made in the course of dispute resolution.
The decision in Tecnimont SpA v LLC Eurochem North-West-2[2] demonstrates that English courts are keen to maintain a finding of jurisdiction and enforce the orders of an arbitral tribunal provided such jurisdiction can be established. In this dispute, a Russian company was restrained from pursuing proceedings in Russia in breach of English arbitration agreements. The Russian legislature has increased the basis on which Russian courts can claim jurisdiction in international disputes and while English courts are more likely to uphold and enforce an arbitral order or award, the difficulty in ultimately enforcing any such decision in the Russian courts remains.
Difficulties with Russian courts finding jurisdiction over international disputes were nothing new in 2024. The consequence of Russian courts finding jurisdiction could mean amplified difficulties in enforcement against Russian parties, as observed in the case leading up to the Russian Supreme Court ruling on 26 July 2024 (the “Ruling”). The Russian legislature, in 2020, amended the Arbitration Procedural Code of the Russian Federation by introducing Articles 248.1 and 248.2 (the “Articles”), granting exclusive jurisdiction to Russian courts regarding disputes over foreign sanctions or sanctioned persons.
This was discussed in Unicredit Bank GmbH v RusChemAlliance LLC,[3] where the Russian court determined it had exclusive jurisdiction over proceedings in Russia pursuant to the Articles when the parties’ contract was governed by English law. The judgment concluded that the English court had and should exercise jurisdiction over this claim and that England was the proper forum for the claim. It was furthermore found that a final injunction to terminate proceedings commenced in Russia was necessary.
The 2024 Ruling followed a case concerning a failure of JSC Novosibirskhlebprodukt (“NHP”) to perform obligations on time due to force majeure and the proposition to C. Thywissen GmbH (“Thywissen”), of an extended delivery date, which led to a rejection of the proposal and the triggering of the arbitration clause. Under the agreement, the seat of arbitration was nominated as London. In 2022, NHP was ordered to compensate Thywissen for damages, interest and arbitration and legal costs. Thywissen applied for the award to be recognised and enforced with the Arbitrazh (Commercial) Court of Novosibirsk. The first instance court granted the application on the basis that the award was not contrary to Russian policy.
In response, NHP applied to the cassation court to challenge the first instance court’s ruling on the basis that it was not properly notified of the proceedings and that the award contravened Russian policy where the arbitrators lacked independence and awarded excessive damages. NHP’s arguments were not accepted by the cassation court and NHP applied to the Supreme Court to overturn the prior decisions. The Supreme Court annulled the prior decisions and referred the case back to the court of first instance for reconsideration with guidance to take into account the considerations of this Ruling.
The Supreme Court’s presumption that the nationality of the arbitrators carried a lack of impartiality and objectivity is important to consider when contemplating disputes with parties based in the Russian Federation. Furthermore, NHP argued that one of the arbitrator’s shared FOSFA committee membership with Thywissen’s representative was found to be insufficiently examined by the lower courts. The Supreme Court also applied the 2020 Articles 248.1 and 248.2 of the Russian Arbitrazh Procedure Court which imposes jurisdiction over cases involving sanctioned entities, allowing injunctions against foreign arbitration or litigation.
The implications of this Ruling should be carefully considered by parties in considering entering into dispute resolution proceedings (or already in dispute proceedings) with entities based in the Russian Federation. While the Supreme Court did not establish the grounds on which a party can rebut the presumption of lack of independence of arbitrators from politically adverse jurisdictions to Russia, there are nevertheless ways in which a party can mitigate the risk of Russian courts dismissing the arbitration proceedings as invalid. It would be especially important to keep closely to all due processes, maintain highly ethical conduct and to maintain accurate records of proceedings in order to evidence a rebuttal to any argument of lack of due process.[4]
Should English courts successfully find jurisdiction over a dispute, they have shown willingness to enforce arbitral orders or awards against Russian parties seeking to establish the Russian courts’ jurisdiction past the 2024 ruling. This does not, however, negate the challenge of ultimately enforcing the orders in Russia.
In Tecnimont SpA v LLC Eurochem North-West-2[5] the claimant sought an order for the Russian party to withdraw the Russian actions and anti-arbitration applications. The Russian party failed to comply with orders from an arbitration tribunal to withdraw the Russian anti-arbitration application and action which were found to be contrary to the arbitration agreement between the parties. The English court granted the order under section 42 of the Arbitration Act, although it was noted that the order may not be enforced in the Russian courts which was not a reason in itself for the order not to be granted by the English court.
The cases identified above highlight the importance of clearly identifying the governing law and jurisdiction for any potential dispute when contracting with parties based in the Russian Federation. The ultimate challenge of enforcing any decision by the English courts nevertheless remains. It is important to mitigate any possible grounds for the Russian courts to dismiss the validity of any arbitration proceedings, orders or awards, especially if members of the tribunal originate from a jurisdiction considered politically unfriendly by the Russian courts.
By complying completely with all due processes in arbitration proceedings and establishing a tribunal with no possible grounds for the Russian courts to establish a lack of impartiality, it would be more difficult for Russian courts to dismiss the validity of any arbitral order or award. The willingness of the Russian courts to establish such grounds highlights that difficulties with enforcement may remain and should be taken into account when contemplating potential disputes.
[1] Case No. A45-19015/2023.
[2] Tecnimont SpA v LLC Eurochem North-West-2 [2025] EWHC 3151 (Comm).
[3] Unicredit Bank GmbH v RusChemAlliance LLC [2024] EWCA Civ 64.
[4] Russian Supreme Court’s Stance Shakes Up Enforcement of Foreign Arbitral Awards | Kluwer Arbitration Blog
[5] Tecnimont SpA v LLC Eurochem North-West-2 [2025] EWHC 3151 (Comm).