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25.06.2024 — How will New EU Sanctions Package Affect Litigation Strategies between Russian and European Companies?

On 24 June 2024, the European Union adopted the fourteenth package of sanctions against Russia. Among other measures, this package introduces two measures aimed at protection for EU operators in light of Russia’s counter-sanctions regulations.

A transaction ban has been imposed on those Russian companies that transfer disputes to Russian courts despite the arbitration agreement. This measure responds to Russia’s amendment to Article 248.1 of the Russian Commercial Procedure Code adopted in 2020 that allows Russian parties to transfer the dispute to Russian state courts and not to enforce arbitration agreement if foreign sanctions were imposed on a Russian party that impair the party’s access to justice. Russian courts take the position that the imposition of foreign sanctions on a Russian party is by itself sufficient for the Russian courts to assume exclusive jurisdiction.

EU individuals and companies are allowed to file claims in EU courts for the recovery of compensation from Russian individuals and entities that caused damages to them. That includes damages suffered in connection with a contract or a transaction the performance of which was affected by the EU sanctions implementation.

EU persons may also claim the recovery of damages caused as a result of Russia’s measures taken on the basis of Presidential Decree No. 302 dated 25 April 2023 “On temporary management of certain assets”, which introduced temporary management by Rosimushchestvo (the Russian Federal Agency for State Assets Management) in respect of certain EU companies.

In both cases, the compensation could be claimed under the condition that the EU national or company concerned does not have effective access to remedies, for example under the relevant bilateral investment treaty.