RUSSIAN COUNTER-SANCTIONS LAW
Author: Roman Zykov
On 8 June 2020, Russia adopted a new law (the “Law”), which extends exclusive jurisdiction of Russian state courts over certain types of disputes and parties affected by the restrictive measures. The Law titled "The law amending the Arbitrazh Procedure Code for the purposes of protecting private and legal persons from restrictive measures enacted by a state, union of several states, or a public body of a state or a union of several states " The law was enacted as the new Articles 2481 and 2482 of the Commercial (Arbitrazh) Procedure Code.
The Law appears to be a reaction to the anti-Russia sanctions, which were introduced against Russian legal and private persons by several states since 2014. As at today, around 690 Russian companies and individuals have been designated by the US and 120 by the EU. The number of persons has been continuously growing and the sanctions affect the most important fields of the Russian economy.
DEFINITION OF RESTRICTIVE MEASURES
Although the Law is believed to be a reaction to the anti-Russia sanctions, its scope is broader than it may seem. The Law employs a broad definition of “restrictive measures” (меры ограничительного характера), which may be interpreted much wider than just unilateral economic sanctions. For example, visa restrictions, administrative or criminal restrictions, economic and trade quotas, tariffs, and other unilateral restrictions may theoretically fall within the meaning of the “restrictive measures”. Such restrictive measures may originate from a state, union of several states, or a public body of a state or a union of several states. Apparently, the Law does not apply to cases in which the restrictive measures were enacted by international organizations.
TYPES OF DISPUTES
The Law applies to the disputes which may be referred by the parties by virtue of an international treaty or parties’ agreement to the arbitral tribunals and courts located outside Russia. Such cases may concern two groups of disputes.
The first group of disputes involves the parties which have become a subject of the restrictive measures. The Law explains that such party (“Designated Party”) may be:
a) A Russian legal or private person, which was designated under the primary restrictive measures; or
b) A foreign legal person, which was designated under the secondary restrictive measures arising out of the primary restrictive measures against a Russian legal or private person.
The second group of disputes shall arise out of the restrictive measures and involve any parties (Russian or foreign).
EXCLUSIVE JURISDICTION OF RUSSIAN COURTS
The Law provides that the parties may refer their disputes to the Russian state commercial court (Arbitrazh court) at the domicile of the private or legal person. For example, if a party is located in Moscow, then the Arbitrazh (Commercial) Court of Moscow will have exclusive jurisdiction.
The Law however limits the scenarios when a case may fall within the exclusive jurisdiction of Russian courts. The parties may refer a dispute to the Russian court only if:
a) There is no case with the same subject matter and between the same parties already pending before a foreign commercial arbitral tribunal or a foreign state court;
b) The dispute resolution agreement between the parties to refer their disputes to a foreign commercial arbitral tribunal or a foreign state court is unenforceable because one of the parties’ access to justice is denied due to the restrictive measures.
RECOGNITION AND ENFORCEMENT OF AWARDS
If a Designated Party acted as claimant, or if acted as respondent it did not object to a foreign arbitration or litigation while it was pending, or if the Designated Party did not seek an anti-suit injunction from the Russian court against the initiation or continuation of a foreign arbitration or litigation, such foreign arbitral award or foreign court judgment shall be generally enforceable.
ANTI-SUIT INJUNCTIONS
The Law also provides for a new procedural instrument, which was not previously available under Russian law, i.e. anti-suit injunctions. A Designated Person which has become or may become a party to a foreign arbitration or litigation may seek Russian court to issue a prohibition to the other party to initiate or continue a foreign arbitration or litigation procedure. The applications are tried by a sole judge, whose ruling may be appealed to a cassation instance within one month. The judge may also award compensation to the Designated Party for breach of the anti-suit injunction in the amount not exceeding the amount of relief sought from a foreign arbitration or litigation tribunal and legal costs.
On 8 June 2020, Russia adopted a new law (the “Law”), which extends exclusive jurisdiction of Russian state courts over certain types of disputes and parties affected by the restrictive measures. The Law titled "The law amending the Arbitrazh Procedure Code for the purposes of protecting private and legal persons from restrictive measures enacted by a state, union of several states, or a public body of a state or a union of several states " The law was enacted as the new Articles 2481 and 2482 of the Commercial (Arbitrazh) Procedure Code.
The Law appears to be a reaction to the anti-Russia sanctions, which were introduced against Russian legal and private persons by several states since 2014. As at today, around 690 Russian companies and individuals have been designated by the US and 120 by the EU. The number of persons has been continuously growing and the sanctions affect the most important fields of the Russian economy.
DEFINITION OF RESTRICTIVE MEASURES
Although the Law is believed to be a reaction to the anti-Russia sanctions, its scope is broader than it may seem. The Law employs a broad definition of “restrictive measures” (меры ограничительного характера), which may be interpreted much wider than just unilateral economic sanctions. For example, visa restrictions, administrative or criminal restrictions, economic and trade quotas, tariffs, and other unilateral restrictions may theoretically fall within the meaning of the “restrictive measures”. Such restrictive measures may originate from a state, union of several states, or a public body of a state or a union of several states. Apparently, the Law does not apply to cases in which the restrictive measures were enacted by international organizations.
TYPES OF DISPUTES
The Law applies to the disputes which may be referred by the parties by virtue of an international treaty or parties’ agreement to the arbitral tribunals and courts located outside Russia. Such cases may concern two groups of disputes.
The first group of disputes involves the parties which have become a subject of the restrictive measures. The Law explains that such party (“Designated Party”) may be:
a) A Russian legal or private person, which was designated under the primary restrictive measures; or
b) A foreign legal person, which was designated under the secondary restrictive measures arising out of the primary restrictive measures against a Russian legal or private person.
The second group of disputes shall arise out of the restrictive measures and involve any parties (Russian or foreign).
EXCLUSIVE JURISDICTION OF RUSSIAN COURTS
The Law provides that the parties may refer their disputes to the Russian state commercial court (Arbitrazh court) at the domicile of the private or legal person. For example, if a party is located in Moscow, then the Arbitrazh (Commercial) Court of Moscow will have exclusive jurisdiction.
The Law however limits the scenarios when a case may fall within the exclusive jurisdiction of Russian courts. The parties may refer a dispute to the Russian court only if:
a) There is no case with the same subject matter and between the same parties already pending before a foreign commercial arbitral tribunal or a foreign state court;
b) The dispute resolution agreement between the parties to refer their disputes to a foreign commercial arbitral tribunal or a foreign state court is unenforceable because one of the parties’ access to justice is denied due to the restrictive measures.
RECOGNITION AND ENFORCEMENT OF AWARDS
If a Designated Party acted as claimant, or if acted as respondent it did not object to a foreign arbitration or litigation while it was pending, or if the Designated Party did not seek an anti-suit injunction from the Russian court against the initiation or continuation of a foreign arbitration or litigation, such foreign arbitral award or foreign court judgment shall be generally enforceable.
ANTI-SUIT INJUNCTIONS
The Law also provides for a new procedural instrument, which was not previously available under Russian law, i.e. anti-suit injunctions. A Designated Person which has become or may become a party to a foreign arbitration or litigation may seek Russian court to issue a prohibition to the other party to initiate or continue a foreign arbitration or litigation procedure. The applications are tried by a sole judge, whose ruling may be appealed to a cassation instance within one month. The judge may also award compensation to the Designated Party for breach of the anti-suit injunction in the amount not exceeding the amount of relief sought from a foreign arbitration or litigation tribunal and legal costs.