The 2013 RAA Arbitration Market Survey revealed that the Russia-related arbitration market was dominated by four arbitration centers – ICC, SCC, LCIA, and ICAC Rus.

However, when several states imposed anti-Russia sanctions in 2014, it appeared that the findings of the 2013 RAA Arbitration Market Survey no longer reflected the actual situation, because the sanctions imposed various restrictions on the leading Russian companies, which commonly resolve their international business disputes through arbitration. As a result, these companies were forced to reconsider their dispute resolution habits. Most of the leading Russian companies thoroughly studied the sanctions regulations and reviewed their internal dispute resolution policies and strategies. More importantly, companies also revisited their dispute resolution policies to minimize the sanctions-related risks. The companies started looking for alternatives to the traditional arbitration centers, seats, and applicable laws.

In 2016, the RAA conducted a survey on the impact of unilateral sanctions on international arbitration among 160 respondents from various jurisdictions. Although the 2016 RAA Sanctions Survey confirmed that more Russian companies started to consider various alternatives, such as the Asian arbitration centers and ad hoc arbitration, the preferences of Russian companies in arbitration mainly remained the same – the ICC, SCC, LCIA arbitration rules; English, Swedish and Swiss material laws, and London, Stockholm, Geneva, and Paris as the seats of arbitration.However, during recent years the RAA has been receiving feedback from its members about existing arbitration practices in sanctions-related cases. There was a common feeling that the preferences have been gradually changing because of the dissatisfaction with the existing situation.

That has led to the new 2022 RAA Sanctions Survey conducted among 182 respondents from various jurisdictions. The new survey demonstrates that the users of arbitration have been actively gathering and exchanging knowledge about sanctions-related practices in arbitration and have since adapted their preferences for the arbitration rules, seats, and applicable laws.
Although the study mainly aimed at establishing preferences of the Russian users, it was also open to the respondents from other states (Users), including the states targeted by unilateral restrictive measures (URM), such as Belarus, China, Cuba, Iran, Lebanon, Libya, Mexico, Venezuela, and other states.We have asked 10 questions to understand the three key issues:

1. Whether URM have impeded arbitrations. We asked Users to answer whether URM affected:

a. AIs case management;
b. payments of arbitration costs;
c. candidates’ decisions to act as arbitrators;
d. tribunals’ decisions on the merits.

2. Whether URM impacted Users’ preferences in arbitration. We asked Users to:

a. choose between institutional arbitration and ad hoc arbitration;
b. rank preferable arbitration rules, arbitration seats, and substantive laws;
3. Whether Users considered URM related risks in their dispute resolution clauses by:
a. agreeing to use URM free currencies;
b. agreeing to ad hoc arbitration and UNCITRAL Arbitration Rules;c. selecting neutral substantive laws and seats.

1. Users reported that there had been cases where URM affected arbitral proceedings, in particular:
a. 21% of Users reported that they are aware of situations where AIs have refused to administer cases due to unilateral sanctions;
b. 38,5% of Users noted that they are aware of cases where AIs (or their banks) were unable to accept payments from Sanctioned Persons;
c. 18% of Users reported that they are aware of cases in which arbitrators refused to act (to accept appointment or to act when the issue of sanctions arose while arbitration was pending).
d. 20% of Users reported that they are aware of cases in which the arbitral tribunals rejected claims or reduced quantum because of URM restrictions.

2. To mitigate URM-related risks, Users strive to delocalize arbitration:
a. 21,5% consider using ad hoc arbitration instead of institutional arbitration;
b. 69% use neutral currencies for payments under contracts;
c. 14% consider using lex mercatoria to avoid the nexus to national legal regimes.

One of the takeaways of the 2022 RAA Sanctions Survey is that Asian and ad hoc arbitration have become viable options that are not treated as an exotic choice anymore. Asian arbitration rules, law, and seat improved their positions in the ranking. Comparing the two RAA Sanctions Surveys of 2016 and 2022, SIAC has moved from 6th to 4th position and HKIAC from 9th to 7th position among the preferred arbitration rules. Similarly, Singapore has moved from 7th to 2d position and Hong Kong from 8th to 7th as the seats of arbitration. Singaporean law has moved from 6th to 4th place as the preferred substantive law.
If such dynamics continue, the arbitration market may evidence a tangible shift of Russia-related and sanctions-related arbitration cases to Asia.

It is well established that arbitration has become a preferred method for the resolution of international business disputes. Although there is no doubt that it will remain the same, the question is whether the international arbitration community will be able to adapt to the changing circumstances, such as a rapid expansion of national sanctions programs.
A possible way forward would be to exclude arbitration from the scope of sanctions. It is in the best interest of the arbitration community to spark the discussion and promote a sanctions-free arbitration to guarantee access to justice as a basic principle of the rule of law.

It is time to recall that international arbitration is a delocalized system with a large degree of contractual procedural freedom. The arbitration centers and tribunals’ mandates are not based on national laws or ever-changing political preferences, but they are based on parties’ consent to arbitrate.

The 2016 and 2022 RAA Sanctions Surveys have been conducted in the hope that the findings will add to the global discussion on the subject and will promote international arbitration.