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When sanctions are involved, Russian courts can now assert jurisdiction over disputes that parties intended to resolve in international arbitration. This article explains what the latest Russian Supreme Court rulings mean for Asian businesses.

Russian disputes shift to courts

Before 2020, most high-profile disputes involving Russian entities and individuals were resolved abroad. The London Court of International Arbitration served as the preeminent hub, favoured for its sophisticated arbitration framework. The International Chamber of Commerce and Stockholm Chamber of Commerce were also preferred venues. The use of Asian arbitral institutions, such as the CIETAC, HKIAC and SIAC, was limited by Russian parties.

But in 2020, amendments to the Russian Commercial Procedure Code (CPC) conferred exclusive jurisdiction of Russian courts over disputes involving sanctioned Russian individuals and legal entities.

Russian courts override foreign arbitration

Under the CPC, exclusive jurisdiction of Russian Arbitrazh (commercial) courts covers disputes:

1. 1. Involving parties subject to Russia-related sanctions; or
   2. Arising from such sanctions and involve Russian and/or foreign parties (even if no party is sanctioned).

Such parties may apply to the Russian court for:

1. 1. Resolution of the dispute on its merits; and/or
   2. An anti-suit injunction.

The key provision for Asian companies is that these remedies may be used despite any arbitration/prorogation agreements if sanctions make recourse to a foreign forum – whether the CIETAC, HKIAC, SHIAC or SIAC – “impossible to perform”.

Russian courts interpret this broadly. The CPC provides that an anti-suit injunction may order a party to discontinue ongoing foreign proceedings or prohibit the other party from initiating new proceedings, and courts may support anti-suit injunction with financial penalty plus legal costs.

Sanctions expand Russian court jurisdiction

• 1. In Uraltransmash v PESA, the mere existence of sanctions sufficed to show that a Russian party faced restricted access to justice abroad.
  2. In NS Bank v NK Lukoil, Russian courts decreed exclusive jurisdiction over a dispute between two Russian entities, even though non-sanctioned, because of “sanctions-related background”. Explaining the likely impartiality of a foreign forum, they stated: “A predetermined finding that the imposition of restrictive measures is lawful may influence the resolution of the dispute on its merits”.
  3. Hong Kong has not imposed sanctions on Russia. Also, the HKIAC, unlike the CIETAC or SIAC, was the first overseas institution recognised by the Russian Ministry of Justice as a permanent arbitral institution in 2019, underlining its respected reputation in Russian arbitration. Despite this, the court, in VTB v OWH, granted VTB’s anti-suit injunction on the grounds that sanctioned status per se restricted access to justice in arbitration seated in Hong Kong.

Russian affiliate co-defendant jurisdiction trap

Under the CPC, a claim against several co-defendants must be filed with the court at the location of one of them. If a claimant directs its claim not only to a foreign but also to a Russian co-defendant, such claim may also be lodged in Russia.

This manoeuvre was first tested in 2023, in SMR v Citibank Companies, when a claimant sued US bank Citibank and its Russian affiliate, KB Citibank, claiming the former breached contractual duties due to sanctions, and both banks inflicted non-contractual damage acting in co-operation in the same group.

The courts initially granted the claim, but the Russian Supreme Court subsequently cancelled the judgments and sent the case for retrial.

In October 2025, the Supreme Court reviewed a similar case, SMR v JP Morgan Companies, claiming recovery of non-contractual damages against UK bank JP Morgan Securities and its Russian affiliate KB JP Morgan Bank International.

The Supreme Court ruled mere affiliation insufficient for joint liability. The claimant had to prove the UK bank de facto ran direct business in Russia and used its Russian affiliate to avoid liability risk.

Russian risks persist; arbitration limits

While the trend toward jurisdictional expansion remains, the Russian Supreme Court is now tightening rules on the merits of joint liability. For Asian groups with Russian subsidiaries, the risk of being dragged into Russian courts still exists – but the “jurisdictional hook” alone is no longer enough.

For arbitration clauses, the HKIAC remains the best option, but it may be overridden if the Russian counterparty is sanctioned. The CIETAC has been successfully tested in at least one case. SIAC is officially designated an “unfriendly” jurisdiction and should be avoided for contracts with Russian counterparties.

Georgy Daneliya and Natalia Kozyrenko are partners, and Igor Sokolov is a senior associate at SL LEGAL in Russia

SL LEGAL
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