International Arbitration (IA by AI)

⚖️ Hong Kong Court of Appeal orders VTB to provide security for costs in dispute with German OWH

PJSC VTB (VTB) is the majority shareholder of German bank OWH SE i.L. (OWH), holding 99.39% of its shares. For many years, the parties entered into numerous foreign exchange and derivatives transactions. Following the events of February 2022 and the imposition of EU sanctions, the German financial regulator prohibited OWH from making any payments to, or disposing of assets in favor of, VTB Group entities in preparation for the bank’s subsequent liquidation.

In April 2022, the parties entered into a termination and settlement agreement (the Agreement), under which OWH undertook to pay VTB more than EUR 112 million. The parties agreed that their relationship would be governed by English law and that all disputes would be resolved by arbitration under the HKIAC Rules.

Despite the arbitration clause, VTB obtained a judgment in Russia in its favor pursuant to Article 248.1 of the Commercial Procedure Code of the Russian Federation and recovered more than EUR 19 million by enforcing against OWH’s assets in Russia. VTB also obtained an anti-suit injunction under Article 248.2 of the Commercial Procedure Code. As it is known, the dispute between VTB and OWH even reached the Constitutional Court of the Russian Federation, which, in a refusal decision, emphasized that Articles 248.1 and 248.2 of the Commercial Procedure Code should not be interpreted expansively.

In response to the breach of the arbitration agreement, OWH applied to the Hong Kong Court of First Instance seeking an anti-suit injunction. VTB opposed OWH’s application, relying on Article 19 of the Basic Law of Hong Kong, which excludes disputes concerning international relations and foreign policy from the jurisdiction of Hong Kong courts. Nevertheless, the court ruled in favor of OWH and granted the anti-suit injunction (the Judgment).

VTB appealed the Judgment to the Hong Kong Court of Appeal. In the appellate proceedings, OWH applied for security for costs in the amount of HKD 1.3 million, relying on the following circumstances:

👀Recovering costs from a Russian party would involve various difficulties, as there is no reciprocal arrangement between Russia and Hong Kong for the recognition of judicial decisions concerning costs;

👀VTB had previously failed to comply with orders of the Hong Kong courts.

VTB opposed OWH’s application on the following grounds:

🔘EU sanctions and VTB’s status created insurmountable legal and practical barriers to depositing funds with the Hong Kong court;

🔘OWH could use VTB assets held by OWH and frozen as a result of sanctions as security for costs by way of set-off;

🔘The appeal has strong prospects of success because the interpretation of Article 19 of the Basic Law, on which VTB had relied before the court of first instance, substantially engaged matters of public interest.

The Hong Kong Court of Appeal upheld OWH’s position, reaching the following conclusions:

👀Although sanctioned persons face difficulties in making payments (“there are difficulties to overcome in doing so”), payment remains possible: VTB had already made substantial payments to Hong Kong to cover arbitration costs at the HKIAC, so this argument was unfounded;

👀As the parties are separate legal entities, OWH’s assets belong to OWH itself, not to VTB, notwithstanding VTB’s status as OWH’s majority shareholder;

👀OWH is in liquidation, and the liquidation is governed by German law, under which set-off of a claim against a sanctioned person is prohibited;

👀VTB’s appeal is “arguable at best” but the prospects of success on appeal could not justify refusing OWH’s application.

The Hong Kong Court of Appeal ordered VTB to provide security for costs in the amount of HKD 1.3 million.

📎The judgment is available at the link.

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⚖️ The Hague Court declined to set aside the NAI award, although it found that the arbitrator should have disclosed his business relationship with a party to the dispute

The employee held the position of Chief Executive Officer at MetaCorp and held shares in the claimant pursuant to a share valuation agreement (the “Agreement”). Following his retirement, the employee was required to transfer the shares to MetaCorp, while MetaCorp was required to pay the employee compensation in return.

A dispute arose over the date for valuing the shares for the purposes of calculating the employee’s compensation. The employee argued that the relevant date was the end of the financial year preceding the termination of his employment, while MetaCorp maintained that it should be the end of the year in which the employment actually terminated.

The employee commenced arbitration under the Netherlands Arbitration Institute (NAI) Rules pursuant to the Agreement’s arbitration clause. The three-member tribunal comprised an arbitrator appointed by the employee from Curaçao, an arbitrator appointed by MetaCorp from the Netherlands, and a Dutch chair. The tribunal ultimately upheld the employee’s claims.

MetaCorp applied to the Hague Court of Appeal, as the court at the seat of arbitration, seeking to set aside the arbitral award on the following grounds:

👀Since 2001, the arbitrator from Curaçao had maintained business relationships with the employee who had appointed him. The employee had regularly retained the arbitrator to provide advice on matters, including matters relating to MetaCorp;

👀The arbitral tribunal awarded interest from a date that had not been pleaded by either party. Consequently, the award came as a “surprise” to the parties.

The Court agreed with MetaCorp and noted that the arbitrator should have disclosed his business relationship with the employee and should have understood that MetaCorp could have had legitimate doubts as to his impartiality and independence. However, the Court did not consider this sufficient grounds for setting aside the award for the following reasons:

🔘An arbitral award may be set aside on grounds of an arbitrator’s lack of impartiality only where the arbitrator was in fact biased, or where the doubts as to his impartiality are so serious that it would be unreasonable to require the unsuccessful party to accept the award;

🔘The contacts between MetaCorp and the arbitrator from Curaçao were not close. First, the arbitrator had participated in the employee’s advisory matters only occasionally and had not devoted significant time to them. Second, most of the advice had been provided a long time ago and was not relevant. Third, the employee had merely acted as the contact person in those matters, whereas MetaCorp itself was the actual client;

🔘The award was rendered unanimously by all three arbitrators, meaning that no particular influence of the arbitrator from Curaçao on the outcome of the dispute could be established;

🔘MetaCorp had not challenged the arbitrator during the arbitration proceedings, although it had had the opportunity to do so, and had therefore lost its right to object;

🔘In light of the above, in the present case the doubts as to the arbitrator’s impartiality and independence were not sufficiently serious to warrant setting aside the award.

As regards MetaCorp’s arguments concerning interest, the Court held that the arbitral award had not come as a “surprise” to the parties. During the arbitration, the parties and the arbitral tribunal had discussed the issue. Accordingly, the parties could have expected that the arbitral tribunal might determine the commencement date for the accrual of interest in accordance with the applicable law. In line with established practice, the arbitral tribunal determined the commencement date for the accrual of interest as the date on which the arbitration was commenced.

Accordingly, the Hague Court of Appeal refused to set aside the NAI arbitral award.

📎The court decision is available here.

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⚖️ Scottish court held that adjudication is a procedure with strict time limits, and therefore the adjudicator is not obliged to give the parties additional time to make submissions on individual issues

Entexol (the claimant), as subcontractor, and Sked (the respondent), as main contractor, entered into a contract for works on a Scottish power grid project (the contract).

The contract provided for the resolution of disputes arising thereunder by way of adjudication. During the performance of the contract, a dispute arose between the parties.

The claimant claimed the respondent to pay for the works carried out. In turn, the respondent filed a counterclaim for compensation of costs, on the ground that the claimant had missed the deadlines for completing the works. According to the respondent, the claimant failed to complete the works by a specific contractual completion date, which was set out in a direction sent to the claimant by email.

The adjudicator rejected the respondent's arguments, holding that time was not of the essence for the performance of the contract ("time was at large").

According to the adjudicator, there was no evidence that the claimant had agreed to any completion date. In particular, the email relied upon by the respondent could not be regarded as a binding direction on the completion date in the absence of the claimant's consent. A binding agreement on the completion date could not be imposed unilaterally by the respondent's direction.

As a result, under the adjudicator's decision, the respondent was ordered to pay the claimant approximately £114,000.

The claimant applied to the Court of Session in Scotland for enforcement of the adjudicator's decision. The respondent opposed enforcement, relying on breaches of the principles of natural justice. According to the respondent, the adjudicator had made a finding that time was at large when the parties had not raised that issue before him. As a result, the respondent was deprived of the opportunity to explain what it considered to be a "reasonable time" in the absence of a fixed date, while the adjudicator had acted "on a frolic of his own".

The judge held that the adjudicator's decision had been made without any breach, noting the following circumstances:

🔘 The adjudicator did not go beyond the issues submitted to him. He merely examined the respondent's argument about a fixed date and, with reasons, rejected it. The adjudicator's statement that time was not of the essence was a logical consequence of the respondent's failure to prove the existence of a fixed date;

🔘 Contrary to the respondent's position, the adjudicator was not obliged to invite the parties to make submissions on the completion date. The judge recalled that adjudication is an accelerated dispute resolution procedure with strict time limits and does not impose an obligation on the adjudicator to give the parties an opportunity to comment further on individual issues. Otherwise, the respondent could have abused its procedural rights.

The judge thus granted the application for enforcement of the adjudicator's decision.

📎 The Scottish court's judgment in English is available here.

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☝️ SIAC and FGV Chamber of Mediation and Arbitration sign Memorandum of Understanding

The Memorandum aims to strengthen the position of international arbitration as the preferred method for resolving cross‑border disputes.

Under the Memorandum, the parties agreed to jointly organise events on international arbitration – by offline, hybrid, and online formats – to be held in Singapore and Brazil. Leading representatives of the arbitration community from both countries will be invited to participate.

The signing ceremony took place on 3 September 2026 in Rio de Janeiro. SIAC was represented by Ms. Adriana Uson, Director and Head of the North and South America division, and the FGV Chamber was represented by Ms. Juliana Loss, Executive Director.

📎 The press release is available here.

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⚖️ The Moscow Circuit Arbitrazh (Commercial) Court confirms the jurisdiction of Russian commercial courts to hear an application to set aside an arbitral award against an individual guarantor of a German bankrupt company

German clothing manufacturer Ahlers AG (the Company) and its affiliated German entities had for many years supplied goods to Russian retailer Jeans Symphony LLC under import and supply agreements entered into in 2015.

In 2018, the parties recorded the Russian retailer’s outstanding debt in an Acknowledgment of Debt and Deferral Agreement. Performance of the contractual obligations was secured by guarantees provided by the beneficial owners of the German manufacturer’s business. One of the guarantors was a Russian citizen permanently residing in the United States (the applicant). The applicant also held a 10% interest in the Company’s Russian subsidiary, Ahlers Rus LLC. The guarantee issued by the applicant contained an arbitration clause in favor of the ICAC at the Chamber of Commerce and Industry of the Russian Federation.

In 2023, the Company was declared bankrupt in Germany due to adverse market conditions and the COVID-19 pandemic. The Bielefeld Local Court appointed Dr. Biner Bähr, a partner at the German office of White & Case, as insolvency administrator.

Following the failure to pay the debt under the guarantee, the insolvency administrator commenced arbitration before the ICAC at the Chamber of Commerce and Industry of the Russian Federation. In February 2026, the arbitral tribunal rendered an award in favor of the foreign creditor, ordering the applicant to pay more than EUR 500,000 in principal, interest at 7.5% per annum, as well as arbitration fees and legal costs exceeding EUR 83,000. Notably, two of the three arbitrators were nationals of “unfriendly” states.

The applicant applied to the Moscow Commercial Court to set aside the ICAC award. However, the court returned the application, finding that a dispute involving an individual who was not registered as an individual entrepreneur did not fall within the jurisdiction of Russian commercial courts.

The applicant appealed the first-instance ruling to the Moscow District Commercial Court. The insolvency administrator of the Company also supported the cassation appeal.

The Moscow Circuit Arbitrazh (Commercial) Court disagreed with the first-instance court and adopted the following legal position:

🔘Russian commercial courts have jurisdiction over disputes arising from business activities;

🔘Since the parties’ disputed relationship is commercial in nature and involves a foreign element, an application to set aside the arbitral award falls within the jurisdiction of the commercial courts. The applicant’s lack of individual entrepreneur status and permanent residence in the United States should not prevent the case from being heard by such courts.

🔘At the same time, proceedings concerning issuance of a writ of execution for enforcement of the ICAC award were pending before the Moscow Arbitrazh (Commercial) Court (Case No. A40-171524/2026), having been initiated by the insolvency administrator. The district court recommended that the first-instance court consider consolidating the two cases.

The courts did not examine the fact that the arbitration had been commenced by the insolvency administrator of a foreign company or that the dispute was connected with its insolvency proceedings.

Ultimately, the circuit court remitted the case to the first-instance court for reconsideration.

📎The judicial act is available at the link.

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⚖️ Another indicator of a permanent arbitral institution without the status of a PAI – a "turnkey" enforcer of arbitral awards

LLC "Bizaps" (the applicant), as the service provider, and LLC "Aller Group" (the interested party), as the customer, entered into a service agreement containing an alternative dispute resolution clause (the contract). Under the clause, the claimant could choose between a state court and an ad hoc arbitral tribunal with the well‑known arbitrator A.V. Kravtsov 👀

Relying on an alleged debt under the contract, the applicant initiated arbitration. A.V. Kravtsov granted the claims in full ☕ The applicant then applied to the Commercial Court of the City of the city of Moscow for a writ of execution on Kravtsov's award.

The Commercial Court of the City of the city of Moscow refused to issue the writ – a frequent outcome with Kravtsov's awards.

The court established, as a matter of course, that the arbitral tribunal exhibited objective characteristics of a permanent arbitral institution without the status of a Permanent Arbitration Institution (PAI).

The court relied, as usual, on the fact that signs of a permanent arbitral tribunal are evident from the website of the tribunal, established in 2010, with sections such as "Chairman of the Court", "Presidium", "Expert Council", and "Fees". Notably, the website offers, on a fee‑based basis, services for facilitating the enforcement of awards, including those rendered by Kravtsov himself – effectively a "turnkey" arbitration award.

Furthermore, during the arbitral proceedings, the interested party acknowledged the claims in full without any substantive objections. The court noted that this fact, in itself, does not disprove the existence of a debt, but neither does it allow the court to compensate for the lack of substantive scrutiny of the issue by the arbitral tribunal.

The Commercial Court of the City of the city of Moscow also took into account that the applicant in this case was represented by an individual who serially represents various unrelated applicants in proceedings for enforcement of Kravtsov's awards.

Thus, the court held that enforcement of the arbitral award would contravene the Russian public policy and dismissed the application for a writ of execution.

📎 The ruling is available here.

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⚖️ Hong Kong Court of First Instance Set Aside an Arbitral Award Ordering the Termination of Court Proceedings, Finding That the Counterparty Had Not Exercised Due Diligence When Signing the Settlement Agreement

A Hong Kong-based developer (the "Developer") and a mainland Chinese holding company (the "Holding Company") entered into a cooperation agreement in 2012 for the development of land in the Fuzhou district (the "Agreement").

In 2021, the Holding Company filed a claim in the Hong Kong Court of First Instance against the Developer, alleging breach of the Agreement. The parties subsequently entered into a settlement agreement, which provided for a repayment schedule to the Holding Company, in exchange for which the Holding Company undertook to discontinue the court proceedings. The settlement agreement also contained an arbitration clause in favor of the Beijing Arbitration Commission and provided for the application of PRC law. On the Holding Company's side, the settlement agreement was signed by a person "having the ability to effectively direct the company's activities," as the Developer later stated.

Despite the settlement agreement, the Holding Company did not withdraw its claim in the Hong Kong court. In view of this, the Developer initiated arbitration and obtained an award requiring the Holding Company to terminate the Hong Kong proceedings and pay the Developer RMB 15 million in damages. In reaching this decision, the arbitral tribunal concluded that the settlement agreement had been signed on behalf of the Holding Company by an unauthorized person. Nevertheless, the agreement was binding on the Holding Company because the Developer had relied on the apparent authority of that person.

The Developer applied to the Hong Kong court for recognition and enforcement of the arbitral award. The respondent objected, arguing that the arbitration agreement was invalid due to collusion between the Developer and the signatory on the respondent's side, and that recognition of the award in Hong Kong would be contrary to public policy.

The Hong Kong Court of First Instance upheld the Holding Company's position, basing its decision on the following grounds:

🔘 Since the respondent had not challenged the tribunal's jurisdiction during the arbitration proceedings, it had lost the right to object to the validity of the arbitration clause on which the award was based;

🔘 At the same time, even if the settlement agreement were invalid, the arbitration agreement would still survive by virtue of the principle of separability, and therefore, contrary to the respondent's argument, the arbitration agreement was valid;

🔘 However, enforcement of the arbitral award would be contrary to Hong Kong public policy if the claimant knew, or ought to have known, that the settlement agreement containing the arbitration clause had been signed by an unauthorized representative of the Holding Company;

🔘 A reasonable person in the Developer's position would have at least conducted a basic check of the signatory's authority on the respondent's side — especially since the Developer's representative who signed the settlement agreement was a lawyer by training and held the position of Risk Management Director. Consequently, the Developer had no reasonable basis to rely on the apparent authority of the Holding Company's representative;

🔘 For this reason, recognition and enforcement of the arbitral award, which was based on a settlement agreement signed in the absence of the Holding Company's genuine consent, would be contrary to Hong Kong public policy — notwithstanding the arbitral tribunal's finding that under PRC law the Developer could rely on the signatory's apparent authority.

In the end, the Hong Kong Court of First Instance refused the claimant's application for recognition and enforcement of the arbitral award.

📎 The full text of the judgment is available here. An analysis of the judgment is available here.

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⚖️ The Commercial Court of the Moscow Region overturned a ruling terminating proceedings on enforcement of an ICAC at the RF CCI award against a Ukrainian debtor, relying on Article 248.1 of the Russian Commercial Procedure Code

Earlier, we reported that the Commercial Court of the city of Moscow had terminated proceedings on the issuance of a writ of execution for enforcement of an award rendered by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC at the RF CCI) in favor of JSC "NORMETIMPEX" (the applicant) against JSC "Zaporozhtransformator" (the interested party). The court terminated the proceedings on the grounds that the claims under the ICAC award had already been included in the register of creditors' claims of Ukraine on the basis of a judicial act of the Kyiv Court of Appeal. The court held that, under such circumstances, the applicant was not entitled to initiate a separate enforcement proceeding.

The applicant filed a cassation appeal with the Commercial Court of the Moscow District.

The cassation court disagreed with the court of first instance and upheld the applicant's arguments. The court noted that the ICAC award cannot be enforced in Ukraine by virtue of paragraph 5 of Article 4 of Ukrainian Law No. 2116-IX of March 3, 2022 "On the Basic Principles of Compulsory Seizure in Ukraine of Property Objects Owned by the Russian Federation." This act established the compulsory seizure of Russian property in Ukraine and declared the debts of Ukrainian organizations (both state and private) to be extinguished.

The court also recognized the exclusive jurisdiction of Russian courts, citing Article 248.1 of the Russian Commercial Procedure Code, since the basis for this dispute is the restrictive measures imposed by a foreign state (Ukraine) against Russian persons.

📎 The full text of the judgment is available here.

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☝️International Bar Association Publishes Recommendations on Third-Party Participation in Investment Arbitration

The Investment Arbitration Subcommittee of the International Bar Association (IBA) has published a report and recommendations on the participation of third parties (i.e., persons who are not direct parties to the dispute) in investment arbitration.

The report's findings are based on a study of 135 investment arbitrations conducted up to December 11, 2024.

🔘 A key trend is the significant increase in third-party participation applications over the past two decades, particularly between 2015 and 2019.

The report notes that third-party involvement can enhance the legitimacy and transparency of the process, as well as assist the arbitral tribunal in addressing issues affecting the public interest.

The report outlines two main areas for further work:

1️⃣ Developing clearer procedural requirements for third-party participation in the process – possibly including guidance on the limits of the arbitral tribunal's authority to invite third parties on its own initiative to submit applications to join the proceedings;

2️⃣ Developing provisions on procedural safeguards (in particular, confidentiality measures) to prevent third parties from disrupting the course of the proceedings.

Based on the study's findings, the IBA concluded that arbitrators generally have the authority to accept third-party applications, even if the relevant investment treaty or rules do not expressly provide for such a possibility. However, there is no uniform approach to how this authority is exercised, particularly with regard to disclosure of information and whether arbitrators may invite third parties to submit applications ex officio.

The IBA does not provide clear recommendations on the allocation of costs when a third party participates in the proceedings, acknowledging that arbitral practice remains inconsistent.

At the same time, the IBA considers that the approach to this issue may vary depending on whether the third party joined the proceedings voluntarily or was invited to participate by the arbitral tribunal or a party.

📎 The full press release is available here.

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Recipe for Failure When Seeking to Set Aside an Arbitral Award:
1️⃣ Hope that the arbitrators will figure out on their own to request evidence;
2️⃣ File to set aside the award;
3️⃣ Voluntarily comply with the award on your own while the set-aside proceedings are ongoing

LLC "Sfera" (the applicant) filed a petition with the Commercial Court of the city of Moscow to set aside an award rendered by the Arbitral Institution at the Russian Union of Mechanical Engineers. The award had recovered from JSC "Tupolev" (the interested party) in favor of the applicant: RUB 20,000 in damages, RUB 1,613.25 in arbitration fees, and RUB 20,000 in legal representative costs — with the remainder of the claim dismissed.

Among other things, the applicant argued that it had been deprived of the right to a fair hearing because the arbitral tribunal had not requested necessary evidence on its own.

After examining the applicant's arguments, the Commercial Court of the city of Moscow denied the petition and upheld the arbitral award.

Referring to the arbitral institution's rules, the court stated that the arbitral tribunal has the right, but not the obligation, to invite the parties to submit additional evidence; nor is it required to obtain evidence on its own initiative if the parties themselves have not shown due diligence. The arbitral case file contained no evidence that the applicant had requested the tribunal to obtain evidence or to hold an oral hearing for that purpose.

On the contrary, the applicant neither claimed that it was unable to obtain the additional materials independently nor asked the arbitral tribunal for assistance in securing them.

The Commercial Court of the city of Moscow noted that denying a claim for lack of proof does not violate the right to judicial protection — it is simply the result of the allocation of the burden of proof, which is consistent with the principles of adversarial proceedings and party autonomy.

The court specifically emphasized that the arbitral tribunal had examined the submitted documents, assessed them, and provided specific reasons why they were deemed insufficient.

The court also took into account that the interested party had voluntarily complied with the award during the set-aside proceedings. Therefore, the court concluded that the applicant's rights in the satisfied portion had already been restored, and challenging the award as to the remainder effectively sought a substantive review of the tribunal's findings — which is impermissible.

📎 The full text of the judicial act is available here.

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⚖️ An arbitral tribunal’s failure to take into account a set-off claim does not constitute grounds for setting aside the award where the applicable rules require a set-off to be asserted only by way of a counterclaim

LLC “GAMMA” (the Applicant), as the supplier, and JSC “NIKIMT-Atomstroy” (the Interested Party), as the purchaser, entered into a contract for the supply of generator units to the construction site of the El Dabaa Nuclear Power Plant in the Arab Republic of Egypt (the Contract). The Contract contained an arbitration clause providing for arbitration by the Arbitration Center at the Russian Union of Industrialists and Entrepreneurs (RSPP).

Due to the delayed payment for the goods, the Applicant commenced arbitration pursuant to the arbitration clause, seeking payment from the Interested Party of approximately RUB 20 million in outstanding amounts for the goods supplied, contractual penalties, and arbitration costs.

In the course of the arbitration, the Interested Party asserted a set-off of mutual claims arising from the Applicant’s failure to deliver the full quantity of goods and its delivery of incomplete equipment.

Under the Contract, the Applicant was required to pay the Interested Party a contractual penalty equal to 10% of the value of the incomplete goods.

The Interested Party stated that it had previously sent the Applicant a claim demanding payment of the contractual penalty, but the Applicant had failed to satisfy the claim.

The arbitral tribunal granted the Applicant’s claims in full. At the same time, the arbitrators rejected the Interested Party’s set-off argument, stating that under the applicable arbitration rules, a set-off had to be asserted in the form of a counterclaim, whereas the Interested Party had not filed a counterclaim.

As the Interested Party failed to comply with the arbitral award voluntarily, the Applicant applied to the Arbitrazh Court of the Republic of Bashkortostan for the issuance of a writ of execution for the compulsory enforcement of the arbitral award.

The Interested Party filed a counter-application seeking partial setting aside of the arbitral award on the grounds that the arbitral tribunal had refused to consider its set-off claim. According to the Interested Party, enforcement of an arbitral award rendered without taking into account the set-off/netting of mutual obligations would violate the public policy of the Russian Federation, the principles of proportionality of civil liability, and the Interested Party’s right to a comprehensive and objective consideration of the case.

The Arbitrazh Court of the Republic of Bashkortostan rejected the Interested Party’s arguments.

🔘The court held that the Interested Party’s arguments were aimed at having the arbitral award reviewed on the merits, which is impermissible.

🔘The Interested Party had failed to provide evidence of the exceptional statutory grounds required for setting aside an arbitral award.

Accordingly, the court issued a writ of execution for the compulsory enforcement of the arbitral award.

📎The full text of the ruling is available here.

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⚖️ St. Petersburg and Leningrad Region Arbitrazh (Commercial) Court stresses that the Lugovoy Law cannot be applied automatically or expansively, leaving Finnish company’s claim against Russian entity without consideration

Finnish company TM System Finland Oy (claimant), as supplier, and Russian JSC ILIM Group (respondent), as purchaser, entered into a supply and services agreement as part of a project to construct a pulp and paper mill in Ust-Ilimsk. The agreement contained an arbitration clause providing for arbitration under the ICC Rules, with Geneva as the seat of arbitration.

Despite the arbitration clause, the claimant brought an action before the St Petersburg Commercial Court and Leningrad Region Arbitrazh (Commercial) Court. In support of the Russian state court’s jurisdiction, the claimant argued the following:

👀The arbitration clause was unenforceable because a dispute involving Russian parties could not be heard fairly and impartially in a foreign state that had imposed restrictive measures;

👀The parties’ contractual relationship had a close connection with Russia, and therefore the Russian courts had jurisdiction to hear the dispute.

The court rejected the claimant’s arguments, relying on the following considerations:

🔘Exclusive jurisdiction of a Russian court may arise where “the legal fact of the imposition of restrictive measures against Russian citizens and Russian legal entities is the direct cause of the dispute” and the Russian party is prevented from accessing justice in the foreign state”;

🔘In light of the Constitutional Court of the Russian Federation’s guidance in Rulings No. 999-O of 29 April 2025 and No. 2615-O of 14 October 2025, Article 248.1 of the Commercial Procedure Code of the Russian Federation “does not provide for the automatic establishment of exclusive jurisdiction of Russian arbitrazh (commercial) courts”. The court must establish not only the subject matter and parties to the dispute, but also comprehensively examine the circumstances and identify other criteria necessary to ensure that all parties’ right to judicial protection is properly exercised;

🔘The claimant failed to provide evidence of any impediment to access to justice in proceedings conducted pursuant to the arbitration clause;

🔘“Essentially, in its statement of claim, the claimant seeks to establish on behalf of the respondent that the forum selection agreement cannot be performed, relying on restrictive measures imposed by foreign states against Russian companies.” At the same time, Switzerland, the seat of arbitration, had not imposed sanctions on the claimant. The claimant was also not a Russian legal entity, and no other evidence was provided that the restrictive measures directly affected the claimant or its ability to commence arbitration.

Accordingly, the court held that the parties’ arbitration agreement was enforceable and that there were no grounds for establishing exclusive jurisdiction over the dispute. The St Petersburg Commercial Court and Leningrad Region Commercial Court therefore left the Finnish claimant’s action without consideration.

📎The judicial act is available at the link.

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⚖️ At the will of the Russian party, arbitration shall proceed – Russian Court held that a dispute between a Cypriot and a Russian company must be resolved under LMAA Rules

LLC "D.N.K." (the Claimant, shipowner) and LLC "Nizhegorodskaya Logisticheskaya Kompaniya" (the Respondent, charterer) entered into 15 standard bareboat charter agreements.

The agreements contained arbitration clauses in favor of arbitration under the rules of the London Maritime Arbitrators Association (LMAA).

Notwithstanding the arbitration clauses provided for in the agreements, the Claimant filed a claim with the Commercial Court of the Nizhny Novgorod Region against the Respondent for recovery of arrears in the amount of RUB 409 million under the charter agreements.

Subsequently, the Claimant assigned its rights under the charter agreements to a Cypriot company – AAS Amur Assets Shipping Company Limited, on the basis of which the court effected a procedural substitution of the Claimant.

The Respondent filed a motion to dismiss the claim without consideration, citing the parties' agreement to refer disputes to arbitration under the rules of the London Maritime Arbitrators Association (LMAA).

In response, the Claimant argued that the arbitration clauses had not been concluded. In support thereof, the Claimant referred to the fact that the parties had used the BARECON‑2001 form for bareboat charters but had not specified in Box 35 (dispute resolution) which option they had chosen. Box 35 provides for the following options:

🔘 Option (a) – dispute resolution in accordance with the rules of the London Maritime Arbitrators Association (LMAA);

🔘 Option (b) – dispute resolution in accordance with the rules of the Society of Maritime Arbitrators (SMA);

🔘 Option (c) – dispute resolution in arbitration at a place agreed by the parties and in accordance with the procedures applicable at that place.

In addition, in the Claimant's view, the dispute could not be referred to arbitration due to the imposition of restrictive measures against Russia, which, as the Claimant alleged, restrict its access to justice in proceedings under LMAA rules in London.

The court rejected the Claimant's objections, relying on the following circumstances:

👀 In violation of the principle of interpretation in favor of the validity of arbitration agreements (ad favorem validitatis), the Claimant failed to provide evidence that any interpretation of the arbitration clause would render it invalid and/or unenforceable (para. 26 of the Plenum of the Supreme Court of the Russian Federation Resolution No. 53 of 10 December 2019);

👀 The parties waived options (b) and (c) in Box 35 of the BARECON‑2001 form on dispute resolution, since in the text of the agreements themselves they elected option (a) at the time of signing, i.e., they agreed to arbitration under LMAA rules. Moreover, the parties did not specify in the agreements any "other arbitration institutions or courts" other than LMAA, so their choice is unambiguous;

👀 The Claimant is registered in Cyprus. At the same time, it did not provide evidence that the restrictive measures impede its access to justice or the consideration of the dispute in the arbitration agreed upon by the parties under LMAA rules. Nor is there evidence that restrictive measures have been imposed on the parties to the dispute.

Thus, the court dismissed the Cypriot company's claim against the Russian Respondent without consideration, based on the Respondent's reliance on the arbitration clauses in the agreements.

📎 The ruling can be found here.

According to the case file, today the ruling was upheld by the court of appeal. At the time of publication of this post, the decision had not yet been published.

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⚖️ When "fraud" committed by filing an application for enforcement of an arbitral award, fabricated arbitrator challenges, and a Russian Ministry of Justice warning did not help: scandals, intrigues, and investigations in the Arbitrazh Court of the Tomsk Region

LLC "Gazprom Methanol" (the Claimant), as the customer, and LLC "Tomskneftegazproekt" (the Interested Party), as the contractor, entered into a contract for design and survey work. The contract contained an arbitration clause in favor of the Arbitration Center under the Autonomous Non-Profit Organization "NIRA TEK" (ANO "NIRA TEK")

The Claimant initiated arbitration proceedings at the Arbitration Center under ANO "NIRA TEK" seeking recovery of penalties, registration and arbitration fees, and termination of the contract. The arbitral tribunal rendered a decision fully satisfying the Claimant's claims.

The Claimant applied to the Commercial Court of the Tomsk Region for a writ of execution to enforce the arbitral award. The Interested Party objected to the issuance of the writ, citing the following circumstances:

👀 The application for a writ of execution constitutes "fraud";

👀 The arbitral tribunal ignored the application for challenge of arbitrators;

👀 The arbitral tribunal also did not consider the Interested Party's application for the application of Article 333 of the Civil Code of the Russian Federation;

👀 The Russian Ministry of Justice issued a warning to the Arbitration Center under ANO "NIRA TEK" regarding violations of the deadlines for notifying the parties of the commencement of arbitration and the formation of the arbitral tribunal;

👀 The information contained in the arbitral award does not correspond to reality.

The Commercial Court of the Tomsk Region rejected the Interested Party's arguments based on the following circumstances of the case:

🔘 The Interested Party did not challenge the arbitrators and did not prove any interest of the arbitral tribunal in the outcome of the dispute. Likewise, it did not submit a written petition for the application of Article 333 of the Civil Code of the Russian Federation. The Interested Party did not file a response to the statement of claim in the arbitration, did not request an extension of the deadline for submitting it, and did not prove that it was unable to submit a response;

🔘 The Interested Party was duly notified of the commencement of the arbitration proceedings and of the scheduled hearing. A representative of the Interested Party participated in the oral hearing via video conference;

🔘 The warning issued by the Russian Ministry of Justice to the Arbitration Center under ANO "NIRA TEK" regarding violations of the deadlines for notifying the parties of the commencement of arbitration and the formation of the arbitral tribunal does not indicate that "the arbitral tribunal prevented the Interested Party from exercising its right to judicial protection";

🔘 Criminal proceedings against the arbitrators were dismissed, which was confirmed by the Interested Party;

🔘 The Interested Party relies on new evidence that was not presented in the arbitration proceedings. Consequently, the Interested Party's arguments are aimed at reassessing the findings of the arbitral tribunal, which is impermissible.

Thus, the Commercial Court of the Tomsk Region issued a writ of execution for the enforcement of the arbitral award.

📎 The court's decision can be accessed via the link.

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⚖️ The Moscow City Court Granted an Application for Recognition and Enforcement of a DIAC Award in Favor of a UAE Company Against a Russian Individual

A contract was concluded between Vitoil Limited Company (the Company), United Kingdom, and SIBET FZCO (the Claimant), UAE. To secure the Company’s obligations under the main contract, a guarantee agreement was also concluded between the Claimant and a Russian individual (the Interested Party). The guarantee agreement contained an arbitration clause in favor of DIAC.

Since the Company failed to perform its obligations, the Claimant initiated DIAC arbitration proceedings against the Interested Party under the guarantee agreement. During the arbitration, the parties entered into a settlement agreement, under which the Interested Party was obliged to make payments to the Claimant in accordance with an approved schedule. In case of non-payment, interest at the rate of 19% per annum was also to accrue on the principal debt. The parties' settlement agreement was approved by a DIAC arbitral award on agreed terms.

The Interested Party paid only part of the established amounts; therefore, the Claimant applied to the Moscow City Court for recognition and enforcement of the DIAC arbitral award.

The Interested Party, in turn, objected to the granting of the application, arguing its position on the following grounds:

👀 The case is not within the jurisdiction of the Moscow City Court, as it should be heard by the Arbitrazh (Commercial) Court of Moscow;

👀 The Claimant did not provide evidence of reciprocity of enforcement of arbitral awards in Russia and the UAE, nor of an international treaty between Russia and the UAE on mutual recognition of arbitral awards, which would make it impossible to recognize the DIAC arbitral award in Russia;

👀 The Interested Party was not properly notified of the commencement of the arbitration proceedings;

👀 The debt arising from the parties' settlement agreement has already been partially repaid by the Interested Party, which prevents the recognition of the arbitral award in Russia.

The Moscow City Court disagreed with the Interested Party’s position and relied on the following circumstances:

🔘 Russia and the UAE are parties to the New York Convention; therefore, the Interested Party’s argument regarding the absence of an international treaty between Russia and the UAE on mutual recognition of arbitral awards is not relevant;

🔘 The mechanism for recognition and enforcement of foreign arbitral awards established by the New York Convention also applies to arbitral awards rendered in disputes between individuals;

🔘 Since the Interested Party is an individual registered in Moscow, the Moscow City Court is the competent court to hear the Claimant's petition;

🔘 The Interested Party was duly notified of the commencement of the arbitration and also actively participated in the process of appointing arbitrators;

🔘 The circumstances of partial repayment of the debt are taken into account to reduce the amount to be recovered but cannot serve as a ground for refusing the application to enforce the arbitral award;

🔘 The Russian Ministry of Justice included DIAC in the register of PDAUs (Permanent Arbitration Institutions) in 2026, which indicates that there are no obstacles to the recognition and enforcement of the arbitral award issued by it.

As a result, the Moscow City Court granted the application for recognition and enforcement of the DIAC arbitral award on the territory of the Russian Federation.

📎 Information on the case can be found at the link.

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☝️ UNCITRAL Adopts Long-Awaited Amendments Expressly Permitting Electronic Arbitration Agreements, Awards and Arbitration Communications by Email

The United Nations Commission on International Trade Law (UNCITRAL), at its 59th annual session in New York, adopted a series of instruments aimed at simplifying the recognition and enforcement of arbitration awards in electronic form and facilitating electronic communications in international commercial arbitration. The package was prepared by Working Group II on Dispute Resolution as part of the project on the digital economy, based on an initiative put forward by Japan in 2024, as well as proposals from Bahrain, Switzerland and Mexico.

The amendments were introduced through “soft law” rather than by amending the New York Convention itself, as such a measure would have required the consent of all 170 States parties to the Convention.

Under the adopted recommendation, the New York Convention should be interpreted so that a national court may not refuse recognition and enforcement of an arbitration award solely on the ground that the award is in electronic form.

The following amendments were also made to the UNCITRAL Model Law:

🔘Article 2 (Definitions): an award in electronic form also constitutes an arbitration award for the purposes of the Model Law;

🔘Article 3 (Exchange of Written Communications): an electronic communication is deemed to have been received if the method of transmission allows the sending of the communication to a designated electronic address to be recorded. An electronic communication is deemed to have been received on the date on which it is sent, while an electronic notice of arbitration is deemed to have been received on the date on which it reaches the addressee’s electronic address;

🔘Article 7 (Arbitration Agreement): the requirement that an arbitration agreement be in writing is satisfied by electronic communication where the information contained in the electronic communication is accessible so as to be usable for subsequent reference;

🔘Article 31 (Form and Contents of an Award): where the parties have expressly agreed, or in the absence of an agreement to the contrary, the parties are deemed to have agreed to the issuance of an arbitration award in electronic form;

🔘Article 35 (Recognition and Enforcement): recognition and enforcement of an arbitration award in electronic form may not be refused solely on the ground that the award was issued in electronic form.

The updated UNCITRAL Notes on Organizing Arbitral Proceedings instruct arbitral tribunals to consult with the parties in advance when issuing an arbitration award in electronic form regarding any specific requirements or restrictions applicable in the jurisdiction where enforcement of the award is contemplated.

UNCITRAL Chair Ann-Jouban Bré emphasized that the amendments “respond to the trend towards the digitalization of trade and build on UNCITRAL’s existing framework for electronic commerce, ensuring interoperability between the existing architecture of arbitration regulation and the digital economy.”

📎The news release is available at the link. The text of the amendments is available at the link.

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⚖️ Court Refused to Recognize Nigerian Court Judgment Issued Nearly 20 Years Ago – A Detailed Look at Nigerian Procedural Law

In 2005, SPAO Ingosstrakh (the interested party) and Tahoma Enterprises Ltd. (the shipowner, Nigeria) entered into a shipowner's civil liability insurance contract, which also covered liability for cargo. Under the terms of the contract, all disputes were to be resolved by the Maritime Arbitration Commission (MAC) at the Chamber of Commerce and Industry of the Russian Federation.

In 2006, Gales Maritime Inc. (charterer) contracted with the shipowner to carry frozen fish to Nigeria for consignee Fiogret Ltd. (applicant). During a port call in Liberia, a fire damaged part of the cargo, leading the applicant to sue the shipowner and charterer in the Federal High Court of Lagos. The interested party was initially a defendant, then removed, and later joined as a third party, enabling enforcement against its assets.

In 2008, the court awarded over USD 1.6 million in damages to the applicant against the shipowner and charterer (Judgment No. 1), and simultaneously awarded the same amount in insurance indemnity against the interested party in favor of the shipowner and charterer (Judgment No. 2). The claim against the interested party was later assigned to the applicant for USD 1.

The applicant applied to the Arbitration Court of the City of Moscow for recognition and enforcement in Russia of Judgment No. 2. Among other things, the applicant stated that the Nigerian court had jurisdiction because the applicant was not a party to the arbitration agreement in favor of the MAC at the Chamber of Commerce and Industry of the Russian Federation. The applicant also argued that the three-year time limit for seeking recognition and enforcement had not expired, since Judgment No. 2 had only become final after the Supreme Court of Nigeria upheld it in 2021.

The interested party objected to the enforcement of the Nigerian judgment, relying inter alia on the following arguments:

👀Recognition of the judgment would be contrary to Russian public policy, because the Nigerian court had heard the dispute despite the arbitration agreement, and Judgment No. 2 had awarded insurance indemnity for a non-insurable event;

👀The interested party had not been properly notified of the proceedings in Nigeria: the courier service's report contained an error in the street name;

👀The time limit for filing the application for recognition of the foreign judgment had already expired, because Judgment No. 2 had become final at the time it was issued in 2008.

During the proceedings, the parties submitted expert opinions on Nigerian law that conflicted with each other. Upon the parties' motion, the court sent a request for an opinion to the Ministry of Justice of Nigeria, whose conclusions on 10 issues were set out in detail in the court's ruling. The opinion contains findings based on the 1958 New York Convention. The opinion has it all: we learned what Fi-Fa means (not football-related), that Nigeria has sheriffs, brushed up on French legal terms, and read American precedents. We are confident that the judge of the Arbitration Court of the City of Moscow is now fully armed to pass an exam on Nigerian procedure.

Having become well-versed in Nigerian law, the Arbitration Court of the City of Moscow rejected the applicant's arguments, relying primarily on the following grounds:

🔘When recognizing a foreign judgment, the court is not entitled to review the merits of the judgment itself, so the interested party's argument about the recovery of insurance indemnity for a non-insurable event was irrelevant;

🔘The Nigerian court had established proper notification of the interested party;

🔘Under Nigerian law, a judgment becomes final immediately upon its issuance, so Judgment No. 2 became final at the time it was issued in 2008, and the time limit for its recognition in Russia had already expired.

As a result, the Arbitration Court of the City of Moscow refused to recognize and enforce the Nigerian court judgment in Russia.

📎The judicial act is available via the link.

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⚖️ Federal Supreme Court of Germany held that sanctions and a no-claims clause do not justify requiring russian party to provide security for costs in violation of the Hague Convention

A Russian company, as buyer (claimant), and a German company, as seller (respondent), entered into a sales agreement for equipment in 2021. The agreement provided for three deliveries and contained an arbitration clause in favor of the ICAC at the Chamber of Commerce and Industry of the Russian Federation. The first two deliveries were duly performed; however, following the events of February 2022, the respondent failed to make the third delivery.

The claimant commenced arbitration under the ICAC Rules. The arbitral tribunal rendered an award in the claimant’s favor, ordering the respondent to pay more than EUR 186,000 plus interest.

The claimant subsequently applied to the Higher Regional Court of Stuttgart for recognition and enforcement of the award in Germany. The court held that, at that time, enforcement of the award would conflict with sanctions imposed on Russian persons and, consequently, with German public policy, and dismissed the application.

In the course of the proceedings, the respondent applied for an order requiring the claimant to provide security for costs by depositing funds with the court. Under German law, such security may be required from a party to proceedings that is not resident in an EU Member State in order to ensure the opposing party’s ability to recover legal costs. However, this rule does not apply where an international treaty provides otherwise.

The issue of security for costs in this case was governed by the 1954 Hague Convention on Civil Procedure (the Convention), to which both Russia and Germany are parties. Article 17 of the Convention prohibits requiring security solely on the ground of a party’s foreign nationality. The court therefore dismissed the respondent’s application.

Disagreeing with the refusal to recognize and enforce the arbitral award, the claimant appealed the first-instance decision to the Federal Supreme Court of Germany.

In the same proceedings before the Federal Supreme Court, the respondent again sought security for costs, relying on the following arguments:

👀Under EU sanctions regulations, courts within the EU are prohibited from granting claims brought by sanctioned persons (the “no-claims clause”);

👀The Convention was inapplicable pursuant to Article 62 of the Vienna Convention on the Law of Treaties (clausula rebus sic stantibus). The Convention should be regarded as having ceased to apply because of a fundamental change of circumstances, in particular the deterioration of Russian-German commercial relations and the alleged unwillingness of Russian courts to provide assistance in cross-border procedural matters.

The Federal Supreme Court rejected both arguments, holding that:

🔘The no-claims clause concerns substantive matters only and does not apply to procedural issues;

🔘The exemption from security for costs is based solely on the existence of an international-law obligation, rather than on the practical enforceability of future judgments;

🔘Neither Germany nor Russia has withdrawn from the Convention, and it therefore remains in force.

Accordingly, the Federal Supreme Court of Germany held that there were no grounds to require the Russian company to provide security for costs on the basis of its nationality.

📎The decision of the Federal Supreme Court of Germany is available at the link.

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⚖️ A Russian Circuit Court confirms that registration of a creditor in an “unfriendly” state does not automatically preclude recognition and enforcement of an arbitral award in its favor

Schlumberger Logelco, Inc., Panama, as contractor (applicant), and Chepakovskoye Oil Production Enterprise LLC, as customer (respondent), entered into an agreement for integrated services, including engineering and technical support for the construction of wells with horizontal completions at the Chepakovskoye field in the Stavropol Region. Under the agreement, if the contractor’s equipment was lost in a well, the customer was required to pay the contractor the full replacement cost of equivalent new equipment. The agreement also contained an arbitration clause in favor of the ICAC at the Chamber of Commerce and Industry of the Russian Federation.

Following an incident that made it impossible to retrieve the equipment from the well, the applicant commenced arbitration. The arbitral tribunal partially upheld the applicant’s claims, ordering the respondent to pay more than RUB 60 million in property losses and USD 30,000 in registration and arbitration fees.

The applicant applied to the Stavropol Region Arbitrazh (Commercial) Court for a writ of execution for compulsory enforcement of the arbitral award. The respondent objected, relying on the following grounds:

👀The applicant’s corporate structure provided for full control by a company incorporated in the British Virgin Islands, a British Overseas Territory included in the list of “unfriendly” states;

👀Enforcement of the award in favor of an applicant controlled by a company from an “unfriendly” jurisdiction would contravene Russian countermeasures and, consequently, Russian public policy.

The court rejected the respondent’s arguments and issued a writ of execution for the award. The respondent appealed the first-instance ruling to the North Caucasus District Commercial Court, reiterating the same arguments.

The North Caucasus Circuit Arbitrazh (Commercial) Court likewise rejected the respondent’s arguments, relying on the following considerations:

🔘The foreign company’s claim was not subject to the special regime governing the performance of obligations to foreign counterparties established by Presidential Decrees;

🔘Enforcement of the arbitral award would be effected through the applicant’s Russian representative office, which was consistent with the applicable countermeasures; and

🔘“The mere fact that the applicant is incorporated in an unfriendly state, in the absence of the transaction in question being subject to restrictions and the applicant being included in the list of legal entities subject to special economic measures, cannot in itself constitute grounds for the debtor (a Russian entity) to refuse to perform its obligations, where the arbitral tribunal has established, and the company has not disputed, the existence of its obligations to the applicant.”

Accordingly, the court found no grounds to set aside the first-instance ruling and dismissed the respondent’s cassation appeal.

📎The judicial act is available at the link.

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⚖️ Svea Court of Appeal refuses Russian party’s challenge to SCC award over untimely evidence

The Russian JSC “Soyuzparfumerprom Mobile Mechanized Column” (claimant), as buyer, and an Italian manufacturer (respondent), as supplier, entered into an agreement for the supply of equipment to Russia (the Agreement). The Agreement contained an arbitration clause providing for arbitration under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).

In early 2022, the respondent informed the claimant that it was unable to perform its contractual obligations due to force majeure and declared the Agreement terminated. Disagreeing with the respondent’s actions, the claimant commenced SCC arbitration. The arbitral tribunal ruled in favor of the respondent, finding that the termination was lawful due to the existence of valid force majeure circumstances.

The claimant applied to the Svea Court of Appeal to set aside the award, arguing that:

👀When interpreting the contractual requirement to deliver the goods through a “reliable carrier,” the tribunal unjustifiably concluded that the carrier was required to guarantee safe delivery even in circumstances involving hostilities risks;

👀The tribunal unlawfully refused to allow the claimant to submit additional evidence and arguments after determining the meaning of that contractual provision;

👀As a result, the tribunal was manifestly biased and the arbitrators therefore lacked authority to adjudicate the dispute.

The Svea Court of Appeal rejected the claimant’s arguments and upheld the award, relying on the following considerations:

🔘The tribunal had carried out an ordinary contractual interpretation based on the evidence submitted and the applicable principles of transport law, and had not attached particular significance to the contractual reference to a “reliable carrier”;

🔘The refusal to admit the claimant’s new evidence was justified because the evidence had been submitted in breach of the procedural timetable;

🔘The tribunal had acted within the permissible scope of its discretion in conducting the arbitration, and the claimant’s allegations of bias were therefore frivolous;

🔘Among other things, the tribunal’s raising the issue of the meaning of the “reliable carrier” provision did not demonstrate any lack of impartiality on the part of the arbitrators;

🔘Each party had been given an opportunity to submit written observations during post-hearing briefs, thereby ensuring procedural equality of the parties.

Accordingly, the Svea Court of Appeal refused the Russian claimant’s application to set aside the arbitral award.

📎An analysis of the court’s decision is available at the link.

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