Validity of Arbitration Clauses in Russia Since 2022
Mikhail Samoylov, September 9, 2025
Since 1993, Russian arbitration law has supported arbitration and required courts to uphold and enforce arbitration clauses. However, in response to Western sanctions imposed on Russian individuals and entities, the legislation was amended, granting Russian courts exclusive jurisdiction over disputes involving sanctioned persons. These amendments may undermine arbitration by potentially invalidating arbitration clauses.
This post explores the direct tension between these two conflicting approaches and the recent Russian case law on the validity of arbitration clauses, as well as the factors that may undermine them.
Arbitration-Friendly vs Hostile Provisions
Russian law pro-arbitration provisions include Article 8 of the 1993 Russian law on International Commercial Arbitration, and Article 148(1)(5) of the Russian Arbitrazh Procedural Code, which both use a wording almost identical to Article II(3) of the New York Convention.
Article 8 provides that “A court […] shall refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed.” In turn, Article 148(1)(5) states: “A court shall leave a statement of claim without consideration if [...] there is an [arbitration] agreement [...], except in cases where the [state] court determines that the agreement is invalid, has ceased to be in force, or cannot be enforced.” The effect of these provisions is the same: a referral to arbitration.
Until 2022, these provisions were effectively applied. In a notable case, Russian courts discontinued proceedings initiated by a prosecutor challenging a credit agreement between a foreign bank and a state entity, on the basis of the existence an ad hoc arbitration clause in the underlying contract (Case No. A21-2499/2003).
Amendments to the Russian Arbitrazh Procedural Code came into force on June 8, 2020 and introduced Articles 248(1) and 248(2) of the Russian Arbitrazh Procedural Code:
While the application of pro-arbitration provisions leads to the recognition of the arbitration clause, the application of Articles 248(1) and 248(2) renders the arbitration agreement ineffective. Until 2022, there were only a small number of cases in which Article 248(1) or Article 248(2) were applied—fewer than 25 in total. However, since 2022, the number of such cases has skyrocketed, exceeding 500 and continuing to grow.
Situations Where Russian Courts are Likely to Consider an Arbitration Clause as Inoperative
Under Article 248(1), Russian courts may disregard arbitration clauses if (i) the dispute stems from unilateral sanctions and/or (ii) one party is subject to such sanctions.
In thePESA case (Case No. A60-36897/2020), the Russian Supreme Court held that sanctions alone prevent access to justice abroad, justifying exclusive jurisdiction of Russian courts under Article 248(1), despite the existence of an arbitration or litigation clause. This approach was subsequently reaffirmed by the Russian Supreme Court in 2022 (Case No. A21-10438/2022).
These rulings show a low threshold under Article 248(1): any official proof of sanctions is sufficient to invoke Article 248(1).
Sanctioned parties often face hurdles in arbitration, including legal representation, fee payment, and attendance of the hearing. While English courts see these as “not a practical impediment of such a nature or degree as to amount to a denial of access to justice” (Barclays Bank PLC v VEB.RF), Russian courts in PESA and other cases treat them as denial of justice, triggering that Russian courts exercise jurisdiction despite the existence of an arbitration clause.
In the Lukoil case (Case No. А40-214726/2023), despite no sanctioned parties and a clause providing for arbitration under the auspices of the London Court of International Arbitration (LCIA), the Supreme Court granted exclusive jurisdiction to a Russian court, as the subject matter of the dispute arose from unilateral sanctions. Interestingly, the Russian Supreme Court focused on Article 248(1) and remained silent about Article 148(1)(5) of the Russian Arbitrazh Procedural Code. This approach was reaffirmed in the recent Sibur case (Case No. А40-116513/2024).
These cases confirm that if sanctions hinder contract performance, Russian courts will likely override arbitration clauses—even if the claimant is not sanctioned.
Situations Where Russian Courts are Likely to Enforce an Arbitration Clause
On the contrary, Russian courts are likely to apply the above-mentioned pro-arbitration provisions when (i) the subject matter of the dispute is not tied to sanctions, and (ii) neither party is on a sanctions list.
In case No. А60-63977/2024, the 17th Arbitrazh Appeal Court referred two Russian companies to arbitration before the LCIA, as the dispute was not related to sanctions, and neither party was included on any sanctions list. References to difficulties in accessing arbitration were disregarded. This case is part of a series of disputes (cases No. А40-259705/2024, А56-111059/2024, and А60-63977/2024) where Russian courts upheld the arbitration clauses and referred the parties to LCIA arbitration (cases No. А40-259705/2024, А56-111059/2024, and А60-63977/2024).
Foreign parties not under sanctions cannot invoke Article 248(1). In case No. A66-19469/2024, involving German and Russian parties, the courts concluded that Article 248(1) was not applicable, as the claimant, a German company, was not affected by sanctions. Consequently, the parties were referred to a German court. In case No. A35-6432/2024, a Polish claimant was referred to LCIA arbitration, with the court noting that Russian parties generally face no access difficulties and citing a General Licence issued by the Office of Financial Sanctions Implementation (OFSI) allowing arbitration payments.
However, Russian courts departed from this interpretation in at least one case. In case No. А12-22543/2022, a Chinese claimant—neither sanctioned nor clearly affected by sanctions—successfully relied on Article 248(1), despite the dispute not stemming from sanctions. The Russian respondent’s motion to refer the case to LCIA was denied.
These cases may ultimately be brought before the Russian Supreme Court, which would clarify the boundaries between Article 248(1) of the Russian Arbitrazh Procedural Code and other pro-arbitration provisions such as Article 8 of the Russian Law on International Commercial Arbitration and Article 148(1)(5) of the Arbitrazh Procedural Code.
Relevance of the Location of the Seat in a ‘Friendly’ or ‘Unfriendly’ State
It has been suggested that an arbitration agreement will be upheld provided that the seat of arbitration is in a ‘friendly’ jurisdiction. In practice, the location of the seat does not affect the validity of the arbitration clause in any way. For example, Russian courts have disregarded Hong Kong International Arbitration Centre (HKIAC) clauses—even though Hong Kong is considered as a 'friendly' jurisdiction—in cases No. А56-129797/2022, А56-103943/2023 and А56-84760/2023, due to one party being under sanctions.
Thus, Russian courts may override arbitration clauses if (i) the dispute involves sanctions, and/or (ii) a party is subject to sanctions, even if the arbitration seat is located in a ‘friendly’ State.
It is worth noting that in cases No. А56-103943/2023 and А56-84760/2023, the losing party challenged Articles 248(1) and 248(2) before the Constitutional Court, arguing that these provisions contradict the Russian Constitution and should not apply when the seat of arbitration is located in a ‘friendly’ jurisdiction. The Constitutional Court declined to hear the case.
In Ruling No. 999-O, the Court clarified that:
1. Russian courts have exclusive jurisdiction over disputes involving a sanctioned Russian entity if the sanctions hinder access to arbitration (e.g., there are difficulties in securing legal representation, paying arbitration fees, or attending the hearing). Whether such difficulties exist is for the court to determine on a case-by-case basis;
2. If such ground exist, courts may also issue anti-arbitration injunctions under Article 248(2);
3. Sanctioned entities may choose not to invoke on Article 248(1), allowing arbitration to proceed;
4. The Constitutional Court made no distinction between ‘friendly’ or ‘unfriendly’ jurisdictions.
Ultimately, the ruling offers limited support for upholding arbitration clauses, as the Supreme Court continues to hold that the mere imposition of sanctions on a Russian person is generally sufficient to successfully invoke Article 248(1).
Conclusion
Russian law both supports and restricts arbitration. On the one hand, Russian courts must refer parties to arbitration if a claim violates an arbitration agreement. On the other hand, certain provisions allow Russian courts to override such clauses and assert jurisdiction.
Russian court practice shows that arbitration clauses are typically invalidated when one party is sanctioned, and/or the dispute stems from sanctions. If neither applies, Russian courts tend to uphold the arbitration clause.
The seat of arbitration—whether in a ‘friendly’ or ‘unfriendly’ jurisdiction—does not affect the validity of the arbitration agreement. HKIAC clauses have been nullified due to sanctions, while LCIA clauses have been upheld when sanctions were not involved.
Russian case-law on arbitration and sanctions is evolving swiftly. The court approaches hereby discussed reflect current practice but may shift—either toward enforcing or disregarding arbitration clauses.
Originally published on the Kluwer Arbitration Blog on September 9, 2025.
This post explores the direct tension between these two conflicting approaches and the recent Russian case law on the validity of arbitration clauses, as well as the factors that may undermine them.
Arbitration-Friendly vs Hostile Provisions
Russian law pro-arbitration provisions include Article 8 of the 1993 Russian law on International Commercial Arbitration, and Article 148(1)(5) of the Russian Arbitrazh Procedural Code, which both use a wording almost identical to Article II(3) of the New York Convention.
Article 8 provides that “A court […] shall refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed.” In turn, Article 148(1)(5) states: “A court shall leave a statement of claim without consideration if [...] there is an [arbitration] agreement [...], except in cases where the [state] court determines that the agreement is invalid, has ceased to be in force, or cannot be enforced.” The effect of these provisions is the same: a referral to arbitration.
Until 2022, these provisions were effectively applied. In a notable case, Russian courts discontinued proceedings initiated by a prosecutor challenging a credit agreement between a foreign bank and a state entity, on the basis of the existence an ad hoc arbitration clause in the underlying contract (Case No. A21-2499/2003).
Amendments to the Russian Arbitrazh Procedural Code came into force on June 8, 2020 and introduced Articles 248(1) and 248(2) of the Russian Arbitrazh Procedural Code:
- Article 248(1) grants Russian courts exclusive jurisdiction over disputes between Russian and foreign parties arising from foreign sanctions and renders inoperable agreements providing for arbitration outside the territory of the Russian Federation;
- Article 248(2) enables Russian persons affected by foreign sanctions to apply to a Russian Arbitrazh Court for an anti-suit injunction prohibiting the other party from initiating or continuing proceedings before a foreign court or international arbitration tribunal located outside the territory of the Russian Federation (see, e.g., RusChemAlliance LLC [2024] UKSC 30). These provisions may be characterized as disfavoring arbitration.
While the application of pro-arbitration provisions leads to the recognition of the arbitration clause, the application of Articles 248(1) and 248(2) renders the arbitration agreement ineffective. Until 2022, there were only a small number of cases in which Article 248(1) or Article 248(2) were applied—fewer than 25 in total. However, since 2022, the number of such cases has skyrocketed, exceeding 500 and continuing to grow.
Situations Where Russian Courts are Likely to Consider an Arbitration Clause as Inoperative
Under Article 248(1), Russian courts may disregard arbitration clauses if (i) the dispute stems from unilateral sanctions and/or (ii) one party is subject to such sanctions.
In thePESA case (Case No. A60-36897/2020), the Russian Supreme Court held that sanctions alone prevent access to justice abroad, justifying exclusive jurisdiction of Russian courts under Article 248(1), despite the existence of an arbitration or litigation clause. This approach was subsequently reaffirmed by the Russian Supreme Court in 2022 (Case No. A21-10438/2022).
These rulings show a low threshold under Article 248(1): any official proof of sanctions is sufficient to invoke Article 248(1).
Sanctioned parties often face hurdles in arbitration, including legal representation, fee payment, and attendance of the hearing. While English courts see these as “not a practical impediment of such a nature or degree as to amount to a denial of access to justice” (Barclays Bank PLC v VEB.RF), Russian courts in PESA and other cases treat them as denial of justice, triggering that Russian courts exercise jurisdiction despite the existence of an arbitration clause.
In the Lukoil case (Case No. А40-214726/2023), despite no sanctioned parties and a clause providing for arbitration under the auspices of the London Court of International Arbitration (LCIA), the Supreme Court granted exclusive jurisdiction to a Russian court, as the subject matter of the dispute arose from unilateral sanctions. Interestingly, the Russian Supreme Court focused on Article 248(1) and remained silent about Article 148(1)(5) of the Russian Arbitrazh Procedural Code. This approach was reaffirmed in the recent Sibur case (Case No. А40-116513/2024).
These cases confirm that if sanctions hinder contract performance, Russian courts will likely override arbitration clauses—even if the claimant is not sanctioned.
Situations Where Russian Courts are Likely to Enforce an Arbitration Clause
On the contrary, Russian courts are likely to apply the above-mentioned pro-arbitration provisions when (i) the subject matter of the dispute is not tied to sanctions, and (ii) neither party is on a sanctions list.
In case No. А60-63977/2024, the 17th Arbitrazh Appeal Court referred two Russian companies to arbitration before the LCIA, as the dispute was not related to sanctions, and neither party was included on any sanctions list. References to difficulties in accessing arbitration were disregarded. This case is part of a series of disputes (cases No. А40-259705/2024, А56-111059/2024, and А60-63977/2024) where Russian courts upheld the arbitration clauses and referred the parties to LCIA arbitration (cases No. А40-259705/2024, А56-111059/2024, and А60-63977/2024).
Foreign parties not under sanctions cannot invoke Article 248(1). In case No. A66-19469/2024, involving German and Russian parties, the courts concluded that Article 248(1) was not applicable, as the claimant, a German company, was not affected by sanctions. Consequently, the parties were referred to a German court. In case No. A35-6432/2024, a Polish claimant was referred to LCIA arbitration, with the court noting that Russian parties generally face no access difficulties and citing a General Licence issued by the Office of Financial Sanctions Implementation (OFSI) allowing arbitration payments.
However, Russian courts departed from this interpretation in at least one case. In case No. А12-22543/2022, a Chinese claimant—neither sanctioned nor clearly affected by sanctions—successfully relied on Article 248(1), despite the dispute not stemming from sanctions. The Russian respondent’s motion to refer the case to LCIA was denied.
These cases may ultimately be brought before the Russian Supreme Court, which would clarify the boundaries between Article 248(1) of the Russian Arbitrazh Procedural Code and other pro-arbitration provisions such as Article 8 of the Russian Law on International Commercial Arbitration and Article 148(1)(5) of the Arbitrazh Procedural Code.
Relevance of the Location of the Seat in a ‘Friendly’ or ‘Unfriendly’ State
It has been suggested that an arbitration agreement will be upheld provided that the seat of arbitration is in a ‘friendly’ jurisdiction. In practice, the location of the seat does not affect the validity of the arbitration clause in any way. For example, Russian courts have disregarded Hong Kong International Arbitration Centre (HKIAC) clauses—even though Hong Kong is considered as a 'friendly' jurisdiction—in cases No. А56-129797/2022, А56-103943/2023 and А56-84760/2023, due to one party being under sanctions.
Thus, Russian courts may override arbitration clauses if (i) the dispute involves sanctions, and/or (ii) a party is subject to sanctions, even if the arbitration seat is located in a ‘friendly’ State.
It is worth noting that in cases No. А56-103943/2023 and А56-84760/2023, the losing party challenged Articles 248(1) and 248(2) before the Constitutional Court, arguing that these provisions contradict the Russian Constitution and should not apply when the seat of arbitration is located in a ‘friendly’ jurisdiction. The Constitutional Court declined to hear the case.
In Ruling No. 999-O, the Court clarified that:
1. Russian courts have exclusive jurisdiction over disputes involving a sanctioned Russian entity if the sanctions hinder access to arbitration (e.g., there are difficulties in securing legal representation, paying arbitration fees, or attending the hearing). Whether such difficulties exist is for the court to determine on a case-by-case basis;
2. If such ground exist, courts may also issue anti-arbitration injunctions under Article 248(2);
3. Sanctioned entities may choose not to invoke on Article 248(1), allowing arbitration to proceed;
4. The Constitutional Court made no distinction between ‘friendly’ or ‘unfriendly’ jurisdictions.
Ultimately, the ruling offers limited support for upholding arbitration clauses, as the Supreme Court continues to hold that the mere imposition of sanctions on a Russian person is generally sufficient to successfully invoke Article 248(1).
Conclusion
Russian law both supports and restricts arbitration. On the one hand, Russian courts must refer parties to arbitration if a claim violates an arbitration agreement. On the other hand, certain provisions allow Russian courts to override such clauses and assert jurisdiction.
Russian court practice shows that arbitration clauses are typically invalidated when one party is sanctioned, and/or the dispute stems from sanctions. If neither applies, Russian courts tend to uphold the arbitration clause.
The seat of arbitration—whether in a ‘friendly’ or ‘unfriendly’ jurisdiction—does not affect the validity of the arbitration agreement. HKIAC clauses have been nullified due to sanctions, while LCIA clauses have been upheld when sanctions were not involved.
Russian case-law on arbitration and sanctions is evolving swiftly. The court approaches hereby discussed reflect current practice but may shift—either toward enforcing or disregarding arbitration clauses.
Originally published on the Kluwer Arbitration Blog on September 9, 2025.
(с) Mikhail Samoylov. 2025.
