The economic sanctions imposed notably by the European Union pose a number of challenges to the conduct of arbitration proceedings.Arbitral institutions have had to heighten their efforts of regularly investigating, throughout the proceedings, whether any of the parties to an arbitration was targeted by a sanctions programme, in particular in regards to the issue of the payment of registration fees and advances on costs. Nonetheless, under the relevant EU Regulation, an explicit carve-out is provided for the payment of legal services, and the EU confirmed on 21 July 2022 that transactions with Russian state-owned entities are exempt from its sanctions regime where they are strictly necessary to ensure access to arbitral proceedings.
A Russian legislation granting exclusive jurisdiction to Russian courts as regards sanctioned persons could generate a great deal of enforcement issues for arbitral awards condemning sanctioned parties. Furthermore, beyond the issue of jurisdiction, the manner in which arbitral tribunals should deal with sanctions regimes remains very uncertain. We anticipate that the multiplication and multilateralization of sanctions could lead jurisdictions to incorporate international sanctions as part of their public policy.
You can read the analysis by Partner Flore Poloni and Associate Kimberley Bazelais published by Option Droit & Affaires here.