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A Chinese 🇨🇳 company successfully blocked an LCIA arbitration clause in a Russian 🇷🇺 court by relying on the 'Lugovoy Act'.

In previously resolved cases before Russian courts, the claimants—a German company and a Polish company—sought to invoke the 'Lugovoy Act' to challenge either a forum selection clause or an arbitration agreement. In both cases, the Russian courts dismissed these attempts and referred the parties to either a German court or LCIA arbitration. The courts emphasized that the 'Lugovoy Act' (Article 248.1 of the Russian Arbitrazh Code) applies only when (a) a party to the dispute is included on a sanctions list or (b) the dispute arises from unilateral sanctions.

However, there appears to be at least one case in which a Russian court departed from this interpretation. In Case No. А12-22543/2022, a Chinese company—the claimant—successfully relied on Article 248.1 of the Russian Arbitrazh Code, despite not being listed on a sanctions list and the dispute not clearly stemming from unilateral sanctions. The defendant, a Russian company, objected to the court’s jurisdiction and demanded that the dispute be referred to LCIA arbitration, but the motion was dismissed.

It is likely that this case will eventually appear before the Russian Supreme Court.

A permanent link to the blog post can be found here: https://smnlaw.ru/chinese-lugovoy

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