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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The Russian counter-sanctions measures and enforcement of arbitral awards.

As of today, multiple cases—either adjudicated or pending before various levels of Russian courts—illustrate differing impacts of counter-sanctions measures on arbitral awards.

In a previous case decided on June 26, 2025, arguments against a domestic arbitral award based on counter-sanction measures were unsuccessful. In Case No. А40-211260/2024, the award creditor sought enforcement of a domestic arbitral award. The award debtor objected, citing counter-sanctions measures under Russian Presidential decrees.

The dispute arose out of an assignment agreement. Initially, there was a supply contract dated 24.01.2022, concluded between an Estonian 🇪🇪 company (the buyer, and the initial creditor) and a Russian 🇷🇺 company (the seller, and the debtor). The buyer made an advance payment. Subsequently, an assignment agreement dated 24.11.2023 was concluded between the Estonian company and a Russian company—the second creditor—who commenced arbitration and obtained an award in its favor in 2024.

According to the debtor's view, the assignment agreement violated Russian counter-sanctions measures under the Russian Presidential decrees. However, both the court of first instance and the cassation court rejected this argument, holding that the Presidential decrees had not been breached by the arbitrator and, moreover, that the Presidential decrees did not apply to the assignment agreement in question. Thus, courts granted the enforcement of the arbitral award.

To conclude, whether the Russian counter-sanctions measures may undermine the enforceability of arbitral awards—both domestic and international—is a matter that requires careful, case-by-case consideration.

A permanent link: https://smnlaw.ru/sanctions-award-1

ProArbitration.Ru