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Russian Supreme Court allowed Russian listed persons to withdraw from international arbitration clauses

Last year the Russian Arbitrazh (Commercial) Procedural Code was supplemented with provisions allowing listed Russian and foreign persons to withdraw from international arbitration clauses and to obtain anti-suit injunctions from Russian courts when sanctions imposed on any party to the proceedings establish “obstacles in the access to justice”.

On 9 December 2021, in the case of PESA Bydgoszcz v Uraltransmash the Russian Supreme Court opined that the very fact of imposition of sanctions over a Russian party at the foreign place of arbitration constitutes an obstacle in the access to justice (regardless of whether the sanctions actually have any impact on arbitration) since the sanctions, at least, damage the reputation of the party. In such cases Russian parties are entitled to unilaterally withdraw from arbitration clauses and also apply for anti-suit injunctions before Russian courts. An arbitral award issued after such a withdrawal would most likely be not enforceable in Russia.

There is also a risk that in the future the reasoning of the Russian Supreme Court may be further extended to some cases where the sanctions were imposed not at the place of arbitration but nevertheless were allegedly sufficient to damage the reputation of the Russian party to arbitration.