Background: Russia’s “Anti-Suit” Mechanism
Under Articles 248.1 and 248.2 of the Russian Commercial Procedure Code, sanctioned Russian parties may ask Russian courts to assert exclusive jurisdiction over their disputes and prohibit counterparties from pursuing proceedings in foreign courts or arbitral tribunals.
Originally intended to protect sanctioned entities from “unfriendly” jurisdictions, these provisions have increasingly been used to override foreign forum clauses even in neutral or friendly countries like Kazakhstan, China, or Hong Kong.
The Case: VTB vs. Its Former EU Subsidiary
The Constitutional Court considered a complaint from OWH SE (formerly VTB Bank Europe), a Luxembourg-based subsidiary of sanctioned Russian bank VTB. Russian courts had refused to enforce the parties’ agreement to arbitrate in Hong Kong (HKIAC), citing VTB’s inability to access justice abroad due to sanctions. OWH argued this approach went too far — especially given Hong Kong’s status as a neutral venue.
The Ruling: No Strike-Down, but Important Clarifications
While the Court upheld the constitutionality of the law, it issued several key clarifications:
- No Automatic Application: Courts must not presume Articles 248.1 and 248.2 apply solely because a party is sanctioned.
- Case-By-Case Analysis: Judges must examine whether the sanctioned party faces real legal, financial, or procedural barriers to pursuing foreign proceedings.
- Dispositive Nature: Sanctioned parties may waive these protections and voluntarily accept foreign jurisdiction — in which case foreign judgments may still be recognized in Russia.
Key Takeaway
Even when dealing with sanctioned Russian counterparties in friendly or neutral jurisdictions, dispute resolution clauses may be overridden unless access to justice abroad can be demonstrated. Companies should factor this uncertainty into their risk assessments.