This second amendment to the chronology of the jurisdictional battle between Russia and the European Union[1] is not about the 16th package of sanctions against Russia adopted on 24 February 2025 because the 16th package does not deal with issues of jurisdiction or the recognition and enforcement of judgments and arbitral awards.[2] Instead, the topic covered in this post is a request for a preliminary ruling concerning the arbitrability of sanctions-related disputes by the Svea Court of Appeal of 20 November 2024.[3]
Factual background
The request was lodged with the European Court of Justice (ECJ) in the proceedings NV Reibel (Reibel), a Belgian company, against JSC VO Stankoimport (Stankoimport), a Russian company. Reibel is a logistics and transport company, Stankoimport’s business is the import of metal products and machinery into the Russian Federation.
According to a working document with a summary of the request[4], the dispute in the main proceedings relates to a contract concluded in December 2015 under which Reibel had to supply certain goods and provide certain services to Stankoimport. The contract provided that European sanctions against Russia would not constitute force majeure and that such sanctions would not release the parties from their obligations under the agreement. The contract contained an arbitration clause providing for dispute resolution through arbitration in Sweden.
Stankoimport paid a part of the contract price to Reibel in advance. In March 2017, referring to Regulation (EU) No 833/2014. and Council Regulation (EC) No 428/2009 of May 5, 2009, the competent Belgian authority refused to issue an export license for Reibel because the goods Reibel wanted to export to Russia were to be used to produce helicopter parts. The Belgian Council of State dismissed Reibel’s appeal against the decision because Reibel was unable to prove that the goods could not be used for military purposes.
Without export license, Reibel could not deliver the contractual products. Stankoimport therefore terminated the contract and claimed repayment of the advance and payment of interest and damages for breach of contract.
The arbitration proceedings
When Reibel refused to pay, Stankoimport filed a request for arbitration. The arbitral tribunal granted Stankoimport’s claim for repayment of the advance including interest but dismissed the claim for damages. In the opinion of the arbitral tribunal, the agreement was valid at the time it had been concluded. The validity was not affected by the refusal to grant an export license. For the tribunal, nothing indicated that the agreement had been concluded to circumvent EU law. Since Reibel was unable to fulfill its contractual obligations after the Belgian authorities had refused to grant an export license, the tribunal held that Stankoimport was entitled to claim restitution under the United Nations Convention on Contracts for the International Sale of Goods (CISG) and interest.
For the tribunal, the request for repayment plus interest did not constitute a claim prohibited from being satisfied under Article 11 of Regulation 833/2014. Article 11 provides:
“No claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation, including claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee, notably a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form, shall be satisfied, if they are made by:
(a) entities referred to in points (b) or (c) of Article 5, or listed in Annex III;
(b) any other Russian person, entity or body;
(c) any person, entity or body acting through or on behalf of one of the persons, entities or bodies referred to in points (a) or (b) of this paragraph.”
The tribunal was of the view that Article 11 of Regulation 833/2014 does not preclude a recovery of the purchase price paid for goods which could not be supplied due to the sanctions. Referring to the Rosneft 2 judgment of the ECJ[5], the tribunal found that Stankoimport’s claims for repayment including the related interest did “not indicate the performance of a prohibited transaction but only aim(ed) to restore the parties to the position they were in before the agreement had been concluded”.[6] Moreover, to dismiss Stankoimport’s claims would in the opinion of the tribunal have constituted a disproportionate application of Article 11 of Regulation 833/2014. However, the claims for damages were dismissed. The tribunal held that these claims were excluded by Article 11 of Regulation 833/2014 as they constituted claims for compensation for Reibel’s failure to perform a prohibited transaction.
Application to set aside the award
Reibel asked the Svea Court of Appeal to set aside the award, arguing that the application of the European sanctions regime was not arbitrable and that the tribunal therefore had exceeded the limits of the task conferred on it. In addition, Reibel argued that the arbitral award was contrary to the Belgian ordre public.
Not surprisingly, Stankoimport did not share this view and emphasized that the parties had concluded a valid arbitration agreement covering the issues decided by the tribunal and that Reibel had never contested the tribunal’s jurisdiction during the arbitration proceedings.
Request for a preliminary ruling
The Svea Court of Appeal ordered a preliminary stay of the execution of the arbitral award and asked the ECJ for a preliminary ruling. For the court of appeal, it is unclear whether the award is compatible with European law. Firstly, the Svea Court of Appeal considers the arbitrability of the issues decided by the arbitral tribunal to be questionable. Secondly, the court considers it unclear whether Regulation 833/2014 is part of the public policy of the European Union. Thirdly, the Svea Court of Appeal has asked the ECJ whether the arbitral tribunal’s interpretation of Article 11 of Regulation 833/2014 is correct.
As to the first question, the Svea Court of Appeal notes that under Swedish arbitration law (like under many other national arbitration laws) [7], the arbitrability of a dispute is determined by the question whether the parties are allowed to reach an amicable settlement about the claim at issue. If they are, the dispute is arbitrable, if they are not, the dispute cannot be settled by arbitration. For the court of appeal, it is questionable whether Regulation 833/2014 allows an amicable settlement of sanctions-related disputes.
Starting point of the considerations of the Svea Court of Appeal is that neither Regulation 833/2014 nor the Swedish law on sanctions provide for civil penalties for infringements of Regulation 833/2014, for example the nullity of legal acts contrary to the regulation. The court examines whether nullity could derive from general principles of law but feels that this is unclear with respect to infringements of Regulation 833/2014. On the one hand, the wording of Art. 11 Regulation 833/2014 seems to be directed at the authorities of EU Member States who are instructed that “no claims … shall be satisfied” and that in “any proceedings for the enforcement of a claim, the onus of proving that satisfying the claim is not prohibited … shall be on the person seeking the enforcement of that claim.” On the other hand, the court argues that the purpose of the regulation to impose restrictive measures on Russia and certain Russian actors may require that the regulation has civil-law effects as well. For the court, the effective prohibition of certain transactions may require that out-of-court settlements of claims relating to prohibited transactions are null and void under civil law. In this context, the court refers to decisions of the ECJ which interpreted sanctions provisions broadly to prevent a circumvention of the sanctions regime and an exploitation of weaknesses in the system.
In summary, the court believes that the question “whether the parties have a possibility of amicably settling claims covered by Article 11 of the regulation, cannot … be considered clear or clarified” and therefore requests a preliminary ruling.
With respect to a possible violation of the ordre public, the Svea Court of Appeal notes that the courts of the Member States do not only have to consider the national rules relating to public policy but also the respective EU rules. For this reason, the court asks the ECJ to determine whether Regulation No 833/2014 “forms part of the foundations of the EU legal order in such a way that it must be taken into account in the judicial review of an arbitration award whose subject matter gives rise to the application of that regulation.”
With respect to the question whether the tribunal’s interpretation of Article 11 of Regulation 833/2014 is correct, the Svea Court of Appeal notes that the scope and interpretation of Article 11 of Regulation 833/2014 is relevant for the setting aside proceedings even if it transpires that issues concerning the application of the regulation are not arbitrable. The court argues that it must know whether a claim for repayment of an advance payment falls within the scope of the Article 11 and thus constitutes a prohibited transaction.
Thus, in accordance with Article 19(3)(b) of the Treaty on European Union (TEU) and Article 267 of the Treaty on the Functioning of the European Union (TFEU), the Svea Court of Appeal referred the following questions to the ECJ for a preliminary ruling:
- Must Regulation 833/2014 be interpreted as meaning that parties to an agreement are precluded from reaching an agreement out of court on claims which, under Article 11(1) of that regulation, are not to be satisfied and that amicable settlements reached by parties to an agreement on claims covered by Article 11(1) are null and void in civil law?
- Must Article 11 of Regulation 833/2014 be interpreted as meaning that a national court hearing an application for setting aside or annulment of an arbitration award in which that article has been applied must determine of its own motion whether the arbitration tribunal’s application of the law is compatible with Regulation 833/2014 and, in such a case, must the national court annul or set aside the arbitration award in whole or in part if the arbitration tribunal’s application of the law was contrary to the regulation?
- Must Article 11(1) of Regulation 833/2014 be interpreted as not precluding satisfaction of a claim if the claim concerns (a) repayment of an advance payment in respect of goods which were never supplied on account of measures under the regulation? (b) interest on a claim mentioned in (a)?
The possible effects of an ECJ ruling
The questions raised by the Svea Court of Appeal and the ECJ’s ruling can have far-reaching effects.
At first glance, it seems clear that sanctions-related disputes can be settled by arbitration. After all, the EU has taken safeguards to provide Russian parties access to justice in litigation and arbitration proceedings within the EU. The seventh sanctions packaged clarified that transactions with sanctioned entities are not prohibited if they are strictly necessary to ensure access to judicial, administrative, or arbitral proceedings in a Member State, and/or relate to the recognition or enforcement of a judgment or an arbitral award rendered in a Member State if such transactions are consistent with the objectives of Regulations 833/2014 and 269/2014.[8] The reference to the objectives of Regulations 833/2014 and 269/2014 in this context indicates that arbitral awards can be issued in such disputes but will be set aside if they violate the mandatory provisions of the regulations and breach European public policy.
However, as the request for a preliminary ruling by the Svea Court of Appeal shows, it is by no means clear whether arbitral tribunals have in fact initial jurisdiction to decide sanctions-related disputes and whether compliance with the sanctions regime can only be reviewed in the context of proceedings for a declaration of enforceability.
Firstly, the EU sanctions are mandatory, and one could therefore argue that since parties cannot settle disputes about the application of a sanction amicably, such disputes are not arbitrable. This is the question raised by the Svea Court of Appeal.
Secondly, there are parallels with the ECJ’s jurisprudence in relation to intra-EU investor state disputes which may exclude the arbitrability of sanctions-related disputes. In intra-EU investor state disputes, the ECJ has taken the position that these disputes cannot be decided by private arbitral tribunals because private tribunals have no access to the ECJ.[9] The ECJ argues that the interpretation of EU law is the prerogative of the courts of the Member States and the ECJ as they safeguard the autonomy of EU law and ensure consistency and uniformity in the interpretation of EU law through the preliminary ruling procedure under Art. 267 TFEU. Private arbitral tribunals cannot submit questions of EU law to the ECJ, Art. 267 and Art. 344 TFEU. Since questions of EU law are an issue in intra-EU investor state disputes, the consistency and uniformity in the interpretation of EU law would be at risk if private arbitral tribunals were allowed to decide these disputes. According to the ECJ, deviations from the case law of the ECJ cannot be corrected by the courts of the Member States in proceedings for the recognition and declaration of enforceability so that these proceedings cannot solve the problem.
Applying this line of reasoning to sanctions-related disputes, one could argue that consistency and uniformity in the interpretation of EU sanctions law can only be guaranteed if arbitral tribunals are not allowed to decide sanctions-related disputes. Such disputes would then have to be decided by the courts of the Member States who are able to submit questions of EU law to the ECJ.
The case of the Svea Court of Appeal illustrates that this is not an academic discussion. Whether the claim for repayment of the purchase price paid in advance for goods or services which could not be supplied due to the sanctions is just a contractual claim under the CSIG or a claim “in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation” and thus may not be satisfied is a question of the interpretation of EU law for which the tribunal may not have had jurisdiction.
With its request for a preliminary ruling, the Svea Court of Appeal may have opened pandora’s box. It will be interesting to see how the ECJ will deal with the questions raised by the Svea Court of Appeal and whether in this context, the issue of requests for preliminary rulings by arbitral tribunals will come up. Should this be the case, the ECJ will hopefully use the opportunity to correct its position and follow the opinion of Advocate General Wathelet that arbitral tribunals are tribunals in the meaning of Art. 267 TFEU and can submit requests for preliminary rulings to the ECJ which was delivered in the Achmea proceedings on 19 September 2017.[10]
[1] Juergen Mark, Chronology of the jurisdictional battle between Russia and the European Union caused by the war on Ukraine (https://www.globalarbitrationnews.com/2024/12/05/chronology-of-the-jurisdictional-battle-between-russia-and-the-european-union-caused-by-the-war-on-ukraine/).
[2] Council Implementing Regulation (EU) 2025/389 of 24 February 2025 implementing Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, imposing, inter alia, restrictive measures on additional individuals and entities, imposing sanctions over entities transporting Russian crude oil and oil products, targeting actors responsible for circumventing EU sanctions, and imposing sanctions on third countries actors supporting Russian war efforts (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202500389).
[3] Request for a preliminary ruling from the Svea hovrätt lodged on 20 November 2024 in the case NV Reibel v JSC VO Stankoimport (Case C-802/24, Reibel) (C/2025/535) (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C_202500535).
[4] Case C-802/24, Summary of the request for a preliminary ruling (working document), https://curia.europa.eu/juris/showPdf.jsf;jsessionid=AEB42E008E69695C21C3F364F5D93AAD?text=&docid=294349&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=28106103. The reasoning of the Svea Court of Appeal regarding the request for a preliminary ruling is taken from this working document.
[5] Rosneft and Others v Council (C-732/18 P, EU:C:2020:727), paragraphs 107 to 109.
[6] Cp. Working Document (footnote 3), para. 13.
[7] Cp. Art. 1020 (3) Dutch Code of Civil Procedure. Until 1997, German law also required that the parties were entitled to reach an amicable settlement about the claim at issue for a dispute to be arbitrable. With the reform of German arbitration law, the right to settle the dispute is a requirement for arbitration proceedings only for claims which do not involve property rights (“vermögensrechtliche Ansprüche”), Sec. 1030 (1) of the German Code of Civil Procedure.”
[8] Juergen Mark/Olena Oliinyk, Sanctions against Russia – How to ensure due process of santioned parties in court or arbitral proceedings while at the same time enforce the sanctions regime (https://www.globalarbitrationnews.com/2022/12/14/sanctions-against-russia-how-to-ensure-due-process-of-sanctioned-parties-in-court-or-arbitral-proceedings-while-at-the-same-time-enforce-the-sanctions-regime/#_ftn3).
[9] Judgments of the ECJ in the case Slovak Republic v Achmea BV of 6 March 2018 (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62016CJ0284) in the case Republic of Moldova v Komstroy LLC of 2 September 2021 (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62016CC0284).
[10] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62016CC0284.
