This third amendment to the chronology of the jurisdictional battle between Russia and the European Union[1] deals with an amicus curiae brief of 14 March 2025, submitted by the Russian Arbitration Association (RAA) to the Court of Justice of the European Union (ECJ)[2] in relation to the request for a preliminary ruling by the Svea Court of Appeal in the proceedings Reibel vs. Stankoimport.[3]
For observers of the jurisdictional battle between Russia and the EU, it may come as a surprise that the RAA passionately endorses the arbitrability of sanctions-related commercial disputes, as the Russian Federation has undermined the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards by establishing the exclusive jurisdiction of the Russian arbitrazh courts for such disputes.[4]
The Reibel vs. Stankoimport Case
Reibel had asked the Svea Court of Appeal to set aside an arbitral award which had granted Stankoimport a claim for the repayment of an advance payment for dual use goods which Reibel was not allowed to deliver in accordance with Regulation (EU) No. 833/2014 (Regulation 833). The Svea Court of Appeal ordered a preliminary stay of the execution of the arbitral award and requested a preliminary ruling from the ECJ about the scope of Art. 11 of Regulation 833.
According to this provision, “no claims in connection with any contract or transaction the performance of which has been affected by the measures imposed under this Regulation… shall be satisfied.” For the Svea Court of Appeal, it was unclear whether a claim for repayment of a down payment falls within the scope of the prohibition of Art. 11 and may not be satisfied. This led the court to ask the ECJ for a preliminary ruling regarding three questions:
- Are sanctions-related disputes arbitrable?
- Must national courts determine of their own motion whether an arbitral tribunal’s application of Art. 11 is compatible with Regulation 833, and must they annul or set aside awards which are incompatible?
- Does Art. 11 preclude the satisfaction of a claim for the repayment of an advance payment for goods which could not be supplied due to a prohibition under Regulation 833?
The purpose of the amicus curiae brief of the RAA
In its brief, the RAA argues in favor of the arbitrability of sanctions-related disputes, maintaining that a prohibition would have negative consequences not only for the parties involved, but also for the EU and its Member States. Consequently, the RAA is advocating for a “restrictive” and arbitration-friendly interpretation of Art. 11 of Regulation 833.
For the RAA, upholding the principle of party autonomy and allowing the parties to determine how their disputes should be resolved in a peaceful and efficient manner is essential.[5] Moreover, only a “restrictive” interpretation of Art. 11 would ensure compliance with international investment law, would be in line with the principle of legal certainty and would guarantee that the objectives of Regulation 833 are achieved in a manner consistent with the international legal obligations of the EU and its Member States.
A “broad” interpretation of Art. 11 would in the opinion of the RAA violate the property rights of Russian parties and create the risk of investor-state disputes and would have significant negative consequences for the EU:
- International businesses would avoid choosing a Member State as the seat of the arbitration or selecting the national law of a Member State as the governing law of their contract.
- Parties to arbitration would refrain from choosing EU nationals as arbitrators because they might consider Article 11 to be mandatory law.
- Non-EU parties would increasingly resort to countermeasures, i.e. rely on the exclusive jurisdiction of the Russian arbitrazh courts and their authority to issue anti-suit injunctions against non-Russian opponents under Art. 248.1 and 248.2 of the Russian Arbitrazh Procedure Code (APC).
- The prohibition of satisfying claims could be seen as expropriation and could result in investment claims against EU Member States.[6]
The arguments of the RAA
According to the RAA, Art. 11 of Regulation 833 only applies to judicial review proceedings but not to arbitration proceedings conducted within the EU. This conclusion is based on the wording of Art. 11 which only refers to “proceedings for the enforcement of a claim” but not to arbitration. To include arbitration proceedings in the scope of Art. 11 of Regulation 833 would, in the opinion of the RAA, “potentially undermine the autonomy of international arbitration.”[7]
Even if Art. 11 of Regulation 833 is deemed applicable to arbitration, the RAA suggests that this does not prevent arbitrators from adjudicating claims on their merits or EU courts from recognizing arbitral awards. The RAA argues that Art. 11 only prohibits the satisfaction of a claim but not the dispute resolution process or the issuance of an arbitral award or its recognition. Only the actual fulfillment/payment under an award would be prohibited.
The RAA arrives at this conclusion inter alia by reference to the preamble of Regulation 833 which states that the EU’s restrictive measures “comprise freezing of funds and economic resources … and restrictions on certain investments.“ From this wording, it follows for the RAA that the sanctions are only temporary measures and do not allow a permanent confiscation of assets:
“If Article 11 of Regulation 833 were to be interpreted as allowing the court or tribunal to dismiss the claim of a Russian party, this could effectively result in the confiscation of assets (funds claimed for payment) of that party. The losing Russian party may be unable to claim that payment again if the sanctions are lifted, either due to res judicata or the expiry of applicable limitation periods. Such a result would be inconsistent with the very nature of the sanctions as a temporary measure rather than confiscation.”[8]
For the RAA, the prohibition of Art. 11 is confined to the enforcement stage and only suspends enforcement for as long as funds and economic resources are frozen.[9] In the opinion of the RAA, Art. 11 does not intend to relieve an EU party from its obligations towards Russian counterparties.
Finally, the RAA argues that even if Article 11 applies to arbitration proceedings and prohibits arbitrators from awarding claims relating to the non-performance of contracts due to the EU sanctions regime, arbitral tribunals are not precluded from awarding claims for the reimbursement of monetary payments to restore the contractual status quo ante.
For the RAA, claims for the reimbursement of advance payments and interest do not fall within the scope of Art. 11. Referring to the European Commission which had described the purpose of Art. 11 “to protect EU operators from having to satisfy damage claims of any types”[10], the RAA argues that extending the application of Art. 11 to claims based on unjust enrichment would unduly broaden the scope of the prohibition and violate the principle of proportionality. This principle requires that EU rules are interpreted in a way that the measures to be taken are appropriate to achieve the legitimate objectives of the rule and do not go beyond what is necessary to achieve those objectives, which is to protect EU operators from having to satisfy damage claims.
Comments
It remains to be seen whether the arguments presented by the RAA will influence the decision of the ECJ. The outcome of the preliminary ruling proceedings remains open.
The RAA’s concern that the ECJ may not take note of the amicus curiae brief is probably unfounded. Although under Art. 40 (2) of the Statute of the Court of Justice of the European Union the RAA has no right to intervene because it has no interest in the outcome of the Reibel case, the ECJ will most likely take the considerations of the RAA into account when preparing its preliminary ruling.
As to the substance of the RAA submission, it is doubtful whether Art. 11 of Regulation 833 only applies to litigation and not to arbitration proceedings. The position of the RAA is based on the wording of Art. 11.3 of Regulation 833 (“right to judicial review”) which guarantees the right of sanctioned parties to judicial review of the legality of the non-performance of contractual obligations in accordance with Art. 11.1 of Regulation 833. This guarantee does not limit the application of Art. 11 to court proceedings. Rather, it only confirms, with respect to arbitral awards dealing with the issue of the legality of non-performance, the general principle that compulsory enforcement of arbitral awards requires recognition and a declaration of enforceability by state courts.
The point raised by the Svea Court of Appeal with respect to the arbitrability of sanctions-related disputes is different. The Svea Court of Appeal’s concerns are rooted in Swedish arbitration law, not in European law. Under Swedish law – and other national arbitration laws –, only disputes concerning matters which the parties may settle by agreement can be submitted to arbitration. The objective of the respective provisions is to prevent the parties from indirectly (through arbitrators) acquiring the power to dispose of a subject matter which they would not have otherwise. In other words, what the parties cannot obtain through a settlement agreement, they should not be able to obtain through arbitration.
Art. 11.1 prohibits the satisfaction of claims in connection with contracts or transactions affected by sanctions. Parties therefore cannot conclude a valid and enforceable settlement agreement which provides for the full or partial fulfillment of such claims. Where national arbitration laws provide that a dispute is only arbitrable if the parties can reach an amicable settlement, this may, under the respective national arbitration law, result in the non-arbitrability of sanctions-related disputes. However, as this is not a question of European law and Art. 11 does not deal with jurisdiction, it appears that sanctions-related disputes are, in principle, arbitrable.
The opinion of the RAA that Art. 11 of Regulation 833 only prohibits the satisfaction of a claim but does not prevent arbitrators from adjudicating claims on their merits or EU courts from recognizing arbitral awards is not in line with the goals of the EU sanctions. For the Reibel vs. Stankoimport case, it would mean that the arbitral tribunal could have awarded Stankoimport claims for damages for non-fulfillment of the contract and the Swedish courts could have recognized such an award. Only the enforcement and the actual payment of damages would be prohibited for as long as the sanctions apply.
The RAA’s position would undermine the sanctions regime. It would create uncertainty. A party ordered to pay damages to a sanctioned party could accept the award and pay voluntarily without recognition and enforcement proceedings, unaware that this payment constitutes a violation of Regulation 833.
Whether the sanctions only constitute temporary measures which do not allow a permanent confiscation of frozen Russian assets is a controversial issue. In any event, only the freezing of Russian assets can be considered a temporary measure. Claims in connection with contracts and transactions covered by Art. 11 may not be satisfied permanently.[11]
The RAA’s view that arbitral tribunals may award claims for the reimbursement of monetary payments to restore the contractual status quo ante appears coherent and is in line with the objectives of the EU sanctions. It is plausible to argue – like the tribunal and the RAA – that the satisfaction of claims based on unjust enrichment is not prohibited by Art. 11 as this does not undermine the sanctions regime but only restores the status quo ante.
Unfortunately, the European commission and Member States have a different view. The RAA itself mentions in its amicus curiae that Germany originally was of the opinion that an advance payment received before the imposition of sanctions could be paid back without violating Art. 11 of Regulation 833. After consultations with the responsible working unit of the EU Commission, Germany’s position has changed. Germany is now of the opinion that such a repayment is prohibited by Art. 11.[12]
This shows that in sanctions-related disputes it is hardly possible to avoid the application and interpretation of European law. The interpretation of EU law is the prerogative of the courts of the Member States and of the ECJ who safeguard the autonomy of EU law and ensure consistency and uniformity through the preliminary ruling procedure under Art. 267 TFEU. According to the ECJ’s settled case-law, arbitral tribunals cannot submit questions of EU law to the ECJ under Art. 267 and Art. 344 TFEU. It is unlikely that the ECJ will change its position. Roma locuta … .
Whether the claim for repayment of the purchase price for undelivered goods or services is 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” is a question of the interpretation of EU law. Thus, one cannot exclude that the ECJ may consider sanctions-related disputes non-arbitrable and the respective arbitration agreements to be inoperative.
Conclusion
It is difficult to predict how the ECJ will address the issues raised by the Svea Court of Appeal and the RAA in the preliminary ruling. A viable solution could be the classification of Regulation 833/2014 as public policy of the EU and the preservation of the arbitrability of sanctions-related disputes. This would enable the EU to achieve its policy goals without undermining the right of the parties to access justice.[13] Whether or not this will be the outcome of the proceedings remains to be seen.
Whatever the outcome of the ECJ proceedings, a relaxation of the jurisdictional battle with the Russian Federation is not in sight. To the contrary: Russia has recently escalated the conflict considerably.
About one month after the RAA had submitted its amicus curiae brief in favor of arbitration to the ECJ, Russia’s General Prosecutor’s office asked the arbitrazh court in Moscow to order that the German company Wintershall Dea terminates arbitration proceedings in Dubai against the Russian Federation under threat of a fine of EUR 7.5 billion. The fact that the international arbitrators in the Dubai arbitration proceedings have also been sued for damages has taken the jurisdictional battle to a whole new level.[14]
[1] Juergen Mark, Chronology of the jurisdictional battle between Russia and the European Union caused by the war on Ukraine.
[2] Russian Arbitration Association, Amicus Curiae Brief to the Court of Justice of the European Union regarding the Interpretation of Article 11 of Regulation 833/2014.
[3] Details of the Svea Court of Appeal’s request can be found in Amendment No. 2 to the Chronology.
[4] Juergen Mark and Olena Oliinyk, The consequences of the sanctions against the Russian Federation and of the Russian countermeasures for international arbitration.
[5] Amicus Curiae Brief (footnote 2), para. 115, page 36.
[6] Amicus Curiae Brief (footnote 2), p. 2.
[7] Amicus Curiae Brief (footnote 2), para. 14, page 8.
[8] Amicus Curiae Brief (footnote 2), para. 113, page 36.
[9] Amicus Curiae Brief (footnote 2), p
[10] Consolidated FAQs on the implementation of Council Regulation No 833/2014, Council Regulation No 269/2014, Council Regulation (EU) No 692/2014 and Council Regulation (EU) 2022/263, p. 19, response to question A 7.
[11] German Federal Ministry for Economic Affairs and Climate Action, FAQs about sanctions against Russia, last amended on 4 October 2023, answer to question 51a.
[12] Amicus Curiae Brief (footnote 2), para. 31, p. 12; German Federal Ministry for Economic Affairs and Climate Action, FAQs about sanctions against Russia, last amended on 4 October 2023, answer to question 51.
[13] Anna Salomonsson, Vladimir Poshivalov, Arbitrability, EU Public Policy, and EU Sanctions: The Svea Court of Appeal’s Referral to the CJEU in NV Reibel v. JSC VO Stankoimport, European Investment Law and Arbitration Review, Volume 10, Issue 1 (2025) pp. 111 – 132.
[14] The application was filed on April 16, 2025: https://kad.arbitr.ru/Card/227a5ddc-e0de-4eed-83d8-4b0c083be3e1. For more details see Tom Jones and Sebastian Perry, Russia sues arbitrators and counsel in ECT dispute, Global Arbitration Review, 17 April 2025 and Alison Ross, Wintershall case resumes with challenge to arbitrators, Global Arbitration Review, 3 June 2025.
