Survey of case law on the invalidation of transactions concluded in violation of special economic measures
This review is dedicated to issues arising from the invalidation of transactions concluded in circumvention of the restrictions established by the Russian state in response to the sanctions introduced by the United States, the European Union, and their allies. This set of regulatory acts is also known as Russian counter-sanctions which have the goal of retaining foreign capital and limiting the movement of financial assets out of the country.
The counter-sanctions have had a significant effect on transactions with individuals and legal entities associated with so-called unfriendly states (hereinafter "unfriendly states"). They cover virtually all the key areas of the financial operations of foreign companies, for example, the disbursement and repayment of loans, the payment of dividends and royalties, and the sale and purchase of assets.
Government agencies deploy proactively a toolkit that draws on civil, administrative, and criminal law to prevent the circumvention of the counter-sanctions during the conclusion of transactions. One of the legal tools most commonly used for this purpose involves the invalidation of transactions that had been concluded in breach or evasion of Russia’s counter-sanctions.
Сertain norms on the invalidity of transactions stipulate adverse material consequences such as confiscation. For this reason, the application of these measures should be taken into account when structuring future transactions, assessing the risks arising from transactions that have already been concluded, as well as in the broader context of sanctions compliance.
We present this review first and foremost for companies from EU countries that retain to varying degrees ties with the Russian market, either directly or through their subsidiaries.
