Die Verletzung von Schieds- und Gerichtsstandsvereinbarungen ist für europäische Unternehmen mit Russlandbezug ein zentrales Risiko. Nach Artikel 248.1 der russischen Zivilprozessordnung können russische Gerichte internationale Zuständigkeiten ignorieren und sich selbst für zuständig erklären. Dies betrifft insbesondere Streitigkeiten mit europäischen Unternehmen, wenn russische Parteien von Sanktionen betroffen sind. Die Gerichte weisen Einreden mangelnder Zuständigkeit in der Regel zurück und setzen Verfahren in der Sache fort. Damit entsteht für europäische Unternehmen ein erhebliches Risiko, vor russischen Gerichten verklagt zu werden – unabhängig von vertraglichen Zuständigkeitsregelungen.
Die Europäische Union hat darauf reagiert und mit Artikel 11 a der Verordnung Nr. 833/2014 eine Möglichkeit geschaffen, vor Gerichten in EU-Mitgliedstaaten Schadensersatz gegen Parteien zu fordern, die Verfahren unter Verletzung solcher Vereinbarungen in Russland einleiten. Für Unternehmen ohne laufende Geschäftsbeziehungen zu Russland kann es sinnvoll sein, diese Ansprüche in der Europäischen Union oder vor vereinbarten Schiedsgerichten geltend zu machen. Unternehmen mit fortgesetztem Russlandgeschäft müssen dagegen mit Beschlagnahmungen oder Gegenklagen in Russland rechnen, insbesondere auch in Bezug auf russische Tochtergesellschaften innerhalb derselben Unternehmensgruppe.
Auch die Anerkennung und Vollstreckung europäischer Urteile oder Schiedssprüche gegen russische Parteien außerhalb der Europäischen Union bleibt herausfordernd. Umgekehrt besteht das Risiko, dass russische Urteile in Drittstaaten anerkannt werden, mit potenziell nachteiligen Folgen für europäische Unternehmen. Artikel 11 a der Verordnung Nr. 833/2014 kann Verluste zwar teilweise kompensieren, ersetzt aber keine vorausschauende Strategie. Dabei sind auch die komplexen Wechselwirkungen von Anti-Suit- und Anti-Anti-Suit-Injunctions zu berücksichtigen, die in verschiedenen Jurisdiktionen unterschiedlich gehandhabt werden.
Vor diesem Hintergrund ist die internationale Rechtslage für europäische Unternehmen deutlich komplexer geworden. Wer grenzüberschreitend tätig ist, muss rechtzeitig Maßnahmen ergreifen, um Zuständigkeitsvereinbarungen zu schützen und Risiken aus parallelen Verfahren zu minimieren. Ob eine Verletzung solcher Vereinbarungen hingenommen oder aktiv bekämpft wird, hängt von den jeweiligen Geschäftsinteressen und Vermögensrisiken ab. In jedem Fall sollten Unternehmen ihre Positionen in Russland, der Europäischen Union und in allen relevanten Drittstaaten sichern.
Before Russian state courts there is currently a stable trend to apply Article 248.1 of the Russian Code of Commercial Procedure (hereinafter the “Russian Code”) to override choice of court and arbitration agreements. If a Russian party files contractual claims against a European counterparty, a Russian state court will declare itself competent to hear the dispute. Russian state courts routinely reject objections by European parties arguing that the claim should be dismissed without a hearing on the merits, due to the existence of an arbitration agreement designating an institution located outside Russia (such as the ICC, SCC, LCIA, SIAC, or others). Instead, courts proceed to hear the case on the merits, relying on Article 248.1 of the Russian Code.
This article analyses the risks and legal remedies available to protect the rights and interests of European parties involved in judicial proceedings before the Russian state courts.[1] European parties conducting – or having previously conducted – business in Russia bear a risk that Article 248 of the Russian Code will be applied, thereby overriding valid choice of court or arbitration agreements. This risk has already materialized and should not be underestimated (see No. II below).
If the European party already initiated proceedings elsewhere, there is a high probability that Russian courts will issue anti-suit or anti-arbitration injunctions. Whether a European party complies with such injunctions or seeks anti-anti-suit or anti-anti-arbitration injunctions in response is of crucial importance, particularly in relation to the imposition of fines. These injunctions place European parties in a legally precarious position, especially when confronted with conflicting obligations arising under international contracts and EU law. The decision to comply with or contest such Russian measures – potentially through counter-injunctions in EU member states or other jurisdictions – can have serious legal and financial repercussions, including enforcement challenges across borders (see No. III below).
While Regulation (EU) No. 833/2014, in particular Article 11 a, and domestic legal remedies, such as Section 280 (1) of the German Civil Code, may offer opportunities for European parties to recover damages resulting from these proceedings, their practical effectiveness remains uncertain (see No. IV below).
Much will depend on the willingness of European courts to grant relief and on the enforceability of such decisions in cross-border contexts. With all these challenges it is, furthermore, important to consider the enforceability and recognition of European decisions in Russia and vice versa (see No. V below).
In light of these developments, European parties must adopt a proactive and strategic approach to dispute resolution when dealing with Russian counterparties. This includes a careful assessment of legal risks, enforcement prospects and the coordination of parallel proceedings in multiple jurisdictions. Whether the remedies granted by EU law will be effective in mitigating risks and damages arising from these complex situations remains to be seen.
1. Exclusive competence of Russian state courts: risks for European parties
Russian state courts utilize Article 248.1 of the Russian Code to establish their exclusive competence. Article 248.1 of the Russian Code was introduced in June 2020. A translation of Article 248.1 of the Russian Code reads as follows:
“1. Unless otherwise established by an international treaty of the Russian Federation or by agreement of the parties, according to which the consideration of disputes with their participation is assigned to the competence of foreign courts, international commercial arbitrations located outside the territory of the Russian Federation, the exclusive competence of arbitration courts in the Russian Federation includes cases:
- in disputes with the participation of persons in respect of which restrictive measures are applied by a foreign state, state association and (or) union and (or) state (interstate) institution of a foreign state or state association and (or) union;
- on disputes of one Russian or foreign person with another Russian or foreign person, if the basis for such disputes is restrictive measures introduced by a foreign state, state association and (or) union and (or) state (interstate) institution of a foreign state or state association and (or) union in relation to citizens of the Russian Federation and Russian legal entities.”
The article establishes the presumption that Russian state courts have exclusive jurisdiction to hear any commercial disputes between Russian and foreign legal entities if a foreign state has imposed sanctions on the Russian party. This article permits a sanctioned Russian party to file proprietary and non-proprietary contractual and non-contractual claims against a European counterparty before Russian state courts.
Prior to 2022, it was fairly rare for Russian state courts to employ Article 248.1 of the Russian Code – it would be used primarily in cases where a foreign state had imposed personal sanctions against a Russian party.
However, the practice of applying Article 248.1 of the Russian Code became more common after 2022. Now the Russian state courts proceed on the assumption that Article 248.1 of the Russian Code applies not only in cases of personal sanctions against the Russian party, but in any other case where the Russian party has been affected by sanctions (for example, if the goods that are the subject of the dispute are covered by sanctions).[2]
Russian state courts apply Article 248.1 of the Russian Code when the contract has an arbitration agreement specifying an arbitration institution located outside Russia. It is also used in cases where the contract has a choice of court agreement which establishes that a foreign state court from a jurisdiction unfriendly to Russia shall be competent to hear disputes arising from the contract (for example, the state courts of England, Latvia, etc.). Over the past three years, there have been only a limited number of cases where a European party managed to prove the validity and enforceability of an arbitration agreement, resulting in termination of the proceedings in the Russian state court.
Thus, there is an enormous risk for European parties that Russian state courts may disregard an arbitration or choice of court agreement and hear the dispute on its merits, holding that the dispute falls under the exclusive competence of the Russian state court. In this instance, a European party, if it has assets in the Russian Federation or third countries which recognise the decisions of Russian state courts (for more details, see No. V below), must assess the risks if it were to participate in or to disregard the judicial proceedings before the Russian state court.
Only in some instances have European parties been successful even though the Russian state court disregarded the arbitration agreement and moved to the consideration of the dispute on its merits. European parties managed to refute the claims of the Russian party in total or to reduce the size of the claims to the minimum possible amount. However, these were the exception rather than the rule.
2. Exclusive competence of Russian state courts: risks for Russian subsidiaries that are part of the same group as a European party
The exclusive competence of Russian state courts bears a risk for Russian subsidiaries that are part of the same group of companies as the European contracting partner of the Russian party. Let us presume that a European party is unable to perform its contractual obligations to a Russian counterparty due to sanctions and has subsidiaries or sister companies in Russia (hereinafter “Russian Subsidiaries”). In such cases, the Russian claimant, understanding that the Russian state court decisions will probably be unenforceable in the European Union (hereinafter the “EU”), not only files claims against the European party (the contracting party), but also names the Russian Companies as co-respondents.
The Russian claimant demands that the Russian Companies be held jointly and severally liable for the defaulted obligations of the European party, asserting that all the co-respondents are part of a single corporate group and have a single decision-making centre, even in instances where the Russian Companies were not involved in the contractual relations between the claimant and the foreign party. For a Russian claimant, attaching the Russian assets of a foreign group is faster and simpler than litigating in foreign courts and/or arbitration institutions and trying to identify group assets in foreign jurisdictions.
This approach of the Russian state courts facilitates that Russian claimants see their claims satisfied with the Russian assets of the foreign group, without requiring recognition and enforcement in a third jurisdiction.
In 2023 and 2024 Russian state courts issued such rulings in various cases, affirming the legitimacy of the claims of Russian claimants,[3] even though previously Russian jurisprudence rejected joint and several liability in similar cases.
In 2025 the Russian Supreme Court heard a landmark case between a Russian bank and Citibank Group.[4] Due to sanctions, the American-based Citibank had not paid a debt to the Russian bank PAO Sovkombank. PAO Sovkombank attempted to recover the debt from the Russian entity of the Citibank group, AO KB Citibank, as a debtor that was jointly and severally liable. All the lower courts had ruled in favour of the Russian bank.
The Russian Supreme Court did not exclude the possibility that Russian companies might be held liable for the actions and debts of a foreign company of their group. The wording of the court decision implies that Russian companies can be held jointly and severally liable, provided that certain preconditions are met.
The Russian Supreme Court stated that debtors only become jointly and severally liable if this is stipulated by contract or established by law. However, in exceptional cases a participant in a corporation and other controlling entities may be held liable to the creditor of the given legal entity if:
When deciding the issue of joint and several liability, the courts should examine the extent of the foreign company’s control over the Russian Subsidiary, based on the following criteria:
Since the Supreme Court has remanded the dispute for a new hearing in the court of first instance, it is still too early to talk about established case law on the issue of the joint and several liability of all group companies for obligations towards a Russian counterparty.
On the one hand, it follows from the decision of the Supreme Court that the mere fact of belonging to the same group of entities is insufficient for the legal entities within this group to be held jointly and severally liable. The position of the Supreme Court reflects the need for the lower courts to be more attentive when they apply the concept of joint and several liability, and to take a more rigorous approach as to what must be proven in this category of disputes.
On the other hand, in this category of disputes the Supreme Court has allowed broad criteria to be used for the joint and several liability of a group of entities; these criteria were initially developed for legislation on bankruptcy and have only been applied in extremely rare cases in non-bankruptcy disputes. The terms “behaviour unrelated to market factors and other objective factors”, “property criterion”, “business risks” and so on are matters of judgment, and may be interpreted differently by the lower courts.
In view of the foregoing, we presume that there is a clear risk for Russian subsidiaries that are part of the same group as foreign companies that they may be held jointly and severally liable for the defaulted obligations of foreign companies of this group to Russian counterparties.
The examples cited above show that Russian Companies risk being drawn into major court disputes as co-respondents regarding contracts between Russian and European entities which had not been performed owing to sanctions. At the same time, interim measures might be imposed on the property of the Russian Companies throughout the protracted litigation, such as the attachment of assets, injunctions on the sale of shares, etc. In this instance, the only option for the Russian Companies would be to proactively present their position in the Russian state court in order to challenge the Russian claimant’s bid to hold them jointly and severally liable and to have interim measures imposed.
If the Russian state court were to satisfy the claims of the Russian claimant with the assets of the Russian Companies, the European parent company might then be entitled to demand the collection of losses from the Russian claimant based on Article 11 a of Council Regulation (EU) No. 833/2014 (for more details, see No. IV below).
1. Injunctions issued by Russian state courts
Article 248.1 of the Russian Code leads to situations in which European parties will initiate arbitration proceedings or state court proceedings outside of Russia and will face parallel proceedings in Russia. If a European party wants to commence arbitration proceedings against a sanctioned Russian party at an arbitration institute, the Russian party is entitled, based on Article 248.2 of the Russian Code, to file a petition with a Russian state court and receive a court order which prohibits the foreign party from continuing the arbitration or court proceedings in the foreign jurisdiction or risk a fine (an anti-arbitration injunction).
Similarly, Article 248.2 of the Russian Code allows a court to issue an injunction on the discontinuation of the judicial proceedings in a foreign state court (anti-suit injunction).[5]
If a European party has assets in the Russian Federation and violates an injunction issued by a Russian state court (hereinafter the “Russian injunction”), then the Russian party is entitled to enforce the fine and satisfy its claim from the Russian assets of the opponent (hereinafter the “Fine”) equal in amount to the claim filed with the Russian arbitration institute (Article 248.2(10) of the Russian Code). It is common practice for a Russian state court to impose such a Fine in favour of a Russian party for the non-compliance by the foreign entity with a valid court injunction.[6] One of the largest Fines in the amount of USD 5 billion was issued by a Russian state court against Port Petrovsk Ltd should the company continue its judicial proceedings against PAO Transneft in the High Court of Justice.[7]
If a case is won by a Russian party, the decision of the Russian state court may be enforced with the Russian assets of the foreign party. The same applies if the Fine is awarded to the Russian party based on Article 248.2 of the Russian Code. In particular, in the dispute of UniCredit Bank vs RusChemAlliance, UniCredit had to withdraw the English injunction as otherwise it would have faced a Fine of EUR 250 million imposed by the Russian state courts. UniCredit pointed out that the English injunction was practically unenforceable as RusChemAlliance did not have assets outside Russia.[8] At the same time, however, maintaining the injunction carried the risk of a significant increase in UniCredit’s liabilities in Russia which could have been enforced with UniCredit’s assets in that jurisdiction.
For example, let us presume that European party X commences arbitration in Paris under the ICC Rules against Russian party Y, in which it demands the value of the work performed in the amount of EUR Z. The arbitral tribunal finds the claims filed by X to be substantiated and satisfies the lawsuit. In parallel, Y files a claim with a Russian state court, demanding that it prohibits X from continuing the arbitration in Paris under the ICC Rules, and – if the injunction is not observed – that X be fined EUR Z in favour of Y. The Russian judge holds that Y’s claims are substantiated and satisfies the lawsuit.
It is clear that subsequently X would secure the recognition and enforcement of the ICC arbitral award in the courts of the contracting states of the New York Convention of 1958 where Y has assets. In turn, Y would secure the recognition and enforcement of the Russian state court’s decision on the collection of the Fine in those countries with which Russia has concluded agreements on recognising court orders and in which X has assets. For the time being, we can only conjecture as to how a foreign court might respond if Y and X were to secure the recognition and enforcement of contradictory decisions in one and the same jurisdiction. Such settlements would result in Russian and European entities running through various jurisdictions in search of each other’s assets.
In the example above the European party X risks losing some or all of its Russian assets. At the same time X cannot fully rule out the risk that the decision of the Russian state court might be recognised in those jurisdictions with which Russia has bilateral agreements on the mutual recognition of the decisions of state courts in commercial disputes. The issue of recognising and enforcing the decision of a Russian state court issued based on Article 248.1 and/or Article 248.2 of the Russian Code would be subject to a review by a foreign court at the place of exequatur, in compliance with the norms of the national law of this state.
As such a decision of the Russian state court on the collection of the Fine would run counter to the provisions of the arbitration agreement and Article 2 of the New York Convention, we assess the likelihood that such a court order might be enforced outside of Russia as low (even in those countries with which the Russian Federation has concluded bilateral agreements on the recognition of court orders). Regarding recognition in the EU, EU courts are required by Article 11 c of Regulation (EU) No. 833/2014 not to enforce any decision based on Article 248 of the Russian Code.
2. Influence of a Russian injunction on arbitration proceedings
Such Russian injunctions may have an influence on arbitration proceedings as well. However, as arbitration is based on the competence-competence principle, which allows arbitrators to independently determine their jurisdiction, subject only to the mandatory rules of the applicable lex arbitri and the law applicable to the arbitration agreement (should it differ from the lex arbitri), it is highly likely that the arbitral tribunal would disregard the Russian injunction. For example, in the case of Uniper vs Gazprom[9] the arbitral tribunal disregarded the Russian injunction and issued an arbitral award in the amount of EUR 13 billion.
3. Injunctions outside Russia
In order to protect its procedural and legal position a European party may be entitled to take countermeasures against a Russian injunction. In particular, a European party is entitled, after the commencement of arbitration, to demand an interim injunction in a foreign court stipulating that the Russian counterpart takes all the necessary steps to seek a stay of the Russian proceedings and refrain from further action there, and also refrain from commencing or pursuing, either within Russia or elsewhere, any other proceedings pertaining to disputes, differences or controversies arising out of, relating to or in connection with the contract, in respect of which the dispute is being considered by the arbitration institution.
For example, the High Court of Hong Kong supported the German bank OWH SE i.L. (previously VTB Bank (Europe) SE) in a dispute with VTB which prohibited the collection of a Fine of EUR 112.6 million from the bank in Russia.[10] By contrast, the Russian commercial court issued a diametrically opposed decision on prohibiting VTB Bank (Europe) SE from commencing proceedings in the High Court of the Hong Kong Special Administrative Region, the Hong Kong International Arbitration Centre (HKIAC), and in other state courts, arbitral tribunals and arbitration courts located outside the Russian Federation. The injunction also included a section regarding the filing of motions and lawsuits on prohibiting the commencement of judicial proceedings in state courts within Russia. The Russian commercial court issued a Fine of approximately EUR 112.6 million to be collected from VTB Bank (Europe) SE in favour of PAO VTB Bank should VTB Bank (Europe) SE breach this injunction.[11]
Similar practice can be seen in the decision of the Court of First Instance of the High Court of Hong Kong in the dispute of Linde vs RusChemAlliance.[12] Notwithstanding the Russian injunction, the foreign court supported the demand of the German party and prohibited the Russian party from commencing court or arbitration proceedings in Russia or third countries arising from the contract.
4. Divergent requirements for issuing injunctions
However, there are different prerequisites for issuing injunctions, depending on the specific jurisdiction. For example, on 17 June 2024, the Higher Regional Court of Düsseldorf held that it was not competent to issue an anti-anti-suit injunction on conducting foreign arbitral proceedings or protecting assets abroad.[13] The Higher Regional Court of Munich issued a different decision in a patent-related case concerning an anti-suit injunction in the US.[14] Furthermore, the Higher Regional Court of Hamm decided that an anti-anti-suit injunction may be admissible and substantiated regarding an anti-suit injunction against the recognition and enforcement of an ICSID arbitral award in the USA.[15] Also in other cases requests for anti-anti-suit injunctions have received mixed results in Germany.[16]
A Dutch state court, which had to decide a request by a Dutch subsidiary of Linde Group to issue an injunction against RusChemAlliance, drew similar conclusions as the Higher Regional Court of Düsseldorf: it held that it lacked the necessary competence.[17]
Consequently, a European party seeking an anti-suit injunction against a Russian party should take note of the national specifics where the injunction has been requested. Furthermore, a European party should be aware of the fact that it may be exposed to fines in Russia.
In view of the apparent practice at present where Russian parties and state courts disregard choice of court or arbitration agreements, foreign parties may seek ways to file claims against Russian companies for damages. The issue as to whether claims might be filed directly against the Russian Federation is not covered in this article.
European parties, however, may have a claim for compensation against Russian parties under Article 11 a of Council Regulation (EU) No. 833/2014 (hereinafter “Regulation No. 833/2014”) (see No. IV.1 below). Furthermore, German parties may also have a claim under Section 280 (1) of the German Civil Code (see No. IV.2 below). German parties may recover damages incurred in the Russian proceedings as well as in proceedings for anti-suit injunctions (see No. IV.3 below). European parties can seek the payment of damages in front of arbitral tribunals or state courts of EU member states (see No. IV.4 below).
The 18th sanctions package against Russia, enacted on 20 July 2025, introduced a new potential claim for damages under Article 11 e of Regulation No. 833/2014. This provision specifically pertains to investor-state dispute settlement proceedings. Given that the same underlying rationale applies to Article 11 e as it does to Article 11 a of Regulation No. 833/2014, this article will not provide further elaboration on this new provision.
1. Claims under Article 11 a of Council Regulation (EU) No. 833/2014
In principle, Article 11 a and 11 b of Regulation No. 833/2014 give a claim for damages against a Russian party that filed a lawsuit in breach of an arbitration agreement. To date there is no case law on this new provision in Germany or, to the best knowledge of the authors, in any other member states of the EU. The reason could be that Article 11 a of Regulation No. 833/2014 has only been introduced by the 14th EU sanctions package against Russia in June 2024 and that there are a number of problems in connection with the unclear and vague wording of Article 11 a of Regulation No. 833/2014.
In general, Article 11 a of Regulation No. 833/2014 provides a new opportunity to claim damages against Russian parties:
“Any person referred to in Article 13, point (c) or (d), shall be entitled to recover, in judicial proceedings before the competent courts of a Member State, any direct or indirect damages, including legal costs, incurred by that person or by a legal person, entity or body that the person referred to in Article 13, point (d), owns or controls, as a consequence of claims lodged with courts in third countries by persons, entities and bodies referred to in Article 11(1), point (a), (b) or (c), 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, provided that the person concerned does not have effective access to the remedies under the relevant jurisdiction.”
Article 11 a of Regulation No. 833/2014 is closely connected to the prohibition of performance under Article 11 of Regulation No. 833/2014. Article 11 a of Regulation No. 833/2014 concerns scenarios where an EU party does not perform its contractual obligations due to the sanctions and a Russian party sues its counterpart before Russian state courts.
As only limited options are available to enforce judgments and arbitral awards in Russia (for more details, see No. V below), it has been discussed that this provision should at least provide EU parties with an offset option. However, the prerequisite is that the EU party has no effective access to legal remedies in the territory concerned. This in turn mirrors Article 248 of the Russian Code.[18]
In general, Article 11 a of Regulation No. 833/2014 does not provide much guidance for its applicants. The provision is vague and practical issues will arise in conjunction with the proof that must be provided as well. In any event, a lawsuit may be brought before European state courts for the recovery of the legal costs incurred in the judicial proceedings in Russia.[19]
2. Claims under Section 280 (1) of the German Civil Code
In addition, in general a claim for damages may be filed pursuant to Section 280 (1) of the German Civil Code. In its judgment dated 17 October 2019 – III ZR 42/19 – the Federal Court of Justice decided that a culpable breach of a jurisdiction agreement triggers the obligation to pay damages.[20] The issue as to whether these principles can be applied to a lawsuit filed in a state court in breach of an arbitration agreement is disputed in literature.[21] The Federal Court of Justice, so far, had no chance to decide on this. English courts and some arbitral tribunals, however, have already awarded damages in some cases.[22]
According to one opinion in literature, the principles of the Federal Court of Justice on the breach of a jurisdiction agreement can also be applied to arbitration agreements.[23] An arbitration agreement has the same meaning and purpose as a jurisdiction agreement: the parties should be able to rely on the agreement in order to achieve legal certainty.
The decisive factor in this respect is whether the requirements of Section 280 (1) of the German Civil Code are met. This presupposes that there has been a breach of duty, that the opposing party is liable and that the German party has suffered damages within the meaning of Section 249 of the German Civil Code:
The issue as to whether conduct in breach of an arbitration agreement constitutes a breach of duty within the meaning of Section 280 (1) of the German Civil Code is disputed in literature. In the opinion of some legal scholars an arbitration agreement merely has a procedural effect. This procedural effect is that it waives the jurisdiction of the state courts and establishes the jurisdiction of a private court.[24] According to other scholars, in addition to the procedural effect, an arbitration agreement should also have the substantive obligation on the exclusive use of arbitration courts.[25]
The Federal Court of Justice adheres to the latter opinion. In its judgment dated 17 October 2019 the Federal Court of Justice decided that a choice of court agreement does not exclude the existence of substantive obligations and that, in addition to procedural obligations, a distinction must be made between the effects of the jurisdiction agreement in terms of disposition and obligation. However, this does not imply that these effects cannot be established simultaneously. This can be compared to a court settlement which has both substantive law and procedural effects.[26]
These principles can also be applied to arbitration agreements. The purpose of a jurisdiction agreement is legal certainty. The contracting parties want to create legal certainty and minimize litigation risks. An agreement on the place of jurisdiction makes it clear to the parties where they can assert their rights in the event of a dispute.[27] Arbitration agreements pursue the same objectives. Against this background, it can also be held that arbitration agreements have the duty of preventing damages if a claim is brought before state courts.[28]
According to Section 280 (1) sentence 2 of the German Civil Code, the plaintiff (in our case the Russian party) is responsible for breach of duty. The latter is in general responsible for intent and negligence under Section 276 (1) sentence 1 of the German Civil Code. In the event of conduct in breach of an arbitration agreement or a choice of court agreement, exculpation will only be possible in exceptional cases.
Russian parties may argue that they have not acted in a culpable manner as they merely used a provision provided by Russian law, i.e. Article 248 of the Russian Code. As Article 248 of the Russian Code contradicts (i) the parties’ intention when entering into an arbitration or choice of court agreement and (ii) the New York Convention, it may still be culpable if a Russian party utilizes this provision in its favor. Within the last years Russian courts started to decide most of the cases in favour of a Russian party. Thus, the Russian party’s behavior may be abusive and, therefore, a culpable or at least negligent breach of an underlying arbitration or choice of court agreement.
3. Damages that may be recoverable
Under Article 11 a of Regulation No. 833/2014 and Section 280 (1) of the German Civil Code, legal costs and probably other damages are recoverable. The German or European party must be placed in the same position as it would have been in if the Russian party suing in breach of the arbitration or choice of court agreement had complied with such agreement and initiated arbitration or state court proceedings. This derives from Section 249 of the German Civil Code.
If a Russian state court has not yet made a legally binding decision, the legal costs may be fully recoverable.[29] If the Russian state court had decided against the German or European party and compels it to assume all the costs, the German or European party must demonstrate that it would have obtained a more favourable decision in an arbitration or state court. It is only in this case that the European or German party is eligible for the difference between the value of the claim that would have been awarded if the case had been considered in the competent arbitration or state court and the value of the claim in the Russian state court ruling. Additionally, it is necessary that the arbitral tribunal or the state court does not recognise the substantive legal force of the Russian decision.[30]
A claim under Article 11 a of Regulation No. 833/2014 is explicitly not limited to legal costs. A European party may recover “any direct or indirect damages, including legal costs”. These direct or indirect damages could also be additional legal costs such as costs in conjunction with anti-(anti-)suit and anti-arbitration injunctions. Furthermore, if a Russian state court decides in favour of the Russian party and the European party is able to demonstrate that a competent court or arbitral tribunal would have decided differently on the merits, the overall loss may be recoverable as well.
Following the Federal Court of Justice, jurisdiction agreements can be interpreted in such a way that they oblige the parties to bring an action before the agreed court. If a party fails to do so, and the derogated court recognizes its lack of jurisdiction, the other party must reimburse the costs incurred on bringing the action before a court that had no jurisdiction.[31]
It should be noted that the derogated court declared that it did not have the necessary jurisdiction in the case resolved by the Federal Court of Justice, which dismissed the case without any deliberation on the reimbursement of legal fees. If some of the costs are awarded to the defendant in breach of the agreement, this amount should be deducted when calculating the damages.[32] If a German state court declares that it has no jurisdiction, the respective decision on costs generally takes priority over an additional claim for reimbursement of costs.[33] However, a claim may be made for the reimbursement of preparatory costs and any costs not covered by the decision of the German state court.[34]
It is highly unlikely that a decision on costs by a Russian state court would take priority over a claim under Article 11 a of Regulation No. 833/2014. Otherwise, the addition to the wording regarding legal costs within Article 11 a of Regulation No. 833/2014 would be meaningless.
It is also highly unlikely that a Russian state court would decline its jurisdiction. In particular, because of Article 248 of the Russian Code, the possibility that a European party will be reimbursed for its costs is largely theoretical. Instead, it can be assumed that the Russian state court would affirm its jurisdiction and rule in favour of the Russian party. Therefore, a European or German party would likely be entitled to claim damages for any losses arising from a negative decision by the Russian state courts. These damages may not be limited to legal costs but could include all direct or indirect losses.
4. Competent forum
If there is a claim for damages, European or German parties must determine the competent forum to decide this claim. In principle, jurisdiction is determined by the contractual agreements between the companies. Accordingly, if there is an arbitration agreement, the arbitration tribunal is responsible for deciding claims for damages arising in connection with circumvention of the arbitration agreement, to the extent that they are covered by its scope.
The objective and subjective scope of application of the arbitration agreement is a matter of interpretation subject to the law applicable to the arbitration agreement. There are essentially two starting points here: (i) the substantive law applicable to the contract as it may also apply to the arbitration agreement or (ii) the law of the seat of arbitration. The issue as to how to effectively determine the law that is applicable to the arbitration agreement is subject of a lively debate in court and legal literature.[35]
Under German law the following applies: Arbitration agreements are in general subject to broad interpretation. Even if claims for the breach of the arbitration agreement do not constitute a dispute based on the meaning of the main contract, they are related to it.[36] Such claims for damages in connection with a breach of the jurisdiction agreement must be brought before the duly designated court.[37] This rationale can be applied to claims under Section 280 (1) of the German Civil Code.
However, the specific forum that has jurisdiction if a claim for damages is brought under Article 11 a of Regulation No. 833/2014 is debatable. According to Article 11 a of Regulation No. 833/2014, the claim should be brought before the competent court of a member state, i.e. a state court. However, there are no clear reasons that prohibit a party from bringing a claim under Article 11 a of Regulation No. 833/2014 in an arbitration proceeding. According to Section 1030 (1) sentence 1 of the German Code of Civil Procedure, any pecuniary claim may be the subject of an arbitration agreement. A claim for damages under Article 11 a of Regulation No. 833/2014 is such a pecuniary claim. In any event, the claim for damages would be arbitrable under German law.
The issue as to whether a German party is required to initiate arbitration proceedings for claims under Article 11 a of Regulation No. 833/2014 if there is an arbitration agreement in a contract has not been discussed or decided yet. At first glance it would appear easy to resolve this issue by looking at the choice of court or arbitration agreement in the contract. However, it is highly likely that a German party could also initiate proceedings in a German state court. A Russian party could probably not raise an objection in connection with the arbitration agreement, as this could be interpreted as the inadmissible exercise of rights and contradictory behaviour. In most cases it has been the Russian party that violated the arbitration agreement.
In Germany there is no general or specific jurisdiction for such claims. Therefore, an international jurisdiction of the German state courts could be considered in this respect.
It might be advisable and helpful to bring such claims to the competent forum which has been chosen in the main contract. If a European party decides to claim before a state court of a member state of the EU under Article 11 a of Regulation No. 833/2014, an opposing Russian party may raise the argument that Article 11 a of Regulation No. 833/2014 imposes the same effect as Article 248 of the Russian Code. Under Article 11 a of Regulation No. 833/2014 a European party may as well be able to avoid an arbitration or choice of court agreement. Claiming damages out of such a breach and conducting a potential breach at the same moment may qualify as contradictory behaviour. In order to avoid a discussion in this respect, a European or German party should bring claims to the contractually agreed forum.
When choosing the forum for bringing such claims, the European or German party should consider whether the recognition and enforceability of the decision in Russia or other foreign countries is needed (see No. V below). If the Russian party has no assets outside of Russia, the recognition and enforceability in Russia would be crucial. If there are assets in Europe or any other country worldwide, either a judgment of a state court or an arbitral award would be most favourable. In order to enforce into assets in Germany, a German state court decision would be sufficient and most practicable.
If a European or German party obtains a favourable decision regarding its claim for damages, the recognition and enforcement of this decision as well as the recognition and enforcement of a Russian decision is highly relevant. In the end recognition and enforcement is decisive for the financial benefit deriving from a favourable decision.
The recognition and enforceability of a decision in a foreign jurisdiction is contingent on several separate issues. A key factor is whether it is the decision of a state court or an arbitral award. An arbitral award benefits from the New York Convention and can be enforced in 172 member states[38] with less procedural effort than a foreign state court decision. State court decisions may in general be enforceable abroad, either if there are conventions such as the Lugano Convention[39] or the Hague Convention[40] or there is reciprocity between both states involved.
The issue as to whether a decision can be enforced or recognized must be addressed with respect to each jurisdiction individually. The article will focus on the recognition of German state court decisions and arbitral awards issued in Germany in Russia and vice-versa. This question is relevant for the question whether decisions under Article 248 of the Russian Code or decisions on claims for damages due to the violation of arbitration or choice of court agreements can be enforced in Russia and/or Germany.
1. Enforcement and recognition of arbitral awards
In general, the enforcement of arbitral awards issued in Russia in Germany does not differ from any other foreign arbitral award issued in any other country that is a contracting state of the New York Convention. Under German law, the recognition and enforcement of arbitral awards is covered by Sections 1060 to 1061 of the German Code of Civil Procedure.
According to Section 1061 of the German Code of Civil Procedure, foreign awards can be recognised. These regulations enshrine the principle of the New York Convention. The Higher Regional Court of Munich held that the European Convention on International Commercial Arbitration of 1961 would in principle take precedence before the New York Convention in the case of arbitral awards issued by an arbitral tribunal located in Russia. However, the most favourable set of rules must be applied.[41] Thus, the enforcement of arbitral awards issued in Russia may be even easier than under the New York Convention. Article IX (2) of the European Convention on International Commercial Arbitration of 1961, for instance, limits the reasons for declining the recognition and enforceability of foreign arbitral awards under Article V (1)(e) of the New York Convention to the reasons listed in Article IX (1) of the European Convention on International Commercial Arbitration of 1961.
Contrary to this decision, on 13 May 2025 the Higher Regional Court of Stuttgart refused to enforce an arbitral award issued in Russia and held that it could not be recognised in Germany.[42] This decision is not a sign that German courts will be less arbitration-friendly in future. It is instead indicative of the European-Russian relations in the past years, i.e., the sanctions regime.
The dispute in question pertaining to the arbitration proceedings conducted in Russia derived from a supply contract between a German party and a Russian party. The contract included an arbitration agreement on the resolution of any disputes in Russia. After February 2022, the German party decided to stop delivering goods to Russia and to discontinue its business relations with Russia.
The Russian party initiated arbitration proceedings in Russia for the repayment of an advance. The German party referred to the sanctions against Russia and argued that it was unable at present to repay the advance. Additionally, the German party filed claims against the Russian party. The arbitral tribunal issued an arbitral award holding that the German party must pay to the Russian party. The Russian party initiated proceedings in the Higher Regional Court of Stuttgart for the recognition and enforcement of this arbitral award.
The Higher Regional Court of Stuttgart decided to refuse to recognise the arbitral award for the moment on the grounds that the recognition and declaration of the enforceability of the award would contravene the fundamental principles of the German legal system, i.e. ordre public, existing at the moment. A violation of the ordre public is assumed if the enforcement of the obligations arising from the arbitral award is not allowed under German law.
The Higher Regional Court of Stuttgart decided that the enforcement of the arbitral award would violate Article 3 k (1) of Regulation No. 833/2014. Article 3 k (1) of Regulation No. 833/2014 prohibits the direct or indirect delivery of certain goods to Russia. As the goods delivered by the German party are included in the respective list of goods in Annex XXIII of Regulation No. 833/2014, under Article 11 (1) of Regulation No. 833/2014, all claims in connection with contracts or business relating to these goods are not to be exercised and executed as long as a Russian person or party requests execution. Therefore, it was held that the repayment of the advance was prohibited under Article 11 (1) of Regulation No. 833/2014.
Such a violation of the EU sanctions against Russia would have constituted a criminal offence under Section 18 et seq. of the German Foreign Trade Act or would have qualified at the very least as an infringement under Section 82 of the German Foreign Trade Act. As the lifting of the EU sanctions cannot be predicted at the moment, the Higher Regional Court of Stuttgart decided that the arbitral award contravenes ordre public at the moment and, therefore, cannot be recognised and enforced in Germany. As the Higher Regional Court of Stuttgart has not acknowledged any of the other arguments raised by the German party, the arbitral award may be recognised whenever the EU sanctions in this respect are lifted.
The decision of the Higher Regional Court of Stuttgart is attributable to the EU sanctions against Russia. Consequently, the sanctions apply not only to the repayment of advances for the delivery of goods per se, but also to the recognition of arbitral awards which contravene EU sanctions. The Higher Regional Court of Stuttgart correctly pointed out that the recognition of such arbitral awards contravenes German law at present. If the EU sanctions are lifted, the recognition and enforcement of foreign awards concerning the performance of obligations previously subject to sanctions should no longer constitute a violation of ordre public. Consequently, and little surprisingly, the Kammergericht, i.e. the Higher Regional Court of Berlin, confirmed in proceedings under Section 1032 (2) of the German Code of Civil Procedure that arbitration is admissible even if one party is subject to sanctions in general.[43]
Following the enactment of the 18th sanctions package against Russia on 20 July 2025, Regulation No. 833/2014 has been amended to include provisions in Article 11 (2) stating that decisions not issued by a court of an EU member state, arising from investor-state dispute settlement proceedings in connection with measures imposed under Regulation No. 833/2014 and Regulation No. 269/2014, shall not be recognized or enforced. This applies equally to requests for assistance during investigations or any other adverse outcomes arising from such proceedings.
The procedure for recognising arbitral awards in Russia is based on the New York Convention, Articles 34–36 of Law No. 5338-1 of the Russian Federation dated 7 July 1993 “On International Commercial Arbitration” and Articles 241–246 of the Russian Code.
It is clear that arbitral awards issued by an arbitral tribunal in breach of a Russian injunction (for more details, see No. III above) will not be recognised in Russia. Regarding arbitral awards that do not violate a Russian injunction, there is still a risk that such arbitral awards may not be recognised in Russia.
Even though the Russian Federation is a contracting state of the New York Convention, at present there is a perceptible negative trend before Russian state courts regarding the recognition and enforcement of arbitral awards issued by foreign arbitration institutes in so-called “unfriendly” jurisdictions.
In a recent case the Russian Supreme Court refused to recognise and enforce a foreign arbitral award in the Russian Federation stating, inter alia, the following:[44]
At present this negative approach is not predominant in Russian judicial practice. However, given the current sanctions regulations, one cannot rule out the risk that it might become more common.
2. Enforcement and recognition of state court decisions
The recognition of Russian judgments and state court decisions in Germany is subject to legal restrictions, primarily due to the lack of reciprocity required under Section 328 (1) No. 5 of the German Code of Civil Procedure. This means that in general Russian judgments and state court decisions are not recognised because Russia does not systematically recognise German judgments in return.
An exemplary decision in this context is the judgment of the Hanseatic Higher Regional Court of Hamburg dated 13 July 2016, in which the court denied the recognition of a Russian judgment due to the lack of reciprocity.[45]
In a notable exception, in a decision dated 23 October 2024 the Commercial Court of Saint Petersburg and Leningrad Region recognised the judgment of the Regional Court of Stuttgart dated 27 May 2021. This was based on the principle of international comity, despite the lack of a bilateral treaty between Germany and Russia.[46] This decision was recently overturned and is now being reconsidered.[47]
Unless Russia begins to recognise German judgments and state court decisions consistently or a binding agreement is established, Russian judgments and state court decisions will continue to face significant hurdles for recognition in Germany.
Foreign judgments and state court decisions must be recognized by a Russian state court before they can be enforced in Russia. Recognition and enforcement are carried out by a commercial court further to the respective application of a party. A judgment is recognised and enforced if there is a respective international treaty or in certain instances subject to the application of the principles of international comity and reciprocity.
The Russian Federation has concluded agreements with Algeria, Argentina, Armenia, Azerbaijan, Belarus, China, Egypt, India, Kazakhstan, Tajikistan, Tunisia, Uzbekistan, Vietnam and a number of other countries on the reciprocal recognition of court decisions.
Pursuant to Article 244 of the Russian Code, a Russian court may refuse to recognize a foreign judgment or court decision in instances where
The grounds for refusing to recognise judgments and court decisions may differ, depending on the provisions of the respective international treaty concluded between the Russian Federation and a foreign country, but are similar in most instances.
In addition, as indicated above, Russian courts may recognise and enforce foreign judgments and court decisions based on the principle of reciprocity. To do so, the applicant must not only provide the court with references to Russian and foreign procedural law, but also refer to the positive judicial practice in that foreign state which demonstrates that the judgments of Russian courts are recognised in that foreign state. The principle of reciprocity on recognising judgments and court decisions is stipulated by Russian law, namely by the bankruptcy laws (Article 6 of Article 1 of the Russian Bankruptcy Law), but can also be found in law enforcement practice in other branches of the law.[48]
In most instances, if there is no international treaty, Russian courts refuse to recognise foreign judgments and court decisions as the petitioner failed to prove that there is reciprocity in the foreign state.[49]
As indicated above, the Russian Federation has concluded agreements with a number of countries on the reciprocal recognition of court decisions (see lit. b) above). In connection with this fact, there is a significant risk that the decision of a Russian state court on the collection of the Fine (see No. III.1 above) and/or decisions or judgments on the merits rendered by Russian state courts in breach of the arbitration agreement (or choice of court agreement) (see Nos. II.1 and III.1 above) might be recognised in the indicated jurisdictions.
Therefore, there is a significant risk that Russian judgments and state court decisions will be recognized and enforced in some jurisdictions. European parties with subsidiaries and assets worldwide will therefore face a financial risk in any of these jurisdictions.
3. Non-recognition and non-enforcement of decisions under Article 248.1 of the Russian Code in Europe
Within the EU, Russian judgments and decisions of a Russian state court under Article 248.1 of the Russian Code will not be recognized. In order to guarantee legal certainty for European parties Article 11 c of Regulation No. 833/2014 has been introduced. Article 11 c of Regulation No. 833/2014 expressly prohibits EU courts from recognizing and enforcing such Russian judgments and decisions. This might also apply to decisions by courts outside the EU on recognising or enforcing Russian state court decisions.
In June 2024 the Higher Regional Court of Düsseldorf decided that an anti-anti-suit injunction cannot be granted, inter alia, as the Russian decision under Article 248.1 of the Russian Code was legal under Russian law.[50] Applying this rationale to the recognition and enforcement of Russian judgments and decisions under Article 248.1 of the Russian Code, it could be argued that such judgments and decisions may also be recognisable and enforceable. This uncertainty has been resolved with Article 11 c of Regulation No. 833/2014 in the 15th sanctions package in December 2024.
Under Article 11 c of Regulation No. 833/2014, the opinion of the Higher Regional Court of Düsseldorf may no longer be correct. Russian judgments and decisions under Article 248.1 of the Russian Code are no longer considered to follow EU law. Consequently, the question whether a decision is legal under Article 248.1 of the Russian Code is not relevant for the recognition and enforcement in the EU.
In addition to the ongoing geopolitical tensions between the EU and Russia, legal systems in both regions have equipped parties to pursue reciprocal claims. While Article 248.1 of the Russian Code has long permitted Russian courts to assert jurisdiction despite arbitration or choice of court agreements, the EU has recently introduced countermeasures. Similar to the anti-anti-suit/arbitration injunction mechanism, the possibility of claiming damages in the courts of an EU member state under Article 11 a of Regulation No. 833/2014 forms part of the EU’s judicial defence system.
European parties without current business relationships to Russia and without any plans to conduct business there in the near future may wish to consider claiming damages in an EU state court or before a competent arbitral tribunal. Those with ongoing business in Russia risk having their Russian assets seized and lost, as it is safe to assume that Russian parties will seek injunctive relief against these proceedings or claim damages against them in Russia.
Attempts to have such judgments/arbitral awards against Russian parties recognised and enforced outside the EU may be challenging. Furthermore, European parties may face negative consequences if countries outside the EU recognise Russian judgments and decisions against them. Article 11 a of Regulation No. 833/2014 could help to offset those losses.
Overall, the international legal landscape has become significantly more complex. Companies operating across borders must adapt to these developments. Regulation No. 833/2014 reinforces the position of European parties seeking to uphold arbitration or choice of court agreements, aiming to ensure that disputes are resolved by the designated competent forum.
In any event, a European party must carefully consider whether to accept a potential breach of such an agreement or to actively challenge proceedings initiated in Russia. Regardless of the approach taken, it is advisable to safeguard the European party’s interests on all fronts – in Russia, within the EU, and in any other relevant jurisdiction.
Zusätzlich zu den anhaltenden geopolitischen Spannungen zwischen der EU und Russland haben die Rechtssysteme beider Regionen die Parteien befähigt, gegenseitige Ansprüche geltend zu machen. Während Artikel 248.1 des russischen Gesetzbuchs den russischen Gerichten seit langem erlaubt, trotz Schieds- oder Gerichtsstandsvereinbarungen ihre Zuständigkeit geltend zu machen, hat die EU kürzlich Gegenmaßnahmen eingeführt. Ähnlich wie der Mechanismus der Anti-Anti-Suit-/Arbitration Injunction ist die Möglichkeit, vor den Gerichten eines EU-Mitgliedstaates gemäß Artikel 11 a der Verordnung Nr. 833/2014 Schadensersatz geltend zu machen, Teil des Rechtsschutzsystems der EU.
Europäische Unternehmen, die derzeit keine Geschäftsbeziehungen zu Russland unterhalten und auch nicht vorhaben, in nächster Zeit dort Geschäfte zu tätigen, könnten in Erwägung ziehen, vor einem staatlichen Gericht in der EU oder vor einem zuständigen Schiedsgericht Schadensersatzansprüche geltend zu machen. Diejenigen, die derzeit Geschäfte in Russland tätigen, riskieren, dass ihre russischen Vermögenswerte beschlagnahmt werden und verloren gehen, da davon auszugehen ist, dass russische Parteien Unterlassungsklagen gegen diese Verfahren erheben oder in Russland Schadensersatzansprüche gegen sie geltend machen werden.
Versuche, solche Urteile/Schiedssprüche gegen russische Parteien außerhalb der EU anerkennen und vollstrecken zu lassen, sind schwierig umzusetzen. Außerdem könnten europäische Parteien mit negativen Folgen rechnen, wenn Länder außerhalb der EU russische Urteile und Entscheidungen gegen sie anerkennen. Artikel 11 a der Verordnung Nr. 833/2014 könnte dazu beitragen, diese Verluste auszugleichen.
Insgesamt ist die internationale Rechtslandschaft deutlich komplexer geworden. Grenzüberschreitend tätige Unternehmen müssen sich auf diese Entwicklungen einstellen. Die Verordnung Nr. 833/2014 stärkt die Position der europäischen Parteien, die Schiedsgerichtsvereinbarungen oder Gerichtsstandsvereinbarungen aufrechterhalten wollen, um sicherzustellen, dass Streitigkeiten durch das zuständige Gericht beigelegt werden.
In jedem Fall muss eine europäische Partei sorgfältig abwägen, ob sie eine mögliche Verletzung eines solchen Abkommens akzeptiert oder aktiv gegen ein in Russland eingeleitetes Verfahren vorgeht. Unabhängig von der gewählten Vorgehensweise ist es ratsam, die Interessen der europäischen Partei an allen Fronten zu wahren – in Russland, innerhalb der EU und in allen anderen relevanten Rechtsordnungen.
Dr. Tobias Pörnbacher
Natalia Bogdanova
Note: This article was originally published in IWRZ – Zeitschrift für Internationales Wirtschaftsrecht, 2025, p. 239.
