The crown jewel: The New York Convention
One of the crown jewels of international arbitration is the New York Convention (NYC), ratified by over 170 sovereign States, including the UK and Russia. The NYC provides a robust and far-reaching enforcement regime, making it easier to enforce arbitral awards than foreign judgments.
Sovereign States that have signed the NYC have committed to recognising and enforcing arbitration awards made in other member States, rather than in the State where enforcement is being sought. The convention mandates that national courts must uphold and enforce these awards, with certain exceptions outlined in the NYC. If the award is issued in an NYC member State and the assets are also located within an NYC member State, the chances of successful enforcement are greatly improved.
Given these circumstances, the UK stands out as a prime destination for enforcing arbitral awards against Russian entities (where the latter has assets within the UK), offering a compelling blend of legal rigour and strategic advantage.
English courts: The knights in shining armour
In the realm of English law, an arbitration award is akin to a royal decree – final and binding, unless the parties have agreed otherwise. According to section 58(1) of the English Arbitration Act 1996 (1996 Act), which remains unchanged by the Arbitration Act 2025, such awards are conclusive, not only for the parties involved but also for anyone claiming through or under them. This principle of res judicata prevents any future challenges of the award's findings of law or fact.
However, the finality of an award does not preclude the right to challenge it through available arbitral processes of appeal or review, as outlined in Part I of the 1996 Act (section 58(2)). These challenges are limited to specific grounds, such as the tribunal's substantive jurisdiction, serious irregularity, and points of law.
The success rate of such challenges continues to be low, with only 5 out of 83 (6%) of applications determined in 2022-2023 succeeding—highlighting the UK’s strong support for arbitration and its commitment to upholding the finality of arbitral decisions.
State immunity: Not always a bulletproof shield
State immunity is a frequently invoked defence when enforcing arbitration awards against sovereign States. This immunity protects a State from the jurisdiction of foreign courts. Under English law, State immunity is governed by the State Immunity Act 1978 (SIA). Section 1 of the SIA states that UK courts do not generally have jurisdiction over disputes involving sovereign States unless specific exceptions, outlined in Sections 2 to 11, apply. These exceptions include situations where the State has waived its immunity, distinguishing between the State's submission to adjudicative and enforcement functions of the courts.A defendant may claim immunity from the jurisdiction of the English court under the SIA or, if adjudicative immunity is not applicable, may claim immunity against execution under section 13 of the SIA. The court cannot exercise its powers under the 1996 Act to enforce an award until it determines that the defendant lacks immunity. Only then can the court assume jurisdiction over the defendant.
In the UK, Russia's attempts to invoke State immunity so far have been met with limited success. In the high-profile Yukos case, the Commercial Court ruled in Hulley Enterprises Ltd v Russia that Russia could not claim immunity under the arbitration exception in Section 9 of the SIA 1978. The court recognised an issue estoppel based on an earlier decision of the Dutch Supreme Court, thus preventing Russia from re-arguing the validity of the arbitration agreement. The court’s decision was affirmed by the Court of Appeal.
Anti-suit injunctions: The legal sword
In 2020, Russia enacted changes to its Arbitrazh (Commercial) Procedure Code allowing local courts to assert exclusive jurisdiction over disputes involving sanctioned parties where sanctions are perceived to hinder access to justice in the agreed-upon forum (Articles 248.1 and 248.2). The Code also empowered Russian courts to issue anti-suit and anti-arbitration injunctions, effectively barring foreign partners from pursuing claims outside of Russia (Article 248.2). On 26 July 2024, the Russian Supreme Court went even further and issued a ruling that restricts the enforcement of international arbitration awards against Russian entities if those awards are rendered by arbitrators from 'unfriendly' States, being countries that imposed sanctions on Russia following its full-scale invasion of Ukraine.
Such an anti-arbitration approach has been met with anti-suit and anti-anti-suit injunctions granted by English courts, upholding arbitration agreements between the parties. Such injunctions would usually prohibit Russian parties from initiating or continuing foreign legal proceedings in breach of an arbitration agreement and requiring the arbitration proceedings to be discontinued. For example, in 2024, in the case of UniCredit Bank GmbH v RusChemAlliance LLC, the Supreme Court upheld the Court of Appeal's judgment, which included a final mandatory anti-suit injunction requiring RusChem to withdraw the proceedings it had initiated in Russia in violation of an arbitration agreement.
This followed a claim filed in the Russian courts by RusChem against UniCredit, seeking payment under bonds. Given that the bonds were governed by an arbitration clause, UniCredit moved to dismiss the claim, arguing that the Russian courts lacked jurisdiction. However, the Russian courts determined that, under Article 248.1 of the Arbitrazh Procedural Code, the dispute fell within the exclusive jurisdiction of the Arbitrazh Courts of Russia. UniCredit successfully sought injunctive relief from the English courts to prevent RusChem from continuing the Russian proceedings.
Other notable examples include Barclays Bank PLC v VEB.RF and Magomedov & Ors v PJSC Transneft & Ors.
Conclusion
The English courts have demonstrated a proactive stance in enforcing arbitration awards against Russian parties, even amidst complex international dynamics and legal challenges. For legal practitioners and claimants alike, the message is unmistakable – when it comes to enforcing arbitration awards against Russian entities, the English courts are ready to play their part with both rigour and resolve.
If you have any questions or would like to discuss any of these topics and what they mean for you and your business, please contact our International Arbitration expert below.
