The European Union’s 20th package of sanctions against Russia, adopted on 23 April 2026, is of particular relevance to arbitration users, as it addresses two practical issues: relief before EU Member State courts against certain Russian proceedings brought in disregard of arbitration clauses; and the treatment of arbitral cost awards against sanctioned parties.
A central feature is the new Article 11ca of Regulation (EU) No 833/2014. It applies, in particular, where proceedings are brought before Russian courts in connection with contracts or transactions affected by EU sanctions, in breach of an exclusive jurisdiction or arbitration clause, or pursuant to Articles 248.1 or 248.2 of the Russian Arbitration Procedure Code or equivalent legislation. These provisions, commonly referred to as the “Lugovoy Law”, allow Russian courts to assume jurisdiction over certain sanctions-related disputes notwithstanding agreed jurisdiction or arbitration clauses. Their practical impact was also addressed at the HIAD DIS Side Event “Arbitration and Enforcement Proceedings in the Age of EU-Sanctions and the Russian Lugovoy Law”. In such cases, affected EU persons may seek an order from the competent courts of an EU member state upholding the agreed clause and ordering the Russian party not to initiate, or to discontinue, the Russian proceedings. Non-compliance may result in financial penalties payable to the EU person.
A further arbitration-specific amendment concerns the release of frozen funds. New Article 5c of Regulation (EU) No 269/2014 allows Member State authorities, under defined conditions, to authorise the release of frozen funds or economic resources where an arbitral award orders a listed person or entity to pay the costs of arbitral proceedings to a non-listed, non-Russian opposing party. The derogation is limited to arbitration costs, including tribunal fees, institutional administrative fees and reasonable legal and procedural costs, and does not extend to damages, interest or other substantive claims.
The DIS welcomes the amendment concerning the release of frozen funds as a first step towards placing arbitral awards on the same footing as court judgments regarding the enforcement against frozen assets pursuant to Regulation (EU) No 269/2014 (for more details, see the discussion in Newsletter 02/2023, “Update on economic sanctions: enforceability of awards in frozen assets”). At the same time, the DIS deplores that the amendment remains very limited, as it is confined to certain arbitration costs and does not extend to damages, interest or other substantive claims.
The DIS will continue to monitor developments in the area of economic sanctions and provide information on any new developments in future newsletter contributions. For practical guidance on sanctions-related issues in DIS proceedings, please see the DIS FAQs on Sanctions.
Carina Alcoberro