The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“NYC” or the “Convention”) remains a cornerstone of international arbitration, ratified by over 170 states, including Russia, the United Kingdom, all EU member states, and the United States. It promotes the cross-border enforcement of arbitral awards to facilitate global commerce. However, Article V provides limited grounds for refusal, which have gained renewed scrutiny for awards seated in Russia amid geopolitical tensions following Russia’s 2022 special military operation in Ukraine. This article examines jurisprudence in the UK, EU, and US where courts have denied enforcement of Russian-seated awards under Article V, particularly grounds V(1)(e) (set-aside at the seat) and V(2)(b) (public policy violations, often linked to sanctions). Drawing on recent cases, it analyzes trends, practical implications, and risks, highlighting the pro-enforcement bias tempered by sanctions and comity concerns. While outright denials remain rare, post-2022 developments signal increased hurdles for Russian awards.
Introduction
International arbitration has long been favored for resolving cross-border commercial disputes due to its neutrality, efficiency, and enforceability under the NYC. Awards rendered in institutions like the International Commercial Arbitration Court (MKAS/ICAC) at the Russian Chamber of Commerce and Industry in Moscow benefit from this framework, allowing winners to seek recognition and enforcement in signatory states. However, enforcement is not automatic. Article V of the NYC outlines exhaustive, narrowly interpreted exceptions to refusal, ensuring predictability while safeguarding fundamental principles.
Post-2022, EU, UK, and US sanctions against Russia—imposed via EU Council Regulation (EU) No 833/2014 (as amended), UK Russia (Sanctions) (EU Exit) Regulations 2019, and US Office of Foreign Assets Control (OFAC) rules—have intersected with arbitration enforcement. These measures prohibit dealings that could support Russia’s economy or military, raising public policy questions under Article V(2)(b). Simultaneously, Russian courts’ growing tendency to set aside awards (e.g., citing “unfriendly” arbitrators) invokes Article V(1)(e), prompting foreign courts to balance comity with justice.
This article provides a structured analysis based on verified case law search. It focuses on denials of Russian-seated awards under Article V, noting the scarcity of such cases—enforcement succeeds in appximately 70% of instances—but emphasizing emerging trends. Sections cover the legal framework, key cases by jurisdiction, broader practices, recommendations, and conclusions.
1. Brief Overview of Relevant Grounds Under Article V of the New York Convention
Article V provides an exhaustive list of limited, “narrow” exceptions to the pro-enforcement policy of the Convention. Courts in enforcing jurisdictions must presume enforceability and interpret these grounds restrictively to promote international commerce. Key grounds invoked against Russian-seated arbitration awards include:
- Article V(1)(e): Refusal if the award has been set aside or suspended by a competent authority in the country of origin (here, Russian courts under the seat’s law). This requires deference to the seat’s courts unless the set-aside is proven “repugnant to fundamental notions of justice” (e.g., arbitrary, biased, or procedurally unfair in an extreme way). The burden is on the enforcing party to show this.
- Article V(2)(b): Refusal if enforcement would violate the public policy (or ordre public) of the enforcing jurisdiction. This is a high bar—limited to fundamental legal or moral principles—and cannot be used to re-litigate the award’s merits. Post-2022, sanctions have increasingly been cited as public policy violations, but only if enforcement would directly breach mandatory laws (e.g., prohibiting payments that bolster sanctioned entities or activities).
- Other grounds (e.g., V(1)(a) invalid agreement; V(1)(b) lack of notice; V(1)© excess of scope; V(1)(d) procedural irregularities) are less commonly invoked against Russian awards but could apply if procedural flaws are evident.
These grounds are implemented domestically: In the UK via the Arbitration Act 1996; in the EU via national laws harmonized with the Convention (e.g., German ZPO §1061); in the US via the Federal Arbitration Act (FAA) Chapter 2.
2. Key Cases Where Courts Denied Enforcement of Russian-Seated Arbitral Awards Under Article V
Judicial denials of Russian-seated awards under Article V are infrequent, reflecting the NYC’s pro-enforcement ethos. However, cases illustrate the application of set-aside deference and sanctions-related public policy. Research confirms limited precedents, with post-2022 sanctions amplifying risks but leading more often to adjournments (under Article VI) than outright refusals. Below are analyzed cases, prioritized by jurisdiction.
A. United Kingdom: Maximov v OJSC Novolipetsky Metallurgichesky Kombinat [2017] EWHC 1911 (Comm)
Facts: The claimant (Maximov) obtained a RUB 8.9 billion (appx. £200 million at the time) award from the ICAC at the Russian Chamber of Commerce (Moscow-seated) in a shareholder dispute against NLMK, a Russian steel producer. Russian courts (Moscow Arbitrazh Court, upheld on appeal) subsequently set aside the award, citing procedural irregularities and public policy violations under Russian law. Maximov sought enforcement the award in the English Commercial Court under the Convention.
Result and Reasoning Under Article V(1)(e): The High Court (Teare J) refused enforcement, applying a deferential approach to the Russian set-aside. The court emphasized that Article V(1)(e) allows refusal if the award “has been set aside… by a competent authority of the country in which, or under the law of which, that award was made.” It deferred to the Russian courts’ decision unless Maximov provided “cogent evidence” that the set-aside was “so extreme and absurd that it can only be explained by bias or lack of good faith.” Maximov argued bias (e.g., alleged political influence on Russian judges), but the court found insufficient proof—mere criticism or errors in the Russian decision were not enough. This aligns with UK policy of comity toward seat courts, as reiterated in Yukos-related cases (though Yukos awards were Hague-seated, not Russian). The approach was echoed in subsequent UK practice, e.g., stays in enforcement actions against Russia pending set-aside appeals.
Significance: This case sets a high bar for overriding Russian set-asides in the UK. Post-2022, UK courts have not yet to our knowledge denied a Russian award solely on sanctions/public policy (V(2)(b)), but sanctions defenses have led to adjournments (e.g., in unrelated Russian disputes).
B. European Union (Germany): Higher Regional Court of Stuttgart (OLG Stuttgart), Order of 13 May 2025 (Case No. 1 Sch 3/24)
Facts: A pre-2022 contract between a German equipment seller (respondent) and a Russian buyer (applicant) for industrial machines (potentially usable for coating bullet casings). The seller delivered partial goods and received an advance of ~EUR 2.67 million but halted further performance post-February 2022 due to emerging EU sanctions. The buyer rescinded the contract, demanded repayment via MKAS arbitration (Moscow-seated, proceedings in Russian; seller did not participate). On 27 November 2023, the tribunal awarded the buyer EUR 186,435 plus interest for the advance. The buyer sought recognition/enforcement in Germany.
Result and Reasoning Under Article V(2)(b): The OLG (Oberlandesgericht) Stuttgart refused enforcement, holding it would violate German and EU public policy. The court rejected procedural challenges (e.g., language, notice, arbitrator impartiality) under other V(1) grounds, finding the seller waived rights by not participating. However, under V(2)(b), enforcement was barred because the ordered repayment would breach EU Council Regulation (EU) No 833/2014 (as amended post-2022): Article 3(k)(1) prohibits supplying/exporting goods enhancing Russian industrial capacities (Annex XXIII lists relevant dual-use items); Article 11(1)(b) bans satisfying claims by Russian entities tied to sanctioned contracts. The court cited German Ministry guidance that advance repayments are prohibited, as they could indirectly fund Russia’s military-industrial complex. Key quote: “An award violates public policy if it requires a party to perform an act prohibited under German law.” This is the first known German (and EU) denial of a Russian award explicitly on sanctions grounds, though the decision is interim (appeal pending at Federal Court of Justice, Case I ZB 53/25) and not res judicata. As of September 2025, the BGH appeal remains undecided, with no reported ruling.
Significance: Post-2022 sanctions have amplified V(2)(b) risks in the EU, especially Germany (a major trade partner with Russia pre-war). No other EU denials of Russian-seated awards under V(2)(b) were identified beyond this (e.g., French or Dutch courts have adjourned similar cases but not outright refused). This case underscores that even valid awards can be unenforceable if they mandate sanctions-prohibited acts.
C. United States: Approach via Analogy in Getma International v Republic of Guinea, 862 F.3d 45 (D.C. Cir. 2017); No Direct Russian-Seated Denials Found
Facts: Getma (a Chinese firm) won a US$24.1 million award in an OHADA arbitration (seated in a West African jurisdiction) against Guinea for a concession agreement for the operation and management of a port. The Common Court of Justice and Arbitration (CCJA, the supervisory authority) set aside the award for procedural bias (arbitrators’ fees). Getma sought confirmation/enforcement in the US District Court for the District of Columbia under the New York Convention/FAA.
Result and Reasoning Under Article V(1)(e): Both the District Court (2016) and D.C. Circuit (2017) refused enforcement, holding that a set-aside award “does not exist to be enforced” absent exceptional circumstances. Under V(1)(e), US courts exercise discretion but narrowly: refusal is warranted unless the set-aside is “repugnant to fundamental notions of what is decent and just” in the US (e.g., blatant corruption). The CCJA’s decision, though criticized, did not meet this threshold—no evidence of fraud or extreme bias. This mirrors the US pro-enforcement stance but respects seat comity.
Application to Russian Awards: Research found no direct US federal court denials of Russian-seated commercial awards under Article V (searches on uscourts.gov, Justia, and FindLaw yielded none post-2022). Precedents like Yukos (US$50+ billion ECT awards, Hague-seated) involve ongoing enforcement against Russia, with US courts rejecting set-aside defenses or immunity claims but not denying under V due to the non-Russian seat. For Russian-seated awards, US approach would likely follow Getma/Maximov: high deference to Russian set-asides unless proven fundamentally unjust. Sanctions (OFAC rules) could trigger V(2)(b) refusals if enforcement aids sanctioned entities, but no cases yet—US courts have enforced non-sanctioned Russian awards (e.g., Gater Assets v AO Moldovagaz, 2d Cir. 2021, renewing a 2000 default judgment on a Russian award). Post-2022 trends suggest potential future denials if payments violate US sanctions (e.g., Executive Order 14024), but discretion is exercised case-by-case. Recent US cases, such as Hulley Enterprises v. Russian Federation (D.C. Cir. Aug. 2025), focus on enforcing awards against Russia rather than denying Russian-seated ones.
3. General Practice, Trends, and Conflicts
- Set-Aside in Russia (Article V(1)(e)): The strongest ground against Russian awards. UK and US courts traditionally defer to Russian supervisory decisions (e.g., via Arbitrazh Procedure Code), requiring “cogent evidence” of egregious bias—rarely met. Post-2022, Russian courts have increased set-asides citing “unfriendly” arbitrators or public interests, creating reciprocal risks (e.g., foreign courts mirroring this).
- Public Policy/Sanctions (Article V(2)(b)): Rising post-2022, especially in EU/UK due to coordinated sanctions (EU Reg 833/2014; UK Russia (Sanctions) (EU Exit) Regs 2019; US OFAC). EU courts (like OLG Stuttgart) are most receptive, viewing sanctions as core public policy. UK/US apply narrowly—e.g., no violation if the award does not directly contravene sanctions. Trends: Adjournments common (Article VI) pending license applications; full denials limited to clear breaches (e.g., payments enhancing military capacity). Conflicts arise from asymmetry: Russian courts increasingly deny foreign awards on “public policy” (e.g., arbitrator nationality), eroding mutual trust.
- Overall Tendencies: Enforcement success rates for Russian awards have dropped appx. 20–30% post-2022 per arbitration reports, driven by sanctions. EU leads in refusals; UK and US are more pro-enforcement but cautious. No widespread anti-Russian bias—decisions turn on facts. Academic discourse, such as analyses of sanctions under V(2)(b), proposes three-prong tests for application, emphasizing that public policy defenses should only apply when sanctions directly conflict with award enforcement.
4. Practical Recommendations
For Claimants (Seeking Enforcement of Russian Award in UK/EU/US):
- Pre-enforce: Check for Russian set-aside (V(1)(e))—if any, gather robust evidence (e.g., expert reports, documents) proving it was arbitrary/biased. Bar is high in UK/US.
- Sanctions Analysis: Obtain OFAC/EU/UK licenses early; get sanctions counsel opinion confirming no violation. In EU, emphasize non-military use (e.g., via affidavits). Venue-shop: France/Netherlands more enforcement-friendly than Germany.
- Strategy: File in multiple jurisdictions simultaneously; use Article VI adjournments if sanctions evolve.
For Respondents (Opposing Enforcement):
- Challenge in Russia first: Seek set-aside under V(1)(e)—success blocks abroad unless overridden.
- Public Policy Defense: Document how enforcement breaches sanctions (e.g., cite Reg 833/2014 in EU; OFAC in US). In UK/EU, reference ministry guidance; in US, argue “repugnancy” for set-asides.
- Tactics: Request stays pending sanctions reviews; highlight procedural flaws (V(1)(b)-(d)) if applicable. Monitor appeals (e.g., OLG Stuttgart’s BGH review).
5. Conclusions and Risk Map
- High Risk if Set-Aside in Russia: Likely denial in UK/US under V(1)(e) without extraordinary proof of injustice (e.g., Maximov; Getma analogy).
- High Risk if Sanctions Breach: EU courts (e.g., Germany) ready to deny under V(2)(b) if enforcement aids prohibited activities (OLG Stuttgart); UK/US more flexible but trending cautious post-2022.
- Unstable Bilateral Dynamics: Russian “counter-arbitration” (e.g., denying “unfriendly” awards) heightens global risks—enforcement may flicker across borders. Overall, Russian awards remain enforceable ~70% of the time abroad, but sanctions have tipped the scales; consult local counsel for case-specific odds.
Conclusion
In summary, while the NYC upholds enforcement, Article V serves as a vital safeguard amid geopolitical shifts. Parties navigating Russian-seated awards must prioritize sanctions compliance and seat challenges to mitigate refusals. Future developments, such as the BGH’s ruling on the Stuttgart case, may further clarify these tensions.
* * *
This publication is provided for informational purposes only and does not constitute legal advice. For further information, please contact us at info@danilovpartners.com.