Fidelity to the Contract and Russian Sanctions

By April 15, 2024 No Comments
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Renaissance Securities (Cyprus) Limited -v- Chlodwig Enterprises Limited and Ors [2023] EWHC 2816 (Comm)

In November of last year, the Commercial Court was faced with the question of whether to grant urgent injunctive relief against Defendants domiciled in Russia, where there was an apparent conflict between Russian statute and an arbitration clause.

The decision demonstrates the Court’s willingness to uphold arbitration agreements and to take proactive steps to prevent sanctioned entities from pursuing litigation in Russia, in breach of a previously agreed contract.

UK Sanctions and Russia’s Response

On 24 February 2022, Russian forces attacked Ukraine in a major escalation to the long-running Russo-Ukrainian war. The invasion was internationally condemned, including by the United Nations, the International Court of Justice and the Council of Europe.

Many nations, and corporations, imposed sanctions on Russia. Some USD$400bn in foreign exchange reserves were blocked from the Russian Central Bank and Russia was expelled from the SWIFT banking system. Upon leaving the EU and in continued support of the EU sanctions against Russia, the UK enacted the Russia (Sanctions) (EU Exit) Regulations 20191 (the “Russia Regulations”) which cover all number of matters including designation of persons, asset freeze provisions, regulation of transferrable securities and loans, immigration and trade.

Many businesses bound by the Russia Regulations now find themselves “between a rock and a hard place”2 – between sanctions regimes and contractual obligations. This was the scenario that befell Renaissance Securities.

Download the full PDF article here.

This article appeared in Issue 16 of ThoughtLeaders4 FIRE Magazine, their annual FIRE Starters Edition 2024‘.


Made under the Sanctions and Anti-Money Laundering Act 2018
2 s. 44 of the Sanctions and Anti-Money Laundering Act 2018 should provide some comfort to those parties who find themselves in such a scenario.