The Challenges that the European Union Sanctions Regime Has Brought to Arbitral Proceedings That Involve Russian Parties - ARIA - Vol. 34, No. 2

Marianna Kychenko was born in Odessa, Ukraine, and grew up in Hamburg, Germany. She graduated from Bucerius Law School and completed her legal clerkship at the Higher Regional Court of Hamburg in 2018. After having worked for an international law firm and an arbitration boutique in Hamburg, she is currently an attorney with the dispute resolution boutique ARKTIK Legal in Frankfurt. She works primarily on complex domestic and international litigation and arbitration proceedings, both as counsel and secretary to arbitral tribunals. She is fluent in German, English, Russian and French.

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Originally from The American Review of International Arbitration (ARIA)

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I. INTRODUCTION

Since the Russian Federation’s unprovoked and unjustified military aggression against Ukraine on February 24, 2022, the European Union (EU) has issued a number of sanctions packages. In doing so, it has gradually extended and supplemented the restrictive measures that were set up in 2014 in reaction to the occupation of Crimea.

When arbitral proceedings with the participation of a Russian party are seated in the European Union, the EU sanctions regime will have to be considered. Since 2022, this requires checking the legality of rendering services in the arbitration proceedings and of assessing the risks of potential delays or additional costs of the proceedings. This article provides an overview of important implications of EU sanctions that are relevant to the conduct of arbitration proceedings involving Russian entities.

II. THE EU SANCTION ON ANY TRANSACTION WITH CERTAIN RUSSIAN ENTITIES AND ITS RESTRICTION WITH REGARD TO ARBITRAL PROCEEDINGS

The regulation that inevitably caught the European arbitration community’s attention is Council Regulation (EU) No. 2022/428 released on March 15, 2022, which introduced new Article 5aa into the already existing Council Regulation (EU) No 833/2014. Paragraph 1 of new Article 5aa prohibits the direct or indirect engagement in any transaction with

a legal person, entity or body established in Russia, which is publicly controlled or with over 50% public ownership or in which Russia, its Government or Central Bank has the right to participate in profits or with which Russia, its Government or Central Bank has other substantial economic relationship, as listed in Annex XIX […].