Cross-border disputes under sanctions pressure: how international judicial practice is changing

In recent years, international commercial disputes have ceased to be solely a matter of contractual obligations and the amount of damages. Today, virtually any conflict between a Russian and a foreign company inevitably involves sanctions restrictions, jurisdictional issues, asset freeze risks, and enforcement issues.

In practice, businesses are faced with a new reality: even a successful lawsuit does not guarantee actual recovery of funds, and standard contractual mechanisms no longer provide the same level of protection.

Why are parties increasingly going to court in Russia?

One of the major changes in recent years has been the desire of Russian companies to refer disputes to Russian courts, even if the contract stipulates that the case be heard in a foreign jurisdiction or international arbitration.

The basis is usually the impossibility of obtaining full legal protection abroad due to sanctions, restrictions on the participation of Russian individuals in proceedings, problems with the payment of arbitration fees, the work of legal representatives, or the enforcement of decisions.

As a result, several processes can exist in parallel:

• in a Russian court;
• in a foreign court;
• in international commercial arbitration.

This leads to competition between judicial decisions and serious procedural uncertainty for both parties to the dispute.

Anti-suit injunctions are becoming common practice

Anti-suit injunctions – court measures that limit the ability to continue or initiate litigation in other countries – are increasingly being used.

While such instruments were previously considered an exception, today they are becoming part of the standard strategy for protecting business interests.

Moreover, modern practice shows the widespread application of such measures. Restrictions may apply to:

• new foreign proceedings;
• processes already initiated;
• enforcement of decisions made;
• asset foreclosures in certain jurisdictions.

The problem is that similar prohibitions are also applied by foreign courts. As a result, companies find themselves caught between two conflicting legal systems, each demanding proceedings in the other jurisdiction be halted.

For businesses, this creates the risk of double liability, fines and additional legal costs.

Contract law no longer guarantees predictability

Choice of law was once considered a key protection mechanism in international contracts. Now, this tool operates much less predictably.

Even if there is an express clause on the application of foreign law, the court may conclude that certain provisions of such regulation are contrary to public order or are associated with sanctions restrictions.

The change in the classification of claims creates additional complexity. A dispute arising from a contract may be considered as damage, which allows for the application of a different regulation and shifts the focus from the terms of the contract to the location of the consequences.

As a result, parties are increasingly faced with a situation where previously agreed contractual mechanisms effectively cease to function as expected at the time of the transaction.

The main issue is not to win the dispute, but to implement the decision

The most serious problem in modern cross-border disputes is the enforcement of court and arbitration decisions.

Even after successful completion of the process, companies may face:

• refusal of foreign courts to recognize decisions;
• sanctions restrictions on payments;
• blocking bank transfers;
• the impossibility of foreclosing on assets;
• delaying recognition procedures for an indefinite period.

Enforcing decisions is particularly challenging in jurisdictions where sanctions restrictions directly impact the ability of Russian companies to satisfy their claims.

In such circumstances, legal victory often remains formal and does not result in a real return of funds.

Asset search becomes part of litigation strategy

Due to the difficulties in enforcing decisions, companies are increasingly analyzing the counterparty’s asset structure and potential countries of recovery in advance.

In practice, attention shifts towards:

• neutral jurisdictions;
• friendly states;
• assets of subsidiaries;
• accounts receivable;
• corporate rights;
• property located outside the sanctions regimes.

In fact, today’s debt collection strategy is formulated even before a lawsuit is filed. Without an understanding of where the judgment can be effectively enforced, litigation may lose its economic value.

Liability within a group of companies

Another important area has been the involvement of Russian subsidiaries of foreign holdings in disputes.

Plaintiffs are increasingly trying to prove that the foreign structure and its Russian companies act as a single economic entity, meaning that obligations must be fulfilled jointly.

This approach allows for recovery from assets located in Russia, even if the primary debtor is registered in another country.

However, there is no uniform practice yet. Judicial approaches continue to evolve, and the criteria for holding group companies liable vary significantly.

International arbitration remains important, but the risks have increased.

Despite its complexities, international arbitration remains a popular dispute resolution tool. Many companies still prefer it to state courts due to its confidentiality, flexible procedures, and the ability to choose arbitrators.

However, sanctions restrictions have also significantly impacted the arbitration sector. Difficulties arise with:

• payment of arbitration costs;
• participation of individual legal consultants;
• enforcement of interim measures;
• recognition of decisions in individual countries.

Moreover, even the presence of an arbitration clause no longer guarantees that the dispute will in fact be heard exclusively by the chosen arbitration body.

How businesses are adapting to new conditions

Companies are gradually restructuring their approach to international transactions and litigation.

Today, when structuring contracts, businesses evaluate not only commercial terms, but also:

• sanctions risks;
• possibility of cross-border payments;
• availability of assets in different countries;
• potential problems with the implementation of decisions;
• probability of parallel processes;
• risks of anti-suit injunctions.

Additionally, mechanisms for securing obligations, special payment structures, escrow accounts, guarantees, risk insurance and alternative payment methods are used.

Thus, modern cross-border conflicts require a comprehensive approach that combines international arbitration, sanctions regulation, litigation strategy, and cross-border asset recovery.

Today, simply winning a case is not enough. Building a defense structure that allows for effective enforcement and economic benefits is key.

This is why businesses are increasingly attracting teams that specialize in international disputes, sanctions law, corporate conflicts, and enforcement of judgments across multiple jurisdictions.