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Sanctioned Russian parties breaching arbitration agreements: German courts confirm availability of extra-territorial anti-suit relief
On 3 September 2024, the Berlin Higher Regional Court (the Berlin Court) afforded a German subsidiary of a European industrial company a novel remedy against a Russian sanctioned party, which had obtained a judgement from the Russian courts in breach of an arbitration agreement. In its decision (currently still confidential), the Berlin Court upheld the parties’ agreement and found that arbitration is the sole, proper forum for the dispute between the parties. Furthermore, it reaffirmed that arbitration agreements are enforceable and exclude recourse to the ordinary courts of law, including the Russian courts – even in situations to entities subject to EU and Swiss sanctions.
The decision is in line with the Berlin Court’s earlier ruling of June 2023 (case no 12 SchH 5/22) – the first ever German court decision to use the declaratory relief mechanism in Section 1032(2) of the German arbitration law as a shield against sanctioned Russian parties trying to pursue claims notwithstanding the fact that they are bound by arbitration agreements. Such declaratory relief can thus serve as an important defence against the enforcement of Russian judgments that are issued in disregard of the arbitration agreement – at least outside Russia itself.
The latest ruling also goes a significant and important step further than the initial 2023 decision with respect to service in Russia: In its new decision, the Berlin Court permitted service via public notice (ie publication of the application form on a public notices board at the courts). It dispensed with the Hague Service Convention on account of the fact that the Convention route is no longer legally effective as concerns Russian parties. By contrast, in the previous decision, the Berlin Court had only allowed service via public notice after the Russian authorities had refused service under the Hague Service Convention.
