Russian Court Refuses to Enforce LCIA Awards Against RUSAL

Russian Court has refused to recognise and enforce two LCIA awards against United Company RUSAL, while holding that such an enforcement would violate the public order of Russia. 

This decision was passed by the Arbitrazh Court of the Kaliningrad region in proceedings involving OWH SE i.L., RTI Limited and RUSAL. The dispute arose from currency swap and foreign exchange transactions which were connected with the RUSAL group.

After the Russian rouble declined in 2022, additional collateral was demanded by OWH and the transactions were later terminated. The dispute moved towards LCIA arbitration. More than EUR 213 million were awarded to OWH in principal along with interests and costs.

Following the same, RUSAL approached the Russian Court for recognition and enforcement of the awards. It was held by the court that RUSAL, even after being a debtor under the awards, had standing to make such an application.

However, enforcement was declined by the court under Article V(2)(b) of the New York Convention. The impact of foreign sanctions was considered along with the restrictions on payments to foreign creditors and the circumstances as to OWH’s conduct and the arbitration.

This ruling highlights the challenges which might be faced by foreign arbitral awards in Russia, where sanctions and counter-sanctions are involved.