The European Court (the highest instance of the EU court) will consider a request from the Svea Court of Appeal (Sweden) for an interpretation of the EU sanctions regulation, which prohibits the satisfaction of any claims by Russian companies related to contracts disrupted due to the sanctions regime.
The Swedish appellate court addressed the EU's highest court for an interpretation of Article 11 of EU Regulation No. 833/2014. This article, introduced back in 2014, states that no "claims" from Russian companies (including those not on the sanctions list) can be satisfied by European parties if the claims are connected to contractual obligations of an EU counterparty that were not fulfilled due to sanctions.
The interpretation is needed to make a decision in the case of Belgian company Reibel and Russian company "Vneshekonombank "Stankoimport," which is not on the EU sanctions list.
The decision will become an important precedent and will define the approach to regulating arbitration disputes related to sanctions. RBC turned to managing partner of the law firm "Nadmitov, Ivanov & Partners," Alexander Nadmitov, for a comment.
Alexander explained that the purpose of the Swedish court's request is to clarify whether it is possible to claim damages, interest for the use of another party's funds, and advance payments for unfulfilled work and services, and whether such a dispute falls under the jurisdiction of international commercial arbitration in Europe in light of the current EU sanctions.
Mr. Nadmitov also noted: "Currently, a significant number of disputes related to non-supply of goods and the return of advance payments to Russian companies are being considered in European arbitrations and courts."
Alexander Nadmitov warned that if the European Court rules that any claims from Russian companies cannot be satisfied, Russian companies will effectively lose their right to judicial protection in European courts and arbitrations.
"The European Court may allow the return of advance payments to companies not subject to sanctions but prohibit the recovery of damages and interest for the use of foreign funds. However, one cannot exclude a complete ban on the recovery of any sums and the consideration of such disputes in international commercial arbitration. This would seem strange, considering that even during the Soviet era, international arbitration made decisions in favor of Soviet companies."
The law firm "Nadmitov, Ivanov & Partners" provides consulting in the field of international commercial arbitration and represents clients' interests in commercial disputes in international arbitration.
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