The Berlin Higher Regional Court has ruled that a sanctioned Russian party must adhere to its arbitration agreement and cannot avoid service. The sanctioned party (“the Respondent”) had submitted that the arbitration agreement was “infeasible” due to it being a sanctioned entity.
The Court ruled that an arbitration agreement between unnamed parties was the only way to resolve the dispute in question, preventing the Respondent from turning to the Russian courts. In the June 2023 ruling, the Court found it could use s. 1032(2) of the German Code of Civil Procedure to make the determination, because:
- the section applies even when the seat of arbitration is outside Germany (it was in Vienna); and
- the applicant was a resident of Germany.
The Applicant had terminated the contract (containing an arbitration agreement) when the Respondent was sanctioned. The Respondent brought proceedings in St Petersburg for invalid termination of the contract, submitting that sanctions prevented arbitration. The Court rejected this, finding “the Parties are guaranteed access to arbitration despite the sanctions”.
The Court also found that sanctioned Russian parties could be served via public notice in German courts.