Unenforceability of arbitration or prorogation agreement in connection with the sanctions of foreign states
The parties to a foreign economic contract, when structuring contractual relations, quite often include a condition in the contract to refer disputes to a foreign court (prorogation agreement) or international commercial arbitration (arbitration agreement) located outside the territory of the Russian Federation, or enter into a separate agreement regarding this issue.
However, the economic sanctions imposed by the European Union, the United States and a number of other countries against the Russian Federation, Russian legal entities and individuals have a significant impact on their ability to comply with an agreement on referring disputes to the jurisdiction of a foreign court or international commercial arbitration.
A new Presidential Decree has been published imposing additional restrictions on the corporate sector
In accordance with Decree No. 618 of the President of the Russian Federation dated September 08, 2022 “On Special Procedure for the Implementation (Execution) of Certain Types of Transactions (Operations) Between Certain Persons”, a special procedure has been established between residents and non-residents from unfriendly countries for transactions (operations) entailing, directly and (or) indirectly, the establishment, change or termination of the rights of ownership, use and (or) disposal of shares in the authorized capital of limited liability companies (with the exception of credit institutions and non-bank financial institutions) or other rights that make it possible to determine the conditions for managing such limited liability companies’ liability and (or) conditions for their entrepreneurial activities. From September 08, 2022 such transactions may be carried out (executed) only on the basis of permits issued by the Government Commission for Control over Foreign Investments in the Russian Federation and, if necessary, containing conditions for the implementation (execution) of such transactions (operations). As an exception, only certain transactions with shares in the authorized capital of users of subsoil plots are defined.
Overview of Sanctions and Other Restrictions, as well as Legislative Easements and Measures of State Support for Business in Russia
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