Russia’s Supreme Court Issues Guidance on Countersanctions

The Supreme Court of the Russian Federation recently issued thematic review No. 8/2026 (the Guidance), a comprehensive guidance approved by the Presidium of the Supreme Court, clarifying how Russian courts must apply certain Russian countersanctions.

In general, the Guidance reflects existing judicial practice in cases involving an “unfriendly” element, such as sanctions imposed on Russia, persons connected with the so-called unfriendly countries, or other links to such countries. Through the Guidance, the Supreme Court confirmed the primacy of countersanctions over other legal provisions; the invalidity of transactions and actions that contravene the public policy objectives underlying the countersanctions regime; the authority of Russian courts to conduct countersanctions compliance review and reopen cases; and the exclusive jurisdiction of Russian arbitrazh (i.e., state commercial) courts even in cases unrelated to sanctions.

BACKGROUND

In recent years, and in particular after the start of the full-scale Russian-Ukrainian conflict in February 2022, many countries have imposed sanctions against Russia. In response, Russia introduced restrictive measures—known as countersanctions—against persons connected with countries Russia considers “unfriendly” (“unfriendly” persons). These countries include the United States, United Kingdom, each EU member state, Canada, Norway, Switzerland, Japan, South Korea, Ukraine, and other countries and territories (in essence, countries and territories that have sanctions against Russia).

The Guidance mainly concerns several countersanctions, including countersanctions decrees issued by the Russian president, Decrees No. 79 (restricting currency transactions), No. 81 (restricting loans and transactions with securities and real estate), No. 95 (restricting financial transactions), and No. 322 (restricting license payments).

They also include several legislative acts that, although not formally designated as countersanctions, contain restrictive measures and therefore operate as de facto countersanctions. These acts include Federal Law No. 57 on foreign investments in strategic sectors (restricting acquisitions of assets of, or shares in, enterprises engaged in strategic activities) and Articles 248 and 248 of the Arbitrazh Procedure Code (on exclusive jurisdiction of Russian courts and anti-suit injunctions in sanctions-related disputes).

The Guidance summarizes cases illustrating these countersanctions and gives mandatory guidance to lower courts on how to apply them. We address below only several key concepts and conclusions.

TRANSACTIONS IN VIOLATION OF COUNTERSANCTIONS ARE NULL AND VOID

A Russian entity controlled by an “unfriendly” person becomes an “unfriendly” person itself. Therefore, the Decree No. 81 countersanctions restrictions imposed on real estate sale and purchase transactions with “unfriendly” persons apply to a transaction with such a Russian entity as well, and entry into the transaction without permission from the government commission for the control of foreign investments in the Russian Federation (the GovCom) makes the transaction null and void. Among other things, the transaction runs counter to the objectives of maintaining Russia’s financial stability and monitoring the transfer of foreign-held assets and infringes upon the public interests of Russia.

While a transaction violating a legal rule would typically be considered voidable under Section 1 of Article 168 of the Civil Code, in this case, the Supreme Court confirmed that Section 2 of Article 168 of the Civil Code on null and void transactions should be invoked here, noting that the protection of public interests, which is the stated aim of countersanctions, makes transactions in violation of countersanctions null and void ab initio. Compared to those merely voidable, null and void transactions generally entail longer statutes of limitations and a wider range of causes of action and parties eligible to challenge the transaction (including a court’s authority to do so on its own initiative).

A transaction aimed at establishing an “unfriendly” person control over a strategic enterprise and concluded without a GovCom permission in violation of Federal Law No. 57 is null and void. Stricter thresholds apply if the foreign investor does not disclose information about its controlling persons and beneficiaries. As a general rule, if a transaction is found to be null and void, the parties must return to each other everything received under the transaction. However, courts may impose harsher consequences where the parties deliberately acted in violation of applicable restrictions, including the confiscation of the acquired assets (including shares) into the Russian federal budget.

In fact, under the countersanctions rules, the purchase or sale of any shares in any Russian company, and not merely the purchase of a controlling stake, by an “unfriendly” person requires a GovCom approval, but the Guidance did not address this broader aspect of the countersanctions regulation.

PAYMENTS THAT CIRCUMVENT THE 10M RUBLES THRESHOLD ARE NULL AND VOID

The Supreme Court confirmed that payments made in breach of Decree No. 95 countersanctions may be treated as null and void. In particular, where a Russian debtor performs obligations under loans, credits, or financial instruments in favor of an “unfriendly” creditor, and a payment exceeds 10 million rubles (approximately $135,000)—the monthly payment threshold allowed under Decree No. 95—the payment must be made through the prescribed special account regime (i.e., to special type blocked accounts, known as type “S” accounts, sometimes referred to as type “C” accounts).

These are accounts opened at a Russian bank without the consent of an “unfriendly” person, the intended recipient of the payment. A payment to an “unfriendly” person bypassing that regime is null and void under Section 2 of Article 168 of the Civil Code as being contrary to public interests.

The Guidance further states that structuring payments to avoid the application of Decree No. 95 results in their invalidity. In particular, the Supreme Court approved the approach under which splitting payments into amounts below the 10 million rubles monthly threshold may be treated as an abuse of rights and as a transaction made in circumvention of law.

PERMISSIBLE AND IMPERMISSIBLE ASSIGNMENTS OF CLAIMS

The Guidance distinguishes between assignments used as a circumvention tool and permissible assignments. Assignments that aim to circumvent restrictions imposed by countersanctions decree—such as Decrees No. 95 and No. 322—are null and void. In particular, an assignment of claims may be declared null and void where an “unfriendly” creditor or rights holder assigns its claim to a Russian or other non-restricted party for the purpose of bypassing payment restrictions established by countersanctions, including Decree No. 95 for certain financial obligations and Decree No. 322 for payments connected with intellectual property rights.

At the same time, the Supreme Court clarified that assignments are not automatically invalid merely because one of the parties is an “unfriendly” person. Such assignments will be valid if the underlying obligation is not covered by the relevant decree (for example, where the assigned claim does not arise from a financial obligation or financial instrument covered by Decree No. 95) or if the relevant threshold or subject matter requirements are not met (for example, where the financial obligation is below 10 million rubles stipulated by Decree No. 95, or where the payment relates to royalties payable to right holders that continue to conduct business in Russia as described in Decree No. 322).

WHEN SANCTIONS MAY CONSTITUTE FORCE MAJEURE

There has been uncertainty as to whether a party to a contract may invoke sanctions as a force majeure event (FM) relieving it of its contractual obligations or liability for non-performance, particularly given that Russia generally regards sanctions as contrary to its public policy. The Supreme Court confirmed that, in certain circumstances, a Russian party may rely on sanctions as FM. Where sanctions prevent a Russian party from performing its obligations, that party must be exempt from liability for damages, fines, and other contractual penalties.

However, the Supreme Court emphasized that sanctions create only a temporary legal impediment to performance. Accordingly, the Russian party’s contractual obligations are not discharged (meaning that they remain enforceable once the impediment ceases to exist). As appears from the Guidance, if an obligation is breached due to alleged interference by sanctions, a court should apply the FM exemption only upon careful consideration of the specific circumstances and satisfying itself that sanctions presented an unexpected and insurmountable impediment to the performance of the obligation

RUSSIAN COURTS’S POWERS TO REVIEW FOR COUNTERSANCTIONS COMPLIANCE

The Supreme Court confirmed that Russian courts have the authority, on their own initiative and even if the issue is not raised by the parties, to assess whether contracts comply with countersanctions and to determine the validity of such contracts.

They are likewise empowered to identify violations of countersanctions and treat them as newly discovered circumstances warranting the review of prior judicial acts and the reopening of cases for reconsideration.

JURISDICTION, ARBITRATION, AND ENFORCEMENT OF FOREIGN AWARDS

The Supreme Court confirmed that Article 248 of the Arbitrazh Procedure Code on exclusive jurisdiction of Russian arbitrazh courts applies to a broader category of cases than just cases concerning sanctions or where a sanctioned person is a party to. A court should also assume jurisdiction if a Russian party faces obstacles to access to justice, including obstacles that arise not only where pursuing a claim is impossible because of sanctions but also where it becomes burdensome or unfair. This applies even where the relevant contract contains an arbitration clause.

For example, obstacles to access to justice include arbitrators or courts from “unfriendly” countries, difficulty paying arbitration fees and other procedural costs, difficulty retaining foreign legal counsel, and excessive costs and legal fees (the Supreme Court specifically referred to the unavailability of law firms due to refusals to act for Russian clients and the increased cost of legal services), the need to cross the border to reach the place of arbitration (difficulties in obtaining visas, the need to travel through third countries), and other situations where pursuing a claim entails unreasonable financial, time-related, reputational, or other burdens.

The Supreme Court also provided guidance on how courts approach jurisdiction in disputes with a foreign element. When determining whether arbitrazh courts have jurisdiction, courts should apply the principle of a close connection between the disputed legal relationship and the territory of the Russian Federation. In doing so, courts should consider, among other factors, the actual place of performance of the contract, whether the subject matter of the dispute is closely connected with Russia, and where the main evidence is located. Even if the contract was entered into outside Russia and a non-Russian defendant is not based in Russia, arbitrazh courts may still find that they have jurisdiction to hear the case (e.g., if a Russian party’s representative cannot travel abroad because of visa restrictions).

The Supreme Court addressed the recognition and enforcement in Russia of arbitral awards rendered in the territory of an “unfriendly” state. When considering an application for recognition and enforcement of such an award, Russian courts should verify whether the award complies with Russian public policy. Notably, the Supreme Court stated that, where a dispute is heard in foreign arbitration involving arbitrators from “unfriendly” countries, the absence of impartiality and objectivity is presumed.

Separately, the Supreme Court affirmed that enforcement of an arbitral award in favor of an “unfriendly” foreign party may be contrary to Russian public policy even if the award is issued by a Russian permanent arbitration institution’s tribunal and in Russia. In the example given by the Supreme Court, the arbitrazh courts denied enforcement of an award, citing restrictions on the transfer of funds abroad to non-residents and the absence of a bank account in Russia held by the foreign claimant.

ANTI-SUIT INJUNCTIONS AND JUDICIAL PENALTIES

The Supreme Court confirmed that an application under Article 248 of the Arbitrazh Procedure Code may be brought to prohibit the initiation or continuation of proceedings before a foreign court or arbitral tribunal in disputes involving persons complying with sanctions. Such an application cannot be left without consideration merely because the parties’ agreement contains an arbitration clause.

The Supreme Court further confirmed that Russian courts may impose a judicial penalty where a party fails to comply with an order prohibiting the initiation or continuation of proceedings before a foreign court. According to the Supreme Court, such a penalty is intended to ensure the effectiveness of anti-suit relief granted under Article 248 and to prevent parties from circumventing Russian court orders by relying on foreign sanctions restrictions.

KEY TAKEAWAYS

The Guidance confirms that countersanctions compliance is now a core validity issue for transactions involving an “unfriendly” element. Transactions made in breach of the applicable rules and structures designed to avoid countersanctions restrictions may be treated as null and void. Companies should therefore not only review transaction documents, but also payment routes, thresholds, instalment structures, assignments, and settlement mechanics before taking action involving Russian counterparties or assets.

In certain cases, a Russian party may claim force majeure if the performance of an obligation is prevented by foreign sanctions, but whether the liability exemption applies will be determined on a case-by-case basis upon careful review of the circumstances.

Overall, the Guidance demonstrates that the Supreme Court is signaling to Russian courts that they should adopt a more restrictive approach in cases involving “unfriendly” parties. Although this approach is framed as necessary to protect Russia’s domestic interests and the interests of Russian parties affected by sanctions, its practical effect is likely to be the further limitation of the rights of “unfriendly” parties, including their ability to pursue claims and enforce awards or judgments in Russia. The position of such parties in Russia is therefore likely to deteriorate further, with access to justice and effective enforcement becoming increasingly limited and uncertain.

HOW WE CAN HELP

Many companies and investors continue to have exposure to Russia, whether through ongoing operations, legacy contractual relationships, prior business exits, divestitures, retained assets, or outstanding obligations. Companies with Russia-related exposure should review their operations, contracts, transaction documentation, and dispute resolution mechanisms in light of evolving Russian countersanctions and sanctions-related risks.

Our team stands ready to assist in assessing and mitigating risks arising from Russian countersanctions and compliance with US, EU, UK, and other sanctions regimes. This includes advising on risks associated with business exits, sales of Russian businesses or assets, legacy investments and divestitures, post-closing obligations, shareholder disputes, and other issues arising from Russia-related corporate, securities, restructuring, and financing transactions. We can also advise on potential claims, available defenses, anti-suit injunctions, cross-border enforcement, and strategies to reduce litigation and enforcement risks.

Our multidisciplinary team combines transactional, restructuring, sanctions, and dispute resolution experience, and advises multinational companies, investors, and financial institutions on Russia-related transactions, sanctions, countersanctions, and cross-border disputes.