June 2025 – Russia’s aggressive anti-sanctions judicial policy is reshaping the legal landscape of cross-border dispute resolution. By routinely disregarding both arbitration and forum selection clauses, Russian courts are asserting jurisdiction over disputes involving sanctioned Russian parties—regardless of prior contractual arrangements.
This trend creates acute risks for foreign companies that engage with Russian counterparties and simultaneously operate or hold assets in Kazakhstan, as Russian judg ments may be enforced there.
In this article, we examine recent developments in Russia’s anti-sanctions litigation policy and assess their potential impact within Kazakhstan’s legal framework for the recognition and enforcement of foreign judg ments and arbitral awards.
Background
Under the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"), contracting states, including Russia, are obligated to recognize written arbitration clauses and enforce foreign arbitral awards. Historically, Russia upheld most arbitration clauses and related awards. However, in June 2020, Russia significantly altered this practice by amending its State Commercial (Arbitrazh) Procedural Code ("Procedural Code") to address issues faced by Russian entities targeted by Western sanctions. These amendments, referred to as the "Lugovoy Law," introduced exclusive jurisdiction for Russian state arbitrazh courts under two primary circumstances:
- If the Russian entity or individual involved is subject to sanctions;
- If the underlying dispute relates directly to sanctions.
Although seemingly logical in ensuring sanctioned entities have access to justice, Russian courts have applied the Lugovoy Law broadly, often using minimal criteria to assume jurisdiction. Typically, the mere existence of personal sanctions against a plaintiff is considered sufficient to presume a denial of justice in foreign jurisdictions. This reasoning aligns with a broader Russian legal trend of viewing sanctions as systemic bias, which undermines the credibility of foreign adjudicative institutions, even when no specific prejudice is demonstrated.
For example, the Arbitration Court of the Far Eastern District (case No. Ф03-6497/2022, 26 December 2023) disregarded an arbitration clause selecting the Paris International Chamber of Commerce, because France, as an "unfriendly" jurisdiction, imposed sanctions against Russia, allegedly compromising impartiality. The court redirected the case to Russian jurisdiction.
Similarly, in a notable ruling on 8 June 2023 (case No. A56-129797/2022), the Arbitrazh Court of St. Petersburg and the Leningrad Region held that arbitration in Hong Kong, despite not being explicitly "unfriendly," would still fail the impartiality test due to its legal connections with jurisdictions imposing sanctions. The court emphasized the participation of British and European judges in Hong Kong, asserting their obligation to uphold sanctions against Russia.
Further amplifying this trend, the Russian Supreme Court has expanded the Lugovoy Law's application beyond its explicit wording, ruling that arbitration under institutions like the LCIA inherently lacks impartiality in sanction-related disputes. The Supreme Court created a presumption of bias for arbitrators from "unfriendly" jurisdictions without clarifying how this presumption can be overcome. Importantly, the Court requires concrete evidence rather than mere assertions for transferring jurisdiction to Russia.
Attempts at enforcement in Kazakhstan
Kazakhstan finds itself at the intersection of two conflicting treaty regimes: the Chisinau Convention, favoring mutual enforcement of post-Soviet court judg ments, and the New York Convention, which upholds the sanctity of arbitration agreements.
On the one hand, as a signatory of the New York Convention, Kazakhstan generally recognizes and enforces foreign arbitral awards and judg ments, subject to public policy considerations and compliance with international obligations. However, the enforcement of judg ments obtained under Russia's Lugovoy Law introduces significant complexities for Kazakhstan.
On the other hand, Russia and Kazakhstan are also both signatories to the Chisinau Convention, which likewise facilitates the enforcement of judg ments across signatory states. Consequently, Kazakhstani as well as foreign companies in Kazakhstan could potentially face enforcement actions based on Russian judg ments, even without assets or a legal presence in Russia.
This scenario raises critical tensions for Kazakhstan's judiciary: compliance with the Chisinau Convention obligates Kazakhstan to enforce Russian court decisions, yet such obligations potentially conflict with the New York Convention’s requirements for recognizing arbitration clauses. Kazakh courts thus face a unique and difficult task of reconciling these international obligations with local public policy.
To date, Kazakhstan lacks definitive judicial precedents resolving these tensions, making outcomes unpredictable. Kazakhstan's dual commitment—adherence to the Chisinau Convention via formal ratification and observance of the New York Convention through presidential decree rather than parliamentary ratification—further complicates this landscape.
For instance, RusChemAlliance (a Russian company and a joint venture between Gazprom and RusGazDobycha), sought enforcement in Kazakhstan of a favorable Russian judg ment against Linde, an international engineering company, targeting assets held by Linde Holdings Netherlands No. 3 B.V. and Linde UK Holdings No. 2 Limited ("Linde No. 2") in the Kazakh entity Linde Gas Kazakhstan LLP. Nevertheless, on 26 August 2024 (Case No. 7527-24-00-00-2m/528), the Kazakh court dismissed RusChemAlliance’s enforcement attempt. It based its decision on procedural rules requiring enforcement to occur in the jurisdiction where the judg ment debtor is registered, unless unknown. RusChemAlliance acknowledged knowing the registration locations of Linde UK Holdings No. 2 Limited and Linde Holdings Netherlands No. 3 B.V. , neither of which were within Kazakhstan, leading the court to reject jurisdiction. The appellate court upheld this decision on 18 October 2024. It appears that Kazakh courts have deliberately taken this position based on considerations of maintaining Kazakhstan’s investment attractiveness. It is expected that in similar cases in the future, Kazakh courts will continue to follow this approach.
However, the question of how Kazakh courts might handle enforcement requests involving entities actually registered within Kazakhstan, including those with foreign parent companies, remains unresolved.
Risks to prorogation clauses
Russian courts have extended their approach to invalidate not only arbitration agreements but also forum selection (prorogation) clauses, especially where sanctioned Russian entities are involved.
This trend is clearly illustrated in PJSC TransContainer v. LLP Kaz-Z Rail Logistics (Case No. А41-51293/24). The contract between the parties designated the courts of Astana, Kazakhstan, as the competent forum for dispute resolution. Note that Kazakhstan is not included in Russia’s list of "unfriendly" states, has not imposed sanctions against Russia, and remains a treaty partner under the Chisinau Convention. Nonetheless, the Russian appellate court overturned the first-instance decision that upheld the parties’ agreement.
On appeal, the Russian court held that, due to sanctions imposed on TransContainer by the U.S., EU, and Switzerland, the company could not effectively access justice in Kazakhstan. It accepted arguments that SWIFT restrictions, inflated legal costs, and difficulties in hiring local counsel created barriers to litigation. Here, the court relied on a presumption of systemic access barriers without demanding concrete evidence tailored to the Kazakh legal context.
Moreover, the counterparty—Kaz-Z Rail Logistics—is a Kazakh company from a state that has not imposed any sanctions against Russia and is not considered “unfriendly” under Russian law. Despite this, the Russian court declared that the foreign forum was effectively inaccessible and asserted exclusive jurisdiction under Article 248.1 of the Procedural Code.
This ruling confirms that Russian courts will override dispute resolution clauses even if the agreed forum is in a "friendly" country and the foreign party is from "friendly" country. The only relevant factor, in the court’s reasoning, is the presence of sanctions against the Russian party—regardless of who imposed them or where the forum is located.
This poses a major challenge for legal certainty in cross-border contracting: even carefully negotiated jurisdiction clauses may be rendered void if a Russian party later faces sanctions. This raises a critical uncertainty: if a Russian judg ment is later brought for enforcement in Kazakhstan, courts may face pressure to recognize it under the Chisinau Convention—even if it contradicts the parties’ agreement.
Conclusion
For foreign companies with operations or assets in Kazakhstan, this is not an abstract legal dilemma—it is a tangible and evolving legal risk. The growing willingness of Russian courts to override arbitration and forum selection clauses—combined with Kazakhstan’s treaty obligations to recognize Russian judg ments—creates an unpredictable enforcement environment.
With no established Kazakhstani jurisprudence to reconcile these conflicting legal frameworks, companies face real exposure: a judg ment rendered in Russia under the Lugovoy Law could, in theory, be brought for enforcement in Kazakhstan—even if it contradicts the parties’ contractual dispute resolution mechanisms and international norms.
Until Kazakhstan’s judiciary provides clear guidance, parties must treat this risk as active and ongoing. Contracts involving Russian counterparties now require more than standard-form clauses—they demand:
- Enforcement-conscious drafting that anticipates jurisdictional challenges;
- Region-specific risk assessments factoring in Kazakhstan’s treaty network and enforcement practices; and
- Contingency planning for potential asset exposure, especially where assets are held via local subsidiaries.
Multinational companies, especially those with complex corporate structures or cross-border operations in the Eurasian region, should reevaluate their dispute resolution strategies in light of these developments. The interplay between Russian litigation trends and Kazakhstan’s treaty obligations is rapidly becoming a key risk vector in post-sanctions legal strategy.