On 28 May 2026, the Arbitrazh Court of the Kaliningrad Region refused to recognise and enforce two LCIA awards rendered against RTI Limited (“RTI”) and International Company Public Joint Stock Company United Company RUSAL (“RUSAL”) in favour of OWH SE i.L. (“OWH”). The court rejected OWH’s procedural objections, holding that RUSAL, although a debtor under the awards, had standing to seek recognition and enforcement in Russia. But the court ultimately refused recognition and enforcement because it found that the awards were contrary to Russian public order (“public order”: the fundamental legal principles of the forum that are treated as mandatory, universal, and essential to the state’s legal, economic, and political system).[1]
The original Russian decision is available here, with an English translation available here.
Facts
The dispute arose from currency-interest swap and foreign-exchange forward transactions entered into between RTI, a company within the RUSAL group, and OWH under a 2002 ISDA Master Agreement (“ISDA”: the International Swaps and Derivatives Association standard documentation framework for derivatives transactions). The court described the commercial purpose of the transactions as reducing RUSAL’s currency risk connected with a possible appreciation of the Russian rouble against the US dollar. The arrangements were originally connected with VTB Bank but were later novated to VTB Bank (Europe), which was subsequently renamed OWH.[2]
The contractual package included an ISDA Master Agreement, a schedule containing individual terms and an LCIA arbitration clause, 11 swap confirmations, and a credit support annex. The credit support annex required RTI to provide collateral to OWH when the US dollar rose against the rouble, and RTI’s obligations were secured by an independent guarantee from RUSAL.[3]
After the rouble depreciated sharply in February 2022, OWH issued multiple demands for additional credit support and sent RTI default notices by email. RTI resisted, arguing that payment to OWH was unlawful under Jersey and Gibraltar sanctions law because sanctions against VTB and controlled persons had become part of those legal systems. OWH then terminated the transactions early and demanded approximately EUR 214 million.[4]
RTI commenced LCIA arbitration on 24 June 2022, seeking declarations that no event of default had occurred and that OWH’s default notices were invalid. OWH counterclaimed against RTI and later brought a separate LCIA claim against RUSAL under the guarantee. The two LCIA cases were consolidated into LCIA Case No. 225567. On 25 September 2024, the tribunal awarded OWH EUR 213,770,661.77 in principal against RTI and RUSAL jointly and severally. On 29 August 2025, the tribunal issued an additional award for EUR 33,835,208.30 in interest, further post-award interest, GBP 3,815,586.69 in arbitration and legal costs, and EUR 2,044,908.07 in legal costs.[5]
RUSAL then applied in Russia for recognition and enforcement. The court noted that Russia’s counter-sanctions regime generally required performance of certain obligations to creditors from “unfriendly” states through a Type C account (“Type C account”: a special Russian account used for controlled payments to certain foreign creditors), unless the Government Commission for Control over Foreign Investment approved payment by another route. RUSAL had sought such approval, and the Ministry of Finance informed RUSAL that it needed information from competent authorities confirming that performance of the LCIA awards would not contradict Russian law.[6]
Issues
The court faced three legally significant questions.
First, did the LCIA arbitration clause deprive the Arbitrazh Court of the Kaliningrad Region of jurisdiction over the recognition and enforcement application?
Second, could RUSAL, as a debtor under the awards rather than the award creditor, apply for recognition and enforcement in Russia?
Third, would recognition and enforcement of the LCIA awards violate Russian public order under Article V(2)(b) of the New York Convention and Russian procedural law?[7]
Rule and Holding
The governing rule was Article V(2)(b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), which permits refusal of recognition and enforcement where the competent authority of the enforcing state finds that recognition or enforcement would be contrary to that state’s public policy. The court also relied on Article 35 of the Russian Law on International Commercial Arbitration and Articles 241 and 244 of the Russian Arbitrazh Procedure Code, which assign recognition and enforcement of foreign arbitral awards to Russian arbitrazh courts and require refusal where enforcement would contradict Russian public order.[8]
The court held that it had jurisdiction because the arbitration clause governed disputes under the ISDA documentation, not the separate question of whether foreign arbitral awards should be recognised and enforced in Russia. The court also held that RUSAL had standing because Russian procedural law permits a party to the arbitration, not only the award creditor, to seek recognition and enforcement.[9]
On the merits, however, the court held that the LCIA awards contradicted Russian public order. It therefore refused RUSAL’s application for recognition and enforcement.[10]
Reasoning and Disposition
The court first rejected OWH’s application to leave RUSAL’s filing without consideration. Recognition and enforcement, the court reasoned, is based on the arbitral awards themselves, not on the underlying ISDA Master Agreement or its arbitration clause. Questions of public order under Article V(2)(b) of the New York Convention must be decided by the competent authority of the state where recognition and enforcement are sought, and in Russia, that authority is the arbitrazh court.[11]
The court then rejected OWH’s argument that only OWH, as the award creditor, could seek recognition and enforcement. It relied on Article 241(2) of the Arbitrazh Procedure Code, which refers to an application by a party to the dispute or arbitral proceedings, and found no statutory prohibition on a debtor’s application. The court also emphasised RUSAL’s practical legal interest: RUSAL needed a Russian court’s assessment of the awards’ compliance with Russian law and public order to support its application to the Government Commission for permission to pay OWH outside the special counter-sanctions payment mechanism.[12]
On public order, the court adopted an expansive approach. It stated that public order includes fundamental legal principles of heightened mandatory force and public significance, including principles protecting state sovereignty, security, large social groups, and constitutional rights. The court also stated that foreign economic sanctions cannot justify violations of Russian legal persons’ rights because the effects of those sanctions contradict Russian public order and cannot be applied in Russia.[13]
The court placed particular weight on the role of Germany’s Federal Financial Supervisory Authority, BaFin. It found that, after sanctions against VTB, BaFin-appointed representatives and liquidators controlled or influenced OWH and pursued the arbitration against RTI and RUSAL. In the court’s view, payment to OWH would effectively leave the funds under BaFin’s, and therefore Germany’s, control for an indefinite period, which the court characterised as equivalent to expropriation.[14]
The court also reasoned that OWH had acted in bad faith. According to the ruling, OWH used the uncertainty created by sanctions and payment restrictions to terminate the transactions when the US dollar had risen sharply, thereby maximising the amount claimed from RTI and RUSAL. The court further found that OWH created a misleading impression concerning the validity of its default notices, including by sending notices electronically when the ISDA documents required a paper notice to RTI’s address.[15]
The court’s reasoning also addressed estoppel. The LCIA tribunal had apparently treated RTI as estopped from objecting to the form of the default notices. The Russian court disagreed with the factual premise of that conclusion. It found that RTI lacked access to its office documents because its office-services provider, Ogier, had terminated services in February 2022, and that OWH knew or should have known this because Ogier had also stopped providing services to OWH. The court concluded that OWH’s conduct caused the LCIA tribunal to form an erroneous impression that RTI knew of the notice defect but failed to object.[16]
Finally, the court treated recognition and enforcement of the awards as effectively supporting unilateral restrictive measures imposed by German state authorities against Russian companies. Because Germany is treated by Russia as an “unfriendly” state, the court concluded that enforcement would support measures contrary to Russian public order.[17]
The disposition was mixed. The court denied OWH’s procedural motions to leave the application without consideration and to terminate the proceeding, but refused RUSAL’s application for recognition and enforcement of the LCIA awards. The state duty paid by RUSAL remained for RUSAL’s account, and the ruling could be appealed within one month to the Arbitrazh Court of the North-Western District.[18]
Conclusion
This decision is significant for three reasons. First, it confirms that, at least in this court’s view, a Russian award debtor may seek recognition and enforcement of a foreign arbitral award in Russia where it has a legitimate interest in obtaining a public order determination. Second, it illustrates how Russian courts may use Article V(2)(b) of the New York Convention to scrutinise not only the formal award but also the sanctions context, the creditor’s conduct, and the practical destination and control of funds. Third, it signals that awards connected to foreign sanctions, state-controlled liquidators, or counter-sanctions payment restrictions may face heightened resistance in Russia, even where the award creditor has prevailed before a respected international tribunal.[19]
[1] Arbitrazh Court of the Kaliningrad Region, Case No. А21-4252/2026, Ruling of 28 May 2026, pp. 1, 5-6, 13-14, 20-21.
[2] Id. at 8-9.
[3] Id.
[4] Id. at 9-10.
[5] Id. at 10-11.
[6] Id. at 11-12.
[7] Id. at 3-6, 12-14.
[8] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed 10 June 1958, Art. V(2)(b); Law of the Russian Federation No. 5338-1 on International Commercial Arbitration, 7 July 1993, Art. 35(1), Arbitrazh Procedure Code of the Russian Federation, Arts. 241 and 244(1)(7); Case No. А21-4252/2026, pp. 12–14.
[9] Case No. А21-4252/2026, pp. 3-6.
[10] Id. at 20-21.
[11] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed 10 June 1958, Art. V(2)(b); Arbitrazh Procedure Code of the Russian Federation, Arts. 241 and 244(1)(7); Case No. А21-4252/2026, pp. 3-5.
[12] Arbitrazh Procedure Code of the Russian Federation, Arts. 241(2); Case No. А21-4252/2026, pp. 5-6, 11-12.
[13] Information Letter No. 156 of the Presidium of the Supreme Arbitrazh Court of the Russian Federation, 26 February 2013; Federal Law No. 127-FZ on Measures of Influence (Counteraction) to Unfriendly Actions of the United States of America and Other Foreign States, 4 June 2018, Art. 1; Case No. А21-4252/2026, pp. 13–14.
[14] Case No. А21-4252/2026, pp. 14-17.
[15] Civil Code of the Russian Federation, Art. 1(4); Case No. А21-4252/2026, pp. 15, 19-20.
[16] Case No. А21-4252/2026, pp. 19-20.
[17] Government Order No. 430-r approving the list of foreign states and territories committing unfriendly actions against the Russian Federation, Russian legal persons and Russian individuals, 5 March 2022; Case No. А21-4252/2026, pp. 20-21.
[18] Case No. А21-4252/2026, p. 21.
[19] Case No. А21-4252/2026, pp. 5-6, 13-21.