The EU-Russian Legal Battle over Sanctions Continues

The legal confrontation between the European Union and the Russian Federation over the effects of restrictive measures continues to intensify. In recent months, the interaction between sanctions law, private international law and national countermeasures has become increasingly complex, as both sides have adopted instruments aimed at protecting the effectiveness of their respective legal frameworks.

On this blog, Marta Requejo Isidro has recently examined the private international law implications of EU restrictive measures, highlighting the growing relevance of sanctions in areas traditionally governed by private law. More recently on this blog, Gilles Cuniberti analysed the EU’s response to Russian anti-suit injunctions against sanctioned persons and the emergence of a European mechanism aimed at preventing the effects of such proceedings within the Union.

The adoption of the EU’s 21st package of restrictive measures confirms that this legal confrontation is far from settled. Recent developments illustrate the continuing evolution of the legal framework on both sides: while the EU has strengthened its response to Russian judicial countermeasures affecting sanctioned persons and EU restrictive measures, Russian legislation has also introduced measures targeting foreign investors that have withdrawn from the Russian market.

The Strengthening of the EU Response: A Broader Shield Against Russian Judicial Countermeasures

On 23 July 2026, the Council adopted Regulation (EU) 2026/1844 amending Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

On the same day, the Council adopted Regulation (EU) 2026/1848 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.

Among other amendments, both Regulations further develop the private international law dimension of the EU sanctions framework, by strengthening the rules concerning the recognition and enforcement of Russian judicial and administrative decisions, compensation for damages arising from third-country proceedings and protective measures against Russian anti-suit injunctions.

Strengthening the Non-Recognition Mechanism

Regulation (EU) 2026/1844 introduces an amended Article 11c into Regulation (EU) No 269/2014, providing that:

No injunction, order, relief, judgment or other court or administrative decision pursuant to or derived from Article 248.1 or Article 248.2 of the Arbitration Procedure Code of the Russian Federation or equivalent Russian legislation, or given by a Russian court or authority pursuant to any other Russian law, holding a person referred to in Article 17, points (c) or (d), liable, whether in contract or in tort or on any other legal basis, or giving effect, directly or indirectly, to any claim, right or alleged obligation against such person, including in the context of insolvency, bankruptcy, restructuring or analogous proceedings, in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation, shall be recognised, given effect or enforced in a Member State.

At first sight, this provision may appear to merely reproduce the solution already introduced by Council Regulation (EU) 2025/395, which amended Council Regulation (EU) No 833/2014 by inserting Article 11c. The two Regulations, however, pursue different objectives within the EU sanctions framework. While Regulation (EU) No 833/2014 establishes sectoral economic restrictions, including trade, financial and technological measures affecting economic relations with Russia, Regulation (EU) No 269/2014 concerns targeted restrictive measures against specifically designated persons and entities, primarily through asset freezes and prohibitions on making funds or economic resources available to them.

The 21st sanctions package therefore extends and strengthens the same private international law response within both regulatory frameworks.

The previous Article 11c provision under Regulation (EU) No 833/2014 already established that no injunction, order, relief, judgment or other court decision based on Article 248.1 or Article 248.2 of the Russian Arbitration Procedure Code, or equivalent Russian legislation, could be recognised, given effect or enforced in a Member State.

A closer analysis, however, reveals that the new provision significantly expands the scope of the EU response.

First, the scope of the prohibition is no longer limited to decisions based on Articles 248.1 and 248.2 of the Russian Arbitration Procedure Code or equivalent legislation. The amended provisions also cover decisions adopted by Russian courts or authorities pursuant to any other Russian law. The focus therefore shifts from the formal legal basis of the Russian measure to its actual effects.

Second, the amended wording expressly includes administrative decisions, preventing circumvention through measures adopted outside judicial proceedings.

Third, the material scope of the prohibition is broader. The provisions no longer focus exclusively on anti-suit and anti-arbitration injunctions, but also cover decisions holding protected persons liable on contractual, tortious or any other legal basis, or giving effect, directly or indirectly, to claims, rights or alleged obligations connected with transactions affected by EU restrictive measures.

Fourth, the provisions expressly extend to insolvency, bankruptcy, restructuring and analogous proceedings, recognising that collective proceedings may also be used as instruments to undermine the effectiveness of EU sanctions.

Finally, the drafting technique reflects an important evolution. The original rule was structured around specific categories of Russian procedural instruments. The amended provisions adopt a more functional approach: what matters is not only the legal source invoked by the Russian authority, but whether the decision produces effects incompatible with the effectiveness of EU restrictive measures.

Extending Compensation Mechanisms

The strengthening of the EU response, however, is not limited to the recognition and enforcement of foreign decisions. The 21st sanctions package also reinforces the compensatory dimension of the sanctions framework by amending Article 11a of both Regulation (EU) No 833/2014 and Regulation (EU) No 269/2014.

Article 11a already provided that protected persons could recover direct and indirect damages, including legal costs, incurred as a consequence of claims brought before courts of third countries in connection with contracts or transactions affected by EU restrictive measures, where effective access to remedies in the relevant jurisdiction was unavailable.

The amendments broaden this mechanism by extending the category of persons whose initiation of proceedings before third-country courts may trigger liability. While the previous wording referred to persons, entities and bodies listed in Article 11(1), points (a), (b) and (c), the amended provision also includes those referred to in Article 11(1), point (d). The possibility of recovering damages is therefore no longer limited to claims initiated by designated persons or persons acting through or on behalf of them, but also covers claims brought by third-country persons, entities or bodies that make available funds or economic resources in breach of the Regulation to such designated persons or entities.

The compensatory mechanism therefore becomes a broader instrument against litigation strategies aimed at challenging or circumventing the effects of EU restrictive measures.

Reinforcing Protection Against Russian Anti-Suit Injunctions

Regulation (EU) 2026/1848, adopted in the context of the EU’s 21st sanctions package and amending Regulation (EU) No 833/2014, further develops the Union’s response to Russian anti-suit injunctions and related judicial proceedings affecting the effectiveness of EU restrictive measures by amending Article 11ca of the Regulation. The amended provision now reads as follows:

1.   Without prejudice to Articles 11a and 11b, in the event that a person referred to in Article 11(1), point (a), (b) or (c), of this Regulation initiated proceedings before a Russian court in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation or under Regulation (EU) No 269/2014, in breach of an exclusive jurisdiction or arbitration clause, or abusively pursuant to Article 248.1 or Article 248.2 of the Arbitration Procedure Code of the Russian Federation or equivalent Russian legislation, or pursuant to any other law of the Russian Federation, or in frustration of the Union’s restrictive measures, against a natural or legal person, entity or body referred to in Article 13, point (c) or (d), of this Regulation to obtain an injunction, order, relief, judgment or other court decision, the natural or legal person, entity or body referred to in Article 13, point (c) or (d), of this Regulation shall be entitled to obtain, in judicial proceedings before the competent courts of a Member State, a court order ordering the person indicated in Article 11(1), point (a), (b) or (c), of this Regulation:

(a) to not initiate or to discontinue those legal proceedings; or

(b) to not seek to enforce, recognise, or rely upon any injunction, order, relief, judgment or other court decision, in any jurisdiction, that was or might be obtained in those legal proceedings.

2.   Failure to observe the court order referred to in paragraph 1 of this Article shall lead to financial penalties imposed by the court proportionate to the potential loss which could be incurred by the natural or legal person, entity or body referred to in Article 13, point (c) or (d), as a result of such violation. Payment of those financial penalties shall be made to the natural or legal person, entity or body referred to in Article 13, point (c) or (d), that submitted the request for the court order.’

As previously analysed by Gilles Cuniberti on this blog, the original provision introduced a mechanism allowing persons targeted by such proceedings before Russian courts to seek protective orders before the courts of Member States.

The amended wording broadens this mechanism by extending its scope beyond proceedings based on Articles 248.1 and 248.2 of the Russian Arbitration Procedure Code or equivalent legislation, expressly covering proceedings initiated “in frustration of the Union’s restrictive measures”.

It also removes the focus on the sole protection of exclusive jurisdiction and arbitration clauses, by enabling courts of Member States to address more broadly abusive proceedings aimed at circumventing Union restrictive measures.

Moreover, the available remedies are strengthened: national courts may not only order the person concerned not to initiate or discontinue such proceedings, but may also order that such person refrain from seeking the enforcement or recognition of, or relying upon, any injunction, order, relief, judgment or other court decision obtained or potentially obtained in those proceedings, in any jurisdiction.

Conclusion

The combined effect of these provisions, introduced or amended within the respective frameworks of Regulation (EU) No 833/2014 and Regulation (EU) No 269/2014, illustrates the broader evolution of the EU’s approach.

Article 11ca addresses the earliest stage, by allowing courts of Member States to grant protective orders against Russian anti-suit injunctions and related proceedings aimed at undermining the effectiveness of EU restrictive measures. Article 11a subsequently provides a compensatory remedy where claims before third-country courts are used to challenge or circumvent the effects of EU sanctions. Article 11c operates at the final stage, preventing certain Russian judicial and administrative decisions from producing effects within the Union.

Taken together, these provisions show that the EU sanctions framework increasingly relies on private international law mechanisms to preserve its effectiveness.

Russia’s Parallel Response: New Restrictions on Foreign Investors’ Exit Rights

While the European Union has strengthened its response to Russian countermeasures affecting the effectiveness of EU restrictive measures, Russia has continued to develop its own legal framework concerning foreign investors.

On 21 July 2026, the amendments to Federal Law No 160-FZ of 9 July 1999 on Foreign Investments in the Russian Federation, recently adopted by the State Duma, introduce a new Article 20.1 establishing a specific mechanism for terminating certain foreign investors’ rights to re-acquire assets previously transferred in Russia.

The mechanism applies to foreign investors connected with “unfriendly states”, as well as entities controlled by them, and concerns shares, participation interests in Russian companies and other business assets in which foreign capital had previously been invested. It applies to transfers carried out after 22 February 2022 where the foreign investor retained a contractual right to buy back the relevant asset.

Under the new provision, a claim for the termination of such buy-back rights may be brought by Russian citizens, Russian legal entities or certain foreign entities controlled by Russian citizens, following the involvement of the competent Russian authorities and the Government Commission for Control of Foreign Investments. The claim may succeed where the foreign investor is considered to have engaged in “unfriendly actions”, including public support for restrictive measures adopted against Russia, withdrawal or suspension of operations in Russia, or conduct aimed at restricting the performance of contracts connected with the relevant assets. Notably, the legislation expressly states that actions linked to compliance with restrictive measures adopted by foreign States or international organisations may constitute such “unfriendly actions”.

From a private international law perspective, the amendments are particularly relevant because disputes concerning the termination of buy-back rights are to be examined by the Commercial Court of the Moscow Region. The provision applies even where the parties have agreed to submit disputes to a foreign court or to international commercial arbitration, including where such mechanisms are considered unavailable due to restrictive measures affecting access to justice. The rule therefore directly affects the operation of dispute-resolution clauses in cross-border investment transactions.