The Russian Arbitration Association's Investment Arbitration Working Group (RAA IAWG) led by Sergey Morozov, BGP Litigation's International Disputes and Sanctions Partner, submitted its amicus curiae brief in relation to Council Decision (CFSP) 2025/1495 dated 18 July 2025 and Council Regulation 2025/1494 dated 18 July 2025 (the "
18th Sanctions Package"). The purpose of the brief is to persuade the Court of Justice of the European Union (the "
CJEU") to annul those provisions of the 18th Sanctions Package that undermine the fundamental principles of investment arbitration.
"The amicus curiae brief is an over 100-page document summarising the arguments challenging the lawfulness of the imposed restrictions. In my opinion, this document is expected to form a key benchmark in discussions over the limits of the sanctions," Sergey Morozov said.
In summer 2025, the European Union adopted the 18th Sanctions Package which provisions affected not only the operations of Russian investors, but the core mechanisms of investment arbitration. The key amendments made to Council Regulation (EU) No. 833/2014 dated 31 July 2014 by the 18th Sanctions Package provide for:
- the obligation of the Member States not to recognise, enforce or give effect to arbitral awards rendered in sanctions-related investment disputes (Article 11(2a));
- the right of the EU and its Member States to recover damages, including legal costs, from investors in such disputes (Article 11e); and
- the obligation of the Member States to invoke any available objections in investment arbitration proceedings (Article 11f).
The European Union has effectively adopted a position in which any arbitral awards rendered against its Member States are viewed not as enforceable claims confirmed by an arbitral tribunal, but as a risk factor requiring deterrence. The CJEU is currently hearing several cases in which claimants are challenging the imposed restrictions, including Ber v Council (Case T-640/25), Shelkov v Council (Case T-655/25), Zhukova v Council (Case T 698/25), and Vakorin v Council (Case T-699/25).
From a public international law perspective, the adoption of the aforementioned provisions of the 18th Sanctions Package gives rise to legitimate questions. Prohibition of recognition of arbitral awards contradicts the provisions of the New York and Washington Conventions and the fundamental international treaty law principle of pacta sunt servanda (or treaties must be performed). Technically, this gives rise to a question over possible consequences for bilateral investment treaties made by and between Russia and EU Member States in the context of the provisions of the 1969 Vienna Convention on the Law of Treaties.
Further, the analysis of the provisions in question from the perspective of the EU law itself points at their incompatibility with the fundamental principles of legal certainty, equality and non-discrimination, protection of property rights, and the right to an effective remedy. In circumstances where recognition of arbitral awards is limited and access to judicial protection is encumbered, the efficiency of arbitration as a mechanism of investor protection is significantly reduced. Nonetheless, investors, as aggrieved parties, can still resort to arbitration, obtain investment tribunal awards, and enforce them against EU's and its Member States' assets located outside the European Union.
In an economic context, the imposed restrictions create additional risks for the EU's investment climate, as they highlight a possibility of limitation of investors' legal protections depending on political factors. This may have an impact upon foreign investors' perception of the stability and predictability of the legal and regulatory framework.
RAA's Investment Arbitration Working Group conducted a comprehensive review to develop its legal position embodied in this amicus curiae brief. The document aims to foster a balanced approach to sanctions regulation and helps identify permissible limits of interference in or with the fundamental international law principles of investment arbitration.
