Recovering money from a Russian company has become more complex for international businesses, but sanctions and banking restrictions do not automatically extinguish a commercial debt or make litigation impossible.
A creditor should distinguish between three separate questions: Does a valid claim exist? Which court or arbitral tribunal has jurisdiction? How can the resulting award or judgment actually be converted into payment?
Can a Foreign Company Sue a Russian Company in Russia?
Yes, subject to the applicable jurisdiction rules. Chapter 32 of the Russian Arbitrazh Procedure Code governs the jurisdiction of Russian commercial courts in cases involving foreign parties.
Article 247 provides a number of jurisdictional grounds and recognises Russian jurisdiction where the disputed legal relationship has the required connection with the Russian Federation. Russian law also allows jurisdiction agreements in favour of Russian arbitrazh courts subject to statutory limitations.
A foreign creditor should therefore analyse the governing-law, jurisdiction and arbitration provisions before commencing proceedings.
Do Sanctions Prevent Debt Recovery?
Not necessarily. The existence of sanctions, the legal existence of the debt and the technical ability to transfer funds are separate matters.
Russian special economic measures, foreign sanctions and bank compliance rules can affect a particular transaction differently depending on the parties, ownership structure, banks, currency and nature of payment. A debtor's statement that payment is 'impossible because of sanctions' should therefore be legally and factually verified.
The Contract Comes First
- governing law;
- jurisdiction clause;
- arbitration clause;
- currency and payment provisions;
- performance and acceptance documents;
- default interest, penalties and damages;
- guarantees and security;
- mandatory pre-action notice or claims procedures.
The contract may refer disputes to a Russian court, a foreign court or international arbitration. The practical enforceability of that choice in a sanctions-related dispute should be analysed before proceedings are commenced.
Article 248.1 and Sanctions-Related Jurisdiction
Article 248.1 of the Russian Arbitrazh Procedure Code is particularly important in sanctions-related international disputes. It establishes special rules concerning the exclusive jurisdiction of Russian arbitrazh courts for certain disputes involving persons affected by foreign restrictive measures and disputes connected with such measures.
Where restrictive measures are alleged to create obstacles to access to justice under a foreign jurisdiction or arbitration agreement, Russian jurisdiction may require separate analysis. Russian law also contains a related mechanism under Article 248.2 concerning applications to restrain certain foreign proceedings.
Foreign Judgments and Arbitral Awards in Russia
Winning proceedings outside Russia and enforcing the resulting decision against assets located in Russia are separate stages. Articles 241 and following of the Russian Arbitrazh Procedure Code regulate recognition and enforcement of foreign court judgments and foreign arbitral awards.
The applicable treaty framework, Russian federal law, public-policy requirements and other grounds for recognition or refusal must be analysed for the particular case. The enforceability of a future judgment should therefore be considered before the forum is selected.
Asset Analysis Before Litigation
A judgment against an insolvent or assetless company may have little commercial value. Before substantial litigation costs are incurred, the creditor should consider the Russian debtor's corporate status, business activity and potentially enforceable assets.
A practical recovery strategy can therefore combine:
claim analysis → jurisdiction → sanctions analysis → debtor and asset assessment → litigation → interim measures → enforcement → payment route
Receiving Payment Under Sanctions
An enforceable judgment does not by itself answer how funds will lawfully move across borders. Russian special economic measures, the creditor's jurisdiction and ownership structure, the banks involved, the currency and applicable foreign sanctions may all be relevant.
Russia also maintains special payment procedures for certain categories of foreign creditors and obligations. Payment architecture should therefore be considered at the beginning of the recovery strategy rather than only after judgment.
RT-Union | Cross-Border Debt Recovery from Russian Companies
RT-Union advises international companies on commercial disputes involving Russian counterparties.
Our work may include contract and jurisdiction analysis, sanctions assessment, review of the Russian counterparty's legal position, preparation of litigation strategy, coordination of proceedings in Russia, and analysis of enforcement and lawful payment mechanisms.
For an international creditor, the objective is not simply to obtain a judgment. The objective is to create an enforceable legal route from the contractual claim to actual recovery of funds.
