Sanctions

Advising a major global leasing company on Russian sanctions and insurance regulations in a litigation in an English court. The dispute arose between the client and insurance companies, which refused to treat the failure to return more than one hundred aircraft leased to Russian airlines due to Russian export restrictions as an insured event.

Representing the client in a dispute in ICC arbitration over the client’s claim against its counterparty, one of the world’s largest manufacturers of wind turbines. The client won tenders for the production of “green” electricity and started the construction of wind farms. The wind turbines were to be produced, supplied and maintained by the opponent. However, due to the sanctions, the respondent terminated its contracts with the client, that resulted in substantial losses for the client.

Defending Goldman Sachs in a number of disputes over the claims brought by a major bank and a Russian state corporation seeking recognition of the competence of Russian courts to hear the disputes (Article 248.1 of the Russian Commercial Procedure Code) arising out of the agreements on financial transactions and a cross-currency interest rate swap concluded between the parties. The claimants were sanctioned, the parties terminated the agreements on condition that the client would provide the termination amount to the claimants but, due to the prohibition on transactions with sanctioned parties, the client was unable to fulfil the obligations. Despite the arbitration clause, the opponents asked the Russian court to change the jurisdiction.

Defending Commerzbank, Landesbank Baden-Württemberg, Bayerische Landesbank (major German banks) in disputes against a Gazprom subsidiary relating to the refusal of clients to make payments to the opponent under bank guarantees due to sanctions restrictions. The claimant is currently attempting to recover funds from the clients through a Russian court despite the fact that the guarantees are subject to English law and contain an arbitration clause.

Defending a major US bank in a dispute with a Russian bank which is subject to sanctions. The dispute is connected with a client’s transfer of US$7m from the opponent’s correspondent account to a special blocked account. Despite the fact that the dispute is under the jurisdiction of US courts, the claimant filed a claim in a Russian court under Article 248.1 of the RF CPC.

Defending Commerzbank in a dispute against a large Russian bank. The opponent commenced a dispute in connection with the freezing of his funds in accounts opened with the depository, whose funds were in turn frozen in a German bank due to European sanctions. The complexity of the dispute is based on the claim’s nature, i.e., the probability of qualification of the claim as of contractual or of tort nature.

Defending a major bank's subsidiary in a dispute against Sovcombank (a major Russian sanctioned bank). The client’s UK affiliate and the opponent entered into agreements under which the opponent was allegedly owed RUB1.4bn. The funds were transferred to a blocked account. The agreements contain arbitration clauses and are governed by English law, but the claimant is seeking to recognise the exclusive jurisdiction of Russian courts as well as apply Russian law due to sanctions. The project is complicated by the fact that the claimant intends to recover the debt not only from the client’s UK affiliate, as a counterparty to the agreements, but also from a Russian bank that is part of the client’s conglomerate, however, has nothing to do with the agreements in question.

Defending Citibank in a dispute with a sanctioned Russian bank. Due to the sanctions imposed by the US and the UK, our client transferred the opponent’s assets – totalling US$25m – to a special blocked account.

Successfully defending a client in a series of proceedings challenging interim measures imposed by an Italian court. The client is constructing a large gas processing plant. The client’s Italian subcontractors, in breach of contract, failed to extend their performance bank guarantees, citing sanctions, so the client demanded the payments under the guarantees. The opponents applied to a Turin court, which, by way of interim measures, prohibited the banks from making payments in favour of the client. We achieved settlements of the disputes.

Defending an investment company before the Limassol District Court in relation to the claims brought against the client by its customers. The dispute arose out of the client’s inability to conduct securities transactions due to sanctions.
The team is defending the client against the claims by developing a comprehensive legal position on the issue of recognising sanctions as a force majeure circumstance and coordinating the Cypriot lawyers.

Successfully defending a major holding in a dispute over the exclusion of foreign companies from its membership. Foreign entities, following the sanctions, stopped participating in general meetings, which made it impossible for the client to make key decisions. Due to their inaction, the opponents caused harm to the client by disrupting the implementation of a major investment project worth tens of billions of roubles. Thanks to the team’s efforts, the client’s claim was fully satisfied.

Preparing an expert report for the English court on the application of Articles 248.1–248.2 of the Russian Commercial Procedure Code and court service in a dispute between a Russian company and a Canadian branch of a leading international aircraft manufacturer (the client). The dispute was caused by the client’s refusal to pay back the advance payment, since the Russian counterparty had breached the payment schedule under the contract. The Russian company argued that the breach of the schedule had been caused by sanctions and appealed to the Russian court (despite the LCIA arbitration clause in the contract), asking it to establish its exclusive jurisdiction over the dispute and recover the disputed advance payment from the client. Thanks to the well-coordinated work of the team, the client obtained an anti-suit injunction in the English court in an extremely short time, which increased the likelihood that the dispute will be considered in a proper forum and will help the client to avoid losses of US$25m.

Successful pre-trial settlement of a dispute between the client and its counterparty pursuant to the General Conditions concluded between the parties for the supply of foreign equipment for the construction of infrastructure facilities. The counterparty faced difficulties in making payments to the Russian branch due to sanctions and currency restrictions, which jeopardised the long-term cooperation of the parties. With the assistance of the firm, the parties agreed on a further payment procedure without initiating LCIA arbitration.

Advising a major Swedish steel sales company in connection with the termination of its operations in Russia. The client needed to transfer assets owned by a Russian subsidiary to a foreign jurisdiction. The matter is complicated by sanctions that do not allow direct distribution of assets of a Russian liquidated entity in favour of a foreign client. We prepared an opinion for the client, proposing various options for structuring transactions for the transfer of assets taking into account the sanctions regulation in order to mitigate the client’s potential losses of approximately US$40m.

Comprehensive support of the liquidation of a Russian food retailer with significant assets owned by foreign legal entities. The project includes support of the liquidator’s activities, as well as coordination of a tax law adviser. The liquidation is being conducted as part of a complex business sale transaction, one of the conditions of which is the termination of the retailer’s operations in the Russian market. The procedure is complicated by the need to comply with both the requirements of Russian law and the terms of the transaction. The range of services provided includes both legal support, including resolving complex issues, and standard liquidation measures, as well as control of tax risks.

Advising a major foreign bank – a systemically important bank in Russia – in connection with the termination of an office building sale and purchase agreement worth over US$50m due to the developer failing to start construction on time and demanding that the client pay an additional amount of over 50% of the agreed price. The firm provided detailed advice on how to mitigate the risks associated with the termination, as well as the developer’s arguments re. sanctions, price increases and other force majeure circumstances.

Defending Shell’s subsidiaries in a dispute with GPN-Salym Projects LLC (a subsidiary of Gazpromneft) over the reorganisation of a branch of foreign company Salym Petroleum Development N.V. into the Russian company Salym Development LLC, which became possible as a result of Russia’s introduction of counter-sanctions measures against companies intending to leave the Russian market. The dispute has become a precedent on this issue in the Russian legal system.

Representing a major agricultural company in the recognition and enforcement of arbitral awards rendered by an international commercial arbitration court in London (FOSFA) against a Russian company in a dispute over wrongful termination of contract (a supply contract violation). The specifics of the case were the prospect of recognising an arbitral award arising out of a contract subject to international economic sanctions.

Supporting a part of the client’s global acquisition of assets of a world leader in optical solutions. The transaction covers about 60 jurisdictions, in each of which the local consultant provides business due diligence and support of applicable corporate procedures. The transaction is complicated by a sanctions component, as well as by the use of a rare asset transfer structure involving the transfer of property instead of the company shares, which complicates business due diligence procedures and asset transfer mechanisms.

Defending a client – a major railcar leasing operator, – in a dispute with two transport companies to which our client had leased railcars under a long-term relationship. Due to the fact that the transferred railcars were actually and legally arrested in Ukraine due to sanctions, the lessees refused to pay the rent, including by referring to the force majeure circumstance confirmed by a certificate of the Chamber of Commerce and Industry of the Russian Federation.

Advising the client, a major Russian private group of companies, in connection with potential litigation relating to replacement of a management company (general partner) of an investment fund (exempted limited liability partnership) in the Cayman Islands. The replacement was caused by sanctions which had been imposed on the beneficiary of one of the fund’s partners. The replacement was effected by the firm without trial.

Developing a defence strategy for a one of Russia’s largest distributors of telecommunications equipment. Due to the imposition of sanctions on the import of high-tech equipment into Russia, the client’s Taiwanese counterparty could not supply the equipment directly to the client. To overcome the problem, the client entered into an agreement with a Turkish intermediary who was to purchase the equipment in Taiwan and resell it to the client. The client made an advance payment of US$1.6m, but the intermediary had problems making payments to the manufacturer because of export restrictions imposed by Turkish law.

Advising an international Swiss investment bank on interaction with counterparties in the context of sanctions and restrictive measures imposed on the territory of Russia by decrees of the President of the Russian Federation in February–March 2022. We also developed a strategy for negotiations with an opponent – an investment company and a leader in the futures and options market by the amount of its clients’ operations in Russia – which refused to fulfil its obligations to the client on derivative financial instruments due to the counter-sanctions restrictions.

Advising a Russian transport company on the consequences of sanctions against Libya, including their impact on a construction contract: suspension of the contract, exemption from liability, qualification as force majeure, timing, procedure and consequences of termination of the contract, and risks of destruction of equipment and a construction facility.
The KK&P team also analysed the possibility of pursuing claims against the Libyan government under the BIT for failure to provide protection for property imported for the purposes of a construction contract, the performance of which was breached due to sanctions. Our services also covered the application of a sanctions clause in an insurance policy as to whether military action in Libya constituted the implementation of no-fly zone sanctions.

Advising the client’s beneficiaries’ private office on sanctions, corporate and other issues related to the management of a Russian company. The firm’s goal is to ensure the stable and uninterrupted operation of the group and the protection of investments.

Preparing a legal opinion on the particularities of the implementation of the British Virgin Islands sanctions regime in relation to companies that are indirectly controlled by a person on the UK sanctions lists for the purpose of re-domiciliation of a company from the BVI to Belize.

Advising a major Russian shipping company in connection with sanctions against Iran, including on the possibility of entering into various types of contracts and payment arrangements.

Preparing and implementing a dispute strategy in relation to a claim brought by a Russian industrial equipment manufacturer against a foreign counterparty that unilaterally terminated a contract. Our work includes analysis of the client’s ability to invoke legal provisions protecting Russian persons from the consequences of sanctions imposed by foreign states, as well as taking provisional measures against the foreign counterparty’s assets due to the risk of termination of operations in Russia.