Sanctions incompatibility of exequatur: Recognition and enforcement of arbitral awards under overlapping mandatory regimes

Chugunov Denis Al'bertovich ORCID: 0009-0001-2554-5803 General Director; SOMMER Rus Trade LLC 125130, Russia, Moscow, Voykovsky district, 6th Novopodmoskovny lane, 3 denis.a.chugunov@gmail.com Other publications by this author

Introduction

An arbitration clause and an arbitration award are different objects of sanctions and their protection mechanisms do not coincide. Earlier, the author distinguished between situation "A" - the inability to initiate proceedings due to the refusal of infrastructural participants to service the process (art. II(3) of the 1958 New York Convention, part 4 of art. 248.1 of the APC RF) and situation "B" - the inability to recognize and enforce the decision (art. V of the Convention, art. 244 Agroindustrial Complex OF the Russian Federation) ^[1]. Developing a single apparatus of the series (imposed law and order, actual enforceability) based on the Russian-Chinese ^[11] and institutional ^[12] dimensions of the dispute, the work extends it to the stage of execution. The Thematic Review of the Supreme Court of the Russian Federation No. 8/2026, approved by Resolution of the Presidium of the Supreme Court of the Russian Federation dated June 17, 2026 No. 11A/2026 "On the Application by Arbitration Courts of legislation on special economic measures provided for in order to protect the national Interests of the Russian Federation" (hereinafter referred to as the Review), brought together eighteen positions, some of which affect this stage.

The degree of development is uneven: public order as the basis for refusal was studied by S. V. Krokhalev ^[2] and A.V. Asoskov ^[3], recognition of the decision as an independent object by N. I. Marysheva and A. I. Shchukin ^[4], the mechanisms of Article 248 of the APC of the Russian Federation by M. L. Galperin ^[5]. The sanctions dimension has been set ^{[6; 7]}, but it does not go beyond the evaluation category of public law and order. The exequatur has not been developed from the point of view of sanctions compatibility of the settlement infrastructure - this gap is filled by work.

Scientific novelty: 1) the concept of sanctioned incompatibility of the executive; 2) the principle of separation of executive title and asset transfer; 3) the model of modal executive and the four-criteria test of sanctioned compatibility of execution; 4) the distinction between anti-search and anti-inappropriate prohibition.

1. The norm, stage, and confusion of argumentation

The framework of situation "B" is formed by art. V(2)(b) of the New York Convention and Part 3 of art. 244 of the APC RF, referring to the grounds for refusal to issue a writ of execution for foreign arbitral awards under the law on International Commercial arbitration. Public order is fixed as such a basis in clause 2, clause 1, Article 36 of the Law of the Russian Federation "On International Commercial Arbitration" (the grounds correspond to Article V of the New York Convention of 1958), and the guideline for its narrow interpretation is the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 26, 2013 No. 156 "Review of the practice of courts considering cases on the application of the public policy clause." In the doctrine, a reservation is an exclusive means of addressing the consequences of execution, rather than the substance of the decision ^{[8; 2]}; Article II(3) refers to the transfer of the dispute to arbitration, Article V refers to recognition and execution ^[9], and distinguishing recognition and execution as independent acts ^[10] anticipates the dichotomy titles and asset transfers.

Practice is moving in the opposite direction: by the ruling of the Judicial Board for Economic Disputes of the Supreme Court of the Russian Federation dated July 26, 2024 No. 304-ES24-2799, the acts on the enforcement of the FOSFA arbitration award (case No. A45-19015/2023, Novosibirsk Khleboprodukt JSC) were canceled - the introduction of restrictive measures for political reasons was considered to raise doubts about the guarantees of a fair trial. (the same line is contained in the resolution of the Administrative Court of the West Siberian District dated May 16, 2025 No. F04-1394/2025) (case No. A45-1031/2025). But these arguments belong to the stage of the enforceability of the agreement, and not to the verification of the decision: their transfer to the executive turns art. V to a retrospective revision of the forum selection in spite of the ban of révision au fond ^[3]. Situation "B" requires criteria that are tied not to the quality of the forum, but to the mode of the awarded provision.

2. Counter-sanctions public policy after Review No. 8/2026

Items 3-5, 7 and 9 of the Review are considered null and void under Articles 10 and Paragraph 2 of Article 168 of the Civil Code of the Russian Federation circumvention of the temporary procedure (Decree of the President of the Russian Federation dated March 5, 2022 No. 95 "On the temporary procedure for fulfilling obligations to certain foreign creditors"): splitting payments below 10 million rubles, assignment to a person outside the scope of the decrees, settlement agreement bypassing the account "O" (Decree No. 322 dated May 27, 2022 "On the temporary procedure for fulfilling obligations to certain copyright holders"). Positions 13 and 14 qualify the sanctioned blocking of settlements as a temporary legal impossibility of execution, which releases the debtor from liability until the obstacle disappears - a modality of execution, not a flaw in the obligation. Position 17 recognizes an obstacle to access to justice and the burdensome nature of proceedings, barriers described by the author as grounds for compliance-induced unenforceability ^[1].

Specification of public order in the sanctions context is required by S. A. Sinitsyn, M. O. Dyakonova, P. D. Pechegina ^[6] and D. V. Konev (through a counter-sanctioned public order) ^[7], but both approaches do not provide a criterion separating cases of refusal from cases where it is sufficient to adjust the method of execution. His review suggests that accounts "C" and "O" are a legal payment channel for a person in an unfriendly jurisdiction, and the question changes: not "is execution acceptable", but "in what way".

3. Mirror outline

The Supreme Regional Court of Stuttgart, by a ruling dated May 13, 2025 in case 1 Sch 3/24 (Oberlandesgericht Stuttgart, Beschluss vom 05/13/2025), rejected the application for recognition of the decision of the ICAC at the CCI of the Russian Federation as enforceable: rejecting all the grounds of art. V(1) of the Convention, the court referred to the prohibition of art. 11(1)(b) of the Regulation of the Council (EU) No. 833/2014 (on restrictive measures in connection with Russia's actions) (covering the refund of the prepayment), recognized the statement as unfounded "at the present time" and indicated that obtaining a title does not contradict public policy. The same qualification of the prepayment refund as a requirement covered by art. 11(1)(b) was given by the Higher Land Court of Frankfurt am Main, rejecting the ruling of June 12, 2025 in case 26 Sch 12/24 (Oberlandesgericht Frankfurt am Main, Beschluss vom 06/12/2025; refund of prepayment under a contract falling under art. 3k of the Regulation, referred to as "similar requirements" in the meaning of art. 11(1)(b)) in the declaration of enforceability of the decision of the ICAC at the CCI of the Russian Federation. By a ruling dated April 28, 2026 (21 Sch 5/25) (Oberlandesgericht Stuttgart, Beschluss vom 04/28/2026), the same court went further, attributing EU restrictive measures to ordre public international: a decision obliging the authorized provision contradicts public policy and is not subject to recognition. German practice varies from a temporary waiver with retention of title to a public policy waiver, but both lines localize the obstacle at the stage of execution, rather than the validity of the agreement. The opposite pole is the decision of the U.S. District Court for the District of Columbia dated January 8, 2026 in the case of Satoriagricultural Consultancy and Projects Management LLC v. T&R Productions LLC (United States District Court for the District of Columbia, Civil Action No. 25-1287, Memorandum Opinion and Order of January 8, 2026, Howell, J. Recognized three decisions of the ICAC at the CCI of the Russian Federation № M-187/2022, M-188/2022 and M-189/2022 dated February 6, 2024 in the amount of USD 13,984,502, the rights of claim for which were ceded to ANO TV-Novosti by SCPM (UAE) before TV-Novosti was included in the OFAC sanctions list): according to the New York Convention, three decisions of the ICAC at the RF CCI in favor of ANO TV-Novosti were recognized. Interpreting the public policy narrowly, the court concluded that recognition in itself does not constitute a prohibited grant and does not prevent subsequent OFAC actions at the enforcement stage, independently drawing the same distinction between recognition of title and asset movement, which is justified below.

The totality of the acts describes the sanctioning incompatibility of the executive order: the decision remains in force and is not affected by the flaws of art. V(1) of the Convention, but its recognition is blocked by the incompatibility of the awarded grant with the settlement regime at the place of execution. In the system of grounds for refusal, the phenomenon is independent. Dogmatics knows two levels of obstacles: the flaw of the arbitration agreement is situation "A" (art. II(3) of the Convention, Part 4 of art. 248.1 of the APC RF) ^[1] and the flaw of the decision itself (invalidity, non-compliance, going beyond the agreement, procedural violations) under art. V(1) of the Convention. The sanctioned incompatibility does not apply to either: the agreement and the decision are impeccable, and the obstacle lies in the third element - the legal regime of the awarded grant. This is not a new basis beyond the exhaustive list of art. V, but a special modality of the application of art. V(2)(b): public order is affected not by the decision, but by the result of its execution. The Russian court rejects the decision leading to the payment of accounts "C" and "O", the foreign one - violating art. 11 of Regulation No. 833/2014: the permissive regimes of the settlement infrastructure compete - the same superimposition of super-mandatory norms that is described by the author for the contract ^[11] and the arbitration agreement ^[1].

4. The principle of separation of executive title and asset transfer

The dogmatic key is provided by the ruling of the Supreme Land Court of Cologne dated May 24, 2024 in case 19 Sch 26/23 (Oberlandesgericht Köln, Beschluss vom 05/24/2024): the court recognized the decision of the Arbitration Institute of the Stockholm Chamber of Commerce as enforceable, making enforcement dependent on the claimant's proof that the voluntary payment would not violate Council Regulation (EC) No. 269/2014 (on restrictive measures in connection with actions undermining the territorial integrity of Ukraine). Three provisions follow from the motivation: the declaration of enforceability is limited to the creation of a title, the interest in which remains even if it is temporarily impossible to execute; the dilemma between the forced seizure of property in favor of a sanctioned person and criminal liability for payment is unacceptable; the freezing of assets is not equal to the prohibition of any payment, crediting to a frozen account, depositing, payment to an escrow agent is not prohibited by the Regulations. The agreement was reached by a condition in the order of § 726 of the German GPU, which transfers the verification to the stage of the enforcement formula; the conflict is described in terms of imposed law and order ^[11].

Hence the principle of separation of executive title and asset transfer: the exequatur and the actual transfer of property value are independent legal facts, and a ban addressed to the latter does not automatically constitute grounds for denial of the former. Consistent with the distinction between recognition and enforcement ^[10] and with the reservation's focus on consequences rather than substance ^[8], the principle subordinates the method of execution to verification rather than the fate of the title, and transfers actual enforceability to the stage of execution ^[11].

5. Modal exequatur and the test of sanctioned compatibility of execution

The applied form of the principle is modal exequatur: the recognition of a decision with the simultaneous determination by the court of a sanction-neutral method of execution. The construction is not arbitrary: it generalizes the model of conditional enforceability observed in practice, a special case of which is the Cologne definition, which made execution dependent on the sanctioning verification of payment in accordance with § 726 of the German GPU. At the same time, Russian law has a tool that German law does not have: accounts "C" and "O" (decrees No. 95 and No. 322) are functionally identical to a frozen account and deposit, and crediting the awarded amount to them does not violate the counter-sanctions procedure, but prescribes.

Operationalization is provided by a test of four criteria. Criterion 1 (objective sanctioning relationship): whether the awarded grant falls under the payment restriction regime at the place of execution. Criterion 2 (neutral channel): is there a legal way of execution - a special account, permission from a Government commission, deposit, escrow. Criterion 3 (focus): realization of the awarded right or circumvention of the time order (indicators - positions 4, 5 and 9 of the Review). Criterion 4 (good faith of the claimant): has the sanctions regime been used to deprive the debtor of the means of protection? Hence, there are three modes: recognition without restrictions (criterion 1 is not fulfilled); modal exequatur (criteria 1 and 2 are fulfilled, 3 and 4 are not refuted) the court recognizes the decision and indicates the method of execution; refusal under Part 3 of Article 244 of the Code of Administrative Procedure (criterion 2 was not fulfilled or circumvention or bad faith was established). The burden of proof according to criteria 1 and 3 is borne by the debtor, according to criterion 2 - by the recoverer, forming a step-by-step algorithm for assessing the enforceability for the court and the recoverer. Thus, the three tools in the series form a single methodology for actual enforceability by stages of dispute: the matrix of a "friendly" institution - ex ante, when choosing a forum ^[12]. A six-criterion functional infeasibility test when initiating proceedings, in relation to a reservation (situation "A") ^[1]. The real test is at the final stage, as applied to the result (situation "B"). All three are addressed not to the formal reality of the design, but to its functional feasibility in a specific infrastructure environment, and thus operationalize a single principle of actual feasibility on three consecutive slices of a single process.

Possible objection: does the modal exequatur introduce a ground for refusal or a condition for recognition beyond the exhaustive list of art. V Conventions? It is removed by the nature of the construction: the court does not refuse recognition and does not condition it - it recognizes the decision in full, to the extent awarded, determining only the channel of provision. The grounds of art . V addresses the question of whether to recognize the decision. Modal exequatur is the question of how to fulfill what is recognized. These issues are at different stages and do not compete. The Cologne model makes the same distinction: the declaration of enforceability took place unconditionally, and the verification of the sanctioned compatibility of the payment is attributed to the stage of issuing the enforcement formula. Modal exequatura does not narrow the pro-convention standard, but preserves the executive title where a refusal by public policy would destroy it.

The model requires that Article 245 of the APC RF be supplemented with Part 2.1: "In the ruling on the recognition and enforcement of a foreign arbitral award, the arbitration court has the right to specify a method of execution that ensures compliance with the legislation of the Russian Federation on special economic measures, including the transfer of the awarded funds to a special bank account opened in accordance with the decrees of the President of the Russian Federation.". The addendum preserves the pro-convention orientation of Chapter 31 of the Russian Agricultural Code and removes the need for a public policy clause when the conflict is resolved by the settlement method.

6. Anti-search and anti-inappropriate prohibition

Position 15 of the Review reflects a case where both the prohibition to continue proceedings in a foreign arbitral tribunal and the prohibition to enforce its decisions are satisfied (for Article 248 of the APC RF as a procedural weapon, see ^[5]). But Part 1 of Article 248.2 of the APC of the Russian Federation speaks about the prohibition to initiate or continue proceedings - a preventive anti-search measure, whereas the prohibition of execution is addressed to the result: practice has formed an anti-inappropriate measure without a textual basis. An objection to its consolidation may be raised about a violation of international courtesy and the risk of escalation of counter-prohibitions. The objection is groundless, since the proposed measure does not create a new procedural weapon, but mirrors Western anti-search prohibitions already applied against Russian persons, issued in support of European arbitration clauses against procedures under Article 248.1 of the APC RF ^[1], and thereby restores procedural parity rather than undermines it. The measure should be consolidated by supplementing Article 248.2 with the right of a person from Part 1 to demand a ban on the recognition and enforcement of a decision of a foreign court or arbitration outside the Russian Federation.

Conclusion

Refusals of enforcement on both sides of the perimeter form a mirror mechanism - the sanctioned incompatibility of enforcement, which cannot be reduced to the unenforceability of the arbitration agreement. The study makes it possible to preserve the executive title where it would otherwise have been lost, removing the dilemma of "refusing or violating the counter-sanctions order." The results obtained form four interrelated positions. Firstly, the concept of the sanctioning incompatibility of the executive is substantiated as an independent phenomenon that does not coincide with either the flaw of the agreement or the flaw of the decision. Secondly, the principle of separation of executive title and asset transfer is formulated: recognition does not constitute a prohibited provision, only the method of execution may be prohibited. Thirdly, the model of modal exequatur at the institute of special accounts and a four-criteria test with three modes of court response are derived from the principle. Fourthly, anti-search and anti-inappropriate prohibitions are distinguished with an independent basis for each. The distinction between recognition and execution, known to the doctrine, has thus been translated into an applicable procedural algorithm. This work closes the methodological outline of the series. Introduced on the basis of the Russian-Chinese trade turnover ^[11] and transferred to the procedural plane of the arbitration agreement ^[1] and the institutional plane of the forum choice ^[12], the imposed law and order and actual enforceability receive a third, executive dimension here: the material incompatibility of the obligation, the procedural unenforceability of the clause and the sanctioning incompatibility of the executive form a single typology of obstacles: from the inability to fulfill the obligation through the inability to conduct proceedings leads to the inability to realize the award. The mode of amounts on special accounts requires further investigation.

The article is published in its final version as approved following the last positive peer review recommending acceptance for publication. It incorporates revisions made by the author in response to prior negative peer review reports that did not recommend publication. All peer review reports, including initial negative reviews, are published in open access alongside the article. All versions of the author’s revisions are archived in the publisher’s repository and may be made available upon reasonable request in accordance with Elsevier’s editorial policies and applicable data availability requirements.
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