EU’s 20th sanctions package: sharpening the EU’s arbitration toolkit against retaliatory Russian litigation

Among other measures, the EU's 20th sanctions package introduces arbitration-related provisions designed to further protect EU operators from retaliatory litigation originating in Russia.  As the European Commission has emphasised, this package “adds further legal protection for EU operators against abusive lawsuits from Russians, as well as legal protection from enforcement of abusive Russian judgments and other retaliation measures” (Questions and answers on the 20th package of sanctions).

This client alert provides an update on our previous alert regarding the arbitration-related provisions of the EU's 14th, 15th, and 18th sanctions packages, available here.

I. Background: protecting EU parties from retaliatory litigation in Russia

By referring to “abusive lawsuits” and “abusive Russian judgments and other retaliation measures”, the EU seeks to protect EU parties from retaliatory litigation in Russia introduced on the basis of Russia’s 2020 amendments to Article 248 of the Arbitrazh (Commercial) Procedure Code (“Code”) that, as commented in our client alert, allow Russian courts to assert exclusive jurisdiction over sanctions-related disputes in breach of valid arbitration agreements (Article 248(1)), issue anti-suit injunctions restraining foreign proceedings (Article 248(2)), and impose penalties up to the full value of the foreign claim plus legal costs against parties defying such injunctions (Article 248(10)).

Recent years have seen such retaliatory litigation multiply, resulting in hefty penalties being imposed against EU parties, counsel, and arbitrators, further threatening and eroding the integrity of the international arbitration system. Notable examples include:

• OMV P&E v. Gazprom: in February 2026, the Commercial Court for the St. Petersburg and the Leningrad Region granted interim anti-enforcement measures prohibiting OMV from enforcing any arbitral or court decisions (including any award in the pending ICC arbitration) against Gazprom outside Russia, noting OMV’s non-compliance with an earlier anti-arbitration injunction.
• Wintershall v. Russia (II): on 9 September 2025, the Moscow Commercial Court invoked its powers under Articles 248(1) and 248(2) of the Code to issue an anti-arbitration injunction directed jointly against Wintershall (as claimant), its counsel, and the entire arbitral tribunal then comprised of Olufunke Adekoya (chair), Charles Poncet (claimant’s appointee) and Hamid Gharavi (respondent’s appointee). On 21 November 2025, the Commercial Court ordered that Wintershall, its counsel, and arbitrators Adekoya and Poncet (arbitrator Gharavi having previously resigned) shall be jointly and severally liable to pay EUR 7.5 billion to the Russian Federation for non-compliance with its previously issued anti-arbitration injunction.
• Uniper v. Gazprom Export (II): on 4 July 2024, the Russian Commercial Court for the North-Western District upheld an injunction and penalty against the ad hoc arbitral proceedings in Uniper Global Commodities SE and METHA-Methanhandel GmbH v. Gazprom Export (2), confirming a penalty of EUR 14.312 billion for non-compliance. At the time, this was reportedly the largest penalty imposed in the context of Article 248 proceedings.

II. The EU’s new arbitration-related toolkit in Regulations 2026/506 and 2026/511

A. From defence to offence: the use of anti-suit injunctions and financial penalties before EU Member State courts and the expansion of access to arbitration

Regulation 2026/506 introduces provisions designed both to enable EU parties to obtain affirmative relief before EU Member State courts and to remove restrictions that might otherwise hinder their ability to initiate or continue arbitration proceedings against sanctioned entities.

1. Anti-suit injunctions before EU Member State courts (new Article 11ca)

Acknowledging that Articles 248(1) and 248(2) of the Code enable Russian courts to assert jurisdiction over sanctions-related disputes in breach of valid arbitration and jurisdiction clauses (Recital (24)), new Article 11ca of Regulation 833/2014 entitles the affected EU party to obtain an anti-suit injunction from an EU Member State court, upholding the original jurisdiction or arbitration clause and ordering the Russian party to discontinue the Russian proceedings. Failure to comply with such injunctions may result in the imposition of financial penalties, payable to the EU party and proportionate to the financial loss it may incur in proceedings before the Russian courts.

Article 11ca goes a step further than Article 11c of Regulation 833/2014 (as introduced by the EU’s 14th and 15th sanctions packages), which had already prohibited the recognition or enforcement within the EU of any “injunction, order, relief, judgment or other court 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.” While Article 11c was defensive in nature – shielding EU parties from the effects of Russian court decisions – Article 11ca is offensive, empowering EU parties to affirmatively obtain anti-suit injunctions from EU Member State courts, backed by enforceable financial penalties. This represents a significant expansion in the EU’s toolkit, effectively enabling EU Member State courts to mirror the very anti-suit injunction mechanisms that Russian courts have been deploying under Article 248 of the Code.

2. Broader access to EU Member State courts as a last resort (amended Article 11d)

Regulation 2026/506 also amends Article 11d of Regulation 833/2014 to broaden the forum necessitatis jurisdiction (i.e., jurisdiction of last resort) first introduced in 2024, under which EU Member State courts may hear claims for damages on an exceptional basis, even where no other court in the EU would normally have jurisdiction. As explained in our previous client alert, these damages claims include: (i) claims by EU nationals and entities under Articles 11a and 11b (introduced by the 14th and 15th packages) for losses resulting from legal proceedings initiated by Russian parties outside the EU in relation to contracts and transactions affected by EU sanctions; and (ii) claims by EU Member States and the EU itself under Article 11e (introduced by the 18th package) for damages and costs incurred in defending against investor-State arbitration claims brought by sanctioned individuals in connection with EU sanctions. Amended Article 11d now extends this exceptional jurisdiction to claims brought under Article 11ca, provided that the case “has a sufficient connection” with the EU Member State of the court seized — a criterion that does not appear to have yet been tested in the case law of the CJEU in the specific context of EU sanctions regulations.

3. Safeguarding access to arbitral and enforcement proceedings (new Article 5aj)

These new offensive and jurisdictional tools would be of limited utility if the sanctions framework itself were to obstruct EU parties’ ability to participate in proceedings. Regulation 2026/506 addresses this risk through the insertion of Article 5aj, which provides that certain transactions that would otherwise be prohibited shall be permitted where they are “strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State, as well as for the recognition or enforcement of a judgment or an arbitration award rendered in a Member State”, provided that such transactions are consistent with the objectives of Regulation 833/2014 and Regulation 269/2014. This carve-out also extends to transactions strictly necessary to recover damages pursuant to Articles 11a and 11b, or equivalent provisions of Regulation 269/2014.

B. Unlocking frozen funds: a targeted derogation for arbitration costs

New Article 5c of Regulation 269/2014 (as inserted by Regulation 2026/511) allows competent authorities of EU Member States to authorise the release of frozen funds to satisfy awards on arbitration costs – including tribunal fees and expenses, administrative fees of the arbitral institution, and the opposing party's reasonable legal costs – where the arbitral award was rendered after the date on which the listed person was included on the EU's sanctions list, and provided that the arbitral proceedings were initiated by that listed person.  Critically, the derogation does not extend to damages, interest, or any other substantive claims.  As Recital (6) makes clear, the purpose is to discourage sanctioned persons from initiating arbitral proceedings after restrictive measures have been adopted, which could lead to a circumvention or frustration of those measures — particularly where such proceedings are initiated in a third country.

An open question is whether Article 5c also covers costs awarded to EU Member States in investor–State arbitration proceedings initiated by sanctioned individuals.  The wording – which refers to costs awarded “to a party that is a natural or legal person, entity or body that is neither listed, nor owned or controlled by a listed person” – could, at a stretch, encompass an EU Member State, although the characterisation of a sovereign State as a “body” within the meaning of this provision is itself uncertain.  The broader framing of Article 5c and its accompanying Recital (6) – which refer to parties by reference to nationality, establishment, and subjection to restrictive measures – suggest that the provision was designed with private parties (and perhaps State-owned entities) in mind.  Had the drafters intended to cover EU Member States, they would likely have said so expressly, as they did in the investor-State provisions of the 18th sanctions package (Regulations 2025/1494 and 2025/1472).

III. Effective tools? Enforcement challenges and the forthcoming Reibel Judgment

The introduction of EU Member State courts' power to award anti-suit injunctions under Article 11ca of Regulation 833/2014 is a noteworthy development, but it is not without its complications.  Most notably, this power may encroach upon arbitral tribunals' own jurisdiction to issue anti-suit and anti-enforcement injunctions, creating a risk of conflicting orders.  That said, Article 11ca is a welcome development insofar as arbitral tribunals may have been reluctant to impose penalties on sanctioned entities that refused to comply with such injunctions, due to uncertainty regarding the scope of their jurisdiction to do so.

A significant question arises, however, as to how such penalties could be efficient in practice in circumstances where EU regulations would prevent the enforcement of such penalties against frozen assets.  If the party against whom the penalty is imposed is itself a sanctioned entity whose assets are frozen, the penalty risks becoming a paper judgment.  In this regard, it is worth querying whether the possibility to release frozen funds to satisfy awards on costs under Regulation 2026/511 (described supra in Point II.B) should be extended not only to arbitration costs but also to financial penalties awarded on the basis of Article 11ca of Regulation 833/2014.  Without such an extension, the practical effectiveness of the anti-suit injunction mechanism may be significantly curtailed.

As we observed in our previous client alert, the effectiveness of EU measures to counter retaliatory Russian litigation will largely depend on the geographical location of the assets of EU investors and listed individuals or entities.  EU sanctions will not protect against the enforcement of Russian penalties against assets located in Russia or Russian-aligned jurisdictions, nor will they prevent Russian courts from upholding their own injunctions.  Conversely, the effectiveness of penalties enforced within the EU against listed individuals or entities will depend on the availability of assets within the EU.

Beyond these practical enforcement concerns, a more fundamental question as to the coherence of the EU's arbitration-related sanctions framework may be emerging.  The CJEU's forthcoming judgment in Reibel (Case C-802/24) is expected to clarify the legal position.  The Advocate General's Opinion delivered on 26 February 2026 suggests that claims arising from contracts or transactions affected by EU restrictive measures may, in principle, be submitted to arbitration.  While this position may be distinguished from the CJEU's established case law in Achmea and Komstroy – which addressed intra-EU investor-State arbitration – it may nonetheless raise questions in light of the reasoning underpinning those judgments.  In particular, the CJEU emphasised that disputes involving questions of EU law should not be removed from the EU judicial system where this would undermine the autonomy of EU law and the uniformity of its interpretation, notably because the arbitral tribunals in those cases could not make preliminary references to the CJEU.  At the same time, the Advocate General's analysis appears to rely on the assumption that arbitral awards remain subject to effective review by national courts capable of safeguarding EU public policy – an assumption that does not hold uniformly across all arbitral frameworks, including investor-State arbitration under the ICSID Convention.  It bears recalling, however, that the CJEU is not bound by the Advocate General's Opinion and may adopt a different approach consistent with its existing jurisprudence.  If the CJEU were to adopt a more restrictive view on the arbitrability of sanctions-related disputes, this could materially affect the operation of several mechanisms discussed above and add further complexity to parts of the EU sanctions framework that rely on recourse to arbitration.  

The forthcoming judgment in Reibel will therefore have significant implications for EU operators dealing with sanctioned counterparties.  We will continue to monitor developments in this area and report on their practical implications. 

Authored by Markus Burgstaller and Iris Sauvagnac.