Russian Court Orders EU Companies to Pay €8.8M, Rejecting EU Sanctions as Legal Defence

The Arbitration Court of the Murmansk Region has ordered two EU-based companies to pay €8,799,286 in damages to Port Lavna, a Russian port operator, ruling that EU sanctions did not constitute a valid legal justification for retaining advance payments.

The dispute dates back to 2018, when Port Lavna contracted the EU companies to design and install equipment for a coal handling facility at Murmansk port. The company paid €8.8m in advance payments in 2019. Following the EU's amendment of Regulation 833/2014 in April 2022 — which prohibited the supply of certain equipment to Russian entities — the EU companies halted work and refused to return the advance.

Port Lavna initially pursued ICC arbitration seeking a refund, but the claim was unsuccessful. A Russian prosecutor subsequently moved to block recognition of the ICC award in Russia, arguing it conflicted with Russian public policy. The Murmansk court agreed, noting that Russian law does not treat EU sanctions as creating binding obligations on Russian entities, and that the arbitration panel — composed of nationals from states Russia classifies as "unfriendly" — could not guarantee a fair hearing.

• With the ICC award blocked, Lavna filed a tort claim in Russian courts for the same amount. The court assumed jurisdiction under Articles 247 and 248.1 of the Russian Arbitration Procedure Code, excluded Dutch law as contrary to Russian public policy, and held both EU companies jointly liable for the full sum.