Russian Court Blocks Enforcement of €248M LCIA Awards Against Rusal and RTI, Citing Public Policy
The Arbitrazh Court of the Kaliningrad Region has declined to recognise and enforce in Russia two LCIA arbitration awards issued in OWH v RTI & Rusal (case No. A21-4252/2026) — the same awards that the English Commercial Court had previously upheld against a sanctions-based set-aside challenge in OWH v Rusal.
Background. Following the imposition of EU, UK, and US sanctions on VTB Bank in 2022, OWH — VTB's German subsidiary — was placed under the control of special representatives appointed by BaFin, Germany's financial regulator, and subsequently entered liquidation. OWH terminated currency swap contracts with RTI, a Jersey-based subsidiary of Rusal, which had refused to perform its obligations citing sanctions. OWH obtained LCIA awards totalling approximately €248 million against RTI and Rusal as guarantor.
Why Russian court involvement was needed. Under Russian counter-sanctions law (Presidential Decree No. 95 of 5 March 2022), payments to creditors from "unfriendly" states must be routed into restricted rouble accounts inaccessible to the foreign creditor. For Rusal to pay OWH directly, it required a Russian Government permit — which in turn required a Russian court ruling confirming that enforcement did not contradict Russian law. Rusal itself brought the recognition application for this purpose.
Grounds for refusal. The court declined recognition on Russian public policy grounds, finding that:
As a result, OWH cannot enforce the awards against Rusal's Russian assets, and Rusal remains unable to obtain the government permit needed to pay OWH outside Russia's counter-sanctions framework.
Background. Following the imposition of EU, UK, and US sanctions on VTB Bank in 2022, OWH — VTB's German subsidiary — was placed under the control of special representatives appointed by BaFin, Germany's financial regulator, and subsequently entered liquidation. OWH terminated currency swap contracts with RTI, a Jersey-based subsidiary of Rusal, which had refused to perform its obligations citing sanctions. OWH obtained LCIA awards totalling approximately €248 million against RTI and Rusal as guarantor.
Why Russian court involvement was needed. Under Russian counter-sanctions law (Presidential Decree No. 95 of 5 March 2022), payments to creditors from "unfriendly" states must be routed into restricted rouble accounts inaccessible to the foreign creditor. For Rusal to pay OWH directly, it required a Russian Government permit — which in turn required a Russian court ruling confirming that enforcement did not contradict Russian law. Rusal itself brought the recognition application for this purpose.
Grounds for refusal. The court declined recognition on Russian public policy grounds, finding that:
- BaFin's appointment of special representatives effectively transferred control of OWH to German state oversight — an act implementing Western sanctions against Russian entities. Enforcing the awards would therefore amount to expropriation of Russian assets
- OWH had terminated the contracts at the moment of maximum dollar appreciation, acting in accordance with Western sanctions policy rather than in the interests of its Russian shareholders, thereby maximising the claim against Rusal
- The UK-seated arbitration could not guarantee impartial proceedings for Russian parties, given the UK's sanctions posture toward Russia
As a result, OWH cannot enforce the awards against Rusal's Russian assets, and Rusal remains unable to obtain the government permit needed to pay OWH outside Russia's counter-sanctions framework.
