Russian counter-sanctions taken in response to restrictive measures of Western jurisdictions is an important element of any risk assessment both for companies and private individuals, especially with assets in Russia. Whilst the executive is leading Russian counter-sanctions policy, the judiciary is another important branch contributing to their development.
Attached is the judgement of the Moscow Court, where the Court granted a judgement in favour of a Russian bank (VEB.RF) which sought damages in tort from the US bank (BoNY) which (acting through its London branch as a paying agent) blocked coupon payments under Eurobonds issued by an Irish SPV of RusHydro (a Russian company consolidating hydro-energy facilities) on the basis of various sanctions being applicable to RusHydro and VEB.RF.
This judgement is an authority as to (among others) the following points: (1) such proceedings can be issued in Russia on the basis of tortious liability (caused by a foreign person blocking funds due to a Russian person) and Russian courts will be competent to consider such proceedings; (2) Russian courts will apply Russian law to such claims on the basis of place of damage being in Russia; (3) any defence on the restrictions arising under foreign sanctions will not be a valid defence; (4) the argument that frozen funds are not expropriated and can be obtained, for example, by applying for licenses will not be a valid defence to prove the absence of damages; (5) foreign sanctions will not be treated as a force majeur event; and (6) any contractual restrictions in Eurobonds documentation on the unilateral issue of proceeding by a single bondholder will, very likely, be disregarded.