Introduction

The case UniCredit Bank GmbH v. RusChemAlliance LLC has become a significant legal battleground over arbitration, international sanctions, and jurisdictional conflicts between Western and Russian courts. Initially decided by the UK Supreme Court ([2024] UKSC 30), the case has now been reconsidered by the UK Court of Appeal ([2025] EWCA Civ 99) in response to new developments in Russia. The Court of Appeal revoked the anti-suit injunction it had previously upheld, marking a major shift in the legal and commercial realities surrounding international disputes involving Russian entities.

Background of the Dispute

RusChemAlliance, a Russian company, entered into construction contracts in 2021 for liquefied natural gas and gas processing plants in Ust-Luga, Russia. UniCredit issued bonds totaling €4.2 billion as financial guarantees for contractual obligations, with disputes agreed to be resolved through ICC arbitration in Paris under English law.

Following Russia’s invasion of Ukraine in 2022, the EU imposed financial sanctions, restricting transactions with Russian state-linked entities. As a result:

• The contractor terminated the construction contracts, citing EU sanctions.
• RusChemAlliance demanded repayment of advance payments under the bonds.
• UniCredit refused to honor the guarantees, arguing that EU sanctions prohibited payment under Article 11 of EU Regulation No. 833/2014.
• RusChemAlliance sued in Russian courts, relying on Article 248.1 of the Russian Arbitrazh Procedural Code, which grants exclusive jurisdiction to Russian courts over disputes involving foreign sanctions.

UK Supreme Court Decision ([2024] UKSC 30)

The UK Supreme Court upheld an anti-suit injunction, ruling that:

• The arbitration agreements in the bond contracts were governed by English law.
• Russian law (Article 248.1) could not override the arbitration clause.
• EU sanctions did not invalidate the arbitration agreement.
• The injunction was necessary to prevent RusChemAlliance from breaching the arbitration agreement by pursuing litigation in Russia.

What Changed? The Russian Court’s Ruling (December 2024)

Despite the UKSC ruling, RusChemAlliance secured a ruling from the St. Petersburg Arbitrazh Court, which:

• Prohibited UniCredit from initiating or enforcing arbitration outside Russia.
• Ordered UniCredit to seek cancellation of the UK court’s anti-suit injunction.
• Threatened UniCredit with a €250 million penalty for non-compliance.

Why Did UniCredit Seek to Revoke the Anti-Suit Injunction?

Facing the threat of significant financial penalties in Russia, UniCredit found itself in a legal and commercial dilemma. If it complied with the UK injunction, it risked severe financial consequences in Russia, where it still had substantial business interests. On the other hand, withdrawing from arbitration could undermine its contractual rights under English law.

UniCredit’s key reasons for seeking to revoke the anti-suit injunction were:

1. Financial Exposure: The Russian court’s order included a €250 million penalty for failing to comply, putting UniCredit at serious financial risk.
2. Ongoing Business in Russia: UniCredit, like other international banks, still had financial engagements in Russia that could be jeopardized by direct confrontation with Russian authorities.
3. Enforceability Challenges: The conflicting rulings created practical enforcement issues, as Russia would not recognize UK court orders, making arbitration effectively unenforceable.

UK Court of Appeal Decision ([2025] EWCA Civ 99)

In response to the Russian ruling, UniCredit sought modification of the UK court’s injunction to avoid the financial penalty. On February 11, 2025, the UK Court of Appeal (Sir Geoffrey Vos, Lady Justice Asplin, Lord Justice Phillips) ruled that:

• English law still governs the arbitration agreements, meaning the UK courts maintain jurisdiction over the dispute.
• However, the anti-suit injunction was revoked to allow UniCredit to comply with the Russian order and avoid financial risk.
• The court recognized that commercial realities outweighed strict legal principles, as UniCredit faced severe economic pressure in Russia.

Legal Principles Applied

1. Arbitration and Governing Law

The UKSC and Court of Appeal reaffirmed that English law governs the arbitration agreements based on the principles in Enka v. Chubb [2020] UKSC 38:

• Where a contract specifies a governing law, it applies to the arbitration agreement unless explicitly excluded.
• The closest connection test also supported English law, as the bonds were issued under international banking standards.

2. Conflicting Court Orders and Commercial Necessity

• The Court of Appeal acknowledged that Western courts and Russian courts were issuing contradictory orders, creating a practical dilemma.
• Rather than insisting on enforcing the UKSC’s injunction, the Court of Appeal prioritized UniCredit’s ability to navigate commercial pressures, avoiding a massive penalty in Russia.

Implications of the Judgment

• Legal Uncertainty in Sanctions Disputes: This case highlights the challenges of enforcing arbitration agreements when sanctions and geopolitical tensions intervene.
• Rise of Russian Court Intervention: Russian courts are increasingly issuing anti-arbitration rulings, forcing companies to choose between complying with Western legal orders or facing financial penalties in Russia.
• Impact on Banking and Trade: The judgment signals that commercial realities can override strict legal enforcement, influencing future banking and sanctions-related litigation.

Conclusion

The UniCredit v. RusChemAlliance case illustrates the complexity of international arbitration in the era of sanctions. While the UK Supreme Court initially upheld arbitration clauses, the Court of Appeal’s later decision reflects the difficulty of enforcing these rulings in the face of Russian court orders. UniCredit’s decision to seek revocation of the injunction was a strategic move to mitigate financial risk, highlighting the practical challenges businesses face when navigating conflicting legal systems. This case sets a precedent for how companies must balance legal commitments with commercial survival.

Case: UniCredit Bank GmbH (Respondent) v RusChemAlliance LLC (Appellant)  [2024] UKSC 30 UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30 (18 September 2024)

UniCredit Bank GmbH v RusChemAlliance LLC [2025] EWCA Civ 99 (UniCredit -v- RusChemAlliance – Courts and Tribunals Judiciary)