EuroChem/Tecnimont – Court of Appeal rules on attempts to frustrate sanctions

The UK Court of Appeal has dismissed an appeal by EuroChem North West 2 (NW2) (cited as [2026] EWCA Civ 5), confirming the validity of an anti-suit injunction issued by an arbitral tribunal to restrain proceedings brought in Russia involving sanctioned Russian parties. The decision, reported, reinforces the English courts’ strong pro-arbitration stance and their willingness to support arbitral tribunals in protecting the integrity of London-seated arbitrations.

Background

The dispute arises out of construction contracts between NW2 and the Italian engineering company Tecnimont. In 2022, NW2’s ultimate owner, Andrey Melnichenko, was added to the European Union’s sanctions list following Russia’s invasion of Ukraine. In response, Tecnimont suspended performance of the construction contracts, taking the position that EU sanctions prevented it from continuing to perform. NW2 subsequently terminated the contracts.

Tecnimont commenced arbitration proceedings in London pursuant to the arbitration agreements in the contracts. NW2 initially participated in those arbitral proceedings. However, it later began court proceedings in Russia, relying on Article 248 of the Russian Commercial (Arbitrazh) Procedure Code.

Article 248 grants Russian commercial courts exclusive jurisdiction over disputes involving Russian parties who are subject to foreign sanctions. Since its introduction, Article 248 has been used repeatedly by Russian parties to override arbitration agreements and foreign jurisdiction clauses, particularly where disputes involve EU, UK, or US sanctions.

The anti-suit injunction

In response to the Russian proceedings, the arbitral tribunal issued an anti-suit injunction ordering NW2 to discontinue the Russian claim. The tribunal concluded that the Russian proceedings were brought in breach of the arbitration agreements and threatened the tribunal’s jurisdiction and the arbitral process.

NW2 challenged the ASI in the English courts. At first instance, the High Court upheld the tribunal’s order in [2025] EWHC 3151 (Comm). The court found that the Russian proceedings were “at least in large part, aimed at frustrating EU and UK sanctions against Russia” and emphasised that it was the policy of the English courts to ensure the effectiveness of those sanctions regimes.

The Court of Appeal’s decision

The Court of Appeal has now upheld the High Court’s judgment, dismissing NW2’s appeal in full. However, the appellate court took a more restrained approach than the High Court. Rather than focusing on sanctions policy or the geopolitical context, it grounded its reasoning squarely in the framework of the Arbitration Act 1996.

The Court of Appeal emphasised that:

• The arbitration agreements were valid and provided for London-seated arbitration.
• The tribunal was entitled, as a matter of English arbitration law, to protect its own jurisdiction and the integrity of the arbitral process.
• An anti-suit injunction aimed at preventing parallel foreign proceedings brought in breach of an arbitration agreement falls squarely within that protective function.

The court rejected the argument that comity or respect for the Russian courts should prevent enforcement of the ASI. Where parties have agreed to arbitrate and one party seeks to undermine that agreement by invoking a foreign statute such as Article 248, English courts are entitled and, in appropriate cases, obliged to intervene.

Notably, the Court of Appeal did not endorse or reject the High Court’s broader observations about sanctions evasion. Instead, it made clear that the outcome could be justified entirely by reference to orthodox principles of English arbitration law.

Significance of the ruling

The decision provides further reassurance to parties choosing London as a seat of arbitration, particularly in disputes involving Russian counterparties and sanctions-related issues. It confirms that English courts will robustly support arbitral tribunals in issuing and enforcing anti-suit injunctions, even where those injunctions are directed at proceedings in jurisdictions that assert mandatory or exclusive jurisdiction under domestic law.

More broadly, the ruling underscores the limits of Article 248 in the face of arbitration agreements governed by English law and supervised by the English courts. While Russian courts may assert exclusive jurisdiction under Article 248, parties who have agreed to arbitrate in London remain exposed to effective remedies in England if they seek to bypass that agreement.