Leading arbitration practitioners gathered this week in London for London Dispute Week but we managed to host some of the same panelists on the Platforum9 app demonstrating that you don’t need to travel in order to get access to some great legal minds.

They shared candid insights about how international sanctions are reshaping arbitration practice. The panel featured Niamh Leinwather, Secretary General of VIAC (Vienna International Arbitral Centre), Jake Lowther from SCC (Stockholm Chamber of Commerce), Miljana Bigovic, Senior Associate at DLA Piper Stockholm, and Matej Pustay, Partner at Squire Patton Boggs, moderated by Professor Velimir Zivkovic from University of Warwick. Their discussion revealed both practical challenges and adaptive solutions in maintaining access to justice amid increasingly complex sanctions regimes.

From Crisis to Competence: The Learning Curve

The conversation highlighted how the arbitration community has evolved since the initial shock of comprehensive sanctions in 2022. As Leinwather observed: “It has been very difficult, I think at the very beginning… But then ultimately we did figure it out and it seems like now there is a way to go about it.”

This transformation wasn’t immediate. Lowther noted the initial uncertainty: “There was some uncertainty in respect to certain of the sanctions packages when introduced in 2022.” However, institutions coordinated effectively, with VIAC and SCC working together to obtain clarification from the European Commission about arbitration coverage under sanctions regimes.

The learning curve proved steep but manageable. Bigovic reflected: “It’s not as easy as one would hope for. It is still allowing us to rely on arbitration and it still shows that arbitration remains one of the main dispute resolution mechanisms for the most complex disputes.”

Practical Challenges: The Devil in the Details

The session revealed how access to justice often depends on seemingly mundane logistics. Document delivery emerged as a significant hurdle, with traditional couriers like DHL no longer serving sanctioned jurisdictions. VIAC adapted by identifying “a specific courier in Austria that leaves Salzburg once a week on a Thursday” and utilizing diplomatic post when necessary.

Banking presented another layer of complexity. Lowther explained: “Banks are in some way, a bit of a law unto themselves… if you want to do and have your banking services with a particular provider, you sort of need to hand with them.” This led institutions to establish separate bank accounts for sanctioned parties and implement additional compliance procedures.

The appointment of arbitrators created new diplomatic challenges. Leinwather described the delicate balance: “You don’t want to delay the proceedings unnecessarily by trying to find this arbitrator that maybe doesn’t exist, the one that the parties envisage.” Both institutions developed databases and used technology to identify suitable candidates meeting increasingly specific nationality and residency requirements.

Legal Guerrilla Tactics and Defense Strategies

A concerning trend emerged around sanctions being weaponized in arbitration proceedings. As Pustay observed: “We’ve seen the arguments being… from some Russian parties that they just couldn’t get a lawyer of their choosing. And that obviously goes according to them, to their due process rights.”

This strategic use of sanctions created new forms of procedural obstruction. Parties began claiming force majeure based on sanctions, arguing inability to perform contractual obligations. Bigovic noted: “Very often these entities are trying to also use sanctions to their benefit in the sense of saying that there is always the excuse of force majeure.”

The phenomenon extended beyond mere delay tactics to fundamental challenges about applicable law. Bigovic described a recent case involving Article 9.3 of the Rome I Regulation: “The other party was arguing that the law that was sanctioning them needed to be applied. And basically they wanted the entire dispute to be governed by it, although the contract was governed by a completely different law.”

Institutional Adaptation: Maintaining Neutrality Under Pressure

Both VIAC and SCC emphasized their commitment to providing neutral forums despite sanctions pressures. As Leinwather stated: “We of course, irrelevant of any sanctions, are very focused on ensuring that we have a fair resolution of any dispute, irrelevant of nationality or sanctions.”

The institutions developed sophisticated approaches to arbitrator selection under sanctions constraints. Lowther explained SCC’s methodology: “We can actually quite quickly find very suitable candidates. We also have a lot of previous case decisions where we have perhaps new proposals based on people who were on those lists.”

Technology played a crucial role in adaptation. SCC deployed internal AI tools to search their arbitrator database by nationality, language, and other criteria. This technological support helped manage the increased complexity without sacrificing quality.

The Future of Sanctions-Proof Arbitration

The discussion touched on whether truly “sanctions-proof” arbitration clauses could be developed. While acknowledging Russian institutions’ work on such clauses, the panelists remained skeptical about comprehensive solutions given sanctions’ evolving nature.

Pustay suggested focusing on procedural provisions: “Things like appointment of arbitrators… I think there is a space to be quite detailed on those points… what happens if one party doesn’t appoint their arbitrator on time, what is the pool of arbitrators that can be appointed.”

The pending EU case (Rival) may provide crucial guidance. Lowther noted: “The Stockholm Court of Appeal here in Sweden has requested a preliminary ruling in respect to the arbitrability of certain sanctions… a lot of us in the EU will be keeping an eye on what does the CJEU say.”

Investment Arbitration: The Next Frontier?

An intriguing discussion emerged about potential investment arbitration claims arising from sanctions. Zivkovic posited scenarios where states acting under sanctions regimes might face claims from affected foreign investors.

While no such cases have materialised yet, Pustay acknowledged the potential: “If you are structured as a foreign investor and you are impacted by this change of the legislation, which it is at the end of the day… that would be an interesting case.”

This represents a potential collision between competing international law regimes—sanctions compliance versus investment protection—that could define future arbitration practice.

A Permanent New Reality

The panel consensus suggested sanctions will remain a permanent feature of arbitration practice. Leinwather predicted: “I would say they’re probably not going to go away… compliance checks, certainly from an institutional perspective, are here to stay.”

Lowther concurred: “As long as there are international states that are doing different things and wanting to try and introduce restrictive measures against each other, it’s probably something that we will all be dealing with.”

However, this permanence brings expertise. Bigovic offered measured optimism: “I’m optimistic that we will get better at handling them… the knowledge will be also more widespread in facing and dealing with sanctions.”

Conclusion

The session demonstrated the arbitration community’s remarkable adaptability in maintaining access to justice under challenging circumstances. While sanctions have created new procedural hurdles, strategic complications, and legal uncertainties, institutions and practitioners have developed sophisticated workarounds.

The key insights for practitioners include:

• Procedural Planning: Draft detailed arbitration clauses addressing potential sanctions scenarios
• Institutional Cooperation: Leverage institutions’ expertise in navigating sanctions compliance
• Strategic Awareness: Recognize potential for sanctions-based guerrilla tactics and prepare accordingly
• Technology Utilisation: Embrace technological solutions for arbitrator selection and case management

As the international legal landscape continues to fragment along geopolitical lines, the arbitration community’s ability to adapt while maintaining its core principles of neutrality and access to justice will be crucial for its continued relevance in resolving complex cross-border disputes.