News

Russian plaintiffs have found a way to recover assets frozen abroad under sanctions: sue the foreign company holding those assets in a Russian court, RBC reported. The claims, for example, involve advance payments made by Russian equipment buyers to foreign suppliers before February 2022 — money that was never returned after suppliers both withheld delivery and declined to return prepayments. Article 248.1 of the Russian Arbitration Procedure Code allows such disputes to be litigated domestically, overriding contractual clauses requiring arbitration abroad.

Claimants have found a convenient workaround: naming the Russian subsidiary or affiliate of the foreign debtor as a co-defendant, and seeking to satisfy the debt from assets held by that entity in Russia. Lawyers cited by RBC estimate that several hundred such cases have already been filed. Russian courts, however, have yet to settle on a consistent approach.

Until May 2025, courts largely allowed claimants to pursue assets held by Russian entities within the same corporate group as the foreign debtor — as happened in cases against the local arms of Citigroup and Commerzbank. Russian affiliates were held jointly and severally liable simply by virtue of their group membership. In spring 2025, however, the Supreme Court shifted the legal landscape. In two separate rulings, it overturned lower-court decisions, holding that Russian subsidiaries and sister companies of foreign firms should not be held liable merely because of their group affiliation.

The Supreme Court stressed that courts must examine the specific circumstances of each case — in particular, whether the Russian defendant was actually involved in the conduct that gave rise to the claimant's loss. Following those rulings, a run of decisions has gone in favour of Russian defendants affiliated with foreign holding companies. RBC's tally puts the post-ruling score at 21 wins for Russian defendants against 14 for claimants, though some courts continue to apply the earlier group-liability approach.

Two cassation appeals on related disputes are now before the Supreme Court, one of them filed by the Central Bank of Russia — challenging a decision that denied joint-and-several recovery. Should either appeal be accepted for consideration, the court would have the opportunity to elaborate on its earlier position and provide lower courts with greater legal certainty, RBC concludes.