Russian court refuses to recognise two LCIA arbitration awards against RUSAL on public order grounds, in a significant enforcement setback for cross-border creditors
The Arbitrazh Court of the Kaliningrad Region has refused to recognise and enforce two LCIA (London Court of International Arbitration) awards rendered against RTI Limited and RUSAL (International Company Public Joint Stock Company United Company RUSAL, one of the world's largest aluminium producers) in favour of OWH SE i.L. The decision was issued on 28 May 2026. The Russian court rejected OWH's procedural objections, ruling that RUSAL — as a debtor under the awards rather than the party that originally sought enforcement — nonetheless had standing to appear before the Russian arbitrazh (commercial) court and seek a refusal of recognition. The substantive ground for refusal was that enforcing the awards would be contrary to Russian public order — a doctrine that allows courts to refuse recognition where enforcement would violate the fundamental legal, economic, and political principles of the forum state. The court also invoked Article 35 of the Russian Law on International Commercial Arbitration and Articles 241 and 244 of the Russian Arbitrazh Procedure Code, which govern the recognition of foreign arbitral awards in Russian courts. The ruling is the latest in a pattern of Russian courts invoking the public order exception to block enforcement of Western arbitral awards following the escalation of the Ukraine conflict and associated sanctions environment. For creditors holding LCIA or other Western institutional arbitration awards against Russian counterparties, the practical effect is that enforcement in Russia is now effectively unavailable, concentrating attention on assets held in other jurisdictions.
Why this matters
This decision matters for banking and finance practitioners because it illustrates the enforcement gap that has opened for creditors with arbitral awards against Russian entities. Where loan agreements or derivatives contracts with Russian counterparties contain English-law arbitration clauses (as many pre-2022 facilities did), the award may be valid but unenforceable inside Russia, forcing creditors to pursue assets in third-country jurisdictions. This activates recognition and enforcement work in parallel jurisdictions — the UAE, Hong Kong, Cyprus, and others where Russian entities historically hold assets. The use of the public order exception, now consistently applied by Russian arbitrazh courts, has effectively suspended the New York Convention (the 1958 treaty that requires signatory states to recognise and enforce foreign arbitral awards) as a practical enforcement tool inside Russia.
On the Ground
A trainee on a cross-border enforcement matter of this type would prepare cross-border legal opinion coordination memos identifying jurisdictions where the debtor holds attachable assets, draft sanctions screening memos to confirm that enforcement activity in a given jurisdiction is permissible, and assist with the preparation of recognition applications in target jurisdictions by coordinating with local counsel.
Interview prep
Soundbite
Russian courts blocking LCIA awards against RUSAL means creditors must hunt assets jurisdiction by jurisdiction — enforcement has become a multi-front exercise.
Question you might get
“A client holds an LCIA award against a Russian counterparty. The counterparty has assets in the UAE and Germany. Walk me through how you would approach enforcement in each jurisdiction.”
Full answer
The Arbitrazh Court of Kaliningrad has refused to recognise two LCIA awards against RUSAL, citing the Russian public order exception under its Arbitrazh Procedure Code and the Russian Law on International Commercial Arbitration. The commercial implication for banks and funds holding arbitral awards against Russian entities is stark: Russian-seat enforcement is unavailable, and creditors must now pursue assets in third-country jurisdictions, generating multi-jurisdictional recognition work. The wider trend is the systematic application of the public order exception by Russian courts since 2022, which has effectively suspended the practical operation of the New York Convention for Western creditors. This will keep international arbitration and enforcement practices busy through any post-conflict settlement period, as parties seek to recover positions built up before the sanctions regime hardened.
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