Swiss Federal Supreme Court judgment – sanctions do not extinguish enforceability of arbitral awards

29 April 2026

The Swiss Federal Supreme Court has dismissed an appeal brought by an Angolan company controlled by a sanctioned entity that sought to enforce an arbitral award in Switzerland – Case 4A_305/2025. All Swiss judgments are on the Switzerland and judgments sections of this site.

The mining company obtained an arbitral award in a London-seated arbitration and applied to enforce the award in Switzerland. The Swiss Higher Court (a Court of Appeal) refused enforcement on the basis that the mining company was controlled by a sanctioned company which meant the Respondent was prohibited from paying the mining company under Article 15(2) of the Ukraine Ordinance (see our Switzerland pages). The Higher Court also said that the sanctions permanently extinguished the mining company’s right to enforce the award in Switzerland.

The mining company appealed. The Federal Supreme Court agreed with the Higher Court that the sanctions prohibited payment and that enforcement must be refused and dismissed the appeal on that basis. However, it disagreed with the Higher Court’s conclusion that the sanctions permanently extinguished the mining company’s right to enforce the award. Instead, it held that the award could not be enforced for as long as the sanctions remained in force and that the sanctions “deferred” rather than extinguished enforcement. The Federal Supreme Court’s reasoning was:

• The purpose of the payment prohibition is to prevent any economic interaction with sanctioned people, companies or organisations. If enforcement proceedings could be used to compel payment notwithstanding the prohibition, a sanctioned creditor could effectively bypass the sanctions regime by obtaining a court order which would defeat the purpose of the sanctions.

• Rather than permanently extinguishing the underlying debt, the payment prohibition postpones the date on which the debt falls due for the duration of the sanctions. The Court described this as a “statutory deferral” analogous to a legally ordered deferral under Swiss obligations law, meaning the debt survives and becomes enforceable again once the sanctions are lifted.

• The payment prohibition is a mandatory provision of Swiss law meaning it applies regardless of the law otherwise governing the underlying legal relationship. The deferral therefore applied even though the arbitral award was governed by English law.

See the opinion of AG Biondi in the Reibel preliminary reference in the European Court of Justice that Article 11 of Regulation (EU) 833/2014 suspends rather than extinguishes the enforceability of arbitral awards. See our coverage for more information on the AG’s opinion.