Russian court refuses to enforce LCIA award against Rusal and RTI on public policy grounds

10 June 2026

The Arbitrazh Court of the Kaliningrad Region has refused to recognise and enforce in Russia LCIA awards in OWH v RTI & Rusal (case No. А21-4252/2026) — the same awards the English Commercial Court upheld against a sanctions-based set-aside application in OWH v Rusal.

Following EU, UK and US sanctions on VTB in 2022, OWH, VTB's German subsidiary, came under the control of special representatives appointed by BaFin, Germany's financial regulator. It was subsequently placed into liquidation. OWH terminated currency swap contracts with Rusal's Jersey subsidiary RTI (which RTI had refused to perform on sanctions grounds) and obtained LCIA awards totalling around €248m against RTI and Rusal as guarantor.

Russian counter-sanctions law (Presidential Decree No. 95, 5 March 2022) restricts payments to creditors from “unfriendly” states (see our Russian countersanctions pages): funds must go into a restricted rouble account inaccessible to the foreign creditor, rather than being paid directly. To pay OWH directly, Rusal needed a permit from the Russian Government, which required a Russian court ruling confirming enforcement did not contradict Russian law. Rusal brought the recognition application for that purpose.

The court refused recognition and enforcement on Russian public policy grounds. It held that:

• BaFin had stripped VTB of control over OWH by appointing special representatives, which was an act implementing Western sanctions against Russian entities. Enforcement of the awards would transfer funds to effective German state control, amounting to expropriation.

• OWH — acting because of US, UK and EU sanctions policy rather than the interests of its Russian shareholders — had terminated the contracts at the moment of maximum dollar appreciation, maximising the claim against Rusal and RTI.

• Because the UK had imposed sanctions on Russia, the UK-seated arbitration could not guarantee impartial proceedings for Russian parties.

The decision means OWH cannot enforce the awards against Rusal's Russian assets, and Rusal cannot obtain the government permit needed to pay OWH directly outside Russia's counter-sanctions regime.