123Sanctions
EU's 20th Sanctions Package: Significant New Legal Safeguards for Judicial and Arbitral Proceedings
On 23 April 2026, the Council of the European Union adopted the 20th package of restrictive measures against Russia. Beyond the widely reported energy, trade, and financial measures, the package introduces a comprehensive set of legal safeguards targeting the intersection of EU sanctions law with judicial and arbitral proceedings. Implemented through Council Regulation (EU) 2026/506 (amending Regulation (EU) No 833/2014) and Council Regulation (EU) 2026/511 (amending Regulation (EU) No 269/2014), these provisions respond directly to the growing practice of Russian entities weaponising court and arbitral proceedings against EU operators and mark a qualitative shift in the EU's approach to legal protection under its sanctions framework.
I. Amendments to Regulation (EU) No 833/2014
Anti-Suit Injunctions Against Russian Court Proceedings (New Article 11ca)
The most significant procedural innovation in the 20th package is the introduction of a mechanism enabling EU operators to obtain anti-suit injunctions from Member State courts. Under the new Article 11ca, where a person listed under Article 11(1) of Regulation (EU) No 833/2014 initiates proceedings before a Russian court in connection with a sanctions-affected contract – in breach of an exclusive jurisdiction or arbitration clause, or pursuant to Articles 248.1 or 248.2 of the Russian Arbitration Procedure Code – the affected EU person may apply to a competent Member State court for an order upholding the jurisdiction or arbitration clause and requiring the Russian claimant to discontinue those proceedings. Non-compliance with such an order triggers financial penalties, which must be proportionate to the potential loss the EU operator could incur. The penalties are payable directly to the EU operator that submitted the request.
This provision directly addresses the systematic practice by Russian entities of invoking Articles 248.1 and 248.2 of the Russian Arbitration Procedure Code to circumvent valid arbitration agreements and foreign jurisdiction clauses. Russian courts have routinely asserted jurisdiction over sanctions-related disputes under these provisions and imposed substantial fines on EU companies refusing to accept that jurisdiction. The new Article 11ca equips EU operators with a defensive instrument within the EU legal order.
Right to Damages from Third-Country Enforcement of Russian Judgments (Revised Article 11a)
Article 11a of Regulation (EU) No 833/2014 has been significantly expanded. EU persons may now claim damages, including legal costs, before Member State courts in two scenarios. First, where claims are lodged against them in third-country courts by persons listed under Article 11(1) in connection with sanctions-affected contracts, provided no effective access to remedies exists in the relevant jurisdiction. Second, where injunctions, orders, or judgments rendered in third countries other than Russia seek to enforce Russian court decisions upholding such claims. Damages may be recovered from those seeking or cooperating in the enforcement, as well as from persons that own or control them — with the exception of lawyers and members of the judiciary.
Right to Damages from Enforcement of Expropriation Decrees (New Article 11b(1a))
A new paragraph 1a is inserted into Article 11b, extending the damages remedy to cases where third-country courts enforce Russian expropriation legislation, specifically Presidential Decree No 302 of 25 April 2023 and Federal Law No 470-FZ of 4 August 2023, or related legislation. EU persons may recover damages where such enforcement is illegal under customary international law or under a bilateral investment treaty, and where no effective access to remedies exists in the relevant jurisdiction.
Transaction Bans on Beneficiaries of Illegitimate Expropriations (New Article 5ai)
Under the new Article 5ai, transactions with Russian entities that have benefited from the Russian Government's so-called "temporary management", effectively the expropriation of EU-owned property in Russia under Decree No 302 and Federal Law No 470-FZ, are prohibited.
Transaction Bans on Persons Enforcing Russian Judgments Abroad (New Article 5aj)
The new Article 5aj enables the Council to impose transaction bans on persons who seek or cooperate in the enforcement (outside the EU) of judgments satisfying sanctions-related claims under Article 11a, or of decisions enforcing Russian expropriation legislation under Article 11b.
Transaction Bans on Intellectual Property Theft (New Article 5sa)
The new Article 5sa introduces a transaction ban on Russian entities that use intellectual property rights or trade secrets of EU subsidiaries in Russia without the consent of the right holder pursuant to Presidential Decree No 122 of 15 February 2024 or equivalent Russian legislation. EU right holders are required to inform their Member State authorities of any such unauthorised use, who in turn inform the Commission.
Broadened Prohibition on Satisfying Claims (Article 11(1))
The prohibition on satisfying claims connected with sanctions-affected contracts has been extended to cover claims brought by natural or legal persons established in third countries – other than partner countries listed in Annex VIII – who sell, supply, or export goods, technology, or services prohibited under Regulation (EU) No 833/2014 to listed persons or for use in Russia.
Forum Necessitatis (Revised Article 11d)
The forum necessitatis provision has been updated to encompass claims for damages under the new Article 11ca, ensuring that EU operators have access to Member State courts even where no other basis of jurisdiction exists, provided the case has a sufficient connection to that Member State.
II. Amendments to Regulation (EU) No 269/2014
Derogation for Arbitration Costs (New Article 5c)
For the first time, a targeted derogation from the asset freeze permits the release of frozen funds for the payment of costs awarded in arbitral proceedings. The conditions are narrowly drawn: the derogation applies only where arbitral proceedings were initiated by the listed person itself, and the cost award is rendered in favour of a non-listed, non-Russian counterparty not subject to restrictive measures under either Regulation (EU) No 269/2014 or Regulation (EU) No 833/2014. The release is strictly limited to procedural costs — including arbitral tribunal fees and expenses, institutional administration fees, and reasonable legal and procedural costs of the opposing party. It expressly does not extend to the payment of any principal amount, damages, interest, or other substantive claims for as long as sanctions remain in force.
The provision pursues a dual objective: discouraging listed persons from initiating arbitral proceedings, particularly in third countries, that could circumvent or frustrate restrictive measures, while ensuring that EU parties who successfully defend against such claims can realise their cost recovery in practice.
Broader Prohibition on Satisfying Claims (Article 11(1))
The prohibition on satisfying claims under Regulation (EU) No 269/2014 has been extended to cover claims brought by natural or legal persons established in third countries, other than partner countries listed in Annex VIII to Regulation (EU) No 833/2014, who make funds or economic resources available to listed persons in violation of the sanctions regime.
Extended Right to Damages in Third-Country Proceedings (Revised Article 11a)
Article 11a of Regulation (EU) No 269/2014 now mirrors the expanded damages provisions in Regulation (EU) No 833/2014. EU persons may recover damages where claims are lodged against them in third-country courts by listed persons in connection with sanctions-affected contracts, or where Russian court decisions are enforced in third countries other than Russia. Damages may be recovered from those seeking or cooperating in such enforcement, or from persons that own or control them – with the exception of lawyers and members of the judiciary.
Compliance Implications
The 20th package fundamentally strengthens the legal position of EU operators facing Russian counterparties in cross-border disputes. Companies and their legal advisers should assess pending and anticipated proceedings with Russian counterparties in light of the new anti-suit injunction mechanism under Article 11ca, review cost recovery strategies in arbitral proceedings against listed persons under the new Article 5c derogation, evaluate exposure to third-country enforcement of Russian judgments and the expanded damages remedies under the revised Articles 11a and 11b, and update compliance frameworks to reflect the new transaction bans on beneficiaries of expropriations, persons enforcing Russian judgments abroad, and entities engaging in intellectual property theft.
Sources:
- Council Regulation (EU) 2026/506 of 23 April 2026, OJ L 2026/506
- Council Regulation (EU) 2026/511 of 23 April 2026, OJ L 2026/511
I. Amendments to Regulation (EU) No 833/2014
Anti-Suit Injunctions Against Russian Court Proceedings (New Article 11ca)
The most significant procedural innovation in the 20th package is the introduction of a mechanism enabling EU operators to obtain anti-suit injunctions from Member State courts. Under the new Article 11ca, where a person listed under Article 11(1) of Regulation (EU) No 833/2014 initiates proceedings before a Russian court in connection with a sanctions-affected contract – in breach of an exclusive jurisdiction or arbitration clause, or pursuant to Articles 248.1 or 248.2 of the Russian Arbitration Procedure Code – the affected EU person may apply to a competent Member State court for an order upholding the jurisdiction or arbitration clause and requiring the Russian claimant to discontinue those proceedings. Non-compliance with such an order triggers financial penalties, which must be proportionate to the potential loss the EU operator could incur. The penalties are payable directly to the EU operator that submitted the request.
This provision directly addresses the systematic practice by Russian entities of invoking Articles 248.1 and 248.2 of the Russian Arbitration Procedure Code to circumvent valid arbitration agreements and foreign jurisdiction clauses. Russian courts have routinely asserted jurisdiction over sanctions-related disputes under these provisions and imposed substantial fines on EU companies refusing to accept that jurisdiction. The new Article 11ca equips EU operators with a defensive instrument within the EU legal order.
Right to Damages from Third-Country Enforcement of Russian Judgments (Revised Article 11a)
Article 11a of Regulation (EU) No 833/2014 has been significantly expanded. EU persons may now claim damages, including legal costs, before Member State courts in two scenarios. First, where claims are lodged against them in third-country courts by persons listed under Article 11(1) in connection with sanctions-affected contracts, provided no effective access to remedies exists in the relevant jurisdiction. Second, where injunctions, orders, or judgments rendered in third countries other than Russia seek to enforce Russian court decisions upholding such claims. Damages may be recovered from those seeking or cooperating in the enforcement, as well as from persons that own or control them — with the exception of lawyers and members of the judiciary.
Right to Damages from Enforcement of Expropriation Decrees (New Article 11b(1a))
A new paragraph 1a is inserted into Article 11b, extending the damages remedy to cases where third-country courts enforce Russian expropriation legislation, specifically Presidential Decree No 302 of 25 April 2023 and Federal Law No 470-FZ of 4 August 2023, or related legislation. EU persons may recover damages where such enforcement is illegal under customary international law or under a bilateral investment treaty, and where no effective access to remedies exists in the relevant jurisdiction.
Transaction Bans on Beneficiaries of Illegitimate Expropriations (New Article 5ai)
Under the new Article 5ai, transactions with Russian entities that have benefited from the Russian Government's so-called "temporary management", effectively the expropriation of EU-owned property in Russia under Decree No 302 and Federal Law No 470-FZ, are prohibited.
Transaction Bans on Persons Enforcing Russian Judgments Abroad (New Article 5aj)
The new Article 5aj enables the Council to impose transaction bans on persons who seek or cooperate in the enforcement (outside the EU) of judgments satisfying sanctions-related claims under Article 11a, or of decisions enforcing Russian expropriation legislation under Article 11b.
Transaction Bans on Intellectual Property Theft (New Article 5sa)
The new Article 5sa introduces a transaction ban on Russian entities that use intellectual property rights or trade secrets of EU subsidiaries in Russia without the consent of the right holder pursuant to Presidential Decree No 122 of 15 February 2024 or equivalent Russian legislation. EU right holders are required to inform their Member State authorities of any such unauthorised use, who in turn inform the Commission.
Broadened Prohibition on Satisfying Claims (Article 11(1))
The prohibition on satisfying claims connected with sanctions-affected contracts has been extended to cover claims brought by natural or legal persons established in third countries – other than partner countries listed in Annex VIII – who sell, supply, or export goods, technology, or services prohibited under Regulation (EU) No 833/2014 to listed persons or for use in Russia.
Forum Necessitatis (Revised Article 11d)
The forum necessitatis provision has been updated to encompass claims for damages under the new Article 11ca, ensuring that EU operators have access to Member State courts even where no other basis of jurisdiction exists, provided the case has a sufficient connection to that Member State.
II. Amendments to Regulation (EU) No 269/2014
Derogation for Arbitration Costs (New Article 5c)
For the first time, a targeted derogation from the asset freeze permits the release of frozen funds for the payment of costs awarded in arbitral proceedings. The conditions are narrowly drawn: the derogation applies only where arbitral proceedings were initiated by the listed person itself, and the cost award is rendered in favour of a non-listed, non-Russian counterparty not subject to restrictive measures under either Regulation (EU) No 269/2014 or Regulation (EU) No 833/2014. The release is strictly limited to procedural costs — including arbitral tribunal fees and expenses, institutional administration fees, and reasonable legal and procedural costs of the opposing party. It expressly does not extend to the payment of any principal amount, damages, interest, or other substantive claims for as long as sanctions remain in force.
The provision pursues a dual objective: discouraging listed persons from initiating arbitral proceedings, particularly in third countries, that could circumvent or frustrate restrictive measures, while ensuring that EU parties who successfully defend against such claims can realise their cost recovery in practice.
Broader Prohibition on Satisfying Claims (Article 11(1))
The prohibition on satisfying claims under Regulation (EU) No 269/2014 has been extended to cover claims brought by natural or legal persons established in third countries, other than partner countries listed in Annex VIII to Regulation (EU) No 833/2014, who make funds or economic resources available to listed persons in violation of the sanctions regime.
Extended Right to Damages in Third-Country Proceedings (Revised Article 11a)
Article 11a of Regulation (EU) No 269/2014 now mirrors the expanded damages provisions in Regulation (EU) No 833/2014. EU persons may recover damages where claims are lodged against them in third-country courts by listed persons in connection with sanctions-affected contracts, or where Russian court decisions are enforced in third countries other than Russia. Damages may be recovered from those seeking or cooperating in such enforcement, or from persons that own or control them – with the exception of lawyers and members of the judiciary.
Compliance Implications
The 20th package fundamentally strengthens the legal position of EU operators facing Russian counterparties in cross-border disputes. Companies and their legal advisers should assess pending and anticipated proceedings with Russian counterparties in light of the new anti-suit injunction mechanism under Article 11ca, review cost recovery strategies in arbitral proceedings against listed persons under the new Article 5c derogation, evaluate exposure to third-country enforcement of Russian judgments and the expanded damages remedies under the revised Articles 11a and 11b, and update compliance frameworks to reflect the new transaction bans on beneficiaries of expropriations, persons enforcing Russian judgments abroad, and entities engaging in intellectual property theft.
Sources:
- Council Regulation (EU) 2026/506 of 23 April 2026, OJ L 2026/506
- Council Regulation (EU) 2026/511 of 23 April 2026, OJ L 2026/511