This article was originally published in Dispute Resolution Journal January-February 2026, Volume 79, Number 5.
Recent Decisions by National Courts
Germany
On 12 June 2025, the Higher Regional Court of Frankfurt am Main (OLG Frankfurt, the Court) rejected the application of a Russian company for the declaration of enforceability of an arbi-tral award issued by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation for reasons of public policy (docket no. 26 Sch 12/24).
Background
In October 2022, a German company (the Respondent) and a Russian company (the Applicant) concluded a contract for the supply of polymer alloys. The Applicant was to pay in advance; the Respondent was to deliver within 21 business days of receipt. After the advance was paid, the bank reported the incoming funds to the German authorities on suspicion of money laundering. The District Court Frankfurt (AG Frankfurt) ordered an asset freeze and attached the Respondent’s account. Subsequently, it issued a penalty order against the Respondent’s managing director for violating a prohibition on sale under directly applicable EU sanc-tions against Russia. The Respondent neither delivered the goods nor refunded the price. The applicant commenced arbitration before the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation seeking repayment.
The arbitral tribunal ordered the Respondent to reimburse the Applicant for the advance and cost of arbitration fees totaling approximately EUR 260,000.
The Applicant then applied to the Court for a declaration of enforceability, arguing that repayment of an advance does not fall within Article 11(1) of Regulation (EU) No 833/2014. It fur-ther submitted that Article 11 does not curtail judicial review of the legality of non-performance under the Regulation and that, at the exequatur stage, the court may not review the award’s merits. The Applicant also contended that seizure of assets does not discharge the respondent’s obligation to refund the price. Finally, it questioned the compatibility of Article 11 of Regulation (EU) No 833/2014 with international law, referring to the 1989 investment protection agreement.
Decision
The Court dismissed the application as unfounded on the ground that the arbitral award contravened German public policy, which must be examined ex officio under Section 1059(2)(b) of the German Code of Civil Procedure (ZPO). Under that section, recognition or enforcement of a foreign arbitral award may be refused only where the arbitral proceedings suffer from a serious defect touching the foundations of public or economic life.
The Court held that the EU’s sanctions against Russia indis-putably form part of German public policy and that repayment of an advance under a purchase agreement covered by Article 3k of Council Regulation (EU) No 833/2014 in itself falls within the performance prohibition in Article 11(1)(b). Contrary to the Applicant’s reading, the Court found Article 11(1); deliberately broad, expressly extending to “claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee.” A claim for repayment of an advance there-fore qualifies as an “other claim of this type,” where as here, it arises in connection with a sanctioned contract.
The fact that the Federal Ministry for Economic Affairs and Energy (BMWi) had previously stated on its website that refund-ing an advance would not breach Article 11 could be disregarded on two grounds: first, the BMWi has since amended its statement and now takes the view that such refunds are prohibited; second, neither the current nor the former guidance has any binding effect.
Reaffirming established principles, the Court noted that enforcement proceedings do not entail a révision au fond; even erroneous arbitral decisions are generally to be accepted. That principle yields, however, where recognition or enforcement would produce a result manifestly incompatible with the funda-mental principles of German law—namely, norms governing the foundations of public or economic life—or otherwise intolerably conflict with German notions of justice.
Finally, the Court held that the EU sanctions adopted in response to Russia’s invasion of Ukraine are consistent with international law and permissible under Article 215 TFEU.
Comment
This decision underscores the rigorous application of the EU Russia sanctions regime and aligns with the OLG Stuttgart’s decision of May 2025 (docket no. 1 Sch 3/24; see our report in Dispute Resolution Journal, Vol. 79, No. 4, pp. 389-92), which held that arbitral awards compelling performance in breach of EU sanctions are unenforceable in Germany as contrary to German public policy (ordre public).
By contrast, in a comparable case (docket no. 19 Sch 26/23), the OLG Cologne treated the Russia sanctions as an impediment to enforcement rather than a ground for refusing recognition, seeking both to preserve warranty rights from being negated by sanctions and to prevent any monetary flows to sanctioned entities.
United Kingdom
In Eletson Gas LLC v. A Limited & Ors [2025] EWHC 1855 (Comm), the Commercial Court of the High Court of England and Wales had to decide what reliance to place on findings of fact in an earlier JAMS award issued on a prior U.S.-seated arbitration. In a judgment dated 14 July 2025, the Commercial Court found that the JAMS award could not be relied upon. This was so because the award was between different parties and had not been recognized in England and Wales under the procedure available for New York Convention awards.
Background
The claim before the Commercial Court was the latest in a series of disputes between two rival groups (referred to as the Spears Parties and the Kertsikoff Parties) as to who controls the claimant, Eletson Gas LLC (Eletson).
The background to the fight for control over Eletson prior to its reaching the Commercial Court is lengthy and complex. Eletson’s board is made up of directors appointed by two groups of shareholders: holders of (1) the common shares, and (2) the preferred shares.
The common shares were held by Eletson Holdings Incorpo-rated (Eletson Holdings). Eletson Holdings became the subject of bankruptcy proceedings and a Chapter 11 plan was approved by the U.S. Bankruptcy Court for the Southern District of New York. Under the plan, Eletson Holdings issued equity to creditors in substitution for debt and its Board was deemed to have resigned with a new Board taking office. The new Board consisted in a large part of the Spears Parties thereby giving them control of the common shares, although the plan was under appeal.
The preferred shares were held by Levona Holdings Limited (Levona) and were the key battleground. The Kertsikoff Parties had an option to buy the preferred shares through an arrange-ment with Levona, Eletson, Eletson Corporation, and Eletson Holdings and asserted that they had exercised that option. The Spears Parties (affiliated to Levona) disputed this and the U.S.-seated JAMS arbitration involving these four parties was commenced to resolve that dispute.
The Kertsikoff Parties ultimately succeeded in the JAMS arbitration and Levona/the Spears Parties failed. Eletson Hold-ings then commenced confirmation proceedings before the U.S. District Court for the Southern District of New York, and Levona applied to vacate the JAMS award, including on grounds of fraud. Pending the determination of those proceedings, the U.S. District Court issued several orders, including an anti-suit injunction requiring, among other things, the dismissal of New York Convention recognition proceedings of the JAMS award that had been started in Greece and in the United Kingdom.
In parallel, a further dispute regarding Eletson’s business arose. Eletson had bareboat charters to three oil tankers. Each bareboat charter was subject to both a London arbitration agreement and to an option that entitled Eletson to purchase the tankers. Both the Spears Parties and the Kertsikoff Parties served notices on behalf of Eletson exercising the purchase options. In order to resolve the issue as to which set of notices to accept, the tanker owners commenced arbitration in London. There again, however, the Spears Parties and the Kertsikoff Parties each pur-ported to appoint their own arbitrator on behalf of Eletson in the arbitration. The Kertsikoff parties then commenced proceedings in the name of Eletson against the tanker owners and the Spears Parties before the Commercial Court and sought a declaration under section 32 of the UK Arbitration Act 1996 affirming that the arbitrator they had caused to be appointed had been validly appointed.
In the proceedings before the Commercial Court, the Kert-sikoff Parties relied exclusively on the JAMS award which deter-mined that the option to purchase the preferred shares had been validly exercised. The Spears Parties argued that the JAMS award could not be relied upon on the key grounds that:
- (1) the parties to the proceedings before the Commercial Court (i.e., Eletson, the tanker owners, the Spears Parties, and the Kertsikoff Parties) were not the same as the parties to the JAMS award (i.e., Elet-son, Eletson Corporation, Eletson Holdings, and Levona), and;
- (2) no application had been made in the United Kingdom for its recognition and therefore it had no relevant effect as a matter of English law. They argued further that there were numerous grounds on which recognition could be resisted under section 101 of the UK Arbitration Act 1996 (which gives effect to the New York Convention), including (1) that upon a proper analysis of the JAMS award, it was not binding on the parties to these proceedings, (2) the JAMS award had been suspended by the U.S. District Court, and/or;
- (3) that recognition should be stayed pending resolution by the U.S. District Court of the application to set aside the award for fraud.
Decision
When considering which of the parties validly appointed the arbitrator, the Court needed to decide who controlled the common shares and the preferred shares.
The Commercial Court decided in favor of the Spears Parties, finding that they controlled both Eletson Holdings (and therefore the common shares) and the preferred shares.
On the issue of control of Eletson Holdings, the Commercial Court deferred to the order of the U.S. Bankruptcy court giving effect to the Chapter 11 plan installing the new Board. Although that order was being appealed, there was no stay in place pending appeal. The new Board (consisting in large part of the Spears Parties) was in control of Eletson Holdings and had made a valid director appointment in Eletson.
On the issue of control of the preferred shares, the Commer-cial Court determined that the Kertsikoff Parties were not entitled to rely on the JAMS award as evidence of the facts found. The parties to the proceedings before the Commercial Court were not the same as the parties to the JAMS award (or their privies). As a result, at common law that award is not admissible in subse-quent proceedings between different parties as evidence of the facts found.
However, the Commercial Court ruled further that even if there had been an identity of parties, the JAMS award would still not be available to support an issue estoppel claim by the Kertsikoff Parties because it had not been recognized in England and Wales.
The Commercial Court held that the JAMS award had not passed through the recognition gateway established by sections 101-103 of the UK Arbitration Act 1996 (giving effect to the New York Convention). In particular, the Commercial Court found that the effect of the orders (including the anti-suit injunction) of the U.S. District Court was that the JAMS award was to be treated as “suspended by a competent authority of the country in which, or under the law of which, it was made” (the relevant wording of section 103(2)(f) of the UK Arbitration Act 1996 giving effect to Article V.1(e) of the New York Convention). Interestingly, the Commercial Court also held that the U.S. District Court was not to be regarded as the sole competent authority: a suspension by the U.S. Bankruptcy Court also constituted a suspension for the purposes of the New York Convention and the UK Arbitration Act 1996.
The Commercial Court further held that in circumstances where there was a pending application to set aside an award for fraud before the Courts of the seat of the arbitration, even if a recognition application had been made, it was probable that the application would have been stayed until after the set-aside application had been determined.
Comment
The judgment clarifies an important issue on the recogni-tion of New York Convention awards in England and Wales. The ability to rely on facts found in a foreign arbitral award as evidence in subsequent proceedings in England and Wales (thus creating issue estoppel) is subject to two conditions. The first one is that reliance can only be placed on those facts where there is an identity of parties in the two sets of proceedings, adding the clarification that this is extended to the parties’ privies. The second one is that the foreign award must first pass through the formal recognition procedure provided for in the UK Arbitration Act 1996 before it can be admissible as evidence.
Legislative Developments and New or Revised Arbitration Rules
United Kingdom
On 1 August 2025, the UK Arbitration Act 2025 entered into force, amending the UK Arbitration Act 1996, and serves as the key arbitration statute for England, Wales, and Northern Ireland (the Act does not apply to Scotland). The ambition is to ensure that the United Kingdom remains a competitive and leading destination for arbitration globally. An overview of the key revisions is below.
The Law Applicable to the Arbitration Agreement
Unless the parties have expressly agreed otherwise, the applicable law of the arbitration agreement is now the law of the seat of arbitration. This is a departure from previous case law which implied the law of the relevant underlying contract as the governing law of the arbitration agreement. Absent any contrary agreement in the contract, if the arbitration is seated in London, then the law of England and Wales will govern the interpretation of the arbitration agreement. Conversely, if the arbitration is seated in Paris, then French law will apply, even if the contract itself is governed by English law. The parties can choose to override this provision by expressly stating which law will govern the arbitration agreement.
Summary Determination
Unless the parties opt out of this rule, arbitral tribunals now have the express power to make an award on a summary basis if they determine that a particular issue, claim, or defence has no real prospect of success. This is the same test employed by the English courts for summary dismissal and will provide confident parties with a route to faster resolution of their dispute.
Increased Powers Against Third Parties
The court has now been granted express powers to make orders against third parties in support of arbitral proceedings, in line with the powers it has in ordinary court proceedings. By way of example, this would include orders in relation to interim injunctions and third-party disclosure, increasing the number of available avenues for investigation and case-building.
Strengthening Emergency Arbitrator Proceedings
Emergency Arbitrators can now make peremptory orders (i.e., final orders) in the event of non-compliance. The courts will also now have the express power to make orders enforcing an Emergency Arbitrator’s peremptory order.
Challenges to a Tribunal’s Jurisdiction
As regards challenges to a tribunal’s jurisdiction, other than in certain specific circumstances, no new evidence, arguments, or re-hearing will be permitted by the court. This is an entirely new direction from the position that had developed under case law, which used to allow a full re-hearing in the event of a challenge.
Arbitrators’ Immunity and Duty of Disclosure
Immunity conferred on arbitrators has been extended, pro-tecting them from claims if they step down from the tribunal, either by resignation or removal. Conversely, arbitrators are now under a positive statutory duty to disclose any relevant circumstances which might reasonably bring their impartiality into question. The existing general duty established by case law has been codified and the duty applies from the first enquiry an arbitrator receives about a potential appointment.
Stephan Wilske is a partner in the Dispute Resolution department of Gleiss Lutz in Stuttgart, Germany, and heads the firm’s International Arbi-tration Focus Group. He regularly acts as counsel and arbitrator in inter-national arbitration. Björn P. Ebert is an associated partner in the Dispute Resolution department of Gleiss Lutz in Stuttgart, Germany, and regularly acts as counsel in international arbitration and is an active arbitrator. Thomas Karalis, a partner in the Dispute Resolution department of Fladgate LLP in London, is a guest contributor to this edition and contributed the parts on the United Kingdom.
