The Saint Petersburg Arbitrazh Court applied Articles 248.1 and 248.2 APC and imposed a EUR 100m fine under Lugovoy Law to bar Societe Generale and ING from foreign proceedings and foreign enforcement concerning independent guarantees.

13. October 2026

The Decision

In a decision dated 9 October 2026, the Arbitrazh Court of the City of Saint Petersburg and the Leningrad Region in case number A56-129116/2025 rendered a judgment on foreign proceedings concerning independent guarantees issued for the Kingisepp ammonia and urea project.

The court prohibited Societe Generale S.A. and ING Bank N.V. from initiating or continuing proceedings against LLC EuroChem North-West-2 outside Russia in connection with the guarantees, including proceedings seeking anti-suit relief. It also prohibited the banks from seeking recognition or enforcement abroad of judgments arising from those disputes. Conditional penalties were set at a EUR 100m fine under Lugovoy Law for Societe Generale and EUR 75,285,299.85 for ING. The court refused to prohibit proceedings conducted against EuroChem Group AG because that company had not filed its own application under Article 248.2 of the Arbitrazh Procedure Code.

Factual Background

EuroChem North-West-2 entered into a group of contracts on 1 June 2020 for the engineering, procurement and construction of ammonia and urea facilities in Kingisepp in the Leningrad Region. The counterparties were LLC MT Russia and the Italian company Tecnimont S.p.A. The parties also entered into a coordination and interaction agreement.

Societe Generale issued five independent guarantees supporting the contractors’ obligations. ING issued a further guarantee, number DLG 1440/20 dated 3 November 2020, through its Milan branch. Clause 11 of each guarantee provided for the exclusive jurisdiction of the English courts over all matters arising from or connected with the guarantee. The decision describes that jurisdiction clause but does not reproduce its full contractual wording.

In May 2022, Tecnimont and MT Russia notified EuroChem North-West-2 that they were suspending performance, referring to Italian and European Union restrictive measures. Tecnimont then stated that it was terminating one of the contracts following the EU’s sixth sanctions package. On 4 August 2022, EuroChem North-West-2 sent notices of unilateral termination and made demands under the guarantees. It repeated those demands later in August 2022 and sent additional demands to Societe Generale in September 2023.

The payment demands totalled EUR 212,445,181.46: EUR 137,159,881.61 from Societe Generale and EUR 75,285,299.85 from ING. Societe Generale refused payment on the basis that payment would breach international sanctions. ING initially referred, among other matters, to Article 15 of the Uniform Rules for Demand Guarantees and later relied on EU sanctions, including Article 11 of Council Regulation (EU) No. 833/2014. The Russian court characterised both refusals as based exclusively on sanctions.

EuroChem North-West-2 sued the banks in the High Court of England and Wales on 19 August 2022 in case CL-2022-000456. EuroChem Group AG was added as a second claimant by an order dated 17 March 2025 and accepted joint liability with EuroChem North-West-2 for the banks’ costs. EuroChem North-West-2 also deposited funds with the Court Funds Office as security for costs.

In a judgment dated 31 July 2025, [2025] EWHC 2994 (Comm), the English High Court dismissed the claim. As summarised by the Russian court, the English judgment treated the demands as valid and the banks’ obligations as continuing, but held that enforcement of those obligations was suspended under the applicable sanctions rules. The judgment treated EuroChem North-West-2 as owned or controlled by a listed person and as a Russian person for the purposes of Article 11 of Regulation No. 833/2014.

An English costs order dated 1 October 2025 required EuroChem Group AG to make interim payments of EUR 7,447,700 to Societe Generale and EUR 4.5 million to ING, subject to detailed assessment if the amounts were not agreed. EuroChem North-West-2 and EuroChem Group AG appealed. EuroChem North-West-2 later withdrew its appeal after commencing proceedings in Russia. An order dated 27 February 2026 dismissed its appeal and allocated the banks’ appellate costs to EuroChem Group AG. A consent order dated 24 August 2026 resolved part of Societe Generale’s costs claim, subject to the provision of a Court Funds Office form and an OFSI licence. ING’s costs had not been finally determined.

Societe Generale also sought an exequatur in Paris for the English costs orders. It withdrew that application in January 2026, referring to the risk associated with the Russian proceedings, and the Paris Judicial Tribunal closed the case on 8 April 2026. The banks’ foreign representatives had separately reserved their position on the Russian proceedings by letter dated 22 August 2025, relying on the English exclusive jurisdiction clauses.

EuroChem North-West-2 then commenced Russian claims for payment under the guarantees against Societe Generale and ING. It also applied in the present case for orders under Article 248.2 APC, arguing that sanctions prevented effective protection in the agreed English forum and that the banks remained able to continue the English proceedings, seek anti-suit relief, begin further proceedings, and pursue recognition and enforcement abroad.

Legal Considerations

Exclusive Russian Jurisdiction Under Articles 248.1 and 248.2

The court began with Article 247(2) APC and Articles 248.1 and 248.2 APC. Article 248.1 assigns certain sanctions-related disputes to the exclusive jurisdiction of Russian arbitrazh courts. Under Article 248.1(4), that rule also applies where the parties selected a foreign court or tribunal but the agreement cannot be performed because foreign restrictive measures create obstacles to a party’s access to justice. Article 248.2 allows the affected party to seek an order prohibiting the initiation or continuation of foreign proceedings.

The court treated the application of restrictive measures to a Russian party as sufficient, in principle, to establish an obstacle to access to justice. It rejected Societe Generale’s submission that EuroChem North-West-2 was not itself included on a sanctions list. The English court had applied sanctions to the company as an entity considered owned or controlled by a listed person and as a Russian person. For the Russian court, the banks’ sanctions-based refusal to honour the guarantees and the English court’s sanctions-based refusal to grant relief showed that restrictive measures directly affected the dispute.

Societe Generale relied on the validity of the English jurisdiction clause and argued that EuroChem North-West-2 had been able to issue proceedings, participate in hearings and retain English lawyers. It submitted a barrister’s opinion dated 30 June 2026 on those points. The court distinguished formal access to proceedings from effective judicial protection. It noted that the English court had recognised the underlying right but had refused relief on sanctions grounds, and that the release of security and the costs arrangements also depended on an OFSI licence.

The court also rejected an estoppel argument based on EuroChem North-West-2 having commenced the English action. It held that Articles 248.1 and 248.2 do not make Russian protection dependent on whether the applicant first attempted to use the agreed forum. In its view, the unsuccessful attempt supported the conclusion that the jurisdiction clause had become incapable of providing effective protection because of restrictive measures. The court referred in this context to the Russian Supreme Court’s ruling No. 305-ES24-13398 in case A40-214726/2023.

Risk of Continued or New Foreign Proceedings

Societe Generale argued that the English litigation had ended and that there was no evidence that the banks intended to start new proceedings. The court found that the foreign proceedings remained open because ING’s costs still required detailed assessment, interest continued to accrue, the Societe Generale consent order was subject to conditions, and the appellate proceedings between EuroChem Group AG and Tecnimont remained pending. It accepted an opinion on English procedural law stating that the matter would remain open until all issues and enforcement steps had been resolved.

The court held that Article 248.2 requires proof of the possibility of foreign proceedings, rather than proof of a present intention to start them. It relied on the Paris exequatur proceedings, the banks’ continued procedural options in England, the August 2025 reservation of rights, and Societe Generale’s insistence that the English jurisdiction clause covered all disputes relating to the guarantees. It also noted that the English costs order preserved a right to apply to the court, including for relief concerning Russian proceedings.

The prohibition was therefore framed to cover foreign anti-suit proceedings, other proceedings connected with the guarantees, and steps to recognise or enforce foreign judgments outside Russia. The court reasoned that recognition or exequatur is the first stage of enforcement and that a prohibition limited to the final enforcement step would not achieve the relief contemplated by Article 248.2. It rejected the argument that such an order intruded on foreign sovereignty because the order bound the banks as parties, rather than purporting to determine the jurisdiction of a foreign court.

Limits of the Relief

EuroChem North-West-2 also asked the court to prevent the banks from continuing costs proceedings and enforcement against EuroChem Group AG. The court refused that part of the application. Article 248.2 gives the right to apply to the person against whom the foreign proceedings have been or may be initiated. The costs procedures at issue were directed against EuroChem Group AG, which had not submitted its own Article 248.2 application and had made no independent claim in the Russian case. The related requests for conditional penalties were refused for the same reason.

The court stated that this refusal did not negate EuroChem North-West-2’s financial interest arising from joint costs liability or from the use of its Court Funds Office security. Those funds were protected to the extent that the orders prohibited steps against EuroChem North-West-2 and its property. The court did not determine what rights EuroChem Group AG might have against EuroChem North-West-2.

Conditional Monetary Penalties

Article 248.2(10) allows a Russian arbitrazh court to order a monetary payment if an anti-suit order is breached, subject to fairness, proportionality and the statutory ceiling linked to the foreign claim and costs. The court also referred to Article 308.3(1) of the Civil Code and paragraphs 31 and 32 of Resolution No. 7 of the Plenum of the Russian Supreme Court dated 24 March 2016. It described the payment as preventive and coercive and held that an earlier breach or an immediate threat of breach was not a condition for granting it.

EuroChem North-West-2 requested penalties corresponding to the amounts pursued under the guarantees. The court reduced the requested penalty against Societe Generale from EUR 137,159,881.61 to EUR 100 million as excessive. It granted the requested EUR 75,285,299.85 penalty against ING in full, noting that ING had filed no objections despite proper notice of the proceedings.

The Court Order

The court ordered as follows:

Societe Generale may not initiate anti-suit proceedings, continue or initiate other proceedings against EuroChem North-West-2 outside Russia in connection with its five independent guarantees, or seek recognition or enforcement abroad of decisions arising from those disputes.
ING may not take equivalent steps against EuroChem North-West-2 outside Russia in connection with guarantee DLG 1440/20 dated 3 November 2020.
A breach by Societe Generale triggers a conditional payment of EUR 100 million in roubles at the Central Bank of Russia exchange rate on the payment date. A breach by ING triggers a conditional payment of EUR 75,285,299.85 on the same basis.
The application was dismissed insofar as it sought to restrain proceedings or costs enforcement against EuroChem Group AG.
Each bank was ordered to reimburse RUB 5 million of the applicant’s court fee. A further RUB 10 million overpayment was ordered to be returned to EuroChem North-West-2.

The decision states that it may be challenged before the Arbitrazh Court of the North-Western District within one month of its issuance.

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St. Petersburg Arbitrazh Court Imposes EUR 100m fine under Lugovoy Law against ING and SocGen