Executive Summary
This case concerns RTI Ltd (a Jersey subsidiary of Russian company Rusal) and OWH SE i.L. (a German financial institution subsidiary of sanctioned Russian bank VTB Russia PJSC) disputing payments under a 2019 ISDA Master Agreement. Following Russia’s 2022 invasion of Ukraine and subsequent sanctions, OWH issued margin calls and default notices to RTI, culminating in an early termination notice and a €213.7 million award in OWH’s favor by an LCIA arbitral tribunal in September 2024. RTI and Rusal challenged the award under s. 68 of the Arbitration Act 1996, alleging serious irregularities including fraud by OWH in document disclosure. The High Court considered OWH’s application for summary dismissal of RTI’s challenge in July 2025.
Sanctions Highlights
- OWH is a subsidiary of VTB Russia PJSC, a Russian financial institution designated as a sanctioned entity in multiple jurisdictions.
- The sanctions imposed on Russia following its 24 February 2022 invasion of Ukraine triggered a steep depreciation of the Russian rouble, directly impacting the contractual obligations under the ISDA agreement.
- Sanctions context underpins the dispute, as RTI’s failure to meet margin calls and OWH’s termination notice relate to the financial instability caused by sanctions on Russian entities.
Emerging Risks
- Allegations of fraud center on OWH’s purported failure to disclose documents relevant to the service of margin calls and notices, raising risks of procedural irregularity and reputational damage.
- The Claimants assert that undisclosed documents likely exist due to testimony about courier services and internal communications, suggesting potential non-compliance with disclosure obligations.
- The case highlights risks for parties dealing with sanctioned entities, including challenges in enforcement and arbitration due to complex compliance and disclosure issues.
Geopolitical Impact
- The case is embedded in the geopolitical fallout from Russia’s invasion of Ukraine, involving Russian entities (Rusal, VTB Russia) and Western jurisdictions (UK, Germany, Jersey).
- Sanctions imposed by the US, UK, and EU against Russian financial institutions like VTB Russia have direct legal and financial consequences for subsidiaries and counterparties.
- The dispute illustrates the intersection of commercial law and geopolitical sanctions regimes, affecting cross-border financial contracts and dispute resolution.
Economic Intelligence
- The award amount of approximately €213.7 million reflects significant financial exposure linked to derivatives contracts denominated in US dollars and Russian roubles.
- The depreciation of the Russian rouble following sanctions materially affected contract performance and valuation.
- Non-payment by RTI and Rusal post-award signals potential enforcement challenges and financial strain on sanctioned Russian entities operating through offshore subsidiaries.
Strategic Recommendations
- Litigants and counterparties should conduct rigorous due diligence on sanctions status and disclosure obligations when engaging with Russian financial institutions or their subsidiaries.
- Arbitration agreements should explicitly address service and disclosure protocols to mitigate risks of procedural irregularities under sanctions-influenced disputes.
- Legal teams must prepare for complex evidentiary challenges, including potential non-disclosure of documents, and consider early engagement with regulators on sanctions compliance.
- Monitoring geopolitical developments and sanctions updates is critical to anticipate shifts in enforcement risk and contractual viability in Russia-related transactions.
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**Source Notes:**
Case Title: *Sanctions Intelligence Digest*
Link: https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1945.txt