Kobre & Kim's Cross-Border Disputes Team
July 11, 2025
Russian Entities Seek Arbitration in Hong Kong’s Neutral Forum
As Western sanctions limit access to traditional dispute resolution forums for parties from Russia and other sanctioned jurisdictions, entities are increasingly turning to Hong Kong for cross-border arbitration. With its neutral legal environment, absence of local sanctions, and global enforceability of awards under the New York Convention, Hong Kong offers a strategic and practical alternative—particularly for sensitive, high-stakes disputes and those involving offshore asset structures.
As international sanctions and geopolitical tensions continue to limit access to traditional dispute resolution venues in the U.S. and Europe for parties from Russia and other sanctioned jurisdictions, entities are increasingly turning to Hong Kong as a strategic alternative for cross-border arbitration. This shift reflects a broader trend toward venues perceived as neutral, legally robust, and less exposed to Western-imposed restrictions.
The movement toward Hong Kong is driven in part by:
- Sanctions-Free Jurisdiction: Unlike the U.S. and EU, Hong Kong has not imposed sanctions on Russia, allowing parties to engage counsel, pursue arbitration, and enforce awards without the procedural and reputational friction seen in Western forums.
- Perceived Legal Neutrality: With a strong rule-of-law framework and robust institutional support from organizations such as the Hong Kong International Arbitration Centre (HKIAC), Hong Kong remains one of the few major hubs where Russian claimants can pursue commercial or treaty-based arbitration on an even playing field.
- Support from Russian Institutions: The Russian Arbitration Association has publicly supported Hong Kong as a legitimate forum for resolving disputes involving Russian parties, citing its non-discriminatory treatment and institutional independence.
That said, it should be noted that the Russian Arbitration Procedure Code grants Russian courts exclusive jurisdiction over disputes involving sanctioned Russian parties and the power to issue anti-arbitration injunctions, notwithstanding the existence of an agreement to arbitrate abroad.
Russian parties should consider the following strategic advantages to selecting Hong Kong arbitration as a more beneficial and effective forum for disputes:
- Preserving Access to Global Enforcement Tools: Awards rendered in Hong Kong are enforceable in over 170 jurisdictions under the New York Convention—allowing Russian claimants to seek recovery globally, even when enforcement in Western jurisdictions may be complicated by sanctions or political risk.
- Leveraging Offshore Structures: Many Russian business assets are held through structures in Hong Kong, the BVI, or other offshore jurisdictions, making HKIAC an ideal forum to align dispute resolution with the legal and financial realities of global asset holdings.
- Maintaining Confidentiality and Control: As public scrutiny and regulatory attention on Russian-linked disputes increases, Hong Kong arbitration offers privacy and procedural control, key considerations for politically exposed individuals or sensitive cross-border investments.
As traditional venues become harder for Russian entities to access, Hong Kong offers a practical alternative for resolving cross-border disputes. With fewer sanctions risks, strong legal infrastructure, and global enforceability of awards, it provides both flexibility and strategic value, especially for those with offshore structures or sensitive matters.