The Lugovoy Law”: From Protection of Sanctioned Persons to a Tool of Judicial Protectionism

This paper analyzes Articles 248.1 and 248.2 of the "Arbitrazh Procedure Code of the Russian Federation" (the “Lugovoy Law”), and examines their application in international disputes. Key cases such as UralTransMash vs. PESA and VTB Bank vs. OWH SE have been discussed to illustrate how Russian courts interpret these provisions to prioritize domestic jurisdiction and question the impartiality of foreign or international arbitration involving “unfriendly countries”. The paper also discusses the problems Russian companies face in cross-border businesses, even in neutral or friendly jurisdictions, because of the secondary sanctions and political considerations. This paper argues that the “Lugovoy Law,” which was made to protect Russian legal entities, has evolved into a form of judicial protectionism, reflecting geopolitical tensions and shaping Russia’s approach to international arbitration and access to justice.