The Effect of Economic Sanctions on Recognition and Enforcement of Foreign Arbitral Awards

Purpose - Economic sanctions that are normally used for political purposes among countries affect not only international trade but also international commercial arbitration, particularly by influencing the application and interpretation of public policy by national courts when they are requested to recognize and enforce arbitral awards. This paper examines how courts respond to objections to public policy arising from economic sanctions in the context of arbitrary award enforcement decisions. Ultimately, it aims to provide contracting parties with practical guidelines to reduce the risk of the non-enforcement of arbitral awards undermined by economic sanctions. Design/Methodology - This paper explores economic sanctions and public policy in international commercial arbitration through a theoretical analysis. It then examines key cases in the United States, France, Russia, and Ukraine to analyze how courts in these jurisdictions respond to public policy objections raised due to economic sanctions. By analyzing court cases, we can also examine whether the application and interpretation of economic sanctions in each jurisdiction are influenced by political factors. Findings - Public policy interpretations vary by country and time. The U.S. excludes temporary economic sanctions from public policy, whereas Russia includes economic sanctions within the scope of public policy. Ukraine initially followed the U.S. approach but later incorporated sanctions into public policy due to its conflict with Russia. France interprets public policy narrowly through international norms and integrates European sanctions into its public policy framework. Originality/value - Previous studies have primarily focused on how arbitral tribunals address public policy defenses arising from economic sanctions. In contrast, this study analyzes the attitudes of national courts toward such objections. In this regard, this research is significant and valuable, as it studies the critical attitudes of courts at the enforcement stage of arbitral awards and provides practical guidelines.