The 4^th edition of the SCC East-West Forum took place on 28 September 2023, at the premises of the Budapest Bar Association, featuring a comprehensive discussion of the implications of EU sanctions in international disputes.

The Stockholm Chamber of Commerce (SCC) Arbitration Institute and Queritius co-hosted the
4^th edition of the SCC East-West Forum, dedicated to a comprehensive analysis of the implications of EU sanctions and Russian countersanctions in international disputes. The forum explored the ramifications of sanctions on legal services offered by arbitrators, counsel, and arbitral institutions dealing with disputes in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) region.

Péter S. Szabó, Vice President of the Budapest Bar Association, János Burai-Kovács, President of the Arbitration Court attached to the Hungarian Chamber of Commerce and Industry, and Natalia Petrik, Deputy Secretary General of the SCC Arbitration Institute, kicked off the conference with their respective opening remarks.

Péter S. Szabó took the stage and set the conference's theme: exploring the legal and economic implications of sanctions in the context of the Russian invasion of Ukraine. He further highlighted the importance of safeguarding access to justice both for those affected by sanctions, as well as those who have claims against persons affected by sanctions.

In his opening remarks, János Burai-Kovács emphasised the relevance and urgency of the conference topic. He posed questions regarding the survival of arbitration amidst the conflict between public and private law, noting that the pressing concern lies in how this conflict impacts access to justice and the protection of fundamental human and legal rights.

Natalia Petrik provided an insightful overview of the keynote speech and the topics of the two panels to follow.

In a thought-provoking keynote speech, titled 'What has the past year taught us about Europe, Russia and the World?', Professor Patrick W. Pearsall, Head of the Arbitration Practice of Allen & Overy in the U.S., Adjunct Professor at Georgetown University Law Center, and Director of the International Claims and Reparations Project at Columbia Law School, proposed a new concept of accountability in light of the past year's pivotal lessons concerning the EU, Russia, and the global landscape. Pearsall said it was imperative to revisit traditional reparation mechanisms and foster a new understanding of accountability within the international legal community. This pursuit focuses on establishing legitimacy, justice, and universal principles to effectively remedy harms and address illegality.

Against this background, Pearsall provided an overview of the historical evolution of reparation mechanisms. He stressed that any viable mechanism for reparations must garner legitimacy and approval from the international legal community, highlighting the critical intersection of accountability and justice. Addressing the current crisis involving Russia, Pearsall said there is a pressing need to hold Russia accountable for its actions. Proposing a forward-looking strategy, he pointed out the limitations of existing international bodies in efficiently managing the scale and breadth of a compensation programme necessary to address the Ukraine crisis and advocated for the establishment of an International Claims Commission for Ukraine.

The International Claims Commission for Ukraine would serve a tripartite objective focusing on: (i) adjudicating claims for compensation; (ii) preserving or collecting Russian assets for paying awards; and (iii) providing a means of enforcing awards on compensation. According to Pearsall, the Commission would offer a more viable and effective approach towards the realisation of these goals as: (a) 'recourse to national courts in the first instance is either undesirable or unfeasible;" (b) existing international adjudicative bodies (i.e., the ICJ, the ECHR, and arbitral tribunals) "are not well suited to a compensation programme of the size and breadth necessary to satisfy the needs arising from this conflict'; and (c) existing institutional organs (i.e., the UN Security Council) are limited by Russia's veto right.

Against this background, Pearsall posited that a bespoke, flexible, and efficient International Claims Commission for Ukraine would be the most effective way to hold Russia accountable for the harm caused, fostering a new era of accountability and justice on the international stage.

The keynote speech was followed by a panel on 'The practical implications of sanctions in international disputes', moderated by Petra Pataki, Of Counsel at Queritius, and featuring Maria Fogdestam Agius, Partner at Westerberg & Partners, Kinga Timár, Adjunct Professor at Eötvös Loránd University, Natalia Petrik, Deputy Secretary General at SCC Arbitration Institute, and Annamária Dajka, Senior Compliance Counsel (Sanctions) at OTP Bank.

1. Maria Fogdestam Agius provided an overview of the EU sanctions regime against Russia, initiated in 2014 as a response to the Crimea annexation and reinforced in 2022 after the invasion of Ukraine. She described sanctions as 'fast-paced development through legislative packages', linked the tightening of sanctions to the severity of the security threat in question, and underscored the need for adaptation based on pre-sanctions integration levels. She further discussed how sanctions affect the arbitrability and enforceability of awards.
2. Kinga Timár focused on the sanctions impacting lawyers and legal professionals in light of the prohibition to engage in any transactions with Russian entities in general and to provide legal advisory services in particular. She outlined the specifics of Council Regulation 833/2014, addressing who is prohibited from providing legal services, to whom, and how, what activities are restricted, as well as exemptions and derogations within the regulation.
3. Natalia Petrik discussed the impact of sanctions on the arbitration procedure. She detailed the restrictions related to the payment of registration fees and advance costs by designated persons, enforcement of awards against designated persons, and payments due to designated persons. She also discussed how the prohibition to satisfy any claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, by the sanctioning measures, comes into play in this context.
4. Annamária Dajka provided valuable insights from an in-house perspective regarding risk assessment within the banking sector in the context of sanctions. She emphasised the practical challenges in dealing with transactions and highlighted the importance of thorough assessment when navigating transactions under the shadow of sanctions. The discussion underscored the need for a comprehensive approach to risk management and transaction evaluation within the banking sector in this complex regulatory environment.

In the second panel discussion, titled 'CEE & CIS Disputes: An Outlook at the Coming Decade', moderated by Peter Ri~nik, Independent Arbitrator at Ri~nik Disputes, and featuring Dmitri Evseev, Independent Arbitrator and Vice-Chair of the SCC Arbitration Institute, Tatyana Slipachuk, Partner at Sayenko Kharenko, Cornel Marian, Senior Legal Counsel at Alstom, and Zsolt Fábián, founder of Fabian Legal, key insights were shared regarding the impact of sanctions on CEE & CIS disputes.

1. Dmitri Evseev pointed to the potentially adverse impact of sanctions on the arbitral process, referring to instances where arbitrators might need to resign due to sanctioning regulations. This occurrence prompted critical reflections on the arbitrators' roles, asking in particular whether arbitrators act as adjudicators facilitating access to justice or function more akin to service providers.
2. Tatyana Slipachuk discussed the intricate challenges concerning the enforcement of judgments and awards amidst the imposing sanctions. She highlighted the extraordinary nature of the current sanctioning regime, with the distinguishing feature being the ongoing nature of the war. Reiterating that the primary objective of sanctions is to influence a State's conduct, she raised critical queries about the utilisation of frozen assets, the complexities of state immunity, and the strategic handling of court rulings on damages, within the context of the persisting war.
3. Zsolt Fábián shed light on the impact of sanctions on contractual relationships and dynamics, presenting the scenario where a party must choose between breaching the sanctioning regime or breaching the contract. He stressed the importance of including a sanctions clause in commercial contracts to effectively navigate the respective implications and stressed the need for careful contract drafting and meticulous preparation to anticipate and address potential issues stemming from sanctions.
4. Cornel Marian delved into the lesser-explored aspect of sanctions: the countersanctions imposed by Russia in response to sanctions from the EU and the U.S. He outlined the various types of countersanctions and noted the unique challenges they present, including the forced involvement of the Russian legal system in cases related to counter-sanctions due to the Russian courts' exclusive jurisdiction over such matters. Marian underscored the complexity of countersanctions, comprising a 'complex patchwork of federal laws and decrees', and advised that the successful navigation of this intricate regime requires a profound understanding. He said he anticipates a significant surge in legal cases stemming from countersanctions, signifying the evolving legal landscape in response to these measures.

The forum concluded with closing remarks by Dániel Dózsa, Partner at Queritius, followed by an engaging cocktail reception.