EU Economic Sanctions in Arbitration

Sometimes, the application of the economic sanctions imposed by the European Union (EU) arises in arbitration proceedings. This article examines the extent to which unilateral EU sanctions are applied uniformly in arbitration. Opting for arbitration between the parties instead of court proceedings, as well as the selection of a particular arbitration venue, may be used to avoid the application of EU sanctions. Although arbitral tribunals have considerable freedom in deciding whether to give effect to EU economic sanctions, which involves an inherent uncertainty in terms of their claim for uniform application, the fact that the parties choose arbitration does not necessarily exclude their application. EU sanctions constitute the public policy of the Member States. The potential for the annulment of the arbitral award by a competent court in an EU Member State or the denial of the recognition and enforcement of the arbitral award in the EU may therefore be an incentive for the arbitrators not to disregard these sanctions and may discourage the parties from choosing arbitration or a particular location for arbitration only to escape the application of EU sanctions.