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Economic Sanctions and Article V(2)(b) of the New York Convention: A Touchy Interaction Exacerbated by the Ukraine-Russia Conflict
Get PDFStates have deployed an unprecedented wave of unilateral sanctions in response to the Russian invasion of Ukraine. They have also escalated the political connotation of economic sanctions by aggressively implementing them extraterritorially. This exercise of lawfare, substituting economic sanctions for armed conflict, raises the question of whether to consider unilateral sanctions elements of public policy within the meaning of Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This article seeks to clarify the interplay between Article V(2)(b) and economic sanctions. Explaining the two different approaches that domestic courts implement worldwide, recent court decisions in Ukraine and Russia are analyzed to demonstrate that the once prevailing exclusion of economic sanctions from the purview of Article V(2)(b) in the name of transnational public policy is no longer tenable. A three-prong test is proposed to determine when Article V(2)(b) apply to economic sanctions, finding that public policy defense can only be successfully raised when: (1) the sanctions express a specific, ex-ante identifiable public policy; (2) the recognition and enforcement of the award touch and concern the public at large; and (3) recognizing and enforcing the award in the face of sanctions would shock the conscience of the court
