12 ASIAN LEGAL BUSINESS – SEPTEMBER 2023 WWW.LEGALBUSINESSONLINE.COM Russia’s relationship with Europe and the West had been deteriorating since Putin’s occupation of Crimea in 2014. But it hit new lows once Russia marched its troops into Ukraine in February 2022. Western alliances, including the G7, NATO and the EU, imposed a flurry of sanctions on Russian oligarchs, companies and banks, crippling their ability to conduct business in traditionally favoured jurisdictions like London. To keep money flowing in, Russia rapidly increased trade with Asia – in economic powerhouses like China, India and Southeast Asia – and dispute resolution has followed. Sanctions have influenced how Russian businesses and counterparties look at arbitration agreements, says Hong Kong-based attorney Denis Brock, who chairs O’Melveny & Myers’ international disputes and arbitration practice, and heads the firms Asia litigation practice. “There are two aspects: concerns of Russian businesses, and concerns of those doing business with Russian companies. Given the sanctions in place, doing business with Russian companies is restricted. Russian businesses will find it difficult to transfer funds to arbitral institutions to pay fees and to pay international counsel to represent them. Those doing business with Russian entities may encounter difficulty enforcing awards in their favour: it may be difficult for Russians to transmit funds internationally to satisfy awards,” notes Brock. In terms of sanctions, Asia has had a mixed response to Russia’s invasion of Ukraine. Russia’s largest trading partner, China, has refused to condemn Russian actions. In fact, in 2023, bilateral trade between the nations grew 36 percent year-on-year to $134.1 billion. India has also remained largely neutral and in fact, has ramped up import of Russian oil in the last year, with overall bilateral trade between the countries reaching a record high of $45 billion. Other large economies like Japan, Singapore and Taiwan have imposed sanctions more in line with the West, but, in many cases, not going as far as their Western counterparts. Hong Kong has also maintained its neutrality. Given the friendlier environment, Russian businesses have increasingly pivoted to China, India, Southeast and Central Asia, with arbitration centres like Hong Kong and Singapore seeing more Russian cases. SINGAPORE AND HONG KONG Since 2014, when the U.S. and EU started sanctioning Russian companies, businesses from the country have tended to prefer dispute resolution under arbitrational institutions in Asia – including the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC) - rather than the LCIA or the ICC, says Kie Matsushima, a Tokyo-based special counsel at Japan’s Anderson Mori & Tomotsune. Russia’s traditionally favoured seat of arbitration – London – has witnessed a steep decline in interest from Russian parties. As per statistics released by the London Centre for International Arbitration, Russian party involvement in its arbitral proceedings has dropped from 7 percent in 2018 to 2.7 percent in 2022. While numbers from the SIAC and the Hong Kong International Arbitration Centre do not necessarily indicate a steep rise in Russian parties availing their services, some arbitration lawyers believe that Russia’s eastward movement following the implementation of sanctions has brought more arbitration to Asian centres, and to some more than others. Let’s start in Singapore, a global arbitration hub which has been actively FROM RUSSIA, WITH WORK Russians have been moving their business and dispute resolution to Asia for over a decade, but new sanctions following the invasion of Ukraine has significantly hastened that process. Dispute resolution hubs like Singapore, Hong Kong and Tokyo are increasingly attracting Russian businesses following the implementation of Western sanctions, and that trend is set to continue as the conflict drags on. BY NIMITT DIXIT ARBITRATION