News, Sanctions updates / 28.04.2021

Latest developments in sanctions-driven court cases in Russia

The State Commercial (‘Arbitrazh’) Court of the city of Moscow has issued an official publication concerning the now infamous case of Tsargrad Media vs. Google LLC (USA), Google Ireland Ltd. and OOO Google (Russia).

Tsargrad Media used to have a Google account, and was a subscriber to Google Ads and other Google services. In 2020, Google closed Tsargrad Media’s account and blocked access to any other Google services owing to the fact that Tsargrad Media’s beneficial owner, a Mr. Malofeev, was a sanctioned person on the U.S. Office of Foreign Assets Control (OFAC) list and also on the EU sanctions list. Tsargrad Media filed a statement of claim with the State Commercial (‘Arbitrazh’) Court of the city of Moscow. Now, the court has issued its ruling on the merits of the case.

Without a doubt, this is going to be a turning point in sanctions-driven disputes in Russia.

First, the court states that US and EU sanctions should not be applied extraterritorially to Russian persons. According to the ruling, the application of US and EU sanctions towards Russian persons in Russia would contradict the principle of a sovereign state as stated in the UN Declaration of 21 December 1965.

Second, the court states that the application of foreign sanctions in Russia is contrary to the country’s public order. This is in line with other Russian court rulings on sanctions-related cases, in particular, the well-known Siemens case. In that case, a Russian court also established that the application of EU sanctions against Russian persons in Russia contradicts the public order and, as a consequence, is void. In so saying, we believe that this will be a prominent trend set for sanctions-related cases in Russian courts, with US, EU and other countries’ sanctions against Russian persons being likely to be declared as contradicting the country’s public order.

The court states that Google must re-activate Tsargrad Media’s account and grant access to any other services. If Google fails to do so, a hefty fine is to be paid for each day of its non-performance of the court ruling.

We are monitoring the situation and will be reporting on progress.

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