London (Firms): An Overview
Private Wealth Disputes with a CIS Element
Overview
Private wealth disputes with a CIS element typically involve individuals and families whose wealth originates in or whose assets remain located in Russia and the wider post-Soviet region. A significant number of those individuals have settled in England over the past three decades, and the English courts remain a principal forum for divorce, succession and trust disputes.
The English courts are familiar with the questions of Russian law that arise where wealth accumulated after the collapse of the Soviet Union falls to be divided, such as the treatment of nominee arrangements and the absence in Russian law of the concept equivalent to beneficial ownership. Other questions are newer and still developing, and advisers need to take them into account.
The Lugovoy Law
For clients whose assets sit in Russia, the more recent complication is a set of jurisdictional rules that can pull part of a dispute back to the Russian courts. Federal Law No 171-FZ dated 8 June 2020, known as the “Lugovoy Law” after the deputy who promoted it, introduced Articles 248.1 and 248.2 into the Russian Arbitrazh (Commercial) Procedure Code (APC) in response to foreign sanctions against Russia and Russian persons.
Article 248.1 confers exclusive jurisdiction on Russian commercial courts over disputes involving persons subject to foreign restrictive measures and over disputes arising out of such measures, extending not only to designated persons but to those affected by them. It allows a Russian commercial court to hear a dispute notwithstanding an arbitration agreement or a foreign exclusive jurisdiction clause, where sanctions are found to impede that party’s access to justice in the agreed forum. Article 248.2 allows a party to apply to a Russian commercial court to restrain the commencement or continuation of foreign proceedings, enforced by an award capped at the sum claimed abroad together with costs.
When the Lugovoy Law reaches private wealth
The Lugovoy Law looks, at first, like a commercial-litigation problem rather than a private wealth one. In practice, it is not. Its provisions govern commercial disputes, whereas divorce and succession claims generally fall to the Russian courts of general jurisdiction under the Civil Procedure Code, to which Articles 248.1 and 248.2 do not apply.
However, in wealth disputes, the assets are rarely held personally and often sit in Russian operating companies and holding structures. Consequently, claims over shares in Russian legal entities, over distributions and payments by Russian entities, and over the recognition or enforcement of a foreign judgment against Russian assets generally fall within the commercial courts’ jurisdiction. A respondent in English proceedings can therefore bring the asset-holding limb of the dispute within Article 248.1 and seek relief under Article 248.2 against a claimant personally.
Potanina v Potanin shows how this plays out. Mr Potanin, designated under the Russia (Sanctions) (EU Exit) Regulations 2019, commenced proceedings in a Russian commercial court under Article 248.1 seeking to prevent his former wife, Natalia Potanina, from continuing her claim in England for financial provision following an overseas divorce, and applied to the Family Court to adjourn the English proceedings pending the Russian outcome, arguing in addition that any English order would be largely unenforceable, relying in support on expert evidence of Russian law.
In Potanina v Potanin [2026] EWFC 80 the judge refused the adjournment and held that designation was no bar to Mr Potanin’s participation in the English proceedings.
Recognition and enforceability
Under Russian law, a foreign judgment is recognised in Russia only where an international treaty or a federal law so provides. There is no such treaty with the United Kingdom. Before 2022, Russian courts compensated for that absence by invoking principles of comity and reciprocity, and a modest line of first-instance decisions recognised English judgments on that basis. Russian courts now routinely refuse recognition to judgments and awards from “unfriendly” jurisdictions, with sanctions-related considerations treated as an independent public policy ground.
The consent regime as a separate obstacle
Even a favourable English order is only as useful as the client’s ability to give effect to it where the assets are. Even where the parties are willing to give effect to a settlement or order in a private wealth dispute, implementation may require approval from the relevant Russian authorities. Presidential Decree No 618 dated 8 September 2022, requires prior consent from the Governmental Commission on Control over Foreign Investments for any transaction directly or indirectly creating, amending or terminating rights over participatory interests in a limited liability company incorporated in Russia, or other rights determining how such a company is managed, where a person connected with an “unfriendly” state is involved. The drafting is deliberately wide, and Ministry of Finance guidance and subsequent practice have drawn in pledges, options, corporate agreements and management arrangements, together with other arrangements affecting rights to interests in an LLC or to shares.
The regime has two features of particular relevance to private wealth structures. First, the “unfriendly person” test applies by reference to citizenship, place of registration or place of principal business rather than to designation, so that a Russian-born client resident in the United Kingdom, or a Cypriot or BVI vehicle within a family structure, may be caught although no sanctions apply to them. Second, consent of the Governmental Commission on Control over Foreign Investments is discretionary and can be granted subject to certain terms. The published sub-commission requirements sometimes include independent valuation, a significant discount to the market value of the asset, and a contribution to the federal budget. Separately, dividends and other payments to unfriendly persons are routed to restricted type “C” accounts, from which funds cannot in practice be withdrawn or transferred abroad without special permission.
The consequence is that an order or settlement providing for the transfer of Russian shareholdings is not merely difficult to enforce against an unwilling respondent, it can also be difficult even for a willing one to implement.
Conclusion
Private wealth disputes with a CIS element remain within the competence of the English courts, but the range of considerations that need to be weighed before proceedings are commenced, and at each stage thereafter, has widened.
Articles 248.1 and 248.2 are no longer a theoretical risk in this area. They can generate parallel proceedings in Russia and expose a claimant personally to an anti-suit application. The consent regime introduced by Presidential Decree No 618 and its associated measures add a further layer, capable of delaying settlement even where a respondent is willing to comply.
These are questions to weigh at the outset: how the claim is structured, which assets relief is sought against, and what an order will realistically achieve.