‘Friendly’ and ‘Unfriendly’ Jurisdictions: A New Taxonomy of Legal Systems

Agreements on the promotion and mutual protection of capital investments allow for an open offer for the creation of international investment arbitrations – something which Russia cannot avoid. In unfriendly states, steps have already been taken to establish international investment tribunals for cases involving “foreign investors vs the Russian Federation”. Mutual recognition and enforcement of judgements and arbitral decisions made in Russia and unfriendly states is becoming a matter of key importance. Clearly, there are set to be more cases of refusing to recognize and enforce decisions based on public policy doctrine. The Russian government has already taken a range of measures which have facilitated efforts to tackle offshoring and restore economic sovereignty. They have also helped boost import substitution and localization of the manufacturing sector. These measures have included restricting the payment of dividends to unfriendly states, restrictions on returning loans to unfriendly states, restrictions on the movement of capital, mandatory settlements in roubles and other currencies, and a ban on issuing depositary receipts abroad. In addition, the sanctions imposed by unfriendly countries have actually had the effect of tackling offshoring and restoring Russia’s economic sovereignty. What needs to be done to develop ways of protecting Russian assets which have been frozen abroad? How can investment arbitration be leveraged in this regard, including in relation to protecting Russian investors who purchased foreign securities through the National Settlement Depository against the authorities of Belgium and Luxembourg? What potential exists today for Russia to participate in international financial organizations?