On 31 July 2023 a law “On application of special restrictive measures” will come into force in Belarus. The Law targets foreign states engaged in unfriendly actions towards Belarus and its residents, as well as entities and persons associated with such states.  

The Law grants exclusive jurisdiction to Belarusian economic courts in disputes against foreign parties, where Belarusian counterparties are subject to unfriendly actions. It also offers grounds to seek antisuit injunction. However, these developments are not new, as similar law applies in Russia since 2020.

What are the key terms of the Belarusian law?

1. Belarusian economic courts will have exclusive jurisdiction over two categories of disputes: (i) with participation of Belarus, its legal entities or persons against whom the unfriendly actions have been committed; (ii) between a Belarusian and a foreign party, if the grounds for the dispute are unfriendly actions against the former. Exclusive jurisdiction will apply if the dispute is not subject to foreign #court or #internationalarbitration jurisdiction under an international treaty or parties’ agreement. Proceedings can be initiated in Belarus, if no parallel proceedings are pending in foreign courts or arbitration.
2. Belarusian exclusive jurisdiction will still apply despite a prorogation or #arbitration clause favouring a foreign court or tribunal, if the application of such a clause is impossible due to unfriendly actions creating obstacles for Belarusian party in the protection of its violated rights and legitimate interests.
3. The Belarusian party facing foreign court or arbitration proceedings can seek an antisuit injunction in Belarusian court prohibiting foreign counterparty to continue or start the proceedings abroad.
4. The Law allows recognition and enforcement of the foreign judgements and arbitral awards if a Belarusian party, who is subject to unfriendly actions, did not object to foreign proceedings, for example by means of seeking antisuit injunction in Belarus.       

Adoption of this regulation raises several concerns. First, circumstances when the exclusive jurisdiction and antisuit injunctions could be used are still unclear. The existing legislation stipulates only the list of the states carrying out unfriendly actions (all EU member states are included), however, it does not explain what such actions are. This gives the freedom of interpretation to the courts, and may open a pandora box for possible circumvention of existing arbitration agreements. Second, to succeed in application for antisuit injunction it would be enough to demonstrate existence of “unfriendly actions” without a requirement to prove unenforceability of prorogation or arbitration agreement as a result of such actions.

At the same time, the new law should not impose serious obstacles for foreign entities, which do not have assets in Belarus, in conducting disputes against Belarusian counterparties in foreign jurisdictions. Enforceability of the antisuit injunction abroad is questionable, as Belarus has limited bilateral treaties on recognition and enforcement of court judgements. Furthermore, international tribunals are not bound by foreign judgements in deciding on their own competence. Lastly, unlike in Russia, currently Belarusian law does not provide for penalties for non-compliance with the antisuit injunction, but the situation could change. The court practice will show if non-compliance with the antisuit injunction by the foreign party will affect the recognition and enforcement of the judgement or award in Belarus.    

by Alexey Pirozhkin