Russia: 2025 investment arbitration developments review

In 2025, Russia signed three new BITs: with China (in force), Congo and Myanmar (signed but not in force). These BITs share a number of distinctive features compared to the previous generation of Russia’s BITs, and they largely copy the BIT Guidelines adopted by the Government of Russia in 2016. The implemented changes also suggest that the drafters of the new Russian BITs have learnt their lessons from Russia’s loss in its battle against Yukos.

The Yukos trauma

The new Russian BITs provide more detailed definitions of ‘investor’ and ‘investment’ (along with very elaborate caveats for these definitions). In the Yukos saga, Russia’s defence was based on the argument that the claimants were ultimately controlled by Russian individuals. Since the dispute in the Yukos case arose out of tax measures, Russia now drafts the relevant clause specifically so that “measures … related to imposition and collection of taxes and other charges, unless such taxes and other charges are arbitrary” do not constitute expropriation.

The BITs expressly provide that dual citizens making investments in their state of nationality are excluded from BIT protection. Additionally, given that the BITs provide specifically that indirect control by a person from a third state also precludes such persons from being considered protected investors, it is crucial to consider other options to formalise the relationship (e.g. individual investment contract).

Another interesting feature is that the BITs exclude the application of the UNCITRAL Transparency Rules 2014 (unless the disputing parties agree otherwise). This is in line with the current situation concerning pending Russia-related arbitrations with the latest updates on these disputes (even according to IA Reporter) dating back to December 2024.

Loss of trust in ICSID

All three BITs demonstrate Russia’s loss of trust in the ICSID system, even in the form of the Additional Facility Rules. Whilst the Russia-China BIT 2006 provided for an opportunity to submit a dispute to arbitration pursuant to the AF Rules, the new BITs exclude the application of the Rules and give preference to the Dubai and Hong Kong Arbitration Centres in the Russia-Congo BIT and the Russia-Myanmar BIT, respectively, since these centres are based in jurisdictions which did not impose sanctions on Russia in and after 2022. The Russia-China BIT follows the Russian Guidelines and does not specify any arbitral institution.

Protection against old claims

A distinctive feature of the Russia-Congo BIT is its extremely detailed clause on the dispute resolution between the investor and the host state. Uniquely it also provides for the contracting parties’ choice of the language of arbitration for any future disputes (English). Another novel feature of the new BITs implemented by Russia, is the twofold time bar for investors to submit a dispute, which is a maximum of five years for the Russia-Congo and Russia-Myanmar BITs and six years for the Russia-China BIT. Not only does the investor have to submit a request for arbitration within three years of requesting consultation with the host state, but any pre-arbitration negotiations must also be initiated within two years of the affected investor’s gaining knowledge of the alleged violation. Clauses imposing time bars are becoming increasingly popular, and there are at least two cases where claims have been dismissed by tribunals as manifestly without merit, Ansung v. China and AFC v. Colombia. Both BITs contained a time bar clause which allowed the host states to win on jurisdiction.

This decision can be explained by the fact that investment tribunals are sometimes constituted to resolve disputes dating back by over a decade, and they may award pre-award interest, which can be as substantial as the main claim. Even in a case similar to ADC v. Hungary, where the tribunal has chosen not to award pre-award interest (because the calculation was based on the value of the expropriated investments as of the date of the award), various economic adversities may cause the award amount to inflate significantly.

Limited scope of protected investments

All Russia’s new BITs expressly state that future tribunals shall not consider arbitral and judicial awards as investments. This provision was inspired by the landmark Saipem v. Bangladesh award on jurisdiction, where the tribunal found that since “the rights embodied in the ICC Award were not created by the [ICC] Award, but arise out of the Contract” it “crystallized the parties’ rights and obligations under the original contract” (para. 129). This finding resulted in a USD6.3 million award, and, whilst this amount has not set a new record in investment arbitration, Russia has decided to incorporate it out of caution.

Russia has built on the negative experiences of other states, even if with a slight delay. For instance, even though the awards in Ambiente Ufficio S.p.A. & Ors v. Argentina and Abaclat & Ors v. Argentina were rendered in 2013 and 2016 respectively, Russia’s BITs signed in that period do not contain limitations on the scope of protected investments. Readers may recall that claims in the above cases arose from sovereign bonds.

Even though the tribunal in Poštová banka v. Greece dismissed similar claims, Russia decided not to test its luck and took proactive steps to word the relevant clause in a more cautious manner.

As a result, Russia included a caveat, specifying which assets do not qualify as protected investment for the purposes of the BITs, excluding, inter alia, all kinds of sovereign bonds issued by governments at all levels.

Clauses typical for BITs signed in the past five years which were excluded by Russia

These include:

• Prohibition on future tribunals’ awarding compensation for moral damage (Article 28.3 of the India-Uzbekistan BIT 2024);
• Non-relaxation clauses, which preclude states from attracting investments by lowering existing health and environmental standards (Article 21of the Japan-Angola BIT 2024). However, the Russian Guidelines 2016 contain a recommendation to include this clause;
• Express anti-corruption clauses, which, depending on the wording, entitle the host state to either deny protection of the investment, or require the state to initiate criminal proceedings. In a yet to be disclosed Spentex v Uzbekistan award, which was based on a BIT without this clause, the respondent’s strategy to invoke a corruption allegation has backfired: while the claims were dismissed, Uzbekistan was recommended to make a contribution of USD8 million to the UN Anti-Corruption Fund to demonstrate its readiness to combat domestic corruption.

Explicit ban to use the MFN clause in ISDS

The Russia-China BIT contains an express prohibition on importing dispute resolution clauses from other BITs (Article 15 (10)). On the contrary, the Russia-Congo BIT (Article 15 (11)) demonstrates a more liberal approach and allows the disputing parties to decide amongst themselves whether the dispute may be submitted to another forum on the basis of the MFN clause.

Innovative fork-in-the-road clauses

While all three BITs contain fork-in-the-road clauses, the Russia-China BIT has a unique feature, namely, that the investor loses their right to submit a dispute to another forum if the court of the contracting party renders its final decision. The BIT expressly provides that the fork-in-the-road clause is not triggered if the law local to the court proceedings allows the claimant to withdraw its claim.

The other two BITs contain a typical fork-in-the-road clause and provide that once the investor submits their dispute to a forum, they are precluded from accessing any other avenues.

In this light, it is crucial for the investor to properly assess all of the scenarios and choose the forum that is likely to make the most favourable decision.

Termination of BITs

In 2025, we saw the unilateral renunciation of the following treaties:

The Russia-Lithuania BIT (effective as of 15 October 2025) and the Russia-Ukraine BIT (effective as of 27 January 2025). However, pursuant to the sunset clauses, the relevant investments continue to enjoy protection for another ten years, i.e. until 15 October 2035 under the Russia-Lithuania BIT, and until 27 January 2035 under the Russia-Ukraine BIT. Hence, these dates are considered deadlines to initiate arbitration on the basis of these treaties.

The year ended with 12 pending cases against Russia brought by investors on the basis of the Russia-Ukraine BIT, with more expected to be initiated. No claims were brought against Russia on the basis of the Russia-Lithuania BIT, whilst Russian investors initiated four proceedings under the same (as per IA Reporter).

How Gherson can assist

Gherson’s Litigation and Arbitration Team are highly experienced in advising on international commercial litigation and arbitration matters. If you have any questions arising from this blog, please do not hesitate to contact us for advice, or send us an e-mail. Don’t forget to follow us on X, Facebook, Instagram, or LinkedIn to stay up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2026