A recent decision from the U.S. District Court for the District of Columbia underscores the strength of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) in cross-border enforcement proceedings, even where sanctions considerations are implicated.
In January 2026, a federal judge recognized nearly $14 million in international arbitration awards that had originally been granted to a Russian state-owned media company, despite subsequent U.S. sanctions imposed on that entity. The awards had been assigned to a UAE-based consultancy prior to the imposition of sanctions, raising questions about timing, ownership, and potential circumvention concerns.
The court ultimately concluded that enforcement was required under the New York Convention. Article III mandates that contracting states “shall recognize arbitral awards as binding and enforce them,” subject only to the limited defenses enumerated in Article V. The court emphasized that these defenses are to be applied narrowly, consistent with longstanding U.S. precedent favoring enforcement of international arbitral awards.
Critically, the court rejected application of the public policy exception under Article V(2)(b), which permits refusal of enforcement only where recognition would violate the forum state’s most basic notions of morality and justice. U.S. courts have repeatedly held that this exception is extremely narrow and applies only in exceptional circumstances. See Parsons & Whittemore Overseas Co. v. Societe Generale de L’Industrie du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974).
Consistent with this standard, the court declined to find that sanctions alone rendered enforcement contrary to public policy, particularly where (i) the awards had been validly assigned prior to sanctions taking effect and (ii) the U.S. government did not take the position that enforcement would violate sanctions regulations or national policy.
For creditors, the ruling reinforces two key principles. First, U.S. courts apply the New York Convention’s public policy exception narrowly. Second, the structure and timing of transactions, including assignments and transfers of rights, can materially affect enforceability in a sanctions environment.
Cross-border enforcement often involves intersecting legal regimes, including arbitration law, sanctions regulations, and bankruptcy considerations. Careful analysis of ownership, timing, and compliance issues is critical when pursuing recovery of international awards.
THCA advises clients on arbitration award enforcement, sanctions-related litigation risks, and cross-border recovery strategy under the New York Convention.
For more information, please contact us at +1 (617) 207-8670 or visit https://thcalaw.com/contact/