LITHUANIA Trends and Developments Contributed by: Kęstutis Švirinas, Ieva Rimavičienė, Domantė Lunytė and Luka Tamulionytė, Sorainen
Belaruskali, a major Belarusian fertiliser producer, historically relied on Lithuanian railways to transport its products to global markets. Following the imposi- tion of EU sanctions against Belarus in early 2022, Lithuania declared the rail transport contract invalid and suspended all fertiliser shipments from 1 Febru- ary 2022. In response, Belaruskali initiated arbitration proceed- ings claiming EUR12 billion in damages – the largest amount ever claimed against Lithuania in an invest- ment dispute. The Lithuanian government has char- acterised the claim as politically motivated, viewing it as an attempt to exert pressure in alignment with Belarus’s broader geopolitical strategy. This arbitration is part of a broader legal and political pattern. Both the EU General Court and Lithuanian administrative courts have upheld the legality of these actions, rejecting Belaruskali’s challenges. These rul- ings reinforce the EU’s position that restrictive meas- ures are lawful responses to Belarus’s violations of international norms and human rights. In July 2025, the EU adopted its 18th sanctions pack- age, which for the first time directly addresses invest- ment disputes. Council Regulation (EU) 2025/1494 (Russia) and Council Regulation (EU) 2025/1472 (Belarus) are intended to: • bar sanctioned Russian or Belarusian investors from initiating or enforcing ISDS arbitral awards or related judgments; and • give EU member states the right to pursue counter- claims for costs and damages linked to defending against such actions. Under Articles 11 (2a) and 11 (2b) of Council Regu- lation (EU) 2025/1494, any ICSID claim filed outside the EU by a listed Russian or Belarusian entity is deemed unlawful. EU member states are prohibited from recognising or enforcing any resulting awards, judgments or injunctions. It means that if a sanctioned Russian or Belarusian investor were to win an arbitral award abroad (for instance under a BIT), EU courts must decline to enforce it. Member states’ courts are instructed to rely on “public policy” exceptions under the New York Convention, arguing that enforcement
would undermine both the EU sanctions framework and the enforceability of Regulation (EU) 2025/1494. Although controversial, these measures are designed to shield EU states from abusive or politically driven claims such as Belaruskali v Lithuania . 2025: dangerous signals in investment arbitrations against Russia Since the onset of Russia’s war against Ukraine in 2022, the Russian Federation has imposed increas- ingly restrictive measures targeting Western compa- nies seeking to exit the Russian market. These meas- ures include mandatory government approvals for asset sales, enforced discounts on asset valuations, elevated exit taxes, and even threats of state seizure of foreign-owned assets. These actions likely constitute violations of Russia’s obligations under BITs with various Western states, including the Republic of Lithuania, as well as under the ECT. in response, numerous Western investors have either initiated or are actively considering initiat- ing investment arbitration proceedings against Russia. In a troubling development, Russia has taken unprec- edented steps to obstruct or suspend these proceed- ings through domestic legal mechanisms. On 9 September 2025, the Commercial Court of Mos- cow issued a ground-breaking interim anti-arbitration injunction in Case No. А40-92702/2025. The injunc- tion targeted a German investor, its legal counsel and the arbitrators involved in an investment arbitration against the Russian Federation. The court threatened a penalty of EUR7.5 billion for non-compliance, mark- ing the first known instance where a Russian court has extended such measures beyond the claimant to include legal representatives and arbitrators them- selves. The court justified its decision by alleging bias and lack of impartiality among the arbitrators. It also cited the fact that the arbitration institution administering the case is located in the Netherlands – a country designated as “unfriendly” under Russian law.
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