Conference Report: Anastasia Medvedskaya on Sanctions, Investment Arbitration, and Human Rights
Russian Arbitration Day
At this year’s Russian Arbitration Day, international arbitration practitioner Anastasia Medvedskaya delivered a presentation on the fast-emerging nexus between sanctions, human rights law, and investor-state dispute settlement (ISDS)—a development she believes is reshaping the system’s very role.
Sanctions and the Legal Gray Zone
Medvedskaya opened by distinguishing UN Security Council sanctions, which have a clear legal basis under Chapter VII of the UN Charter, from the wave of unilateral sanctions now dominating geopolitics. She noted that post-2022 sanctions against Russia fall outside the UN framework and, under international law, can only be lawful if they meet strict countermeasure criteria under ARSIWA – requirements many states fail to meet.
Disproportionate Impact on Individuals
She highlighted cases like Shvidler where sanctions were imposed on individuals for business associations rather than direct wrongdoing, raising proportionality concerns under the Bank Mellat test. In her view, such measures often punish those with no real capacity to influence state conduct—“a sledgehammer to crack a nut.***
*** The presentation was delivered before the UK Supreme Court handed down its decision in the above-mentioned case
Human Rights Strain
From practice, Medvedskaya detailed how sanctions restrict access to justice, citing UK laws that make obtaining legal representation slow and bureaucratic, particularly before OFSI’s 2022 resource expansion. She drew on precedents such as JSC VTB Bank v Taruta, where courts reaffirmed that “even pariahs have rights.”
ISDS as the New Forum for Sanctions Disputes
Medvedskaya described how sanctions disputes are now moving into ISDS, integrating human rights law via systemic interpretation under Article 31(3)(c) of the Vienna Convention. She pointed to Fridman v Luxembourg—a $16 billion claim under the Belgium/Luxembourg–Russia BIT—as emblematic of how sanctions are being framed as treaty breaches involving expropriation, FET violations, and transfer restrictions.
She also referenced Dayyani v Korea, where sanctions-related claims survived jurisdictional challenge, showing tribunals’ willingness to treat such measures as investment disputes.
Rethinking Fair and Equitable Treatment
In her view, sanctions cases create “compound FET violations”—simultaneous breaches of legitimate expectations, proportionality, transparency, and non-discrimination—often warranting damages far beyond those in traditional investment disputes.
State Defenses and Procedural Innovations
States typically invoke public policy powers, security exceptions, or obligations under other international law. Yet tribunals are testing the proportionality and logic of these defenses. Sanctions cases have also driven procedural change—expedited timelines, advanced provisional measures, secure handling of classified evidence, and coordinated multi-claimant arbitrations – all of which may outlast the sanctions context.
The Future of ISDS
Medvedskaya argued that sanctions disputes are not a temporary surge but the future of ISDS, as economic measures increasingly replace armed conflict as tools of statecraft. She sees ISDS evolving from a commercial dispute forum into a broader accountability system for state economic conduct—a shift she is helping shape through her own practice.