Sibuglemet Trading v. POSCO

An ICC tribunal awarded Sibuglemet Trading Pte Ltd over $11M against companies of the Korean POSCO group for goods delivered. The respondent argued that payment was impossible because of U.S. sanctions, but the arbitrators rejected that argument. In the tribunal’s view, the respondent had not proved that the claimant was owned by sanctioned persons. The arbitrators also found that sanctions risk is not force majeure and that the respondent had taken no steps to overcome the difficulties caused by the sanctions (alternative payment methods, consent to an assignment of the claim). The Moscow Arbitrazh Court issued a writ of execution for the ICC award, accepting jurisdiction because the respondents hold assets in Russia (a patent, trademarks, and an interest in an LLC), and imposed an escalating court penalty for failure to comply with the award.

The ICC tribunal placed the burden of overcoming sanctions risks on the buyer and rejected the force majeure argument, siding with the Singapore subsidiary of a Russian company. A Russian court enforced the award against a Korean respondent in favor of a company from Singapore, which Russia regards as an “unfriendly” state.