The Impact of Sanctions Policies on the Law Applicable to the Merits in International Commercial Arbitration

Over the last two decades sanctions have gained a primary role in international relations. Furthermore, the resort to these measures has significantly grown since 2022 due to the international crisis which followed the invasion of Ukraine by Russia. The recent proliferation of such phenomenon, its massive effect on economic relationships among private operators, on the one hand, and the success of international commercial arbitration as a mechanism of dispute settlement for commercial disputes, on the other hand, make urgent an assessment of the impact of sanctions on the law applicable to the merits of arbitral proceedings. This paper aims to review the state of practice and scholarship in order to answer three fundamental questions: (i) how arbitrators should qualify sanctions (e.g. mandatory rules), (ii) what are the systems of law they should consider when scrutinising the application of sanctions and, finally, (iii) how they should deal with conflicts among different sets of sanctions applicable to the same case.