04 December 2024

USA and Russia: Features of Foreign Trade under Sanctions

December 4, 2024

BRACE Law Firm ©

Determining the state of Russian-American relations since late 2022 is difficult because interaction between the two countries is largely frozen, and a significant number of mutual sanctions have been imposed.

This article examines the features of foreign trade with US companies in the current environment, where Russia is subject to increasing sanctions pressure from the United States.

Statistics on Trade Turnover and Foreign Trade between Russia and the USA

According to data collected by the Bureau of Economic Analysis of the US Department of Commerce, the five countries that were the largest trading partners of the United States by total imports and exports of goods and services in 2022 were Canada, Mexico, China, Japan, and Germany. The countries to which the United States exported the largest volume of goods and services in 2022 were Canada, Mexico, China, the United Kingdom, and Japan. The countries from which the United States imported the largest volume of goods and services in 2022 were China, Mexico, Canada, Germany, and Japan.

The most important goods exported from the USA in 2022 were industrial supplies and materials; consumer goods (except food and automotive); foods, feeds, and beverages; and automotive vehicles, parts, and engines. The most important services exported from the USA in 2022 were business services (except financial and insurance services); financial services; travel (for all purposes); charges for the use of intellectual property; and transport services [1].

Regarding trade turnover with Russia, the latest statistical data is available for 2021. The Federal Customs Service ceased regular publication of customs statistics in April 2022 to "avoid incorrect estimates and speculation" against the backdrop of sanctions [2].

In 2021, the trade turnover between Russia and the USA amounted to 34,414,596,467 USD, an increase of 44.09% compared to 2020. Russia's exports to the USA in 2021 amounted to 17,537,826,371 USD, an increase of 61.78% compared to 2020. Russia's imports from the USA in 2021 amounted to 16,876,770,096 USD, an increase of 29.39% compared to 2020.

The US share in Russia's foreign trade turnover in 2021 was 4.3840% compared to 4.2063% in 2020. In terms of share in Russian trade turnover, the USA ranked 5th in 2021 (6th in 2020). The US share in Russia's exports in 2021 was 3.5676% compared to 3.2226% in 2020. In terms of share in Russian exports, the USA ranked 9th in 2021 (also 9th in 2020). The US share in Russia's imports in 2021 was 5.7517% compared to 5.6361% in 2020. In terms of share in Russian imports, the USA ranked 3rd in 2021 (also 3rd in 2020) [3].

Simultaneously, according to US statistics, Russia ranked only 23rd among US trading partners by trade turnover volume, with a share of 0.8% [4].

In the structure of Russia's exports to the USA in 2021 (and 2020), the main share of supplies fell on the following types of goods:

mineral products (codes of the Commodity Nomenclature of Foreign Economic Activity (the "TN VED"));
metals and articles thereof (TN VED codes 72–83);
precious metals and stones (TN VED code 71);
products of the chemical industry (TN VED codes 28–40);
machinery, equipment, and vehicles (TN VED codes 84–90);
wood and pulp and paper products (TN VED codes 44–49);
food products and agricultural raw materials (TN VED codes 01–24) [5].

In the structure of Russia's imports from the USA in 2021 (and 2020), the main share of supplies fell on the following types of goods:

machinery, equipment, and vehicles (TN VED codes 84–90);
products of the chemical industry (TN VED codes 28–40);
metals and articles thereof (TN VED codes 72–83);
food products and agricultural raw materials (TN VED codes 01–24) [6].

Legal Regulation of Foreign Trade in the USA

The United States actively uses trade remedies against imports perceived as unfair or harmful to domestic industries, including antidumping duties, countervailing duties, and safeguard measures. Currently, the United States applies more than 650 antidumping and countervailing duties, the largest number of which (232) are imposed on imports from China, and the second largest number (65) on imports from India. Overall, current US antidumping and countervailing duties apply to imports from Asia, Europe, Africa, South America, Canada, and Mexico. US antidumping and countervailing duties cover a wide range of imported goods, including steel and aluminum products, chemicals, agricultural products, and various industrial goods [7].

US antidumping and countervailing duties are authorized by the Tariff Act of 1930, and US safeguard measures are authorized by the Trade Act of 1974. The US Department of Commerce and the International Trade Commission play roles in investigations regarding US antidumping and countervailing duties. The Department of Commerce investigates and determines whether imports are dumped or unfairly subsidized, while the International Trade Commission investigates and determines whether such imports cause material injury or threaten to cause material injury to the domestic industry producing a like product.

U.S. Customs and Border Protection enforces customs laws and regulations. Its mission for customs purposes is to facilitate legitimate trade and protect associated US revenue. It also enforces US trade-related laws to ensure security. Importers must declare imported goods and related information to U.S. Customs and Border Protection, which in turn conducts appropriate monitoring and enforcement of compliance [8].

Information on import tariffs and other fees can be found in the Harmonized Tariff Schedule of the United States.

Bilateral Agreements between Russia and the USA

The USA has active free trade agreements with 20 countries, which do not include Russia.

Regarding bilateral agreements between Russia and the USA in the sphere of foreign trade, their number is small and includes the following treaties and agreements:

Treaty between the Russian Federation and the United States of America on the Encouragement and Reciprocal Protection of Investment (signed in Washington on June 17, 1992);
Agreement between the Government of the Russian Federation and the Government of the United States of America on Cooperation and Mutual Assistance in Customs Matters (concluded in Washington on September 28, 1994);
Agreement between the Government of the Russian Federation and the Government of the United States of America on Investment Incentives (concluded in Washington on April 3, 1992);
Convention between the Russian Federation and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated June 17, 1992. However, note that the operation of the provisions of Paragraph 4 of Article 1, Articles 5–21 and 23, as well as the Protocol to this Treaty, has been suspended by Decree of the President of Russia No. 585 dated August 8, 2023, and Federal Law No. 598-FZ dated December 19, 2023.

Also, Russia and the USA are parties to the United Nations Convention on Contracts for the International Sale of Goods of 1980.

Sanctions against Russia in the Context of Foreign Trade

As early as late February 2022, the USA announced the imposition of the largest trade sanctions in history against Russia, aimed at depriving a number of sectors of the Russian economy (the military-industrial complex, aircraft and shipbuilding, etc.) of access to a wide range of high-tech products.

Russia-related sanctions include comprehensive territorial measures prohibiting new investments in Russia, and the import and export of certain goods, services, and technologies both to and from Russia. Transactions involving sanctioned Russian persons and export control restrictions on dual-use goods intended for Russia are prohibited.

Additionally, the USA decided to revoke Russia's status of Permanent Normal Trade Relations. In April 2022, the US President signed the Suspending Normal Trade Relations with Russia and Belarus Act [9].

Duty rates on goods from most countries are listed in Column 1 of the Harmonized Tariff Schedule of the United States. Countries whose goods qualify for these rates are considered countries with which the USA has normal trade relations. Upon revocation of Permanent Normal Trade Relations status, Column 2 of the Harmonized Tariff Schedule of the United States begins to apply to imports of goods. The duty rates in Column 2 are higher than in Column 1; that is, duty rates on goods from these countries are listed in Column No. 2 of the tariff schedule [10].

In late June 2022, a list of goods subject to a 35% duty when imported from Russia was published. The increased tariffs cover 570 items, including steel products, certain types of aluminum products, minerals and ores, chemical compounds, rubber, wood, paper, aircraft components, etc. As a result, the import of Russian products from this list practically ceased after the introduction of prohibitive duties. Moreover, supplies of other goods also decreased, as Russian exporters expected a further expansion of prohibitions [11].

Note that on the Russian side, import customs duty rates for certain goods originating from the United States of America were also approved by Resolution of the Government No. 788 dated July 6, 2018 (as amended on April 26, 2022).

As a result, according to US statistics, bilateral trade turnover in the first half of 2022 decreased compared to the same period of the previous year to a record low level not seen in twenty years [12].

In 2023, US imports of goods from Russia decreased to 4.57 billion USD. As noted by RBC, the main items were nuclear fuel, mineral fertilizers, and platinoids. American exports to Russia amounted to only 597 million USD. The main export item was pharmaceutical products. The USA also exported instruments and apparatus to Russia—mainly medical devices, X-ray based apparatus, etc. [13].

In May 2024, trade between the two countries jumped 1.5 times compared to April, reaching 487 million USD. Russian exports increased by 47% in late spring, reaching 439 million USD. The main commodity in US imports from Russia was uranium, purchases of which resumed after a pause in April (purchased for 209.5 million USD). The USA increased plywood imports more than fivefold, to 11.6 million USD, and also purchased ferroalloys for 10.7 million USD for the first time since January [14].

Simultaneously, American exports to Russia also grew—by 41%, to 48 million USD. Russia mainly purchased American vaccines (imports grew 2.5 times, to 15.6 million USD). This is followed by food products (6.9 million USD) and medical devices (4 million USD) [15].

It should be noted that in January, the US House of Representatives passed bill H.R. 4768 (EH) titled the "No Russian Agriculture Act", aimed at reducing dependence on Russian agricultural products. The text of the bill states that the US Department of the Treasury, through representatives in international financial institutions, "as strictly as practicable", undertakes to support investments in projects aimed at reducing the dependence of countries on the agricultural sector of the Russian Federation, including grain supplies, as well as ensuring the sustainability of global grain supplies and stimulating private investment. As of January 16, 2024, the bill has been sent to the US Senate [16].

How to Check a Counterparty from the USA?

The most common types of commercial organizations in the United States are corporations, limited liability companies (LLCs), and general or limited partnerships. The two most significant differences between corporations on the one hand, and general and limited partnerships on the other, relate to tax treatment and management. Partnerships generally are taxed on a "pass-through" basis, with no tax at the entity level, unlike corporations, which are generally taxed at the federal level. Regarding management, corporations are managed by a board of directors to whom the corporation's officers report, whereas a partnership is managed by its general partner. Limited liability companies combine features of corporations and partnerships, with limited liability for their members and a choice of management either by a board or directly by members, as well as the option to choose taxation on a "pass-through" basis, like a partnership. These various types of legal entities exist under US state law rather than federal law, with Delaware being the most popular jurisdiction for incorporating or forming companies [17].

There is no centralized official database with company information in the USA. US companies are registered primarily at the state level, so each state has its own company registry, plus one for the District of Columbia and others for US territories.

There are more than 50 company registries in the USA, each collecting different data on registered companies, structuring the received data inconsistently, and providing data in different ways.

Therefore, it is difficult to form a unified view of companies existing in the USA and who they are affiliated with. Documents and information on business registration can most often be found in the offices of the Secretary of State and at the U.S. Securities and Exchange Commission (the "SEC").

To find information about an American company, it is necessary to know the state in which it is incorporated. The most likely place to find company registration information is the website of the Secretary of State of the relevant state. This is because business in the USA is generally governed at the state level.

Although this is the traditional method for searching US business registration, it has its complexities. One is that the state where a business was incorporated is not necessarily where it primarily operates. For example, Google's headquarters are in California, but it is actually incorporated in Delaware. This means one may have to search for information in multiple states.

Another problem is that there is no standardized interface for the business search system of each state's Secretary of State. Therefore, each may have different search parameters and/or ways of displaying information. Finally, many of these systems require account registration and/or payment of a fee before providing access to the requested information [18].

The SEC's Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) (the "SEC") is another place where one might have luck finding a company's registration number. It allows searching for company documents by company name or ticker symbol, or CIK number (Central Index Key). The CIK is a unique number that the SEC computer system assigns to individuals and corporations who file disclosure documents with the SEC [19].

Corporate reports allow one to find out if a company is making money or losing it, and why. This information can be found in the company's quarterly reports on Form 10-Q, annual reports (with audited financial statements) on Form 10-K, and periodic reports on material events on Form 8-K.

However, finding information about small companies can be extremely difficult. Generally, small companies must file reports with the SEC only if they have assets of 10 million dollars or more and 500 or more shareholders, or if their securities are listed on an exchange or Nasdaq [20].

General financial information about companies can be found in directories and commercial databases. For example, Bloomberg News Service and Lexis/Nexis provide company news. Dun & Bradstreet, Moody's, Hoover's Profiles, and Standard & Poor's Corporate Profiles provide financial data on companies.

How to Conclude a Foreign Trade Contract with a US Company?

The sale of goods in the USA is regulated by a special codified act—the Uniform Commercial Code (the "UCC"). The UCC is a model project of federal significance, on the basis of which state commercial codes were created. In addition to the UCC, sales relations in the USA are regulated by a number of other legislative acts (including consumer protection) and judicial precedents.

Contracts arise when a duty arises due to a promise made by one of the parties. To be legally valid as a contract, the promise must be exchanged for adequate consideration.

A contract for the sale of goods can be concluded in any form that shows that an agreement between the buyer and the seller has been reached. The contract may be concluded in writing, orally, or through any other conduct of both parties that can show the existence of a contract. A sales contract can be concluded for both the current sale of goods and the sale of goods in the future. Under the UCC, a sale is understood as the transfer of title from the seller to the buyer for a price.

The UCC contains a provision according to which if a sales contract contains a condition regarding a purchase price of more than 500 USD, the parties must execute the contract in writing. Such a contract enjoys judicial protection. This refers not to a contract in the traditional form, but to any written document sufficient to prove the fact of the existence of a contract between the parties. For example, the Supreme Court of Virginia ruled in Lucy v. Zehmer, 196 Va. 493 (1954), that even an agreement made on a piece of napkin can be considered a valid contract if both parties were of sound mind and demonstrated mutual consent and respect [21].

The scope of requirements for the content of a written document on a sales contract includes: names and signatures of the parties who intend to consider themselves bound by such a contract, and an indication of the subject of the contract and its quantity. All this information does not necessarily have to be contained in one specific document; if necessary, it can be obtained by analyzing several documents (exchange of letters, telegrams, facsimiles, and electronic messages). Even if one or more terms remain undefined, the sales contract does not cease to be effective due to uncertainty if the parties intended to conclude a contract.

In accordance with the UCC, the seller's primary obligation is to transfer and deliver the goods, and the buyer's obligation is to accept and pay for the goods. The price can be paid in money or otherwise.

What to Include in a Contract with a Company from the USA?

It is recommended to include the following conditions in a contract with an American partner:

subject of the contract;
contract value;
payment terms;
delivery term;
acceptance terms;
force majeure;
disputes and methods of their resolution (possible problems and situations, and the algorithm for their resolution);
prohibitions and restrictions;
details of the parties (addresses and contact details of the buyer and seller);
signatures;
other conditions that should be considered during delivery.

Recall that in Russia, contracts concluded between residents and non-residents are subject to registration when the amount of obligations equals or exceeds the equivalent of:

for import contracts – 3 million rubles;
for export contracts – 10 million rubles.

Under the current circumstances, it should be kept in mind that when concluding a transaction between a Russian and an American company, the Russian company will undergo a thorough check for signs indicating the counterparty may be included in sanctions lists.

In addition, a so-called "sanctions clause" may be included in the contract. A sanctions clause in a contract effectively constitutes a statement by the supplier that it is not violating any sanctions, and an obligation not to violate sanctions regimes. The sanctions clause also indicates what will happen in the event of a sanctions violation. This usually includes the right to take no action that could violate the sanctions regime, and the right to terminate the contract.

Before concluding an import contract, the issue of the possibility of exporting the goods from the USA to Russia should be worked out. Most often, bans and restrictions are imposed on goods with certain TN VED codes. It is the codification of the goods under the commodity nomenclature that determines the restrictive measures applied to them.

If the contract involves intellectual rights, appropriate provisions should be included in the contract. Intellectual property clauses may cover patents, trademarks, copyrights, trade secrets, or other proprietary rights relevant to the subject of the contract. By clarifying intellectual property rights, this clause helps prevent disputes over ownership or unauthorized use of intellectual assets. A clear delineation of ownership rights allows both parties to protect their intellectual property interests and use them for mutual benefit. Moreover, the inclusion of licensing provisions allows the parties to grant each other the necessary rights to use the specified intellectual property for the purposes of the agreement. Overall, an intellectual property rights clause protects valuable intangible assets and promotes innovation in the parties' relationship [22].

Settlements (Payment) under a Contract between Companies from Russia and the USA

In addition, settlements with an American company pose particular difficulty. It will not be possible to perform an operation if accounts are opened in Russian banks under blocking sanctions. Currently, more than 100 credit institutions are under sanctions: VTB, Sovcombank, Novikombank, Promsvyazbank, Otkritie Bank, Rossiya, as well as Alfa-Bank, Sber, Rosbank, Gazprombank [23]. The sanctions provide for the freezing of bank assets and the introduction of a ban on US citizens and companies doing business with them. The list of banks is updated regularly. If a bank conducts currency operations in 2024, this does not mean the possibility will remain in 2025. It is necessary to clarify the possibility of transfers to the desired country before opening a current account and create 2–3 reserve accounts in different banks in case one of the selected banks falls under sanctions.

Although most Russian banks have been disconnected from SWIFT, one can still find organizations that allow receiving a payment from the USA via this system. Among the banks continuing to work with SWIFT are Raiffeisenbank, UniCredit, Credit Europe, ATB, and other organizations. It should be noted that their list changes regularly—the gradual disconnection of Russian banks from SWIFT continues.

In addition to the low availability of SWIFT in Russia, this method has other disadvantages. One of the key ones is transfer instability. Processing an operation can take a long time, and the transfer can be frozen by either the foreign or the Russian bank. Out of fear of falling under secondary sanctions, a foreign bank may refuse to send money even to a non-sanctioned bank. And a payment already made may be sent for verification followed by cancellation of the transaction. Therefore, before transferring, it is better to clarify in advance whether the foreign bank will provide such a service [24].

Some organizations use the services of intermediaries who accelerate and simplify currency operations. An intermediary conducts payments from one country to another through its accounts. Often this is a group of companies with accounts opened in different countries. The agent can be either a foreign company or a Russian one affiliated with a foreign one. Payment agents help businesses conduct settlements under foreign trade contracts. Usually, they only deliver payments and rarely accompany the entire contract.

There are no identical money transfer schemes. Each time, the intermediary simultaneously assesses the complexity of the goods, the current situation in the global banking system, and exchange rates in different banks. Based on this, they decide how to deliver the payment to the final recipient.

Usually, an import payment proceeds in four steps:

transferring the amount in rubles to the agent, taking into account the commission;
the agent converts rubles into the contract currency with the supplier;
the agent sends the currency to the supplier's account minus the amount of their remuneration;
the supplier receives money for the goods or service under the foreign trade contract [25].

The commission includes the agent's remuneration, expenses for converting rubles, and bank expenses for the transfer. Please note that the possibility of payment through a payment agent must be provided for in the foreign trade contract.

Similar recommendations are also offered to American companies. Thus, they are recommended to:

switch to a non-sanctioned bank not disconnected from SWIFT;
switch to one of the banks connected to the System for Transfer of Financial Messages (SPFS) or other financial messaging systems;
make payment to the payee's bank account in a third country (e.g., Kazakhstan, Armenia);
pay via agents [26].

Delivery of goods from the USA is complicated by the need to develop an alternative delivery route through friendly countries, which increases delivery times. Russian logistics firms find a large number of complex multi-leg cargo transportation routes from the USA. Most often, goods from the USA are brought to a country friendly to Russia, and only after that are they forwarded further. From the USA, cargo can be delivered by:

Air freight. This is the fastest method even considering the development of an alternative route through friendly countries. However, it is forbidden to transport a certain list of goods by plane, and in this case, one will have to settle on another type of transport;
Sea transport can deliver any cargo, including dangerous, oversized, large-scale, heavy cargo, as well as cargo requiring special delivery conditions. Delivery by sea takes more time, but costs much less and is suitable for the absolute majority of goods.

Rail and freight road transport can be additionally used to transport cargo through the territory of the USA, friendly countries, and Russia.

Choice of Applicable Law in a Contract with a US Company

Also, the choice of applicable law in a contract with a US company is no less important. In current realities, choosing the national law of one of the contract parties is extremely difficult. The optimal option in this situation would be the choice of neutral substantive law, that is, not related to unfriendly jurisdictions.

If the parties have agreed to choose US legislation as the applicable law, attention should be paid to the fact that the federal legal system regulates the most general legal issues, while the laws of individual states may differ significantly from each other. For example, the legislation of individual states may establish a requirement that the chosen law must relate either to the parties to the contract or to the transaction. This gives the court or arbitrators the opportunity to deviate from the law chosen by the parties if it is the law of a third, neutral country [27].

If the parties chose, for example, the law of the State of New York as the applicable law, the situation changes. Under the General Obligations Law, parties to any contract for an amount of at least 250,000 USD may agree that the law of the State of New York will govern their rights and duties in whole or in part, regardless of whether such contract, agreement, or undertaking bears a reasonable relation to this state [28].

According to a Study by the Russian Arbitration Association, although English law continues to be preferred and the most common when choosing applicable rules, Russian respondents more often turn to national legislation, as well as the legislation of Singapore, Switzerland, or Hong Kong. It is important for the parties to the agreement to reach a consensus in this part, as the issue of applicable law will subsequently directly affect the enforceability and recognition of the arbitral award, which is in the interests of both participants in the dispute [29].

It is important to note that, like Russia, the USA is a party to the United Nations Convention on Contracts for the International Sale of Goods of 1980. Consequently, the UN Convention may be used as the applicable law for the legal relations of the parties.

In disputes with an American company involving a breach of contractual obligations, it must be kept in mind that American judicial practice has developed a position according to which, if a contract does not meet legal requirements to be considered a valid contract, the contractual agreement will not be enforced by law, and the breaching party will not have to compensate the injured party for damages. That is, the injured party in a contractual dispute suing the breaching party can win expectation damages only if it can prove that the alleged contractual agreement actually existed and was a valid and enforceable contract. In such a case, expectation damages will be recovered by awarding a sum of money that the party would have received had there been no breach of the agreement, plus any reasonably foreseeable consequential damages incurred as a result of the breach. However, it is important to note that punitive damages do not exist for contractual remedies, and the injured party cannot receive more than the expectation value (the monetary value of the contract had it been fully performed) [30].

Choice of Venue for Dispute Resolution between Companies from the USA and Russia in Current Realities

The US Constitution establishes a federal system of government that grants certain powers to the federal (national) government and all other powers to the states. Statutory law regulating arbitration exists at both the federal and state levels. In the US common law system, statutory law regulating arbitration is developed based on case law. Thus, practitioners must consider both state legislation and federal legislation and case law in the jurisdiction where the arbitration is conducted [31].

At the federal level, the Federal Arbitration Act (the "FAA") governs arbitration in both state and federal courts. Chapter 1 of the FAA deals with arbitration in general, while Chapters 2 and 3 include the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Inter-American Convention on International Commercial Arbitration. Chapter 1 of the FAA primarily governs domestic arbitration but also applies to international arbitration to the extent that it does not conflict with Chapters 2 and 3. For example, international arbitration involving a country that is not a party to the New York or Panama Conventions (or the ICSID Convention) will likely be governed by Chapter 1 of the FAA [32].

In addition to the FAA, each state has its own laws governing arbitration proceedings conducted in that state. For example, in New York (NYCPLR 7501 – 7515 (2012)), Texas (Tex. Civ. Prac. & Rem. Code Ann. §§ 151.001–151.013 (2017)); Florida (Fla. Stat. §§ 682.01–682.25 (2018)). These state laws operate in conjunction with the FAA; however, if a state law conflicts with the FAA, the FAA prevails [33].

It should be noted that the FAA was enacted prior to the adoption of the UNCITRAL Model Law on International Commercial Arbitration. Consequently, the law governing international arbitration in the USA is not based on the UNCITRAL Model Law. However, states such as California, Texas, and Florida have based their arbitration laws on the Model Law. Although the FAA is not based on the Model Law, it nevertheless shares the Model Law's presumption in favor of arbitration. Nevertheless, there are several significant differences between the FAA and the Model Law. For example, while the Model Law allows the arbitral tribunal to rule on its own jurisdiction, the FAA says nothing on this matter. However, the US Supreme Court has held that when parties agree to submit the issue of arbitrability to an arbitral tribunal, including when they incorporate institutional rules that delegate the issue of arbitrability to the tribunal, a court cannot override the parties' agreement [34].

The following arbitration institutions operate in the USA:

American Arbitration Association;
Judicial Arbitration and Mediation Services (JAMS);
International Institute for Conflict Prevention and Resolution;
Inter-American Commercial Arbitration Commission;
International Centre for Settlement of Investment Disputes.

In addition to the above institutions, the International Chamber of Commerce, headquartered in Paris, administers arbitration proceedings in the USA through its International Court of Arbitration.

There are also various arbitration centers based in the USA. For example, the New York International Arbitration Center (NYIAC) is located in New York. NYIAC does not administer cases and does not have its own rules. Unless the parties agree on other rules, cases at NYIAC are governed by the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).

Thus, in the United States, there are no specialized arbitration courts at the federal level. However, federal courts located in Washington, D.C. typically hear more international arbitration cases than other courts. Additionally, two states, New York and Florida, have specific provisions for hearing international arbitration cases. New York state courts began assigning all international arbitration-related cases filed in their commercial division to a dedicated judge. Also, in the state of Florida, an International Commercial Arbitration Court was created within the Civil Division of the Court of the Eleventh Judicial Circuit, which hears international commercial arbitration cases.

Currently, questions arise as to whether arbitrators can be properly appointed and whether a truly independent panel of arbitrators will be formed. European and American arbitration institutions have lost popularity with Russian business. The possibility of dispute resolution remains only in Asian arbitration institutions.

There is a practice of concluding so-called "waterfall arbitration clauses", in which several arbitration institutions are listed in order of priority, so that in the event of a dispute, arbitration is referred to the highest-ranking institution on the list. If such an arbitration institution cannot settle the dispute for any reason, the parties agree to refer it to the second arbitration institution on the list, and so on [35].

As a possible venue for transferring a dispute between a Russian and an American company, one can consider arbitration in Hong Kong (Hong Kong International Arbitration Centre, HKIAC), in Singapore (Singapore International Arbitration Centre, SIAC), as well as Dubai arbitration (Dubai International Arbitration Centre, DIAC). Thus, in 2023, parties from Russia entered the top 10 parties participating in HKIAC for the first time, and 11 applicants from Russia preferred SIAC [36].

In the current conditions, bilateral trade and economic relations are at a historically low level, although separate areas for interaction remain, which must be preserved and maintained taking into account the long-term perspective.

______________________

References

[1] United States: International Trade. Legal500 website.

[2] The Federal Customs Service disclosed the volume of Russia's foreign trade in 2023. What trends are currently characteristic of the import and export of goods? November 14, 2023. RBC website.

[3] Trade between Russia and the USA in 2021. Foreign Trade of Russia website.

[4] Bagdasaryan K.M. The Impact of Sanctions on the Prospects of Russian-American Trade and Economic Relations. Journal "Economic Development of Russia", 2023, Vol. 30, No. 1.

[5] Trade between Russia and the USA in 2021. "Foreign Trade of Russia" website.

[6] Ibid.

[7] United States: International Trade. Legal500" website.

[8] Ibid.

[9] GovInfo website of the US Government Publishing Office.

[10] Column 1 / Column 2 / MFN / NTR - Countries that does business with the United States. U.S. Department of Homeland Security website.

[11] Bagdasaryan K.M. The Impact of Sanctions on the Prospects of Russian-American Trade and Economic Relations. Journal "Economic Development of Russia", 2023, Vol. 30, No. 1. [12] Ibid.

[13] The USA disclosed the main item of import from Russia. February 8, 2024. "RBC" website.

[14] Trade turnover between Russia and the USA grew one and a half times. July 8, 2024. "ALFA Soft" website.

[15] Ibid.

[16] GovInfo website of the US Government Publishing Office.

[17] United States: Corporate Governance. "Legal500" website.

[18] Top 3 Ways to Perform a Business Registration Lookup. "Middesk" website.

[19] How Do I Use EDGAR? U.S. Securities and Exchange Commission website.

[20] Getting Info About Companies. U.S. Securities and Exchange Commission website.

[21] Wex Legal Dictionary and Encyclopedia. "Legal Information Institute" website.

[22] A Comprehensive Guide to Crafting a Supply Agreement: Clauses Explained. "Legittai" website.

[23] Which banks fell under sanctions in 2024, and which did not. And what has changed for customers? November 25, 2024. "T-Zh" website.

[24] How to receive payments from the USA for Russian business in 2024. October 22, 2024. "VC.ru" website.

[25] Foreign Trade Payment Agent: how to choose, execute a transaction, and reflect in accounting. "Spravochnaya.Tochka" website.

[26] Sanctions against Russia: frequently asked questions. SCHNEIDER GROUP website.

[27] Mata O. Legality of the Choice of Applicable Law by Contract Parties: US Experience. Journal "Russian Justice", 2022, No. 8.

[28] Information from the FindLaw for Legal Professionals website.

[29] Katrovskaya E.A. Sanctions Challenges in the Sphere of International Commercial Arbitration in 2022 and Ways to Overcome Them. Journal "International Law", 2023, No. 1.

[30] Wex Legal Dictionary and Encyclopedia. "Legal Information Institute" website.

[31] United States: International Arbitration. "Legal500" website.

[32] Ibid.

[33] Ibid.

[34] Ibid.

[35] Zykov R. How Sanctions Can Change International Arbitration. "MANSORS" website.

[36] Disputes with foreign counterparties: problems and their solutions. June 5, 2024. Pravo.Ru website.