Representing a Sanctioned Party in International Arbitration: A Practical Guide

This page is advertising material. Published August 11, 2026; stated law current as at that date. It is general information about a licensing regime that changes frequently — it is not legal advice, does not address any particular situation, and does not create an attorney-client relationship. Submitting the contact form does not create one either. Verify current requirements before acting.

Sanctions and international arbitration now collide often enough that most cross-border practitioners will meet the problem at least once. Yet the most widely repeated statement about it — that U.S. counsel can generally represent a designated party in arbitration under an existing general license — is wrong, and acting on it can create exposure before a matter even begins.

This guide sets out what the licensing regimes actually say, on both sides of the Atlantic.

The Threshold Question: Is the Representation Authorized at All?

Under U.S. law, the property and interests in property of blocked persons are frozen, and U.S. persons — wherever located — are prohibited from dealing in that property absent authorization/license from the Office of Foreign Assets Control. Providing legal services is a dealing.

OFAC’s sanctions programs contain a near-uniform “provision of certain legal services” section. It authorizes, among other things, representation of persons made parties to legal, arbitration or administrative proceedings before any U.S. federal, state or local court or agency, and the initiation and conduct of such proceedings.

The operative words are the last seven. The ICC, the LCIA, the ICDR, DIAC and every other arbitral institution is not a U.S. court or agency. OFAC has taken the position — stated expressly in a 2016 interpretive letter under the Ukraine program — that the legal services authorization does not extend to private commercial arbitration.

The dividing line is therefore the forum, not the seat. A U.S.-seated ICDR arbitration is no more covered by the general license than a Dubai-seated DIAC arbitration. Anyone advising on the basis that a U.S. seat cures the problem has misread the regulation.

The practical consequences, absent a specific license:

•     U.S. persons generally may not serve as arbitrator in a commercial arbitration involving a blocked person

•     U.S. persons generally may not represent a blocked person as counsel in such a proceeding

•     U.S. arbitral institutions generally cannot administer such a case

•     Non-U.S. arbitrators and institutions can still be caught where there is a U.S. nexus — fees paid in dollars through the U.S. banking system, a U.S. seat, or U.S. persons involved in administration

•     The first three restrictions reach non-U.S. lawyers working in foreign offices of U.S.-incorporated firms

This is not a fringe reading of the rules. In November 2023, a coalition including the U.S. Chamber of Commerce, USCIB/ICC-USA, SICANA, the New York International Arbitration Center, the AAA/ICDR and two New York City Bar committees formally petitioned OFAC to issue a dedicated general license putting arbitration on parity with litigation. That petition remains outstanding. The gap it identified is still open.

What Is Generally Authorized

Three things are worth separating out, because the answer differs for each.

Advice on U.S. sanctions law itself. The general licenses authorize legal advice and counselling on the requirements of, and compliance with, U.S. law — provided the advice is not given to facilitate a prohibited transaction. This is usually the only lane available for a first conversation with a designated prospective client.

Challenging a designation. Representation before U.S. agencies and courts concerning the imposition, administration or enforcement of sanctions is authorized. Delisting petitions and license applications sit here.

Acting for a non-sanctioned party against an SDN. This generally does not require a license. But — and this is where matters go wrong — entering into a settlement with, or enforcing an award against, the blocked party does.

Payment of Fees Is a Separate Authorization

Even where the underlying services are authorized, payment is governed by its own provision, in a different section of the regulations. It permits receipt of fees and reimbursement of expenses from funds originating outside the United States, provided the funds do not come from a U.S. source, from any source within the possession or control of a U.S. person, or from any other blocked person. Reporting to OFAC is required.

Two points routinely missed:

The fee authorization is derivative. It authorizes payment for services that are themselves authorized. If the underlying arbitration work falls outside the general license, structuring the funds correctly does not rescue the engagement.

There is a separate route for designation challenges. A U.S. person seeking administrative reconsideration or judicial review of their own designation may apply for a specific license releasing a limited amount of blocked funds to pay legal fees, where alternative funding is not available. OFAC has published guidance on this.

Engagement letters in these matters need to be drafted around the licensing position, not retrofitted to it.

Settlement and Enforcement: The Step Everyone Postpones

Entry into a settlement agreement, or enforcement of any lien, judgment, arbitral award, decree or other order through execution, garnishment or other judicial process purporting to transfer or affect blocked property, is prohibited unless licensed.

The contrast worth remembering: a specific license is not required to commence proceedings against a designated person, or for a U.S. court to hear the case. It is required to settle or to enforce against blocked property. Winning is the easy part.

Build the licensing timeline into the procedural calendar at the outset. Applications take months, and the application is not usually made until enforcement is already underway.

The EU Layer Is Not a Mirror Image

For parties with European exposure, the EU framework is structurally different, not merely parallel.

A ban on legal advisory services. Article 5n(2) of Regulation 833/2014 prohibits the provision of legal advisory services, directly or indirectly, to the Russian government or to legal persons established in Russia. Carve-outs exist at Article 5n(5) for services strictly necessary to exercise the right of defense and the right to an effective remedy, and at 5n(6) for services strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State, or for recognition or enforcement of a judgment or award rendered in a Member State.

That geographic limitation matters enormously for Gulf-seated work. A DIAC or LCIA arbitration is not a proceeding in a Member State, and an award rendered there is not rendered in a Member State. The 5n(6) carve-out does not obviously reach it.

Fundamental rights shaped the carve-outs; they did not defeat the ban. Article 6 ECHR and Article 47 of the EU Charter inform how these provisions are read. But on 2 October 2024 the General Court dismissed challenges brought by the French ACE and Belgian and Paris bar associations and upheld the validity of Article 5n(2), finding that the prohibition did not call the right to be advised by a lawyer into question. Any advice premised on fundamental rights overriding the regime is optimistic.

The no-claims clause. Article 11 of Regulation 833/2014 prohibits the satisfaction of claims by Russian persons in connection with any contract whose performance has been affected by the sanctions. The EU’s 18th package (Regulation (EU) 2025/1494) extended it to arbitration including investor-state proceedings, added an obligation on Member States to object to recognition of such awards, and created a cause of action for Member States to recover litigation costs from sanctioned investors and those who own or control them.

This is live law. In NV Reibel v JSC VO Stankoimport (C-802/24), Advocate General Biondi delivered an Opinion on 26 February 2026 concluding that claims caught by Article 11(1) remain capable of being submitted to arbitration, but that the prohibition on satisfying them forms part of EU public policy which national courts must apply when reviewing awards. The Court’s judgment is pending. German courts have already refused enforcement of awards requiring performance contrary to Article 11.

The UK Regime Runs on a Clock

The UK operates its own designations and licensing through the Office of Financial Sanctions Implementation, and its general licenses are time-limited — replaced rather than renewed, with terms and caps reset each cycle.

As at the date of this article, the relevant instruments are:

•     Legal Services General License INT/2026/9512597, issued 24 April 2026, in effect 29 April 2026 to 28 October 2026, permitting UK firms and counsel to receive payment from designated persons subject to fee and expense caps and reporting

•     Arbitration Costs General License INT/2025/5787748, issued 28 March 2025, permitting payments to arbitrators and arbitral institutions up to £500,000 per arbitration, with reporting to HM Treasury within 14 days of receipt. It replaced the earlier LCIA-specific license

Anyone relying on these must consult the current instrument. Terms differ between successive versions, and clearance under U.S. rules confers nothing under UK or EU law.

The Russian Counter-Move

No practical guide is complete without it. Articles 248.1 and 248.2 of the Russian Arbitrazh Procedure Code, in force since June 2020 and known as the Lugovoy Law, give Russian commercial courts exclusive jurisdiction over disputes involving sanctioned persons even where the parties agreed to foreign arbitration, and allow those courts to enjoin the commencement or continuation of foreign proceedings — typically backed by substantial penalties and seizure of the foreign party’s Russian assets.

This produced the anti-suit litigation in UniCredit v RusChemAlliance before the English courts. If your counterparty has Russian assets or a Russian nexus, jurisdictional strategy has to be planned alongside the licensing strategy, not after it.

One More Trap: The 50% Rule

Entities owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more SDNs are themselves blocked as a matter of law — without appearing on any list. So are entities owned or controlled by certain sanctioned governments. Screening a counterparty’s name against the SDN List is not diligence. Ownership analysis is.

Worth noting alongside this: the list is not only growing. In May 2026 OFAC removed a batch of entries as part of a stated effort to retire outdated designations, on the reasoning that an oversized list dilutes screening attention. For some parties, delisting is now a more realistic route than it was.

Practical Steps

1.   Confirm designation status and ownership structure — the 50% Rule, not just the list

2.   Identify every applicable regime: U.S., EU, UK, and the law of the seat

3.   Do not assume a general license covers the arbitration. For private commercial arbitration, plan on a specific license application

4.   Scope any initial consultation to U.S. sanctions compliance advice until the licensing position is resolved

5.   Structure fees around non-blocked, non-U.S.-sourced funds, and diaries the reporting obligations

6.   Build licensing lead times into the procedural timetable — especially for settlement and enforcement

7.   Assess jurisdictional risk in the counterparty’s home forum, not only at the seat

Schedule a Consultation

Sanctioned-party arbitration sits at the intersection of U.S. sanctions law and international dispute resolution, and the licensing analysis has to be right before the merits matter.

The Law Office of Sean Ekhlas LLC handles OFAC license applications, delisting petitions and blocked asset matters before the U.S. Treasury, and advises on international arbitration matters — list only institutions before which the firm has actually appeared: ICC / ICSID / LCIA / DIAC. Attorney Sean Ekhlas is a Fellow of the Chartered Institute of Arbitrators and is listed as an arbitrator at the Dubai International Arbitration Centre.

The firm works with Nasser Malalla Advocates & Legal Consultants, a Dubai firm providing multilingual representation across the region — describe the actual arrangement and retain documentation before using “formal collaboration” or “affiliated”. The Law Office of Sean Ekhlas LLC does not practice UAE law.

If sanctions exposure is complicating your arbitration, contact us.

The Law Office of Sean Ekhlas located in Washington, DC at 20 F Street NW, 7^th Floor, Washington DC, 20001, and Atlanta, GA at One Alliance Center 3500 Lenox Road NE, Suite 1500, Atlanta, GA 30326. Responsible attorney: Sean Ekhlas. Admitted in the District of Columbia and Georgia, legal services in other jurisdictions are limited to matters of federal law and international arbitration, or are provided in association with locally admitted counsel.