Payments to “unfriendly” creditors: courts take a stricter stance

In accordance with Decree of the President of the Russian Federation No. 95 dated 5 March 2022 (“Decree No. 95”), financial obligations to creditors associated with “unfriendly” states (including payments under loan agreements, credit agreements and derivatives, as well as dividend payments) exceeding RUB10 mln (or the equivalent amount in another currency) per month (“Monthly Threshold”) must be performed by crediting a special Type C account opened in the creditor’s name with a Russian bank. Funds credited to such Type C account may only be debited for specified purposes.

Since Decree No. 95 was adopted, it has been common practice to reschedule obligations falling within its scope so that they can be performed in instalments not exceeding the Monthly Threshold. Based on the wording of Decree No. 95, this should allow such obligations to be performed without the funds having to be credited to a Type C account.

Over recent months, we have observed an emerging line of case law under which such performance in instalments may be deemed as a circumvention of Decree No. 95.

For example, in case No. A56-21150/2026, the courts considered a situation where a Russian borrower entered into an agreement with an “unfriendly” bank to repay debt under credit agreements totalling approximately EUR 33,000,000 in instalments not exceeding the Monthly Threshold. The court held that, in the absence of evidence of any other legitimate business purpose for changing the terms on which the Russian borrower repays its debt, the borrower’s actions were in substance aimed solely at circumventing the special procedure established by Decree No. 95 for performing obligations to an “unfriendly” creditor.

A similar position is also reflected in paragraph 4 of Thematic Review No. 8/2026 of the Supreme Court of the Russian Federation on the application by arbitrazh courts of legislation on special economic measures introduced to protect the national interests of the Russian Federation (approved by Resolution of the Presidium of the Supreme Court of the Russian Federation No. 11A/2026 dated 17 June 2026).

Similarly, in case No. A40-75763/2025, the court held that a structure for the payment of dividends (distribution of profits) by a Russian person to “unfriendly” shareholders (participants), under which the payments were artificially split into numerous small tranches, not exceeding the Monthly Threshold, and made on a monthly basis, was aimed at circumventing Decree No. 95.

In our view, this approach to interpreting the regime for performing obligations to “unfriendly” creditors is inconsistent with a literal reading of Decree No. 95. Nevertheless, given that courts have now repeatedly adopted this approach in specific cases, and that a similar position was set out in a review by the Supreme Court of the Russian Federation, Russian persons should take this approach into account when planning the servicing of the relevant debt and the payment of dividends (profit distribution). We also note that, since such approach constitutes an interpretation of the existing provisions of Decree No. 95, courts may also apply them to historical transactions and payments, i. e. those made before the court rulings referred to above were published.