Settling with a Russian Counterparty in 2026: Payment Routes, Releases, Approvals and Enforceability
Read how to structure lawful, enforceable and commercially effective settlements under Russia’s 2026 payment and counter-sanctions regime.
Law and practice as at 24 July 2026
Law and practice as at 24 July 2026
A settlement involving a Russian counterparty is no longer merely an agreement on amount, timing and release. In 2026 it must align four elements:
The key distinction is between legal discharge under Russian law and unrestricted receipt of funds. A payment to a restricted Russian account may discharge the debtor even though the foreign creditor cannot freely transfer or use the money. Conversely, an offshore payment, set-off or non-cash arrangement may appear commercially satisfactory but be invalid in Russia if it circumvents a mandatory payment regime.
The Russian Supreme Court’s review approved on 17 June 2026 confirms that payments violating temporary economic measures may be void and that Russian courts must refuse to approve settlements designed to bypass them.
- a valid settlement contract;
- a lawful and operational payment route;
- effective termination of obligations and claims; and
- an enforcement structure that works in Russia.
The key distinction is between legal discharge under Russian law and unrestricted receipt of funds. A payment to a restricted Russian account may discharge the debtor even though the foreign creditor cannot freely transfer or use the money. Conversely, an offshore payment, set-off or non-cash arrangement may appear commercially satisfactory but be invalid in Russia if it circumvents a mandatory payment regime.
The Russian Supreme Court’s review approved on 17 June 2026 confirms that payments violating temporary economic measures may be void and that Russian courts must refuse to approve settlements designed to bypass them.
1. Choosing the settlement structure
The principal options are:
Private settlement agreement
This offers maximum flexibility for conditions precedent, staged payments, approvals, releases, confidentiality and coordination of proceedings in several jurisdictions.
Its weakness is enforcement: after default, the creditor will normally have to bring a new contractual claim under the settlement’s dispute-resolution clause.
Russian court-approved settlement
A Russian judicial settlement, or mirovoye soglashenie, must be written and signed by the parties or representatives with specific authority. It should clearly state the obligations, amounts and performance dates.
Once approved, the settlement is included in the court order, the proceedings terminate, and the order becomes immediately enforceable. If the debtor defaults, the creditor may obtain a writ of execution.
The disadvantages are judicial scrutiny, reduced confidentiality and the fact that the original proceedings end upon approval—not upon payment.
Consent arbitral award
An arbitral tribunal may record the settlement in an award on agreed terms. This can be useful where assets are located in several jurisdictions.
However, a consent award does not override Russian mandatory rules. Russian courts may refuse enforcement where the payment mechanism conflicts with Russian counter-sanctions law or public policy.
Foreign consent judgment
A foreign judgment is not automatically enforceable against Russian assets. Recognition in Russia remains subject to jurisdictional, procedural and public-policy objections, including the existence of parallel Russian proceedings.
The settlement format should therefore be selected before the parties finalise payment and release provisions.
Private settlement agreement
This offers maximum flexibility for conditions precedent, staged payments, approvals, releases, confidentiality and coordination of proceedings in several jurisdictions.
Its weakness is enforcement: after default, the creditor will normally have to bring a new contractual claim under the settlement’s dispute-resolution clause.
Russian court-approved settlement
A Russian judicial settlement, or mirovoye soglashenie, must be written and signed by the parties or representatives with specific authority. It should clearly state the obligations, amounts and performance dates.
Once approved, the settlement is included in the court order, the proceedings terminate, and the order becomes immediately enforceable. If the debtor defaults, the creditor may obtain a writ of execution.
The disadvantages are judicial scrutiny, reduced confidentiality and the fact that the original proceedings end upon approval—not upon payment.
Consent arbitral award
An arbitral tribunal may record the settlement in an award on agreed terms. This can be useful where assets are located in several jurisdictions.
However, a consent award does not override Russian mandatory rules. Russian courts may refuse enforcement where the payment mechanism conflicts with Russian counter-sanctions law or public policy.
Foreign consent judgment
A foreign judgment is not automatically enforceable against Russian assets. Recognition in Russia remains subject to jurisdictional, procedural and public-policy objections, including the existence of parallel Russian proceedings.
The settlement format should therefore be selected before the parties finalise payment and release provisions.
2. Governing law
Russian conflict-of-laws rules generally respect party autonomy. The parties may choose foreign law for the settlement and may apply different laws to different parts of the transaction.
That choice cannot exclude Russian overriding mandatory rules concerning:
A foreign-law settlement may therefore require a Russian-law schedule dealing with debt termination, security releases, Russian procedural filings and registered assets.
The agreement should identify separately the law governing:
It should also state whether the original jurisdiction or arbitration clause survives for enforcement of the settlement or is replaced.
That choice cannot exclude Russian overriding mandatory rules concerning:
- temporary economic measures and counter-sanctions;
- Russian corporate capacity and approvals;
- payments through restricted accounts;
- transfers and releases of Russian registered assets;
- Russian insolvency and enforcement;
- Russian court settlements; and
- Articles 248.1 and 248.2 of the Arbitrazh Procedure Code.
A foreign-law settlement may therefore require a Russian-law schedule dealing with debt termination, security releases, Russian procedural filings and registered assets.
The agreement should identify separately the law governing:
- the settlement;
- the original obligations and their termination;
- the release and waiver;
- security and asset transfers; and
- the dispute-resolution clause.
It should also state whether the original jurisdiction or arbitration clause survives for enforcement of the settlement or is replaced.
3. Signatory authority and corporate approvals
Foreign counsel should not rely solely on a person’s title as “General Director”.
For a Russian company, the basic authority package should include:
A representative signing a Russian judicial settlement must have express authority to conclude a settlement. General litigation authority is insufficient.
Corporate approval must cover the entire settlement package, including:
For a Russian limited liability company, a transaction outside the ordinary course may qualify as a major transaction where its value reaches the statutory threshold, generally 25 per cent of the company’s balance-sheet assets. Related-party approval rules may also apply.
A contractual representation that all approvals have been obtained is not a substitute for reviewing the resolutions themselves. The resolutions should expressly approve the payment route, currency, restricted-account mechanics, releases and procedural filings.
A party also cannot ordinarily release claims belonging to a non-signatory affiliate merely by defining it as a “Releasing Party”. The affiliate should sign, accede or validly authorise another person to act for it.
For a Russian company, the basic authority package should include:
- a recent EGRUL ("ЕГРЮЛ") extract;
- the current charter;
- the appointment decision;
- evidence of any joint-signature requirements;
- the relevant power of attorney; and
- board or shareholder resolutions.
A representative signing a Russian judicial settlement must have express authority to conclude a settlement. General litigation authority is insufficient.
Corporate approval must cover the entire settlement package, including:
- the settlement amount;
- forgiveness or acknowledgement of debt;
- provision or release of security;
- transfer of assets or shares;
- termination of proceedings;
- indemnities; and
- non-cash consideration.
For a Russian limited liability company, a transaction outside the ordinary course may qualify as a major transaction where its value reaches the statutory threshold, generally 25 per cent of the company’s balance-sheet assets. Related-party approval rules may also apply.
A contractual representation that all approvals have been obtained is not a substitute for reviewing the resolutions themselves. The resolutions should expressly approve the payment route, currency, restricted-account mechanics, releases and procedural filings.
A party also cannot ordinarily release claims belonging to a non-signatory affiliate merely by defining it as a “Releasing Party”. The affiliate should sign, accede or validly authorise another person to act for it.
4. Payment routes, Type C accounts and Russian approvals
Classify the obligation first
Not every payment by a Russian company to a person connected with an “unfriendly” jurisdiction must be made to a Type C account.
Presidential Decree No. 95 principally covers specified obligations under loans, credits, financial instruments and bank deposits owed to certain foreign creditors, generally where monthly performance exceeds RUB 10 million or its foreign-currency equivalent.
An ordinary trade debt does not fall within Decree No. 95 solely because the creditor is from an “unfriendly” jurisdiction. Other restrictions may nevertheless apply depending on:
Russian counsel should provide a written regulatory classification before the payment route is agreed.
Type C accounts
A Type C account is a restricted rouble account opened in the foreign creditor’s name. Credits and withdrawals are limited by Russian regulation.
A compliant Type C payment may discharge the Russian debtor even though the foreign creditor cannot transfer the money offshore or use it as unrestricted liquidity.
The settlement should therefore distinguish:
Russian-Law Discharge: the point at which the obligation is treated as performed or extinguished under mandatory Russian law;
Unrestricted Receipt: irrevocable receipt of cleared funds in an account from which the creditor may lawfully transfer and use them without Type C, Type O or equivalent restrictions.
The parties may agree that wider releases become effective only upon Unrestricted Receipt. They cannot, however, contractually preserve the original debt if mandatory Russian law already treats it as discharged following a Type C credit.
Other Russian regimes
Depending on the transaction, the parties may also need to consider:
The required permit should be described precisely. The agreement should identify:
A bank’s willingness to process a payment does not replace a government or Central Bank approval. Equally, a Russian permission does not guarantee that foreign correspondent banks will execute the transfer.
Set-off and non-cash performance
Set-off, novation, accord and satisfaction, assignment, payment through an agent or transfer of assets are not automatic alternatives to a restricted account.
Where the underlying obligation is covered by a mandatory payment regime, providing other value may also require permission. Relabelling the debt, splitting the payment or interposing an affiliate may be treated as circumvention.
Not every payment by a Russian company to a person connected with an “unfriendly” jurisdiction must be made to a Type C account.
Presidential Decree No. 95 principally covers specified obligations under loans, credits, financial instruments and bank deposits owed to certain foreign creditors, generally where monthly performance exceeds RUB 10 million or its foreign-currency equivalent.
An ordinary trade debt does not fall within Decree No. 95 solely because the creditor is from an “unfriendly” jurisdiction. Other restrictions may nevertheless apply depending on:
- the nature of the debt;
- the creditor’s ownership and control;
- the underlying transaction;
- the assets involved;
- assignments of the claim; and
- the aggregate monthly amount.
Russian counsel should provide a written regulatory classification before the payment route is agreed.
Type C accounts
A Type C account is a restricted rouble account opened in the foreign creditor’s name. Credits and withdrawals are limited by Russian regulation.
A compliant Type C payment may discharge the Russian debtor even though the foreign creditor cannot transfer the money offshore or use it as unrestricted liquidity.
The settlement should therefore distinguish:
Russian-Law Discharge: the point at which the obligation is treated as performed or extinguished under mandatory Russian law;
Unrestricted Receipt: irrevocable receipt of cleared funds in an account from which the creditor may lawfully transfer and use them without Type C, Type O or equivalent restrictions.
The parties may agree that wider releases become effective only upon Unrestricted Receipt. They cannot, however, contractually preserve the original debt if mandatory Russian law already treats it as discharged following a Type C credit.
Other Russian regimes
Depending on the transaction, the parties may also need to consider:
- Type O accounts for certain intellectual-property payments under Decree No. 322;
- special procedures for dividends and distributions;
- permissions for certain securities, real-estate and loan transactions;
- permissions for transfers of interests in Russian limited liability companies;
- restrictions affecting strategic, financial or energy-sector assets; and
- prohibitions involving persons on Russian counter-sanctions lists.
The required permit should be described precisely. The agreement should identify:
- the issuing authority;
- the relevant legal basis;
- the applicant;
- the amount and currency;
- the payer and recipient;
- the bank accounts;
- the permitted payment period; and
- any conditions attached to the permission.
A bank’s willingness to process a payment does not replace a government or Central Bank approval. Equally, a Russian permission does not guarantee that foreign correspondent banks will execute the transfer.
Set-off and non-cash performance
Set-off, novation, accord and satisfaction, assignment, payment through an agent or transfer of assets are not automatic alternatives to a restricted account.
Where the underlying obligation is covered by a mandatory payment regime, providing other value may also require permission. Relabelling the debt, splitting the payment or interposing an affiliate may be treated as circumvention.
5. Payment currency
Russian monetary obligations are generally expressed in roubles, although the amount may be linked to a foreign currency and paid in the rouble equivalent. Foreign-currency payments remain subject to currency-control and temporary economic restrictions.
The settlement should distinguish:
Type C payments are made in roubles. A settlement should not promise a euro or US-dollar Type C payment.
Payment should not normally be deemed complete merely when the payer’s account is debited. For an unrestricted payment, completion should be linked to irrevocable cleared receipt. For a restricted payment, the agreement should separately define Russian-Law Discharge and Unrestricted Receipt.
The settlement should distinguish:
- currency of account;
- currency of payment;
- exchange-rate source;
- conversion date and time;
- fallback rate;
- bank and correspondent charges;
- withholding tax;
- value date;
- treatment of shortfalls; and
- consequences of a rejected or returned payment.
Type C payments are made in roubles. A settlement should not promise a euro or US-dollar Type C payment.
Payment should not normally be deemed complete merely when the payer’s account is debited. For an unrestricted payment, completion should be linked to irrevocable cleared receipt. For a restricted payment, the agreement should separately define Russian-Law Discharge and Unrestricted Receipt.
6. Release, waiver and termination under Russian law
A common-law release of “all claims, known or unknown, present or future” should not be imported into a Russian-law settlement without adaptation.
Russian law distinguishes between several mechanisms:
A robust settlement will normally combine:
The released claims should be connected to identified contracts, transactions, facts and periods. The agreement should specify whether the release covers:
Claims to enforce the settlement, confidentiality obligations and other continuing obligations should be expressly preserved.
Russian law prohibits gifts between commercial organisations. Where debt is forgiven, the agreement should record the reciprocal concessions and commercial benefit received by the creditor and confirm that there is no donative intent.
Withdrawal of a Russian claim does not itself forgive the underlying debt. Substantive termination and procedural withdrawal must be addressed separately.
Russian law distinguishes between several mechanisms:
- performance;
- termination by agreement;
- accord and satisfaction;
- set-off;
- novation;
- forgiveness of debt; and
- waiver of the exercise of an accrued contractual right.
A robust settlement will normally combine:
- termination of identified obligations by agreement;
- express forgiveness of any remaining identified debt;
- waiver of specified accrued contractual rights;
- a covenant not to sue on released claims; and
- procedural steps terminating pending proceedings.
The released claims should be connected to identified contracts, transactions, facts and periods. The agreement should specify whether the release covers:
- principal and interest;
- penalties and damages;
- restitution and unjust enrichment;
- costs and legal fees;
- guarantees and security; and
- claims against directors, employees or affiliates.
Claims to enforce the settlement, confidentiality obligations and other continuing obligations should be expressly preserved.
Russian law prohibits gifts between commercial organisations. Where debt is forgiven, the agreement should record the reciprocal concessions and commercial benefit received by the creditor and confirm that there is no donative intent.
Withdrawal of a Russian claim does not itself forgive the underlying debt. Substantive termination and procedural withdrawal must be addressed separately.
7. Russian judicial settlements and confidentiality
A Russian court will refuse to approve a settlement that violates mandatory law or prejudices third parties. It cannot simply rewrite the parties’ arrangement.
The court case terminates upon approval. If payment is due later and the debtor defaults, the creditor enforces the settlement order rather than resuming the original merits proceedings.
The operative terms should therefore be objectively enforceable. Vague formulations such as “payment when sanctions permit” or “best efforts to obtain approvals” may be unsuitable for a court order.
Where a permit is still outstanding, the parties may consider:
Confidentiality is also limited. The Russian approval order will normally reproduce the settlement terms and may become publicly accessible. A private settlement can remain confidential, but it should allow disclosures to courts, regulators, tax authorities, banks, auditors, insurers and professional advisers.
The court case terminates upon approval. If payment is due later and the debtor defaults, the creditor enforces the settlement order rather than resuming the original merits proceedings.
The operative terms should therefore be objectively enforceable. Vague formulations such as “payment when sanctions permit” or “best efforts to obtain approvals” may be unsuitable for a court order.
Where a permit is still outstanding, the parties may consider:
- obtaining it before seeking court approval;
- using a lawful restricted-account route;
- keeping detailed commercial terms in a separate private agreement; or
- postponing approval until the route is sufficiently certain.
Confidentiality is also limited. The Russian approval order will normally reproduce the settlement terms and may become publicly accessible. A private settlement can remain confidential, but it should allow disclosures to courts, regulators, tax authorities, banks, auditors, insurers and professional advisers.
8. Tax consequences
Tax treatment depends on the character of each payment, not the label “settlement amount”.
The agreement should allocate the consideration among, where relevant:
Written-off accounts payable may constitute taxable non-operating income for a Russian debtor. For the creditor, voluntary forgiveness does not automatically make the debt tax-deductible.
Payments to foreign organisations must be analysed for Russian withholding tax. Historic treaty rates should not be assumed to remain available because Russia has suspended material provisions of numerous double-taxation treaties.
The tax clause should address:
A Type C payment may produce Russian accounting or tax consequences before the creditor obtains unrestricted access to the funds.
The agreement should allocate the consideration among, where relevant:
- principal;
- interest and penalties;
- damages;
- payment for goods or services;
- royalties;
- dividends;
- asset-transfer consideration; and
- legal-cost reimbursement.
Written-off accounts payable may constitute taxable non-operating income for a Russian debtor. For the creditor, voluntary forgiveness does not automatically make the debt tax-deductible.
Payments to foreign organisations must be analysed for Russian withholding tax. Historic treaty rates should not be assumed to remain available because Russia has suspended material provisions of numerous double-taxation treaties.
The tax clause should address:
- VAT;
- permitted withholding;
- any gross-up;
- evidence of tax payment;
- tax-residence documents;
- invoices;
- allocation of the settlement amount; and
- cooperation during tax audits.
A Type C payment may produce Russian accounting or tax consequences before the creditor obtains unrestricted access to the funds.
9. Enforcement in Russia and parallel proceedings
A private settlement is enforced as a contract. A Russian judicial settlement provides the most direct route to enforcement against Russian assets.
Consent awards and foreign judgments require recognition or enforcement proceedings and remain subject to Russian public-policy, jurisdictional and procedural objections.
Court approval or an award also does not automatically transfer or release registered Russian assets. Separate filings may still be required for:
Articles 248.1 and 248.2 APCArticles 248.1 and 248.2 of the Russian Arbitrazh Procedure Code form Russia’s sanctions-related jurisdiction and anti-suit regime.
Article 248.1 may give Russian courts exclusive jurisdiction where foreign sanctions create obstacles to access to justice under a foreign jurisdiction or arbitration clause.
Article 248.2 permits a Russian party to seek an injunction restraining foreign litigation or arbitration. Breach may result in a monetary sanction broadly linked to the amount claimed abroad and associated costs.
The settlement should identify every relevant:
It should then establish a clear sequence: signing, approvals, payment, effectiveness of releases, filing of procedural documents, termination of enforcement and lifting of interim measures.
A clause requiring the parties simply to “withdraw all proceedings” is insufficient. The agreement should identify the case numbers, filing party, deadline and agreed form of each procedural document.
Consent awards and foreign judgments require recognition or enforcement proceedings and remain subject to Russian public-policy, jurisdictional and procedural objections.
Court approval or an award also does not automatically transfer or release registered Russian assets. Separate filings may still be required for:
- Russian company interests and shares;
- real estate and mortgages;
- registered pledges;
- intellectual-property rights; and
- other registry changes.
Articles 248.1 and 248.2 APCArticles 248.1 and 248.2 of the Russian Arbitrazh Procedure Code form Russia’s sanctions-related jurisdiction and anti-suit regime.
Article 248.1 may give Russian courts exclusive jurisdiction where foreign sanctions create obstacles to access to justice under a foreign jurisdiction or arbitration clause.
Article 248.2 permits a Russian party to seek an injunction restraining foreign litigation or arbitration. Breach may result in a monetary sanction broadly linked to the amount claimed abroad and associated costs.
The settlement should identify every relevant:
- Russian and foreign court proceeding;
- arbitration;
- Article 248.1 or 248.2 application;
- recognition or enforcement case;
- bailiff file;
- interim measure; and
- security-enforcement action.
It should then establish a clear sequence: signing, approvals, payment, effectiveness of releases, filing of procedural documents, termination of enforcement and lifting of interim measures.
A clause requiring the parties simply to “withdraw all proceedings” is insufficient. The agreement should identify the case numbers, filing party, deadline and agreed form of each procedural document.
10. Wording to agree with Russian counsel
The following concepts should be reflected in the final drafting.
Mandatory rules
“Russian Mandatory Rules” means all overriding provisions of Russian law applicable to the settlement, payment, termination of obligations, transfer or release of assets, and related proceedings, including temporary economic measures and binding decisions of competent Russian authorities.
Discharge and receipt
A credit to a Type C or other restricted account constitutes Russian-Law Discharge only to the extent required by Russian Mandatory Rules. It does not constitute Unrestricted Receipt or trigger the wider release unless expressly stated otherwise.
Approvals
No payment, set-off, novation, asset transfer or other performance requiring Russian regulatory approval shall occur before that approval becomes effective.
The relevant authority, amount, currency, accounts and permitted period should be listed in a schedule.
Release
From the Release Effective Time, the identified obligations terminate by agreement; any remaining identified debt is forgiven; specified accrued contractual rights are waived to the extent permitted by law; and each releasing party undertakes not to commence or continue proceedings concerning the released claims.
The definition of Released Claims should be tied to specified contracts, events and dates.
No circumvention
Nothing in this agreement requires or authorises any party to evade applicable Russian payment, approval or account requirements. No payment shall be divided, redirected, assigned, novated or recharacterised for that purpose.
Proceedings
Within the agreed period after the Release Effective Time, the parties shall file the documents listed in the procedural schedule in relation to each identified court case, arbitration, Article 248 application, enforcement file and interim measure.
Authority
Delivery and satisfactory review of the constitutional documents, register extracts, powers of attorney and corporate approvals listed in the closing schedule are conditions to the Release Effective Time.
Where documents will be used in Russia, the parties should also agree which language prevails and ensure that the private agreement, Russian court settlement, bank instructions and regulatory applications use consistent terms.
Mandatory rules
“Russian Mandatory Rules” means all overriding provisions of Russian law applicable to the settlement, payment, termination of obligations, transfer or release of assets, and related proceedings, including temporary economic measures and binding decisions of competent Russian authorities.
Discharge and receipt
A credit to a Type C or other restricted account constitutes Russian-Law Discharge only to the extent required by Russian Mandatory Rules. It does not constitute Unrestricted Receipt or trigger the wider release unless expressly stated otherwise.
Approvals
No payment, set-off, novation, asset transfer or other performance requiring Russian regulatory approval shall occur before that approval becomes effective.
The relevant authority, amount, currency, accounts and permitted period should be listed in a schedule.
Release
From the Release Effective Time, the identified obligations terminate by agreement; any remaining identified debt is forgiven; specified accrued contractual rights are waived to the extent permitted by law; and each releasing party undertakes not to commence or continue proceedings concerning the released claims.
The definition of Released Claims should be tied to specified contracts, events and dates.
No circumvention
Nothing in this agreement requires or authorises any party to evade applicable Russian payment, approval or account requirements. No payment shall be divided, redirected, assigned, novated or recharacterised for that purpose.
Proceedings
Within the agreed period after the Release Effective Time, the parties shall file the documents listed in the procedural schedule in relation to each identified court case, arbitration, Article 248 application, enforcement file and interim measure.
Authority
Delivery and satisfactory review of the constitutional documents, register extracts, powers of attorney and corporate approvals listed in the closing schedule are conditions to the Release Effective Time.
Where documents will be used in Russia, the parties should also agree which language prevails and ensure that the private agreement, Russian court settlement, bank instructions and regulatory applications use consistent terms.
Conclusion
A settlement with a Russian business partner in 2026 should answer five questions clearly:
Payment mechanics, release language and enforcement architecture cannot be negotiated separately. Unless all three operate consistently under Russian mandatory law, the parties may sign a settlement without achieving the commercial result they intended.
This article provides general information as at 24 July 2026 and does not constitute legal or tax advice.
- Where and in what currency will payment be made?
- Will payment produce Russian-Law Discharge, Unrestricted Receipt, or both?
- Which Russian approvals and corporate authorisations are required?
- How will the obligations, claims and parallel proceedings terminate?
- What instrument can actually be enforced against Russian assets?
Payment mechanics, release language and enforcement architecture cannot be negotiated separately. Unless all three operate consistently under Russian mandatory law, the parties may sign a settlement without achieving the commercial result they intended.
This article provides general information as at 24 July 2026 and does not constitute legal or tax advice.
Need help with a settlement involving a Russian counterparty?
Vasiliy Tarasenko is a Russian-qualified advocate with more than 25 years of legal experience, advising foreign companies, investors and international counsel on cross-border settlements, Russian counter-sanctions regulations, payment and restricted-account arrangements, corporate approvals, litigation, arbitration and enforcement in Russia. Assistance can cover the full settlement process — from regulatory and enforceability analysis to negotiation, drafting, obtaining Russian approvals and coordinating the termination of parallel proceedings.
