There are cases where legal procedure quietly becomes political, not because anyone explicitly intends it to be so, but because the surrounding context makes it unavoidable. The ongoing investment arbitration brought by Michail Fridman against Luxembourg appears to be drifting into precisely that territory.
According to information circulating among legal practitioners familiar with EU-level arbitration, the tribunal has at this point resolved one of the most sensitive preliminary issues: the seat of arbitration and the venue for future hearings. The tribunal decided in favour of Hong Kong (pictured), rejecting Luxembourg’s preference for Singapore and setting aside Dubai, which had been discussed as a possible compromise.
On paper, the decision can be defended as technical. Hong Kong is a globally recognised arbitration hub, with a sophisticated legal profession and a long history of handling complex commercial disputes. Yet in practice, the choice raises questions that go well beyond venue logistics—particularly given the political and sanctions context surrounding this case.
When procedure meets geopolitics
The arbitration reportedly involves claims approaching €16 billion, making it one of the most financially significant investor-state disputes currently touching the European Union. It also sits uncomfortably alongside EU sanctions policy, given Fridman’s status as a sanctioned Russian businessman and the broader context of the EU’s confrontation with Moscow following Russia’s invasion of Ukraine.
Against that backdrop, the decision to locate proceedings in Hong Kong is likely to be scrutinised closely in Brussels and other EU capitals. While Hong Kong retains its own legal system under the “one country, two systems” framework, arbitration awards and judicial oversight ultimately fall within the sovereignty of China. That reality cannot be divorced from Beijing’s current geopolitical alignment, including its notably non-confrontational stance towards Russia.
From a European perspective, the idea that a dispute touching core EU sanctions policy could be procedurally anchored in a jurisdiction under Chinese sovereignty is, at the very least, uncomfortable.
The seat decision inevitably feeds a narrative that Luxembourg—and by extension the EU—has lost control of a dispute with profound political implications.
Why Brussels may be paying attention
For Luxembourg, the case is about exposure to a potentially enormous financial liability. For the EU, it is about something more structural: whether disputes entangled with sanctions and foreign policy can safely migrate into jurisdictions whose geopolitical interests do not align with Europe’s own.
If this arbitration proceeds to a final award under Hong Kong’s legal supervision, questions may arise about enforcement within the EU, political acceptance of the outcome, and the precedent it sets for future sanctions-related disputes.
In that sense, the choice of Hong Kong may turn out to be more consequential than many of the legal arguments still to come.
Not because of what it guarantees, but because of what it symbolises: a major EU-linked sanctions dispute, procedurally anchored in a jurisdiction shaped by global power politics well beyond Europe’s control.
