New Bill Shields U.S. Entities from Foreign Lawsuits Linked to Sanctions Compliance, Even Retroactively

The “Protecting Americans from Russian Litigation Act of 2025” (SEC. 1) is a piece of legislation designed to draw a hard line in the sand regarding U.S. sanctions policy. Essentially, this bill aims to make sure that if a U.S. person or company messes up a contract because they were trying to follow U.S. sanctions or export controls, they can’t be penalized for it in a U.S. court (SEC. 2).

The Policy: No Penalties for Compliance

The core policy here is two-fold: First, the U.S. government wants to protect its people from being disadvantaged when they act in good faith to comply with sanctions. Second, and this is the big one, it wants to ensure that foreign persons cannot use the U.S. court system to get compensation related to these compliance efforts (SEC. 2). Think of it like this: If a U.S. supplier had a contract with a foreign company, and the supplier had to break that contract because the foreign company got hit with U.S. sanctions, this bill says the foreign company can’t sue the supplier in a foreign court, win a judgment, and then come to a U.S. court to try and collect.

Blocking the Courthouse Door

This bill inserts a new section into federal law (Section 1660 of Title 28) that directly limits what U.S. courts can do. Specifically, no one can bring a civil action in any U.S. federal or state court to enforce a foreign judgment or arbitral award if that claim is based on conduct resulting from actions taken to comply with U.S. sanctions (SEC. 3). If a foreign court, say in Paris or Dubai, issues a ruling against a U.S. company for breaking a contract due to sanctions, that ruling becomes unenforceable here.

More importantly, if someone tries to enforce one of these blocked foreign judgments in a U.S. court, the defendant (the U.S. person or company) can immediately have the case moved to a U.S. district court, and the judge must dismiss the action (SEC. 3). This is a massive shield for U.S. entities involved in international trade, giving them a clear legal defense against sanctions-related litigation originating abroad. For the busy person, this means less legal risk for American companies trying to navigate complex global trade rules.

The Real-World Impact and the Catch

While this bill provides crucial protection for U.S. entities trying to do the right thing under U.S. law, it also creates significant uncertainty for foreign businesses. Imagine a small manufacturing firm in Germany that had a valid contract with a U.S. tech company. Sanctions hit the German firm’s customer base, forcing the U.S. tech company to back out. The German firm wins a legitimate arbitration award for breach of contract in London. Under this bill, if the U.S. tech company refuses to pay, the German firm cannot enforce that award in the U.S., even if the U.S. company has assets here. The U.S. court system is effectively closed to them for this specific type of claim.

The biggest catch? This new rule applies to civil actions that are already pending in U.S. courts on the day the bill is enacted (SEC. 3). This retroactive application means that ongoing lawsuits seeking to enforce foreign judgments related to sanctions could be dismissed immediately, changing the rules of the game mid-litigation. This is a powerful move that could wipe out years of legal work for parties holding foreign judgments against U.S. entities. The bill does make clear exceptions for victims of terrorism and those enforcing contracts that specifically chose U.S. courts for dispute resolution, but for everyone else holding a foreign award related to sanctions compliance, the door to U.S. enforcement is slamming shut.