New Bill Shields US Firms from Foreign Lawsuits Over Sanctions Compliance

Ever feel like you’re walking a tightrope trying to follow all the rules, only to find yourself in trouble for doing the right thing? Well, a new piece of legislation, the “Protecting Americans from Russian Litigation Act of 2025,” aims to give U.S. individuals and companies a bit more solid ground when it comes to navigating international sanctions. Essentially, this bill wants to make sure that if you’re following Uncle Sam’s rules on sanctions and export controls, you won’t get dragged through foreign courts and penalized for it.

The Sanctions Shield

At its core, this bill sets up a legal shield for U.S. entities. The policy states the U.S. wants to protect its people and businesses from being penalized for actions (or inactions) taken to comply with U.S. sanctions and export control laws. Think of it this way: if a U.S. company has a contract with a foreign entity but has to pull out because of U.S. sanctions, this bill says that foreign entity can’t then turn around and sue that U.S. company in a foreign court, and then try to get that foreign judgment enforced in a U.S. court. That’s a big deal for anyone doing business internationally, especially when geopolitics are as wild as they are right now.

Blocking Foreign Judgments in U.S. Courts

The real muscle of this bill comes from adding a new Section 1660 to Title 28 of the U.S. Code. This new section creates a straight-up ban on civil lawsuits in U.S. federal or state courts that try to enforce foreign judgments or arbitration awards under two specific conditions. First, if the original claim came from actions taken because of U.S. sanctions that prevented a contract from being performed. Second, if the foreign court or tribunal even got its authority to hear the case in the first place, partly or fully, because U.S. sanctions or export controls existed. So, if a foreign court says, “You broke a contract because of U.S. sanctions, now pay up!” and tries to get that enforced here, U.S. courts would be told to say, “Nope, not happening.”

What Happens if Someone Tries Anyway?

Let's say a foreign entity tries to enforce one of these blocked judgments by filing a lawsuit in a state court here in the U.S. The bill has a clear path for that. Any defendant can have that lawsuit moved (or “removed”) to a U.S. federal district court. Once it's there, the federal court's job is to dismiss the case. This means less time and money spent fighting these kinds of claims for U.S. businesses and individuals.

Important Exceptions and Definitions

Now, this isn't a blanket ban on all foreign judgments. The bill is pretty specific about what it doesn't touch. For example, it doesn't limit the President’s authority or the rights of U.S. nationals, military members, or government employees who are victims of international terrorism. So, if you’re a victim of terrorism with a valid claim, this bill won’t stop you from pursuing justice. It also doesn't mess with contracts where parties agreed to resolve disputes in U.S. courts or through arbitration within the U.S. The bill defines “United States sanctions” broadly to include any U.S. prohibition or restriction on transactions involving foreign countries or nationals, covering things like the International Emergency Economic Powers Act. However, it explicitly says this doesn't include import duties, so tariffs are still fair game. This new rule applies to any civil action that’s pending on or after the date the bill becomes law, meaning it could impact ongoing cases.

This legislation looks to solidify the legal ground for U.S. entities trying to do right by U.S. law in a global marketplace, aiming to prevent foreign legal systems from penalizing them for it.