I saw David Duchovny discuss this on a talk show. He said the choice to just speak English was because if everyone tried to speak English with Russian accents every accent would sound different which would be ridiculous. Russian speaking actors with subtitles was ruled out because it was feared it wouldn't sell well.
It is indeed set in 1968 and based on the K-129 incident, but because no one really knows what happened aboard that boat the movie is pure speculation.
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