More Information on the Impact of Sanctions on Commercial Contracts

In response to numerous requests from our clients as we continue our alert devoted to sanctions, “Anti-Sanctions Clause in Commercial Contracts” dated 06.08.2014, Awara specialists want to elaborate about drafting agreements which may fall under the sanctions of the United States, the EU and other countries joining them, as well as under the Russian response prohibitions.

Agreements may be wholly or partially suspended; paid-for goods or services may not be delivered or rendered; assets may be frozen or barred from expatriation. These risks apply to both customers and suppliers, as well as to other third parties, intermediaries, and agents. Questions of ownership of goods which had been paid for but not delivered to the customer may arise. The issue of liability of a party for the failure to make deliveries due to sanctions may arise, as well as the question of the duty to take additional actions to resolve the situation. Questions of who should bear losses incurred by spoilage of goods after the expiration date may arise.

Each of our clients’ cases is unique, and we offer the following tailored made assistance to the clients that have faced a negative impact of the sanctions already, or have concerns about the current sanctions or possible additional sanctions in the future:

1. Providing advice on our clients’ risk exposure in the context of current contracts as well as structuring new arrangements with our clients’ customers in Russia for the purpose of: 

1. Protecting our clients’ legal and commercial interests and property;
2. Working out specific, practical and legally sound solutions for typical and unusual scenarios.  

2. Providing advice on existing and proposed agreements with clients’ customers in Russia, including with regard to anti-sanctions clauses. 

Again, Awara strongly advises that you review your exposure to risks in your agreements to avoid costly complications related to international sanctions. This might mean including a so-called “anti-sanctions” clause in your agreements. Also, while it is not certain that foreign sanctions will be consistently considered by Russian and foreign courts as “force majeure”, adding properly worded Anti-Sanctions clauses to agreements may reduce risks.

Awara experts are ready to help you in drafting such clauses, as well as in negotiating and drafting agreements in general.

Evgeny Isaev
Executive Partner
eugene.isaev@awaragroup.com

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