Contracts affected by economic sanctions: Russian and international perspectives.

Abstract

Economic sanctions, particularly unilateral ones, are an increasingly popular instrument of foreign policy. Some states have extensive experience in adopting them and in resolving private disputes arising from such measures. For other countries, this practice is more recent and their sanction regimes are not as mature. Against the background of post-2014 sanction regimes targeting Russia and its counter-sanctions, this article considers the primary aspects of the impact sanctions have on the private contractual sphere. These include qualification of sanctions as a ground for invalidity of contracts and as impediment excusing debtors from the performance of their obligations. The article begins by analysing the theoretical framework developed in international doctrine and practice. It highlights the differences between the application of sanctions by domestic courts and by arbitral tribunals and considers their significance. Alongside its international counterparts, the article considers Russian domestic statutory regulation, which is well-developed and similar to that in other civil law European jurisdictions. Although it is possible to hypothesise on the possible judicial approaches, available Russian case law on this subject remains scarce and occasionally inconsistent. The avenues for further development of fundamental approaches in the practice of courts and arbitral tribunals are explored in the conclusion