Legal implications of the Russia-Ukraine war on business

First of all, the most prominent effect is the sanctions that have been imposed. Sanctions have already been imposed by the EU, but also by individual states such as the United States and the United Kingdom. These relate to Russian persons and Russian entities, export bans on goods and restrictions on technology transfer. Restrictions on access to international payment systems are also being discussed, but have not yet been implemented in depth. Here, only a specific due diligence based on the concrete restrictions currently in place will help. If, according to the contract, the delivery of the goods is imminent, it is recommended to wait until the specific sanction framework has been established with legal certainty.

The second important point of analysis is whether the parties may have agreed on (unfavourable) Incoterms here. If the seller has chosen relatively unfavourable Incoterms such as DAP (delivered at place) or DDP (delivery duty paid) – in which he bears the responsibility up to the agreed place of delivery – then the risk factors (especially export, transport) arising from the conflict are in his sphere of risk. It should be remembered in particular that transport to Ukraine is anything but unproblematic at present due to suspended air traffic, destroyed transport links, etc. All these risks fall within the sphere of responsibility of the seller, especially in the case of DDP. If you have agreed Incoterms, you should consider your agreed risk distribution.

Another problem area is that of payment terms. For example, if the purchase contract provides for payment by documentary credit, the current disruption of air traffic may mean that the required documents cannot be presented to the bank. In addition, the crisis has increased the risk that a contractor cannot perform due to public restrictions or for economic reasons. Parties should therefore – if possible – take contractual precautions here.

A keyword that also always comes up in sudden disruptive events is that of force majeure. This is often seen as a kind of miracle weapon in legal problem solving. It is not. First of all, while your contract might contain a force majeure clause, often ‘acts of war’ are excluded as a statutory connecting point. Here, only a close look at the wording of the clause will help. If there is no exclusion, then even then the safeguards are relatively limited. As a rule, only a general adjustment of the contract is provided for as a legal consequence. This can be an extension of delivery deadlines or possibly a price adjustment. With regard to the general principle of contractual compliance (pacta sunt servanda), withdrawal from the contract is the absolute exception. If the contract does not contain a force majeure clause at all, a general adjustment of the contract can be demanded by either party through the institute of frustration of contract of the respective nationally agreed law. In most legal systems, however, the possibilities for adjustment are very limited and will be found only in the reasonable extension of deadlines, etc.

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