The Role and Effects of Economic Sanctions in International Commercial Contracts

Abstract

The objective of this study is to answer the question of whether sanctions may be regarded as an instance of “force majeure” or “hardship” and what consequences they entail for the contractual liability of the parties. The present research was conducted using a descriptive–analytical method and by relying on library resources, international conventions (such as the United Nations Convention on Contracts for the International Sale of Goods (CISG)), as well as the examination of judicial practice and international arbitral awards. The findings of the study indicate that economic sanctions, depending on the time of their imposition and the scope of their application, may render the performance of contractual obligations temporarily or permanently impossible. Where sanctions are unforeseeable and unavoidable, they are generally analyzed within the framework of force majeure and result in the exemption of the obligor from liability for damages. However, where sanctions merely cause severe financial hardship and disrupt the contractual equilibrium between reciprocal obligations, they fall within the concept of hardship and may lead to the renegotiation of the contract. The study further demonstrates that the inclusion of a “sanctions clause” in the contract plays a vital role in risk management and the equitable allocation of losses. Ultimately, this research concludes that economic sanctions constitute not only an obstacle to contractual performance, but also a factor contributing to the transformation of traditional interpretations of contract law. In order to safeguard the rights of the parties, economic actors should adopt preventive mechanisms through the use of flexible contractual clauses and a precise understanding of private international law rules, rather than responding passively to sanctions, so as to prevent the unintended termination of contracts and the imposition of substantial losses.