Browsing by Author "Forsbom, Julia"

There are many different types of trade sanctions, including export and import bans, embargoes, freezing of funds, and bans on provisions of certain services. Trade sanctions can be used on an international, regional and national level. The main risks a contracting party may face due to trade sanctions are: 1) a contracting party may be exposed to breaching a sanction or alternatively be associated with an existing breach of a sanction when entering into a contract, and 2) Sanctions may be imposed or extended so that the parties’ contractual obligations become impossible to perform. If a contract is affected by an international sanction, contracting parties have certain remedies they can rely on in order to try to get the breach of a contract compensated. If a sanction interferes with contracting parties’ obligations, the most common remedy used is force majeure. Impossibility to perform one’s contractual obligations is usually considered a breach of a contract under contract law unless there is a major objective issue: a force majeure event. However, as force majeure has strict unforeseeability, externality and irresistibility requirements, the requirements of force majeure are not always fulfilled if a sanction interferes with a contract. Therefore, a contracting party may have to rely on other remedies such as specific performance, control liability and adjustment of a contract. As it can be risky to rely on force majeure clause in order to be excused from performance in case of sanctions, the contracting parties should add a specific sanctions clause to a contract. The sanctions clause should be individualized for the purpose of the contract, and it should include the terms under which circumstances a sanction can allow the parties to terminate the contract.