LEGAL
Working with Russia in the Brave New World As the awful events in Ukraine have unfolded on our screens over recent weeks, so the economic response by the UK, EU and other western countries has evolved. By Lee Hills This has culminated in the UK government imposing a raft of trade sanctions on Russia, Belarus and on named individuals, some of which may have a direct impact on UK businesses importing goods from or exporting goods to these countries. As the conflict in Ukraine continues, so the depth and breadth of sanctions has increased. It is important for UK businesses dealing with these countries to understand not only where they can turn to for guidance but also the legal and reputational impact of falling foul of sanctions. Failure to comply, even inadvertently, may lead to criminal conviction, financial penalty, civil liability and reputational damage. For businesses trading or intending to trade with Russia or Belarus, it is important to undertake due diligence to confirm the identity of the party on the other side of a contract. Sanctions can apply not only to businesses operating out of the countries concerned but also those that are owned, operated and or controlled by those to whom sanctions would otherwise apply.
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UK businesses engaged in the import or export, supply or distribution of goods in the sectors specified by the UK government and which include chemicals, construction, defence, electronics, energy, digital technologies and transport. And given the rapidly escalating situation, those which are not presently affected by the sanction regime but could well be at some point in the future, should be reviewing the terms of their commercial contracts. Careful consideration should be given to the existence and wording of force majeure clauses and the impact, if any, that sanctions may have on the ability of either party to perform its obligations under the contract. Even if a force majeure clause exists, its wording will be critical in determining whether the impact of sanctions and the corresponding consequences of a failure to perform the contract can benefit from the protection of a force majeure clause, irrespective of any separate legal arguments that performance of the contract has been frustrated by the imposition of sanctions or rendered unenforceable through illegality.
