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Force majeure - hardship in relation to conflict and sanctions

International
09/05/2022
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The invasion of Ukraine has prompted western democracies, including the European Union, UK and US, to initiate a raft of sanctions against Russian-owned companies, and prominent inpiduals closely associated with the Russian government and its leadership. These sanctions are having a far-reaching effect on the supply chain and business contracts across the globe.

As a result, scores of companies are no longer able to fulfil their contractual obligations. This has raised a series of questions: what does the inability to fulfil a contractual obligation mean within the legal position of the various parties? And can a party, whose operations have been disrupted, terminate an agreement or at least suspend its obligations?

When considering these questions, many legal specialists turn to the legal principle of 'force majeure', which is a French term that means 'greater force' and relates to sudden and disruptive events, such as natural disaster or unexpected military action, which arose through no fault of the parties, were unanticipated, and render normal business operations impossible. The laws on force majeure differ from country to country. Indeed, some jurisdictions do not recognise force majeure and leave contractual parties free to regulate its meaning between themselves. In other countries, the law contains a specific definition of force majeure that is not open to interpretation.

If you would like to learn more, check our latest Expert Guide to Force Majeure – Hardship in relation to Conflict and Sanctions.

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