Unilateral restrictive measures (sanctions) force Belarusian businesses and their counterparts to seek balance in their contractual relations, given their differing juridictions. As a general rule, parties to a trade deal are free to set its terms; at the same time, they are constrained by the mandatory norms of their respective legal systems.
Failure to comply with sanctions imposed by certain jurisdictions creates grave legal risks — including criminal liability— for one party to the contract, while the other one may be free not to comply or even obliged to disregard them under its national law. Sanction safeguards, if used wisely and skillfully, can partly mitigate the negative impact of such legal conflicts, and sometimes even help avoid them altogether. In the authors' experience, such caveats have on more than one occasion helped domestic enterprises – private or state-owned, sanctioned or unsanctioned – settle related issues, or, alternatively, prevent opponents fr om contract breach and bring them back to compliance (without even recoursing to court or arbitration), or minimize the legal damage fr om unilateral restrictions.
Unfortunately, there is no "one-size-fits-all" remedy in such cases, as laws and implementation practice change all the time. In each case, in order to draft a workable sanctions safeguard, parties and their lawyers must have outstanding legal profiency and technique. Above all, they are well-advised to develop a deep knowledge of the subject and fundamental terms of the deal, and carefully assess both legal and business risks to its implementation.
Let us have a thorough look at the following points:
1. What is a Sanctions Safeguard?
Sanctions, due to their purpose and legal nature, can have a serious impact on contract execution. One should take these challenges well into account and expressly write them into a contract.
A sanctions safeguard is a contractual provision that stipulates how the parties must act in the event of sanctions or counter-sanctions. Such a modus operandi is fixed through a specific set of rights and obligations under the agreed clause.
The authors believe the nature of the sanctions safeguard to be mixed. It may include, for instance, well-known elements of the following civil law institutions:
• force majeure;
• a material change in circumstances for the contract modification or termination;
• representations and warranties;
• delegation of obligations to a third party.
The reasons for including a sanctions safeguard into a contract may include:
• assisting the parties in making good on their shared commitment and carrying out the deal in the face of sanctions;
• minimizing likely losses should the parties find the contract impossible to execute because of sanctions;
• compliance with the laws of their respective jurisdictions.
Experts generally favour the following typical structure for a workable sanctions clause:
- the scope of the stipulated sanctions restrictions;
- specific actions of the parties;
- future fate of the deal.
The scope shows which measures and under which jurisdictions can trigger the safeguard. It may include e.g. references to UN, EU, U.S. and other states’ collective or individual measures (depending on the deal jurisdictions) and sanction descriptions: a ban on operations, embargo, visa restrictions, activity ban or suspension, tariff rise, new approval requirements, etc.
A more precise, detailed description of sanctions is advisable, as it helps the parties avoid uncertainty regarding which exactly legal fact empowers them to trigger the safeguard without arguing about its qualification, i.a. in court or arbitration.
The safeguard may describe concrete steps of the parties in various ways, depending on their legal relationship. This may include, in particular:
• obligations not to commit actions that could entail sanctions violation;
• obligations to inform to the other party of sanctioned persons or dealings with them;
• the right to delegate the execution of contractual obligations to third parties;
• possibility to change the parties to an obligation (assignment of claims or debt transfer);
• possibility to change the way contract terms are executed (e.g. payments, delivery, choice of currency, etc).
This part of the sanctions safeguard is considered essential, and one should to take into account the laws of the jurisdictions wh ere the parties are domiciled or wh ere the contract is to be executed.
Otherwise, actions by the parties that violate such laws may result in serious, i.a. criminal, liability.
N.B.: Article 9 of Regulation (EC) No. 765/2006 of the European Parliament and of the Council of 18 May 2006, establishing restrictive measures (sanctions) against Belarus, obliges EU Member States to adopt necessary norms, including on criminal liability for infringements of this Regulation. For example, paragraph 1bis of Article 459 of the French Customs Code provides for criminal liability for violation or attempted violation of restrictive measures (sanctions) imposed in the European Union. Penalties include 5 years' imprisonment, confiscation of the subject of the offense, vehicles, property, and assets constituting the direct or indirect proceeds of the offense, and a fine up to twice the offense amount. In the United States, the International Emergency Economic Powers Act of 1977 (§ 1705) criminalizes sanctions’ violations and foresees a fine of up to $1 million and/or up to 20 years’ imprisonment.
According to Article 9 of the Law of the Republic of Belarus of July 12, 2023, No. 280-Z "On the Application of Special Restrictive Measures," failure to comply with such measures may trigger liability under applicable laws. Currently, the Code of the Republic of Belarus on Administrative Offence does not specifically establish, what offences may result in incompliance with special restrictive measures. However, violations of certain prohibitions and restrictions imposed by the Government of the Republic of Belarus may fall under the provisions of this Code (e.g., failure to declare goods or providing false information thereof, as per Article 15.5).
The main snag facing the parties’ lawyers while drafting a balanced sanctions safeguard is to artfully reconcile two conflicting legal systems within a single document that both of them would recognize as valid and enforceable.
The key is to guarantee that the contract runs on despite new sanctions. The related clause must be written with a comprehensive, realistic view of how feasible the contract terms are, making sure that neither party loses its public-law ability or deal commitment. Should the execution become impossible or commercially impractical, one needs to least discuss contract termination on agreed terms (e.g. fair division of the resulting losses) and include an appropriate mechanism in the sanctions clause in advance.
Provisions concerning applicable law and dispute resolution are also essential for effective implementation of the sanctions clause. It is crucial that the clause is interpreted neutrally within the legal framework chosen by the parties, ruling out unwarranted application of the sanctions (without their due prior analysis or by way of "overcompliance") and ensuring that the contract remains valid and executable where possible.
2. Risks to Consider When Drafting a Sanctions Safeguard
The authors agree that it would be impossible to propose a single blueprint sanctions carveout that would work with each and every foreign trade contract. Nevertheless, any good safeguard clause must first of all take into consideration the risks to which the parties may be prone during contract execution, and offer ways to mitigate them.
The point of any such caveat is to protect the parties and their contract fr om negative implications of the sanctions. Therefore, when conducting a risk assessment, the parties and their lawyers should check:
• information of the other party: whether it is directly targeted by sanctions (a person controlled by or associated with sanctioned persons) or comes fr om a jurisdiction wh ere sanctions are applied;
• jurisdictions (including foreign to the parties) wh ere the contract may be executed. Particularly: whether a jurisdiction has associated itself with the sanctions regime and how this jurisdiction is economically linked to the sanction-applying jurisdictions through banks and financial institutions;
• relationship of the contractual activities (e.g., the sale and purchase of goods, works or services) to the sanction regime: whether they are banned or restricted or fall under special requirements, i.a. notifications, extra authorizations, etc.
One needs to keep in mind the ever-present risk of the sanctions’ change: they may expand, tighten, spill out to other jurisdictions, relax or drop altogether. It would be helpful to look up the information on upcoming meetings and sessions of institutions that decide on such changes.
It is also important to consider the economic realities in which the parties operate or plan to operate. Conducting a study of the markets where the contract is to be executed would be highly advisable. Sanctions are often meant to put economic pressure on entities or states, especially when the state imposing the sanctions enjoys an alternative supply source. Before adopting sanctions, competent authorities typically assess their impact, e.g. possible price rise, on their own market.
N.B.: Regulation (EU) No. 2025/1227 of the European Parliament and the Council of 17 June 2025, which provides for an increase in customs duties on certain goods from the Russian Federation and the Republic of Belarus, states that the European Commission may propose a temporary suspension of the imposed tariffs if the price of the goods significantly exceeds the 2024 level.
Naturally, parties may agree not to include a sanctions caveat into the contract if they find risks to be negligible. This may happen if they deem the contract not to involve a sanctioned entity in any way, or the sanctions not to apply to the legal relationship governed by the contract, such as sale and purchase of goods, services, or payments. However, in view of the sanction pressure and the unpredictable relations with countries that imposed sanctions against Belarus, we believe that a standard force majeure clause should nevertheless foresee, among other risks, possible rulings and bans by foreign governments, which should be understood as covering i.a. sanction decisions. This would save the parties the task of recognizing the sanctions as a force majeure after the fact, and ensure legal certainty regarding liability for the failure to comply with contractual obligations.
However, if any of the above risks is already present or highly probable, there is every reason to add a sanctions clause to the contract. Such situations may arise, for example, in the case of the state holding a share in a private company, or if a party to the contract carries out activities targeted by sanctions.
3. Types and Examples of Sanctions Clauses
The scope and type of a sanctions safeguard depend on potentially applicable sanctions regimes and their legal implications.
Depending on risk degree, safeguards can be roughly divided into the following categories:
• Complex – against several overlapping risks, as well as high risks;
• Specific – against lower risks.
“High risks” in this case imply risks arising from direct sanctions’ application, e.g. when an entity appears on the ban list or engages in clearly targeted activities. Lower-level risks are indirectly associated with sanctions, such as "overcompliance" or engaging in activities related or similar to the targeted ones.
Complex sanctions clauses cover several elements at the same time (force majeure, assurance of circumstances, material change of circumstances, etc.). Here are some examples:
"The Parties agree to comply with legislative prohibitions and restrictions that are or may be adopted in their respective states.
Each Party declares and guarantees that neither it nor any of its officials or employees is subject to sanctions imposed or applied by the UN, the European Union, the United States, or other relevant bodies authorized to impose sanctions.
If a prohibition or restriction arises or is identified under any of these sanction regimes, the Parties are exempted from liability for failure to respect their obligations under this agreement, if such prohibitions or restrictions affect the execution of the agreement. In such a case, the parties undertake to engage in negotiations within one (1) month from the date of the notification by a Party of the obstacles that have arisen, with a view to exploring the possibility of agreement amendment (assignment of claims, transfer of debt). If no agreement is reached, this agreement will terminate upon expiry of this period, unless the parties agree to extend it to continue negotiations."
A specific clause enables the parties to address a concrete single risk. Here are some examples:
"If, as a result of sanctions, settlements in the agreed currency are impossible, the Parties agree to make payment in an alternative, freely transferable and convertible currency acceptable to the recipient Party."
"If, as a result of sanctions imposed by the European Union or retaliatory measures adopted by the Republic of Belarus one of the Parties is unable to execute its obligations under this agreement, that Party shall have the right to offer the other Party third-party execution. Such execution shall be deemed proper."
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