Melling, Voitishkin & Partners successfully defended a contractual sanctions compliance clause in a precedent-setting court case. Melling, Voitishkin & Partners represented a Russian subsidiary of a well-known Swedish manufacturer of mining equipment in a claim brought by one of the companies of the UMMC [Ural Mining and Metallurgical Company] group. The subject matter of the dispute was the collection of a contractual penalty charged for the non-delivery of certain equipment manufactured in Europe. The defense developed by Melling, Voitishkin & Partners was based on a sanctions compliance clause in the parties’ contract, according to which the supplier cannot be held liable for breach of the contact and can exit the deal in case of sanctions-related restrictions impeding the delivery.
The courts of the first, appeal and cassation instances agreed with the defendant.
The outcome of this court case sets a precedent in the sense that the supplier of foreign equipment was exempt from liability on a novel ground. Rather than demanding the defendant to plead such classical concepts as force majeure (Article 401.3 of the Russian Civil Code) or impossibility of performance (Article 416 of the Russian Civil Code), the courts went for freedom of contract as a basis for their conclusions. The parties are free to agree in advance that the supplier is not liable for a breach of the contract where the performance is frustrated by external difficulties (Article 421 of the Russian Civil Code). Thus, even in the absence of force majeure and even despite the existence of so-called parallel imports of Western goods into Russia, the supplier bears no obligation to find replacement for the equipment in third countries, for example, in “friendly jurisdictions”.
Melling, Voitishkin & Partners project team included Dispute Resolution & Arbitration lawyers Anton Maltsev (partner), Roman Butenko (counsel), Anastasia Galkina (associate) and Tatyana Bolshakova (intern), as well as International Trade, Customs, Sanctions lawyers Vladimir Efremov (partner) and Anastasia Goryacheva (associate).
