We are witnessing a new dispute resolution landscape emerge as a result of the ongoing situation in Ukraine.
We have created a dedicated taskforce of specialists that aims to help our clients through this challenging time as the number of business and legal issues arising from the conflict continues to increase. This includes sharing market experience, insight and providing practical advice. We will examine and share with you in the coming weeks the key disputes and risk related issues we see clients focusing on.
The first issue that has been on the forefront since the beginning of the conflict pertains to the effect of the conflict on performance of contractual obligations.
Those mechanisms (contractual or statutory depending on the governing law) which may suspend, excuse or significantly alter performance are of particular relevance, such as:
- Force Majeure – it is common for contractual force majeure clauses to cite ‘war’ amongst the list of events that may excuse performance under the contract, should they occur. Even where that is not case, the widespread effects of the conflict in Ukraine may still engage force majeure mechanisms. Whether parties can rely on the doctrine of force majeure to suspend, defer or release liability for non-performance will be highly fact-specific in each case. Parties affected by force majeure are well advised to carefully identify the force majeure event causing the failure to perform, consider whether any non-performance has been caused by the current conflict, and to strictly observe any notice requirements.
- Frustration / Hardship / Material adverse change – if performance under a contract has become radically different, impossible or illegal, the impacted party may seek a renegotiation of its terms or to withdraw from its future obligations. Performance which is more burdensome or costly will not suffice and in some EU countries, material adverse change must be unforeseeable which can be challenging in the case of sanctions that have been significantly reinforced but were already in place to some extent.
- Price adjustment mechanisms – which may allow parties to renegotiate the price of contracts impacted by the situation.
Contact our dedicated taskforce directly at RussiaUkraineTaskforce@cgsh.com.