Consequences of impossibility to fulfill obligations due to sanctions

We would like to draw your attention to draft law No. 92282-8 which provides for amendments to the Civil Code of the RF in terms of regulating legal relations with contractors in case of unfriendly actions of foreign states and international organizations.

The draft law, inter alia, provides for the following legal consequences if it is impossible to fulfill obligations in connection with imposition of restrictive measures against Russian citizens and legal entities:
  • the obligation is terminated in full or in relevant part, if its fulfillment objectively and definitively becomes impossible in whole or in part;
  • a person is not liable for non-fulfillment or improper fulfillment of the obligation if he proves that proper fulfillment objectively appeared to be temporarily impossible. At the same time the debtor is not considered to breach his obligation, unless otherwise is specified by the agreement of the parties concluded after introduction of the provisions of the draft law;
  • a party has the right to withdraw from the contract if the other party cannot objectively temporarily perform the contract. The party entitled to withdraw from the contract shall notify the other party within a reasonable period of time before the withdrawal. The means of enforcing this contractual obligation continue to ensure the obligations which remain after withdrawal from the contract or are associated with this withdrawal.

The draft law introduces a number of other innovations, including with regard to a security deposit as well as with regard to the agreements related to exercise and protection of rights for the results of intellectual activity and means of individualization.

It is assumed that the draft law will apply to the legal relations that arose from February 24, 2022 as well as contracts for which the deadline for fulfilling obligations came after February 23, 2022.

As follows from the explanatory memorandum, in case of adoption of the draft law its provisions shall be temporary.