Modification or termination of contracts due to international economic sanctions from the standpoint of Russian legislation and court practice

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Modification or termination of contracts due to international economic sanctions from the standpoint of Russian legislation and court practice

A.I. Goriacheva

Abstract

In this article the author covers the problem of possible modification or termination of contracts due to international economic sanctions, in particular the US and EU sanctions against Russia. The author analyses relevant legislative acts, approaches of governmental authorities and court practice on this matter. This extensive analysis includes overview of development of main legal doctrines and institutions, related to the subject matter of this article. Moreover, it covers definitions of the relevant terms. This article is mainly aimed at defining a list of criteria to rely on when determining the possibility to modify or terminate a contract due to international economic sanctions in each particular case. The author raises the hypothesis that possibility to modify or terminate a contract due to international economic sanctions is subject to a closed list of criteria. The subject matter of this article is important since sanctions are now one of the main instruments of political influence in interstate relations and have a significant impact on all types of contractual relationships. Today, a major and common challenge faced by market participants is the inability to enforce contracts the way they were originally entered into. Due to the fact that in Russia it is rare for contracts to be amended or terminated due to newly imposed sanctions, parties do not always find themselves in a position to enforce a contract in a timely manner or to perform at all. As a result, the stability of the business environment is disrupted and the level of trust is reduced. Thus, it is highly important to perform a thorough analysis of this matter and provide possible solutions for market participants.

Keywords: international economic sanctions, sanctions, clausula rebus sic stantibus, substantial change of circumstances, contracts, hardship.

Аннотация

Изменение или расторжение договоров в связи с международными экономическими санкциями с точки зрения российского законодательства и судебной практики

А.И. Горячева

В данной статье автор освещает проблему возможного изменения или расторжения договоров в связи с международными экономическими санкциями, в частности санкциями США и ЕС против России. Автор анализирует соответствующие законодательные акты, подходы органов государственной власти и судебную практику по данному вопросу. Этот обширный анализ включает в себя обзор развития основных правовых доктрин и институтов, связанных с предметом данной статьи. Кроме того, он охватывает определения соответствующих терминов.

Данная статья в основном направлена на определение перечня критериев, на которые следует опираться при определении возможности изменения или расторжения договора в связи с международными экономическими санкциями в каждом конкретном случае. Автор выдвигает гипотезу о том, что возможность изменения или расторжения договора в связи с международными экономическими санкциями подчиняется закрытому перечню критериев.

Тематика данной статьи важна, поскольку санкции в настоящее время являются одним из основных инструментов политического воздействия в межгосударственных отношениях и оказывают существенное влияние на все виды договорных отношений. Сегодня основной и распространенной проблемой, с которой сталкиваются участники рынка, является неспособность обеспечить соблюдение договоров в том виде, в котором они были первоначально заключены. В связи с тем, что в России редки случаи изменения или расторжения договоров в связи с вновь введенными санкциями, стороны не всегда оказываются в состоянии своевременно обеспечить исполнение договора или вообще его исполнить. В результате нарушается стабильность бизнес-среды и снижается уровень доверия. Таким образом, очень важно провести тщательный анализ этого вопроса и предложить возможные решения для участников рынка.

Ключевые слова: международные экономические санкции, санкции, clausula rebus sic stantibus, существенное изменение обстоятельств, контракты, трудности.

Introduction

The term “sanction” has multiple meanings and origins from the Latin “sanctio”, which meant an inviolable law or a strictest decree. In legal literature and everyday life this term is most frequently used in the sense of means of enforcement in response to violation of legal norms (Evgeneva 1999, 27). In international law, however, the term takes on a specific meaning. Namely, nowadays, it refers to means of enforcement in respect of foreign governments and persons, which have violated their obligations or international legal norms. This meaning has not always been the same.

In 20^th century the meaning of term “sanctions” was limited solely to coercive measures taken by a decision of the UN Security Council¹. As for one-sided extraterritorial coercive measures applied by states in the absence of a decision by the UN Security Council, such measures were declared illegitimate, inconsistent with international law and the UN Charter (Hofer 2017; Schmidt 2022) UN Charter. 1945. Ch. VII. Accessed July 25, 2022. https://treaties.un.org/doc/publication/ctc/un- charter.pdf. -- See also, e. g.: Subsidiary Organs of the United Nations Security Council: Fact Sheets 2022. Accessed July 25, 2022. https://www.un.org/securitycouncil/sites/www.un.org.securitycouncil/files/subsidi- ary_organs_factsheets.pdf. ^{See, e. g.:} General Assembly Adopts Resolution Calling on States Not to Recognize Unilateral Coercive Economic Measures (October 16,2002). Accessed July 25, 2022. https://press.un.org/en/2002/ga10083.doc.htm., and, therefore, did not fall under the concept of “sanctions”. Specifically, in legal literature as of 1950-1990 unilateral economic measures were referred to as “economic coercion” (McDougal, Feliciano 1958; Bowett 1972; Parry 1977; Brosche 1974; Lillich 1976; Elagab 1988). Over a long period of time, the term “sanctions” referred merely to collective response by states to a violation of international law. Moreover, in preparing the Draft articles on State Responsibility, the UN International Law Commission avoided using the term “sanctions” in the text of the Draft Articles on State Responsibility, reserving it for measures adopted by decision of international organizations Yearbook of the International Law Commission. 1979. Vol. 1: 54-62. (In Russian).

However, in circa 1980^th a terminological switch occurred. For example, in 1985, the first edition of “Economic Sanctions Reconsidered” was published, in which the term “sanctions” included unilateral coercive economic measures (Hufbauer, Schott 1985; see also: Lenway 1988; Malloy 1990; Marossi, Bassett 2015; Neuwirth, Svetlicinii 2015).

At the moment, the definition of this term is unambiguous. This is also confirmed by the report of the Human Rights Council Advisory Committee, which noted that, despite the vigorous debate that this term has generated among scholars as well as among various UN bodies in recent decades, the definition of the term remains vague “Research-based progress report of the Human Rights Council Advisory Committee containing rec-ommendations on mechanisms to assess the negative impact of unilateral coercive measures on the enjoy-ment of human rights and to promote accountability, A/HRC/28/74 (February 10, 2015), para. 7”. United Nations, General Assembly, Human Rights Council. Accessed September 21, 2021. http://www.ohchr.org/ Documents/HRBodies/HRCouncil/AdvisoryCom/CoerciveMeasures/A-HRC-28-74_en.doc..

Today, most often economic sanctions are considered to encompass “any action taken by a nation or international body which is intended to prevent, regulate or otherwise hinder economic activity with another nation for the purpose of condemning or influencing the latter's actions or policies” (Moyer, Mabry 1988, 2; see also: Carter 1988, 4).

For research purposes the author examines specifically international economic sanctions (a. k. a. “sanctions”) and defines them as follows:

Any regulations or restrictive measures related to economic, financial or trade relations imposed by governmental bodies, which include the UN Security Council, the US Government, the US President, the Office of Foreign Assets Control (“OFAC”), the US State Department, the US Department of Commerce, the Council of the European Union, as well as Russian competent authorities See, e. g.: “Sanctions: RIAC Handbook”. Russian International Affairs Council. Accessed July 25, 2022. https://russiancouncil.ru/en/sanctions..

Basic research

Glimpse into international economic sanctions targeting Russia

Brief historical background. Since the author finds that the history of this legal instrument may be of interest in light of this research, below is provided the brief historical overview.

The history of sanctions can be traced back to Ancient Greece. According to ancient literary sources, in circa 432 B. C. the Athenian Maritime Union imposed restrictions similar to modern international economic sanctions on the city of Megara as part of the Peloponnesian War. Restrictions were imposed on the inhabitants of the city of Megara, whereby they were forbidden to be in the market, in the fields, on the land and at the sea (Aristophanes 1983, 34). Later, blockades became a particularly widespread method of political influence. International economic sanctions in the modern sense have been actively used since the First World War. contract economic sanction legal

Sanctions against Russia featured on the agenda in 2014, when Crimea and the city of Sevastopol became part of Russia. Later, in respond to these sanctions Russia introduced the so-called counter-measures. The reasoning of the Russian counter-measures is based on numerous studies substantiating the illegality of the original foreign sanctions (Doraev 2016; Savel'ev 2015; Entin, Entina 2015). This reasoning is also partially based on acts of international organizations. For example, the inadmissibility of economic measures to exert influence on other states has been postulated in a number of UN documents as one of the core foundations of current international law. Coercive economic measures are considered to violate the entire system of basic principles of international law, especially the principle of non-intervention, as interpreted in the Declaration on Principles of International Law “Declaration on Principles of International Law concerning Friendly Relations and Coopera-tion among States in accordance with the Charter of the United Nations, A/RES/2625(XXV) (October 1970, 24)”. United Nations, General Assembly. Accessed September 21, 2021. https://www.refworld.org/ docid/3dda1f104.html; Proceedings of the United Nations Conference on Trade and Development (Geneva, 23 March -- 16 June 1964). Vol. 1: Final Act and Report. 1964. New York, United Nations..

Specifically, unilateral economic measures were subject of special consideration within the framework of the General Agreement on Tariffs and Trade. In 1982 at the session of this organization a declaration was adopted, which stressed that the member states of the General Agreement on Tariffs and Trade (“GATT”) “undertake individually and jointly to refrain from taking restrictive trade measures for reasons of non-economic nature inconsistent with the General Agreement” Ministerial Declaration No. L/5424 (adopted on November 29, 1982). Accessed September 21, 2021. https://www.wto.org/gatt_docs/English/SULPDF/91000208.pdf.. At the same time the GATT and General Agreement on Trade in Services of (“GATS”) include provisions that de facto legalize unilateral economic measures. It concerns the right of WTO member-states to deviate from the requirements of GATT and GATS when there is a threat to their security.

As a result, sanctions are now one of the main instruments of political influence in interstate relations. Particularly, sanctions are often imposed to induce a foreign state to alter its domestic or foreign policy (Silveira 2014, 21). For the purposes of further analysis, it is necessary to look into the concept and types of sanctions, as well as the role they play in international private relations. Many countries have developed their own independent sanctions regimes. Although, for the purposes of this article the author deems necessary to limit the scope of this research to the currently imposed US and EU sanctions.

General overview of US and EU economic sanctions

US economic sanctions. The United States tend to use economic coercion in respect of Russia in order to influence its political strategy. Robert Pape outlined tree main forms of economic coercion, namely economic sanctions, trade wars, and economic warfare (Pape 1997, 93-95). Out of all the forms of economic coercion the US policy toward Russia has focused on sanctions (Baldwin 1985; Hufbauer et al. 2009). As previously mentioned, in March 2014, the US introduced the first sanctions against Russia in connection with the situation in the Crimea and eastern Ukraine. First, sanctions touched upon solely specific people and companies. Therefore, these first sanctions were not very significant to the Russian economy. Though, already in July 2014, additional sectoral sanctions were imposed. These newly introduced sectoral sanctions addressed companies in three main sectors, namely financial, oil and gas, military. Since then, sanctions have become the US foreign policy instrument of choice in dealing with Russia (Ashford 2016) See also: “Treasury Designates Russian Oligarchs, Officials, and Entities in Response to Worldwide Malign Activity”. US Department of the Treasury. 2018. Accessed September 21, 2021. https://home.treasury. gov/news/press-releases/sm0338..

As of today, intense scientific discussions regarding the effectiveness of the sanctions imposed on Russia are still ongoing. Although the effect of these restrictive measures is often denied, it is necessary to mention a number of academic papers that analyze the impact of sanctions on the Russian economy. For example, E. Gurvich and I. Prilepskiy draw the following conclusion: “Aside from their direct effects, i. e., limited foreign borrowing opportunities for banks and companies in the fuel and energy and military-industrial sectors that are publicly held, the financial sanctions have considerable indirect effects on the Russian economy in the form of decreasing foreign direct investment, fewer borrowing opportunities for companies and banks not directly targeted by the sanctions and lower capital inflow into the government debt market.

These indirect effects roughly triple the direct effects of the sanctions” (Gurvich, Prilepskiy 2015, 384). Similarly, C. E. Ziegler wrote that “sanctions did impact the Russian economy, particularly during the economic downturn in 2014-2015, but by 2017 Russian energy, finance and defense sectors had returned to normal as the country utilized domestic resources and cultivated new foreign partners” (Ziegler 2020, 510). Although the author finds these conclusions interesting, since the question of impact of the US sanctions is not the main subject of this article, the author decided not to enter into this discussion and focus on describing the sanctions regimes themselves.

Generally, the US sanctions can be divided into a number of sanctions regimes, such as:

-- Ukraine-related sanctions under Executive Order 13660 “Blocking Property of Certain Persons Contributing to the Situation in Ukraine” dated March 6, 2014, Executive

Order 13661 “Blocking Property of Additional Persons Contributing to the Situation in Ukraine” dated March 16, 2014, Executive Order 13662 “Blocking Property of Additional Persons Contributing to the Situation in Ukraine” dated March 20, 2014, etc.;

— sanctions targeting significant malicious cyber-enabled activity under Executive Order 13694 “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities” dated April 1, 2015, Executive Order 13757 “Taking Additional Steps to Address the National Emergency with Respect to Significant Malicious Cyber- Enabled Activities” dated December 28, 2016, Executive Order 13848 “Imposing Certain Sanctions in the Event of Foreign Interference in a US Election” dated September 12, 2018;

-- US nonproliferation sanctions under Russia-Related Directive dated August 26, 2019, Executive Order 13382 “Blocking Property of Weapons of Mass Destruction Prolif- erators and Their Supporters” dated June 28, 2005 All documents are available at GovInfo. Accessed July 25, 2022. https://www.govinfo.gov., etc. There are two main groups of restrictions, namely blocking and sectoral sanctions. Below the author examines the both in more detail. The list of individuals subject to the US blocking sanctions is called “Specially Designated Persons List” (“SDN List”) Specially Designated Nationals and Blocked Persons List (SDN) Human Readable Lists. Accessed July 25, 2022. https://home.treasury.gov/policy-issues/financial-sanctions/speciany-designated-nationals- and-blocked-persons-list-sdn-human-readable-lists. ^{So-called “50 Percent Rule”. See: “Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked”.} Department of the Treasury. Accessed July 25, 2022. https://home. treasury.gov/system/files/126/licensing_guidance.pdf.. The main feature of these sanctions is that they involve a complete blocking of funds of designated persons and a ban on entry into the US. In addition to the above, any dealings with designated persons or their subsidiaries are prohibited. In this context, subsidiaries shall be defined as those 50 % or more owned by designated persons, regardless of whether the subsidiary itself is listed. Moreover, if several shareholders are listed on the SDN List, their shares are summed up and the total percentage is calculated. Thus, if the company is owned, for example, by two designated persons, 25 % each, such a company will also be considered designated¹¹.

Unlike blocking sanctions, sectoral sanctions do not involve blocking of funds. There are specific restrictions set forth in the OFAC directives. As of today, four OFAC directives are in effect Directive 1 (as amended on September 29, 2017) under Executive Order 13662. Accessed July 25, 2022. https://home.treasury.gov/system/files/126/eo13662_directive1_20170929.pdf; Directive 2 (as amend-ed on September 29, 2017) under Executive Order 13662. Accessed July 25, 2022. https://home.treasury.gov/ system/files/126/eo13662_directive2_20170929.pdf; Directive 3 under Executive Order 13662. Accessed July 25, 2022. https://home.treasury.gov/system/files/126/eo13662_directive3.pdf; Directive 4 (as amended on October 31, 2017) under Executive Order 13662. Accessed July 25, 2022. https://home.treasury.gov/sys- tem/files/126/eo13662_directive4_20171031.pdf.. Each of these directives affects a different sector of the economy. For instance, the first directive targets the financial sector, the second and fourth directives target the energy sector, and the third directive targets the defense sector.

Notably, the US sanctions are only binding on “US persons”, as in:

— companies incorporated under US law and their subsidiaries outside the US;

— individuals and companies in the US, even those temporarily located in the US;

-- US citizens and residents, wherever they live or work;

-- directors, employees, officers, agents located in the US regardless of nationality and citizenship See, e. g.: “A Regulated World Sanctions”. Freshfields Bruckhaus Deringer. 2017. Accessed July 25, 2022. https://www.freshfields.com/globalassets/our-thinking/campaigns/sanctions_guide.pdf..

In addition to the US sanctions outlined earlier, there are the so-called “secondary sanctions” related to involvement of individuals in certain activities (Meyer 2009). For example, such sanctions may be imposed on those operating in Crimea or investing in specific Russian oil extraction projects, etc.

EU economic sanctions. As for the EU sanctions, they were introduced almost simultaneously with the US sanctions. These restrictive measures, however, cover a smaller list of Russian persons and have a less significant impact on the Russian economy. The effectiveness of the EU sanctions is also often questioned: “Closer coordination between sanctions and other policy instruments could be beneficial, including closer synchronisation with mediation efforts, referrals to legal tribunals and more creative use of assistance to member states and sectors negatively affected by sanctions. A more strategic use of the threat of sanctions could also be useful” (Moret et al. 2016, 5). There is an opinion that the EU sanctions would be more effective if they were combined with other policies and stronger international cooperation with third states or organizations (Horbelt 2017). Generally, the EU sanctions function in a similar way. In particular, the EU has also developed a list of designated persons who are subject to blocking sanctions, “Designated Persons List” See: Consolidated text of Council Regulation (EU) No. 269/2014 dated March 17, 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. Accessed July 25, 2022. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CE LEX%3A02014R0269-20220604.. The persons on this list are subject to similar restrictions, such as blocking of funds, a ban on entry into the EU, and a prohibition to directly or indirectly access any funds or economic assets. Importantly, the latter restriction applies not only to the designated persons per se, but also to companies that are 50 % or more owned or controlled by such persons See, e. g.: “Sanctions”. Standard Club. Accessed July 25, 2022. https://www.standard-club.com/ knowledge-news/sanctions.. In addition to the above, the EU also imposes sectoral sanctions and restrictions related to reunification of Crimea with Russia See, e. g.: “EU restrictive measures against Russia over Ukraine (since 2014)”. Council of the Eu-ropean Union. Accessed July 25, 2022. https://www.consilium.europa.eu/en/policies/sanctions/restrictive- measures-against-russia-over-ukraine..

The EU sanctions can also be divided in several sanctions regimes as follows:

-- Ukraine-related sanctions under Council Regulation (EU) No. 208/2014 dated March 5, 2014, Council Regulation (EU) No. 269/2014 dated March 17, 2014, Council Regulation (EU) No 833/2014 dated July 31, 2014, Council Decision No. 2014/512/CFSP dated July 31, 2014;

-- Crimea-related sanctions under EU Council Regulation No. 692/2014 dated June 23, 2014, Council Decision No. 2014/386/CFSP dated June 23, 2014;

— chemical weapons-related sanctions under Council Decision (CFSP) No. 2018/1544 dated October 15, 2018;

— cyber-related sanctions under Council Regulation (EU) No. 2019/796 dated May 17, 2019, Council Decision (CFSP) No. 2019/797 dated May 17, 2019, Decision (CFSP) No. 2020/1127 and Council Implementing Regulation (EU) No. 2020/1125 dated July 30, 2020 All documents are available at EUR-Lex. Accessed July 25, 2022. https://eur-lex.europa.eu/ homepage.html?locale=en., etc.

It is, however, important to stress that only EU-registered organisations, their branches, directors, employees and agents need to comply with all of the above restrictions. It needs to be underlined here that due to the purpose of this study, the author found it unnecessary to describe all the US and EU sanctions regimes and focused solely on the most important ones.

Modification or termination of contracts due to international economic sanctions in Russia

Brief history of clausula rebus sic stantibus. A review of the rebus sic stantibus clause should begin with a brief history of its origin. According to Roman law, the debtor could not refuse to fulfill his obligations in the event of “substantial change of circumstances” (Thier 2011, 16). Lawyers relied on the principle “pacta sunt servanda” and assumed that the parties had to envisage all possible changes of circumstances when concluding a contract. This principle indicates that once a contract has been concluded by the parties, it must be performed. Should the parties fail to perform their obligations, they will become subject to enforcement. It was allowed to terminate a contract only as a result of complete de facto or de jure impossibility of performance.

The evolution of Roman law gave rise to the idea that performance of obligations under a contract, regardless of de facto circumstances, is not always correct and fair. For example, Marcus Tullius Cicero (De Officiis 3, 95) described the following situation: if the owner of a sword had deposited it and was later declared insane, it would be unreasonable to return the sword to him (Thier 2011, 16). As a ground for non-performance, Marcus Tullius Cicero designated exactly the circumstances that arose during the performance of the contract, in which the performance of obligations under the contract would be a direct threat both to the creditor and to third parties. The same example was later used by Aurelius Augustine (Psalmum V, 7 in fine) Aurelii Augustini Opera omnia. Patrologia Latina, vol. 36: Enarrationes in Psalmos. Accessed Sep-tember 21, 2021. https://www.augustinus.it/latino/esposizioni_salmi/index2.htm. to illustrate situations where it is possible not to keep a promise. Lucius Seneca wrote that in every promise and obligation there is an implied clause, which sounds approximately as follows: I undertake to fulfill the promise if I am able and in a position equal to the one at which the obligation arose. In doing so, both parties must make an effort to ensure that the purpose of the contract and benefits to the parties remain unchanged (Seneca 1995, 97). The idea that a change of circumstances may somehow affect the enforceability of a contract was developed during the Middle Ages due to rather unstable economic conditions. In general, it is often the lack of economic stability that is the impetus for the development of new legal institutions, especially those relating to possible difficulties or impossibility of performance. As the economy struggled with crises, the legal system was forced to adapt to the changing reality. The former principle “pacta sunt servanda” was supplemented by “rebus sic stantibus”.

Medieval theologians, although holding to the idea of the sanctity of the contract, began to speculate about the previously described concept of the implied clause. A collection of ecclesiastical canons compiled in the 12^th century, the Decretum Gratiani¹⁹, included clauses on the admissibility of oaths and lies of necessity. As a result, there was a general understanding in canon law that the clause “rebus sic se habentibus" was an important condition, or even principle, of private law. Moreover, such a clause was considered “implied".

The natural law school evolved differently; in particular, much greater importance was attached to the principle of “pacta sunt servanda". For this reason, the possibility of non-performance of obligations due to changed circumstances was seen as an unacceptable violation of this fundamental principle. Thus, a vibrant discussion on this subject arose. Hugo Grotius opposed the recognition of the “rebus sic stantibus” clause as an implied clause. In this regard, he pointed out that newly arisen circumstances may be in clear contradiction with the original will of the parties at the time of conclusion of the contract, if it is a change in those contractual obligations which motivated the conclusion of the contract.

Despite the existence of a number of studies and development of thought on the subject, this doctrine did not often apply in practice, since it was not clearly fixed by national legal acts. Until today, a number of jurisdictions use this instrument in a very limited way. As for international law, clausula rebus sic stantibus is deemed to be one of the oldest norms of customary law (Lauterpacht 2004, 14-15). Its variations are set forth in a number of international legal acts. Generally, in international law, this legal institute is called “hardship". Various acts provide for different types of legal consequences of hardship as follows:

— termination or withdrawal from a contract;

— amendment of a contract by court;

— duty to renegotiate a contract;

— exemption from liability in damages (this possible legal consequence is currently the subject of considerable debate).

The first variation is presented in Art. 62 (1) of the 1969 Vienna Convention on the Law of Treaties Accessed July 25, 2022. https://gratian.gratian.org. ^{Accessed July 25, 2022.} https://legal.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf.:

A fundamental change of circumstances which has occurred with regard to those existing at the time of the conclusion of a treaty, and which was not foreseen by the parties, may not be invoked as a ground for terminating or withdrawing from the treaty unless:

(a) the existence of those circumstances constituted an essential basis of the consent of the parties to be bound by the treaty; and

(b) the effect of the change is radically to transform the extent of obligations still to be performed under the treaty.

This provision is only applicable when terminating or withdrawing from the treaty, but not modifying it.

Another version of hardship is provided in Art. 6.2.3 of the UNIDROIT Principles of international commercial contracts 2016 (“UNIDROIT Principles”). It encompasses three of the four above types of legal consequences of hardship. According to the UNIDROIT Principles, in case of hardship a party to a contract may request renegotiations. Solely if the parties do not reach an agreement in the course of negotiations, the court may terminate or adapt the contract. Similar provisions are specified in the Principles of European Contract Law Principles of European Contract Law. Parts I and II. Combined and Revised. 2000. Eds Ole Lando, Hugh Beale, pp. 322-327. Alphen aan den Rijn, Kluwer Law International.. As for the last type of legal consequences of hardship (exemption from liability in damages), it is currently subject to scientific discussion. This is due to the fact that this effect of hardship indirectly follows from the provisions of Art. 79 of the 1980 United Nations Convention on Contracts for the International Sale of Goods. The application of Art. 79 to hardship is disputable, as it applies primarily to force majeure. At the moment, the prevailing opinion is that this provision covers not only force majeure events, but also hardship CISG-AC Opinion No. 20, Hardship under the CISG, Rapporteur: Prof. Dr. Edgardo Munoz, Uni- versidad Panamericana, Guadalajara, Mexico. Adopted by the CISG Advisory Council following its 27th meeting, in Puerto Vallarta, Mexico on February 2-5, 2020. See also: (Schwenzer 2008, 713-725).. Therefore, the author named this type of legal consequence of hardship among others.

Below the author elaborates in more detail on this doctrine within the framework of Russian legislation and court practice.

Clausula rebus sic stantibus in Russian legislation and court practice. Clausula rebus sic stantibus was unknown to the Russian national legal system until the introduction of the Civil Code of the Russian Federation Hereinafter all references to Russian regulations and court practice are given according to the data from the “ConsultantPlus” system. Accessed September 21, 2021. http://www.consultant.ru. (“Russian Civil Code”) in 1994. To begin with, Russia built its legal system to a very large extent through legal reception, and consequently, most of legal instruments appeared in Russia after their detailed development and application abroad. Secondly, in the USSR it was actually impossible to develop this doctrine exactly as we know it, since the USSR used to have a planned economy rather than a market one.