International trade in geopolitical uncertainty involves the execution of cross-border transactions against a backdrop of sanctions, trade wars, conflicts, and political shifts. At Musch Legal, we observe that geopolitical risks have fundamentally changed since 2022. Russian sanctions, US-China tension, and revised trade relations require active legal monitoring. Those who contract without preparation bear risks that could otherwise be managed contractually.
What is the legal issue? (How does geopolitics affect your contracts?)
Geopolitical developments fundamentally change trade opportunities: new sanctions prohibit delivery to certain parties, trade tariffs suddenly increase costs, export restrictions block technology exports, and conflicts disrupt supply chains. Existing contracts often lack a mechanism for these changes — parties remain bound by unenforceable obligations or bear unintended costs. Legal preparation makes the difference.
What does the law say? (Which frameworks affect geopolitical trade?)
EU sanctions via Regulation 833/2014 (Russia), 765/2006 (Belarus), 2580/2001 (terrorism), 269/2014 (asset freezing). US OFAC sanctions with secondary effects. UK Sanctions and Anti-Money Laundering Act 2018. Export control under EU Regulation 2021/821. For force majeure: Article 6:75 of the Dutch Civil Code, Article 79 of the CISG. For hardship: Article 6:258 of the Dutch Civil Code, ICC Hardship Clause 2020. For trade tariffs: WTO agreements and EU Common Commercial Policy.
For investment protection: Bilateral Investment Treaties and ICSID.
Geopolitical risk
Legal instrument
Prevention
Sanctions
Sanction clause + force majeure
Automated screening
Tariff increase
Hardship clause + indexation
Tariff pass-through clause
Export restriction
Force majeure clause
Pre-export compliance check
Political expropriation
BIT + ICSID arbitration
Structuring via Dutch holding company
Supply chain disruption
Alternative supplier clause
Multi-sourcing
Geopolitical risk
Legal instrument
Prevention
Sanctions
Sanction clause + force majeure
Automated screening
Rate increase
Hardship clause + indexation
Tariff pass-through clause
Export restriction
Force majeure clause
Pre-export compliance check
Political expropriation
BIT + ICSID arbitration
Structuring via Dutch holding company
Supply chain disruption
Alternative supplier clause
Multi-sourcing
What risks do companies face? (What damage threatens in the event of a geopolitical crisis?)
In the event of new sanctions: prohibited compliance with criminal risk under the Sanctions Act 1977. In the event of a tariff increase: contracts loss-making without pass-through. In the event of an export restriction: blocking of deliveries. In the event of a conflict: supply chain failure. For investments in unstable jurisdictions: political expropriation without compensation. Accumulation of risks during a broad geopolitical crisis can affect continuity. Reputational damage due to involvement with sanctioned parties.
Practical example from our practice (How did clients react to Russia sanctions?)
Musch Legal advised a Dutch exporter who had a supply contract with a Russian client in February 2022 without a sanctions clause. Supply was prohibited under Regulation 833/2014. The client demanded performance or damages of 1.8 million euros. We defended under Article 6:75 of the Dutch Civil Code (force majeure due to statutory impossibility) and won. When renegotiating contracts for other clients, we incorporated a sanctions clause, a hardship clause, and multi-sourcing for critical components. Clients with this structure were immediately executable upon the next sanctions expansion.
What can you do? (Which geopolitical framework are you building?)
Implement geopolitical risk framework: sanctions clauses and automated screening, hardship clauses for long-term contracts, alternative suppliers for critical components, BIT structuring for unstable investments, force majeure clauses tailored to pandemic, sanctions, and conflict risk. Periodic legal radar for monitoring. Engage Musch Legal for geopolitical risk assessment.
The impact of sanctions on existing contracts