Sanctions and export restrictions in disputes are legal conflicts arising from government restrictions on trade with certain countries, entities, or persons. At Musch Legal, we have been working intensively on sanctions disputes following Russian sanctions since 2022. Sanctions can render contracts unenforceable and trigger force majeure, termination, and damages claims. Prompt action under legal advice is required; non-compliance leads to heavy fines and reputational damage.
What is the legal problem? (What disputes arise?)
Disputes arise regarding: contractual deliveries rendered unenforceable by sanctions, payment blockades, termination following sanctions, damages for an unenforceable contract, and due diligence failures in the event of a sanctions violation. For Dutch companies since the 2022 Russian invasion: massive renegotiation of Russian contracts. Regarding exposure to US sanctions (extraterritorial reach): risk of US fines for Dutch companies that have no connection with the US.
What does the law say? (Which frameworks apply?)
EU sanctions against Russia: Regulation 833/2014 with extensions since 2022 (16th package 2024 covering financial services, transport, dual-use). Regulation 2580/2001 anti-terrorism; Regulation 2017/2063 Venezuela; Regulation 2010/204 Iran (partially). For export control of dual-use: Regulation 2021/821. For implementation in the Netherlands: Sanctions Act 1977 and Sanctions Regulations. US: OFAC Specially Designated Nationals List (SDN), Sectoral Sanctions Identifications List (SSI), secondary sanctions reach extraterritorial. For force majeure: Article 6:75 of the Dutch Civil Code; CISG Article 79; common law frustration of contract.
EU Blocking Statute (Regulation 2271/96) prohibits compliance with certain US sanctions by EU persons — clash between regimes.
Sanction regime
Law/Regulation
Scope
EU Russia
Regulation 833/2014
EU persons worldwide
EU Iran
Regulation 2010/204
EU persons worldwide
US OFAC SDN
IEEPA + executive orders
Worldwide (secondary)
UK sanctions
Sanctions and Anti-Money Laundering Act 2018
UK persons worldwide
EU Blocking Statute
Regulation 2271/96
Prohibition of compliance with US-secondary
Sanctions regime
Law/Regulation
Scope
EU Russia
Regulation 833/2014
EU persons worldwide
EU Iran
Regulation 2010/204
EU persons worldwide
US OFAC SDN
IEEPA + executive orders
Worldwide (secondary)
UK sanctions
Sanctions and Anti-Money Laundering Act 2018
UK persons worldwide
EU Blocking Statute
Regulation 2271/96
Prohibition of compliance with US-secondary
What risks do companies face? (What is the threat of sanctions?)
Fines for sanction violations: EU up to statutory maximums per Member State (NL: 870,000 euros or capital gains); US up to millions of dollars (OFAC settlements often amount to 10-100 million dollars). Criminal prosecution possible. For enterprises: reputational damage and loss of bank accounts (banks refuse sanctions-exposed customers). For contracts: claims from both sides (party that wants to deliver but cannot; party that does not receive). For Blocking Statute: catch-22 between EU and US regimes.
Practical example from our practice (How did we resolve Russia dispute?)
Musch Legal represented a Dutch machine builder with an 18 million euro contract for a Russian industrial client, affected by the July 2022 Extension Regulation 833/2014. The client could no longer deliver (sanction); Russian client demanded delivery or a €12 million penalty. We pursued: a force majeure claim under Section 6:75 of the Dutch Civil Code with sanctions as an external non-attributable cause, frustration or contract under choice-of-law English law, and partial performance of pre-sanction deliveries. ICC arbitration in Stockholm: contract terminated without penalty; pre-sanction delivered machines were paid for. Client avoided a €12 million penalty and a violation of sanctions.
What can you do? (Which sanctions strategy are you building?)
For new contracts: add sanctions clauses (force majeure, termination right, indemnification for non-compliance). Conduct due diligence on counterparties against SDN lists and sanction screening tools. Build a sanctions compliance program with training and monitoring. In the event of an incident: engage sanctions counsel immediately. For existing contracts with affected parties: renegotiation, suspension, or termination under force majeure. For Blocking Statute issues: apply for a permit from the Investment Review Office. Engage Musch Legal.
Sanctions and export control 2026: current frameworks