Data

Date:: 27-03-2024
Country:: Russian Federation
Number:: A43-16584/2023
Court:: First Arbitrazh Appellate Court
Parties:: Polyplast v Polyplast North-West

Keywords

SUPPLY AGREEEMNT - BETWEEN TWO RUSSIAN COMPANIES – REFERENCE TO UNIDROIT PRINCIPLES IN ORDER TO INTERPRET APPLICABLE DOMESTIC LAW (RUSSIAN LAW)

HARDSHIP - NO AUTOMATIC RIGHT TO WITHHOLD PERFORMANCE - REQUEST FOR RENEGOTIATION OF THE CONTRACT TO BE MADE "WITHOUT UNDUE DELAY - REFERENCE TO UNIDROIT PRINCIPLES (ART. 6.2.3)

Abstract

The claimant relied on Article 451 of the Russian Civil Code, arguing that EU sanctions and related restrictions constituted a fundamental change of circumstances, making performance economically unavailable and threatening bankruptcy.

The first instance court rejected the claim, and the appellate court upheld that decision.

The Appelate Court emphasized that sanctions and increased transport costs form part of ordinary entrepreneurial risk. Referring to Russian law, it noted that contract stability is prioritized unless the claimant proves unforeseeability, disproportionality, and lack of assumption of risk. In the case at hand, however, the claimant concluded an additional agreement in 2022 after sanctions were already in place, circumstance which undermined its argument of unpredictability.

The judgment explicitly invoked the UNIDROIT Principles of International Commercial Contracts, particularly Article 6.2.3 on hardship. According to these principles, a party must request adaptation or termination within a reasonable time; failure to act promptly violates good faith. The court stressed that economic sanctions are a foreseeable element of international trade and should be addressed through contractual risk allocation (e.g., force majeure or hardship clauses).

Accordingly, the appeal was dismissed, confirming that the presence of economic sanctions did not justify contract termination.

Abstract in English kindly provided by Roman Zykov.

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