Seeking Certainty and Cooperation in the Face of Escalating Sanctions

June 16, 2023 | BY

Susan Mok

Sanctions are an increasing area of business risk for those doing business with Chinese enterprises. Jianwei (Jerry) Fang and Chuchen (Julie) Hou of Zhong Lun Law Firm analyze so-called sanction-proof clauses and how they could assist businesses in China seeking to negotiate their ongoing business relationships.

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Summary

  • The core purpose and effect of sanction-proof clauses is to suspend or discharge a party's contractual obligation where the imposition of sanction on the other party renders the performance of the contract in violation of laws
  • Where Chinese entities are involved in sanctions, the newly formed Chinese legal system for anti-foreign sanctions and its impacts must be taken into consideration when negotiating sanction-proof clauses
  • Sanction-proof clauses may consist of various parts, and each part should  be carefully considered and formulated with clear and specific wording