Research On The Validity Of International Commercial Contracts Under Unilateral Trade Sanctions

In recent years,as trade between countries has become more frequent and economic globalization has expanded,more and more international commercial entities are engaged in cross-border transactions.However,with the prevalence of unilateralism in some countries,the increasing frequency of trade sanctions has restricted the freedom of transactions of subjects of international commercial transactions,giving rise to many contractual disputes where unilateral trade sanctions have resulted in non-performance.From China's perspective,enterprises,the legislature and the judiciary lack theoretical knowledge of the impact of unilateral trade sanctions on international commercial contracts,and do not know how to deal with and minimize the impact of unilateral trade sanctions.Therefore,the study of the effects of unilateral trade sanctions on international commercial contracts has certain theoretical and practical significance for enterprises and relevant state authorities to respond correctly to unilateral trade sanctions.The reasons why unilateral trade sanctions,as public law norms,in practice have extraterritorial effects on the transnational transactions of enterprises in another country,which violate the principle of territoriality of public law,deserve to be explored.It is also worth examining whether a party can invoke the exclusion clause of CISG and PICC when a court or arbitral institution applies the Convention and PICC to a contract affected by unilateral trade sanctions.In terms of the type of unilateral trade sanctions,different forms of trade sanctions,as well as different penalties for their violation,have different effects on the performance of international commercial contracts,creating different characteristics of obstacles,but not necessarily cutting off the possibility of performance altogether.It is this uncertainty in different situations that causes some difficulties for courts or arbitral institutions in dealing with such cases.From the point of view of the domestic law of each country to examine the effects of unilateral trade sanctions on the validity of international commercial contracts,in the English judicial practice under the English "contractual default" principle in the common law system,when an international commercial contract is affected by trade sanctions,the English court will often observe the contractual nature of the contract without exempting the parties from their contractual obligations.From the study of "commercial inability" in the United States,courts can impose economic sanctions indirectly by awarding civil damages for acts occurring extraterritorially,directly under the provisions of the trade sanctions statute.From the French "force majeure" and "unforeseeability" in the civil law system to the German "basis of legal conduct",the courts of both countries have shown flexibility in their approach to unilateral trade sanctions.In the current international environment,where sanctions are frequent,contracting parties often include sanctions disclaimers in their contracts to counter the impact of sanctions.At the same time,in the light of article 79 of CISG,unilateral trade sanctions,as a basic governmental restrictive sanction regulation,have a mandatory nature that cannot be eliminated and should be considered as an exclusion of liability in disputes over the validity of international commercial contracts.If the contract can be continued(e.g.,alternative solutions are sought),it should be continued,and if it cannot be continued,the contract should be terminated,and damages awarded.If a party asserts a third party exemption,the specific position of that third party in the entire chain of contract performance should be examined as a whole,and if it assumed part of the seller's obligations under the contract during the entire contract performance,the seller should be able to assert the exemption on third-party grounds under CISG.In the light of the exclusion clause in the PICC,a court,when applying the PICC to a dispute of this type,may consider the existence of a substantial possibility of granting an exclusion of liability to an adverse party if a party to an international commercial contract can prove that the unilateral trade sanction occurred within the period of performance of the contract and that it was unforeseen and beyond the control of the adverse party at the time of the unilateral trade sanction.Where a party asserts force majeure,it needs to demonstrate the unpredictability of unilateral trade sanctions and be able to demonstrate that it was unable to seek alternatives at the time the sanctions were imposed before it can invoke the exemption.The applicable distinction between hardship and force majeure,on the other hand,is that force majeure should be asserted if the purpose of the party affected by the sanctions is to obtain an exemption from liability for non-performance of its obligations.If the purpose is to renegotiate the terms of the contract,hardship should be asserted.Finally,having reached the above conclusions,the author makes some suggestions on how Chinese enterprises and relevant State organs should respond to the issue of unilateral trade sanctions affecting the validity of international commercial contracts.Given that,at the time of writing,China and the United States are at a critical juncture in the trade war,the author believes that Chinese enterprises should conduct an adequate risk assessment before cancelling trading contracts,while developing and implementing trade compliance plans.In order to minimize risk,efforts are also needed to seek the removal of the enterprise itself from the specially designated List,the list of entities and unverified lists.The Chinese legislature should also carefully enact a deterrence law to reduce the negative impact of unilateral trade sanctions,while the Supreme People's Court should issue relevant judicial interpretations on the application of CISG and the interpretation and supplementation of PICC to CISG,and should also improve the judicial interpretation of the relevant provisions of domestic law to facilitate the courts in making correct and appropriate decisions.