Overcoming the challenges of trade and economic sanction regimes

Overview

In this video, Brian Mulier explains trade and economic sanction regimes and gives his five tips for minimising disruption.

Other topics covered in this video include:

  • What governing bodies have the power to trade and economic impose sanctions.
  • Which governments and/or sectors are most commonly impacted.
  • The practical challenges that sanctions present for businesses trading with sanctioned industries or countries.
  • Why financial institutions often block funds transfers, even when these transfers are not subject to sanctions.
  • Why exporters are particularly at risk from witheld funds and what they can do to protect themselves.
  • Why due diligence is key to minimising the impact of sanctions.
  • The importance of screening counter parties in trade deals.

Want to know more?

On 9 December 2014 Bird & Bird's Dutch Trade & Customs group hosted a successful seminar "A closer look at EU sanctions and other restrictive measures" in The Hague. This seminar has been recorded.

Please click here to learn more about this.

Featured contacts

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Brian Mulier

Partner
Netherlands

Call me on: +31 (0)70 353 8800

Transcript

Overcoming the challenges of trade and economic sanction regimes
Brian Mulier

I will try to keep it as brief as possible and as simple as possible.  Sanctions are an instrument to bring about a change in activities or policies such as violations of international law or human rights.  Sanctions maybe imposed by the EU on an autonomous basis or by implementing binding resolutions from the security council of the UN. 

Sanctions and restrictive measures are in fact the same they may target third country governments, non-state entities, individuals and may comprise arms embargoes import and export bans, travel bans financial restrictions and other measure as appropriate.

 Basically sanctions impact all business that are involved in a transaction with a sanctioned party or a sanctioned country.  Let's take Russia as an example because that's a hot topic these days.  It is a misunderstanding that all transactions involving parties in Russia are prohibited for all of the scope of the EU sanctions against Russia.  What they see in daily practice is that if a transaction is authorised either because it does not fall under the scope of the EU sanctions against Russia in my example or the government in the country where the exporter is established has issued a licence to authorise the transaction what we see is that banks refrain from processing payments from a Russian bank account to a European bank account.  It all has to do with banks implementing their selves restrictive measures against Russia but in a much more stringent way than is required by law and just by protecting themselves and complying with the regulation they refrain from processing such transactions and that is for exporters really a burden and a major issue where they have supplied legally products or services to Russian customers but where they encounter issues when receiving the payments. 

What clients can do if their business is impacted by sanctions is minimise disruption and it all comes down to compliance.  What you need to do is to make sure that upfront you have the forms and clear due diligence and in that respect I have I think 5 tips.  Tip 1 is due diligence, screen your counterparties, document what you have done in terms of screening, if you are screening one of your counterparties make sure there is a standardised process of how to screen and that you have the availability of published sanctions lists.  Tip 2 is once you have done the screening at the same time determine how future transactions or if future transactions may require a licence.  It will save you a lot of time if you have this information upfront and it will minimise business interruption.  Tip 3 is building contractual protection.  If you are in the process of negotiating the contract, make sure that you obtain certifications or warranties from your counterparty at the same time require your distributor or agent if any to perform screening and I think that is very important building contractual provision that allows termination or suspension of fulfilment of the contractual obligations if sanctions apply.  Tip 4 would be stay up to date with sanctions developments and tip number 5 my final tip I think very important tip in this respect is in case of any doubt contact expert lawyers and ask for their advice.  Bird & Bird has a team of lawyers specialising in trade and sanctions regimes keeping a close eye on all the developments in the sanctions and are well placed to provide such advice.

END

This document is a transcript of an edited video recorded in September 2014.