The sanctions imposed by the EU, the US and the UK against Russia and Belarus have far-reaching consequences for business life and the daily work of companies. In addition to our overview of the sanctions imposed (to be found here), we would also like to answer urgent questions related to the sanctions.
Our experts have summarised the answers to the most frequently asked questions on payment transactions & flows of goods, contract law, labour law and cyber security. With this, we want to give you an initial assessment of the situation and any need for action. Our experts are of course also available for further questions or individual advice on all topics relating to the sanctions against Russia and Belarus and the effects on your company.
Payments & flows of goods
Questions and answers on common topics around the sanctions against Russia and Belarus
▪ Do I have to/should I pay invoices to Russian suppliers?
▪ Can I receive payments from listed companies?
▪ Can I adjust payment terms with my Russian suppliers?
▪ Are my suppliers liable to me for the loss of their suppliers/ Tier 2 suppliers due to the sanctions?
▪ What impact do sanctions have on the flow of goods in my supply chain?
▪ What is Force Majeure?
▪ Is the Ukraine War a Case of Force Majeure?
▪ What effect does force majeure have on my contract?
▪ Can contracts with Russian companies be terminated due to the sanctions?
▪ Can the price increases that are expected or have already occurred due to the Ukraine war be passed on to the customer?
▪ Can I dismiss workers who make pro-Russian statements or do not clearly distance themselves?
▪ What are the consequences for me as an employer if my employees are called up as Bundeswehr reservists?
▪ Can I employ Ukrainian refugees in my company?
▪ What labor regulations should Ukrainian refugees be aware of?
▪ Does my cyber insurance also cover warlike attacks of any kind or are there exclusions for this case?
▪ How should my cybersecurity respond to a war that is no longer fought with weapons alone?
Payments & flows of goods
Do I have to/should I pay invoices to Russian suppliers?EU sanctions prohibit direct and indirect economic interactions with listed persons, companies in which a listed person has at least a 50% stake, and companies dominated by listed persons.
This so-called prohibition of payment and provision includes transfers of money, sale of goods, provision of services, management of assets as well as the provision of other economic resources, e.g. cash, cheques or loans.
Whether persons, groups and organisations are covered by the sanctions can be checked here.
Can I receive payments from listed companies?Payments from contracts concluded before the listing of the person or company may be received if the goods have already been delivered. However, an authorisation must usually be applied for from the tax authorities and sent to the recipient bank. Payments to listed persons are prohibited regardless of when the contract was concluded (see above).
Can I adjust payment terms with my Russian suppliers?As long as the contractual partner is not covered by the sanctions and the goods in question are not controlled goods (military goods and so-called dual-use goods, i.e. goods that can be used not only for civilian purposes but also for military purposes) and other goods whose export is restricted by the sanctions, a mutually agreed adjustment of the payment terms is conceivable. In individual cases, a claim for adjustment of the contract may be considered if the continuation of the contract at the agreed conditions is unreasonable. It must also be examined whether war situations in individual cases fall under any agreed force majeure clauses (allocation of risk for events of force majeure) and on this basis a contractual adjustment claim exists.
Are my suppliers liable to me for the loss of their suppliers/ Tier 2 suppliers due to the sanctions?
- If the supplier is directly affected by the sanctions, i.e. the delivery is prohibited by the sanctions, a case of legal impossibility exists under German law. As a result of the impossibility, both the supplier's obligation to perform and the obligation to counter-perform cease to apply. Consideration already rendered (i.e. payment, for example) must be reversed. The supplier is only liable if he is responsible for the non-delivery, which is to be negated in the case of sanctions. This is not the case if the supplier has assumed a guarantee or risk in the contract, e.g. for delivery failures due to sanctions.
- If deliveries are cancelled due to a lack of preliminary deliveries, the supplier cannot generally invoke impossibility if he could procure the goods from third parties. The fact that this would involve greater effort or increased costs does not generally release the supplier from his obligation to deliver. In exceptional cases (e.g. particularly extreme price increases) a contractual adjustment may be considered. If a reservation of self-supply has been contractually agreed, the supplier may invoke this with the consequence that he is released from his delivery obligation.
What impact do sanctions have on the flow of goods in my supply chain?In addition to the above-mentioned ban on payment and provision, sanctions apply to certain deliveries of goods to Russia that may lead to interruptions or difficulties in the supply chain. Goods in this sense are basically goods, software and technology.
The military embargo prohibits in particular all direct and indirect exports of military goods to Russia. This also includes the export of all goods that have a military end-use, even if they are not subject to declaration or authorisation.
The export of goods that may contribute to Russia's military and technological development is also prohibited (Regulation 833/2014, Article 2a and Annex VII).
The export of dual-use goods (i.e. goods that can be used for military as well as civilian purposes) to Russia is prohibited, regardless of whether they originate in the EU or not. The current list of dual-use goods can be found in Annex I of Regulation (EU) 2021/821 of 20 May 2021.
What is Force Majeure?So-called force majeure clauses are contractual clauses that regulate how the contracting parties deal with an unforeseeable event of force majeure.
The exact form of the force majeure clause varies from contract to contract, so that the applicability of the clause must be examined in each individual case.
Force majeure clauses can be formulated in very general terms. An event is then defined as a force majeure if it is unavoidable, unforeseeable, beyond the control of the parties and not caused by either party. In this case, it is not clear from the outset whether a particular event is subject to force majeure. This can only be determined by interpreting the contract as well as the parties' intentions.
On the other hand, the force majeure clause may also contain a list of possible events which the parties always consider to be force majeure. This list usually includes explosions, fire, floods, fog or bad weather, hurricanes, earthquakes, epidemics or the outbreak of war.
Here it is necessary to examine whether the clause only defines the enumerated events as force majeure or whether the events are only listed as examples.
Is the Ukraine War a Case of Force Majeure?This question can only be answered on a case-by-case basis. Although the outbreak of war meets the requirements that correspond to the general definition of force majeure, the parties may have expressly excluded the outbreak of war.
Attention should also be paid to the frequently agreed requirement of the unforeseeability of the force majeure event. If a contract is concluded after the outbreak of war, there is a risk that the obligor will no longer be able to invoke the force majeure clause because the outbreak of war is no longer unforeseeable.
What effect does force majeure have on my contract?Typically, the parties regulate with force majeure clauses that certain events which may have an influence on the performance of one or both parties do not give rise to claims of the other party. In this respect, force majeure may mean that the contracting party affected by the force majeure event is not liable for the delay in delivery or the failure to deliver. It may also be that the other party is then granted a right of withdrawal.
Can contracts with Russian companies be terminated due to the sanctions?If the sanction relates to an obligation of the parties under the contract, which, for example, means that the object of purchase may no longer be sold to Russia due to an EU sanction, the sanction is a legal prohibition. This has the consequence that the debtor of the performance obligation is prohibited from fulfilling its performance obligation. Admittedly, the contractual partner's obligations do not automatically expire; rather, the contract continues to exist. However, the creditor can no longer enforce his claim to receive the goods because the seller is unable to deliver. As a result, the obligation to deliver is suspended and possibly even cancelled.
If the sanction does not affect the contract, there is no statutory right of termination. If the supplier wishes to terminate the contract in this case, this can only be done by means of a contractually agreed right of termination. If the contract provides for such a right, it depends to a large extent on the form of the contract whether the outbreak of war and the sanctions imposed as a consequence justify termination of the contract. For example, it would have to be examined whether the contracting party can terminate without giving reasons or whether only certain reasons entitle the party to terminate or withdraw from the contract.
Can the price increases that are expected or have already occurred due to the Ukraine war be passed on to the customer?An adjustment of the contractual partner's payment obligation can legally only be achieved through the institute of adjustment of the basis of the contract (§ 313 BGB). This basis of claim has high prerequisites, which are handled very restrictively.
Pursuant to section 313 of the German Civil Code (BGB), a serious change of circumstances which have become the basis of the contract and which leads to the fact that the parties, had they known about these circumstances, would not have concluded the contract or would have concluded it with a different content is required.
The highest hurdle is regularly the delimitation of the parties' areas of risk. If one party alone bears the risk for its contractual obligation, no subsequent adjustment can be demanded.
In principle, the debtor of the performance obligation bears the so-called procurement risk. According to the law, he is obliged to deliver the goods he has contractually agreed to deliver, regardless of the price at which he has to purchase the goods himself.
Case law treats cases in which there have been significant price increases differently. For example, in some decisions price increases of 100 %, and later 200 %, were considered sufficient for an adjustment of the contract. In other cases, especially in the trade with raw materials, the courts regularly see the procurement risk with the supplier and refuse an adjustment.
Accordingly, in the case of new contracts, care must be taken to structure the conclusion of the contract in such a way that a price increase occurring later can be passed on to the customer. This can be done in business transactions with other companies, for example, by means of a price adjustment clause. However, it must be ensured that these clauses are designed in such a way that they can withstand an effectiveness test.
Can I dismiss workers who make pro-Russian statements or do not clearly distance themselves?If an employee takes an extreme political position, depending on the intensity, an ordinary or extraordinary dismissal may be justified, even without a warning.
In principle, it is true that employees' political opinions are protected by fundamental rights and are therefore not relevant for dismissal. This is particularly the case if this is lived and articulated in private life and has no effect on work performance.
However, if the political opinion is expressed within the enterprise, this may constitute grounds for dismissal if the industrial peace is disturbed and the industrial peace is concretely impaired. In the case of extreme pro-Russian statements or an ambiguous distancing from extreme statements made, the peaceful cooperation of the employees with each other and with the employer may be shaken or permanently impaired and have detrimental operational effects and therefore justify a dismissal for conduct-related reasons in individual cases. Even off-duty political activity can justify dismissal if it specifically harms the employer, e.g. lowers the employer's reputation. In any case, the decisive factor is that a concrete disturbance has actually occurred due to the employee's internal or external political conduct.
Furthermore, a dismissal under pressure can be considered if this is intended to avoid dismissals of other employees. However, this is not a case of unlawful discrimination, since such a statement shares a political view and not a world view, and such a statement is not covered by section 15 AGG.
What are the consequences for me as an employer if my employees are called up as Bundeswehr reservists?For the duration of the reserve service, the employment relationship is suspended, i.e. the main mutual obligations arising from the employment contract (performance of work and remuneration) cease to apply. In this respect, the employer does not have to pay contributions to pension insurance, statutory health and long-term care insurance and unemployment insurance for this period. Further contributions paid to the occupational pension scheme will be reimbursed to the employer upon application. This also applies proportionately to further costs incurred by the employer, for example, for the deployment of a substitute employee with equivalent qualifications.
With regard to holiday entitlement, the employee's annual leave is reduced by one twelfth for each month of training completed. Accordingly, however, the reservist is entitled to leave for his service in the Bundeswehr.
After completion of the service, the employment relationship shall be revived with all rights and obligations. If an employment relationship is limited in time, it ends with the expiry of the agreed time limit. This also applies if the end of the fixed term falls within the period of the reservist service.
Termination on the grounds of reserve service is in principle not possible either before or after the service.
Employees must inform their employer as early as possible about the planned reserve service, at the latest, however, after receipt of the call-up notice. However, the employer's written consent is only mandatory if a single period of reservist service is to last longer than three months, several individual reservist services in total exceed the statutory total duration of six weeks in a calendar year or a special foreign assignment is planned.
Can I employ Ukrainian refugees in my company?The employment of Ukrainian refugees in a German company is only possible after registration according to § 24 AufenthG. However, this procedure should be possible at short notice, so that the persons can be employed within one week after registration.
Against this background, it is also possible to already offer employment contracts on the condition that registration with registration of the work permit is granted.
What labor regulations should Ukrainian refugees be aware of?The EU has decided to apply the Temporary Protection Directive (RL 200155EG). For the situation in Germany, this means that the asylum procedure no longer applies to refugees from Ukraine. The refugees can register in a simplified procedure as war refugees according to § 24 AufenthG. This gives them an initial right of residence of one year, which can be extended to up to three years. Registration also gives rise to an entitlement to state support in the form of social benefits (maintenance) and medical care.
The registration procedure as a war refugee according to § 24 of the Residence Act should be simple and in some cases even possible by e-mail. Moreover, the persons concerned are to receive a confirmation on the day of registration.
A circular of the Federal Ministry of the Interior, which was published after the EU decision on the application of the Temporary Protection Directive (RL 200155EG) and can be downloaded here, also makes statements on the possibility of employment after registration according to § 24 AufenthG:
According to § 24 para. 6 p. 2 AufenthG, the residence permit entitles the holder to self-employment, but not to employment. In principle, the approval of the Employment Agency is required for this. An exception exists in accordance with § 31 BeschV if a residence title in accordance with § 24 AufenthG has been issued and there are no reasons under residence law to the contrary. According to the urgent recommendation of the Federal Ministry of the Interior, the fact that employment is permitted and does not require the approval of the Employment Agency should therefore already be entered in the residence title with the note "Erwerbstätigkeit erlaubt" ("gainful employment permitted") when the residence permit is issued. The entry should also be made if no employment relationship is foreseeable.
Conversely, it must therefore apply a fortiori if either an employment relationship already exists with another company in the group or an employment relationship is to be concluded in the near future. We therefore recommend that the persons concerned receive a confirmation from the company in writing that they will take up or continue employment with in Germany. The persons concerned should present this confirmation when registering and also refer to the entry of the work permit in the residence title in accordance with the urgent recommendation of the BMI.
Until May 23, 2022, refugees from Ukraine are exempted from the residence permit requirement by Ministerial Regulation (Amtliche Veröffentlichungen – Bundesanzeiger). According to our understanding, this exemption allows for residence, but – because it is precisely not a residence title according to § 24 AufenthG – not the exemption according to § 31 BeschV. The persons concerned would therefore have to apply for registration in accordance with § 24 AufenthG.
In principle, war refugees can be redistributed to other federal states – it is unclear to us whether this also applies if employment in a federal state is already foreseeable.
Does my cyber insurance also cover warlike attacks of any kind or are there exclusions for this case?Whether warlike or cyber-warlike attacks are covered by your cyber insurance depends on what has been agreed in the insurance conditions.
The standard terms and conditions (AVB Cyber) exclude insured events or damage due to war. Damage directly attributable to an armed conflict is thus excluded from the insurance. Whether cyberwar is to be understood as "war" is disputed and depends on the circumstances. In some cyber insurance policies, however, war-like events in virtual space are explicitly included in the exclusion.
However, the cyberwar exclusion would only apply if the attack was not carried out by terrorists or private hackers, but with the deliberate sponsorship of a state. Insurers would have to prove that a foreign state was behind the attack, which is practically difficult.
How should my cybersecurity respond to a war that is no longer fought with weapons alone?In the event of cyberwar, cybersecurity measures must be upgraded, especially for operators of critical infrastructures (energy, information technology/telecommunications, transport/traffic, health, water, food or finance/insurance) and for providers of digital services.
Cybersecurity measures must be taken in proportion to the risk; a cyber war increases this risk. The Federal Office for Information Security (BSI) already classifies the threat situation for Germany as increased and has already called on affected companies to be vigilant and ready to react.
Possible preparatory actions include reviewing contingency plans, ensuring availability of IT specialists, updating software and backup measures, and creating backup copies.
The content of this notice does not constitute legal advice and is provided for general information purposes only. For further information, please contact:
Sara Bandehzadeh, LL.M. (San Francisco), Partner, Corporate
Dr. Stefanie Greifeneder, Partner, Commercial IP
Dr. Marcus Iske, Partner, Labour law
Oliver Süme, Partner, Technology
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