There is no need for someone else’s grief – Newspaper Kommersant No. 205 (7406) dated 11/07/2022

The uncertainty in the economy caused by the international sanctions imposed against the Russian Federation due to the military operation in Ukraine has a negative impact on business activity, which is why regulators often return to the idea of ​​artificially redistributing losses among market participants. The state is ready to take on part of the risks by expanding the list of benefits in exchange for companies’ investments – this practice has proven itself in the context of COVID-19, applies now. But international business contracts remain outside the sphere of influence of the authorities: if enterprises are unable to fulfill their obligations, counterparties and creditors demand payment of fines from them.

In 2022, the government proposed to massively terminate contracts that are unenforceable due to sanctions if obligations are violated by the company’s counterparties, the market does not have the goods it needs, or the debtor simply does not have the money, recognizing such situations as force majeure. The mechanism has recently also been quite actively used by the government. Force majeure (but only for the needs of state contracts) was recognized as COVID-19, and the Crimean sanctions, and partial mobilization.

However, in relation to market entities, such norms are de facto an attempt to artificially redistribute losses between them, which can either create a “domino effect” and cause “serial” bankruptcies, or result in the nationalization of losses. This has been discussed more than once with business, lawyers and economists – so, after discussions, the authorities abandoned their attempts to shift the losses of tenants due to lockdowns to private landlords in 2020, eventually freeing only state property tenants from payments.

The question of whether sanctions specifically constitute force majeure has also been discussed since the annexation of Crimea in 2014. Then it was decided that the decision to recognize the sanctions as force majeure in each case is made by the court. Nevertheless, a new draft law recognizing sanctions as “force majeure” was written – and again faced with reasonable objections: last week, the Presidential Council on Codification and Improvement gave clarifications that there are tools in the legislation, and the situation can only be aggravated civil law.

Risks are the other side of business profits, and he takes them into account. The problem of artificial risks (such as sanctions) lies outside the economic plane. And perhaps, instead of a new attempt to declare them force majeure, it would be worth spending resources on writing one and much shorter bill – directly prohibiting the transfer of losses of some companies to others by decisions of officials. The business climate would probably benefit from this.