International economic sanctions in civil international law: a theoretical aspect.

Butakova Yana Sergeevna ORCID: 0000-0002-8686-5384 Postgraduate student at the Faculty of Law of the Higher School of Economics 108814, Russia, Moscow, blvd. Scandinavian, 2 to 4 yanabutakova@yandex.ru Other publications by this author

Despite the fact that the UN General Assembly has spoken out about the inadmissibility of the practice of applying unilateral measures not authorized by UN bodies: "unilateral economic measures as a means of political and economic coercion of developing countries", "refusal to use unilateral extraterritorial economic coercive measures as a means of exerting political and economic pressure", "the need to stop economic, trade and financial the blockade imposed by the United States against Cuba", "human rights and unilateral coercive measures" (see UN General Assembly Resolutions: A/56/179, December 21, 2001; A/58/301, September 11, 2003, A/59/266, August 16, 2004), unilateral restrictive measures are a modern legal, political reality and need in-depth analysis.

G. Hufbauer, in his writings on the economics of sanctions, argued that sanctions are an integral part of international diplomacy, a tool for forcing target governments to certain areas of response [Hufbauer, Schott, Elliott, 1990, P. 119]. In most cases, the application of sanctions presupposes the willingness of the initiator country to interfere in the decision-making process of another sovereign state, but in a measured manner, complementing the diplomatic aspect without the immediate introduction of military force.  The author identifies three areas of sanctions within the framework of international economic sanctions - export restrictions, import restrictions or restrictions in the banking and financial sphere (restrictions on banking operations, asset freezing). Of course, most modern sanctions regimes are a combination of trade and financial sanctions [Hufbauer, Schott, Elliott and oth., 2007, P. 112]. And F. Gumeili believes that sanctions are politically conditioned measures resulting from violations of international norms [Giumelli, 2011].

In the Draft Articles on Responsibility of States for Internationally Wrongful Acts (Draft Articles on Responsibility of States for Internationally Wrongful Acts), the International Law Commission defined sanctions as "collective coercive measures, the decision on the implementation of which is taken by an international organization or group of States." Subsequently, the UN International Law Commission, when preparing the above-mentioned Draft Articles on Liability [Kalinin, 2005, pp. 31-32], deliberately abandoned the use of the term "sanctions", replacing it with "measures" and "countermeasures" to describe the "horizontal" reactions of States to international violations.

A number of studies interpret international sanctions too broadly and often identify or confuse them with forms of international legal responsibility [Kurdyukov, Keshner, 2014].

At the same time, modern sanctions are primarily economic in nature – they are commercial or trade, as well as financial measures. It can be argued that international economic sanctions are coercive measures that have a material and/or non-material negative impact. They can be both domestic or national (internal sanctions) and international (international sanctions) in nature. E. Voitovich points out that the decision to impose economic sanctions may be taken by authorized state authorities, international organizations, groups of states or individual states [Voitovich, 2014, p. 113]. But in our opinion, the authority of an individual State to impose unilateral restrictive measures is controversial, with the exception of State self-help (countermeasures) in the context of international law.

State self-help is an alternative to UN sanctions by taking nonviolent measures. At the same time, both self-help and countermeasures are often used as interchangeable synonyms, which is incorrect from the standpoint of the international legal conceptual and categorical apparatus. Comment 2 to section 2, comment 2 to Article 52 of the Draft articles on the responsibility of States for internationally wrongful acts call countermeasures a form of self-help of the affected State [Sobakin, 1962, p.145]. 

G. Hufbauer, understands international economic sanctions as "intentional, governmental withdrawal or threat of withdrawal from ordinary trade or financial relations" [Hufbauer, Schott, Elliott and oth., 2007, P. 3].

The legal nature of the influence of foreign legal acts on private law relations complicated by a foreign element should be determined taking into account their place in the mechanism of legal regulation. There is no doubt that they are sources of law. Acts adopted in accordance with the established procedure, including decisions of the Council of the European Union and decrees of the President of the United States on the application of economic sanctions against Russia, are part of a foreign legal system and, therefore, sources of law.

The boundaries of national legal norms are important in private international law. The growing needs to ensure the sovereignty of the State and its economic security require determining the optimal limits of the operation of a foreign law in space and in relation to persons. All this raises the question of the limits of the application of foreign sanctions regulation. I. N. Kryuchkova, studying the impact of economic sanctions of the UN Security Council on foreign economic relations, comes to the conclusion that lex causae norms, including norms on sanctions, may not be applied in the lex fori state if such sanctions contradict the fundamental principles of certain industries or the entire legal system of the state, since they will violate the public order of a particular state [Kryuchkova, 2005, p. 64].

The analysis of international inter-economic sanctions can be carried out from the point of view of public and private law. One should not deny the importance of the consequences of economic sanctions for public international law, while one should not underestimate the impact of sanctions on private law relations, on private international law.

Economic sanctions go back to medieval Europe. Even the Romans resorted to economic methods of influence against intractable barbarians [Thompson, 2002, p. 10-12]. The Pope imposed economic coercive measures against some Italian cities during the war between the Guelphs and the Ghibellines. In the nineteenth century, Napoleonic France initiated an embargo against Great Britain with the support of a number of countries. But, nevertheless, the era of economic sanctions began in the twentieth century, when economic sanctions began to be widely applied by various states and organizations, and it was during this period that the application of economic sanctions became regulated. Thus, the Pact of the League of Nations, defining the main function of the League of Nations as the promotion of international cooperation and the achievement of international peace and security, in article 16 allowed the imposition of economic sanctions provided that one of the members of the League committed an act of war. It was this provision that allowed the members of the League of Nations to impose economic sanctions against Italy after the invasion of Ethiopia in 1935. Also, the League of Nations threatened Greece with sanctions under Article 16 for the invasion of Bulgaria in 1925, and Greece withdrew its troops and agreed to pay compensation.

Modern economic sanctions take a variety of forms, such as embargoes, asset freezes, restrictions on financial transactions, air travel and migration restrictions for certain individuals. It can be said that in the broadest sense, the term embargo even includes financial restrictions, such as asset freezes imposed on individuals or any partial or complete interruption of economic relations [Math, 2016, S. 26-27]. But, at the same time, economic sanctions are a broader concept than embargoes and are used not only in the context of banning exports or imports, interrupting commercial relations, transport and communication channels, but also implies freezing the assets of states, organizations and individuals. Jacques Periyet described the embargo as a measure of half-state, half-private law, which is generally true for economic sanctions. Also, the author added that private international law hardly perceives this reality. In fact, economic sanctions are used by private individuals as a means of achieving foreign policy, public goals [P?rilleux, 1996, P. 167, 181]. Migration and travel bans can equally have economic consequences if they are used against political or economic leaders of the target State or its companies.

Economic sanctions may also include the prohibition of financial transactions, as well as the seizure or freezing of assets. Article 2 of EU Regulation No. 269/2014 of 03/17/2014 "On Restrictive measures against actions Undermining or Endangering the Territorial integrity, sovereignty and Independence of Ukraine" (hereinafter referred to as "Regulation No. 269/2014") stipulates that all funds and economic resources owned, held or controlled by a sanctioned person are subject to freezing.

One or another type of economic sanctions can be applied separately or in combination with other restrictions, which most often happens in practice. Economic sanctions can be comprehensive or targeted. It is extremely rare that economic sanctions apply to trade in all goods related to the target State of sanctions (for example, applicable to the destination or origin of the goods, the nationality of the seller or buyer). Such a sanctions precedent took place in the case of the sanctions imposed against Iraq during the Gulf War (UN Security Council Resolution No. 661 of August 6, 1990). Currently, partial, targeted sanctions are usually applied, focusing, for example, on the trade in weapons, dual-use goods, strategically important goods and some services.

Economic sanctions are imposed unilaterally or multilaterally at three different levels: by a State unilaterally; by a regional organization (such as the EU, the Arab League); or by the United Nations as a global international organization.

The relationship between foreign policy and private international law fits into the broader issue of the relationship between politics and private international law. Private international law is generally regarded as neutral in relation to public activities and values. It is worth noting that traditionally private international law has been formed in such a way as to prevent itself from being influenced by changes in the political situation and public legal value judgments, including foreign policy and geopolitics [Campbell, 2014, P. 18]. This returns to the idea that private international law covers only the legal relations of individuals and applies to the legal relations of the State only to the extent that it does not act as a sovereign. Based on this, it would be logical to assume that private international law has nothing to do with foreign policy and public relations. However, such a conclusion would be premature. In the context of private international law, courts decide on the applicable law and even apply the rules of foreign law, i.e. the result of the actions of a foreign State resulting from the exercise of its sovereign power, if provided for by conflict of laws rules. At the same time, in such cases, the judge has the opportunity to make a decision on the merits of foreign law or reject the application of said foreign law if, for example, it violates public order.

Speaking about the violation of public order, it is worth mentioning the Agreement of the CIS countries on the Procedure for Resolving Disputes related to the Conduct of business Activities dated March 20, 1992, which does not provide for violation of public order as a basis for refusing recognition of a foreign court decision, but enforcement in the territory of the said Agreement is not as relevant as enforcement in the territory of the UN Convention 1958 due to the more limited territorial coverage of the first.

In the last decade, European researchers in the field of private international law have not refrained from issues at the interface between EU foreign policy and private law^[1]. This is primarily due to the fact that the EU acts in international relations, including as a party to international treaties related to private international law. And also, due to the fact that the legal literature has focused equally on the contours of the external dissemination of EU private law and private international law. These works mainly describe the extent to which EU private international law contributes to the maintenance and achievement of certain political goals and values in public relations, including, for example, ensuring compliance with human rights or consumer protection standards, thereby extending private law values and categories to certain external relations.

In our opinion, international economic sanctions are a unique phenomenon and a vivid example of how the operation of the norms of private international law can affect the achievement of foreign policy goals. Economic sanctions, being a public instrument, are also applied to international contracts through private international law. It is not only about restricting the conclusion of new contracts for a number of goods and technologies (for example, EU Regulation No. 833/2014 of July 31, 2014 "On Restrictive measures in connection with Russia's actions destabilizing the situation on the territory of Ukraine" (hereinafter referred to as "Regulation No. 833/2014"), Article 2a prohibits the sale, supply, transfer or export, directly or indirectly, goods and technologies that can contribute to the military-technical strengthening of Russia), but also about settlements on concluded transactions with a substation person (Article 7 of Regulation No. 269/2014 stipulates that payment to a substation person can only be made to a blocked account) and even logistics of execution of transactions (Article 3ea of the Regulations No. 833/2014 establishes a ban on granting access to ports, to locks on the territory of the EU to any vessel registered under the flag of Russia).

The emergence of international economic sanctions and foreign policy judgments in private law disputes has an impact on the rhetoric of courts and arbitration tribunals. A good example here is Articles 248.1 and 248.2 of the Agroindustrial Complex of the Russian Federation. These norms granted persons under foreign sanctions the right to request that a dispute be considered in a Russian court, even if the parties have fixed a different jurisdiction in the contract or provided for the settlement of the dispute in international arbitration.  Also, similar amendments were included in the CPC of the Russian Federation.

From the fact that private international law is (or at least should be) neutral and outside politics, international commercial arbitration courts usually try to avoid statements related to foreign policy. The situation is more complicated with national courts, which may try to adhere to a technical approach and the automatism of conflict of laws rules when deciding on the application of economic sanctions. Most often, foreign courts do not distance themselves from foreign policy arguments. It should be noted that court decisions rendered in cases of the application of international economic sanctions sometimes have foreign policy arguments as justification.

The application of EU sanctions by the courts of the EU member States usually does not cause problems, since the courts of the member States apply economic sanctions imposed by the EU as part of the national legislation of the country of the court. But at the same time, the courts of the EU member states have different approaches to economic sanctions, despite the existence of common conflict of laws rules within the framework of contractual relations. Previously, in Europe, the applicability of foreign superimperative norms was different in different countries, i.e. there were no union-wide universal foundations.  This changed after the adoption of Regulation EC No. 593/2008 on the law applicable to contractual obligations (hereinafter "Rome I"). But a number of States have made reservations to Rome I on peremptory norms and continued to apply their national legal approach based on conflict of laws rules.  Nevertheless, Rome I created a uniform legal system for the EU member States, but at the same time, despite the existence of uniform conflict of laws rules with respect to contractual obligations, Rome I allows for different interpretations with respect to foreign super-mandatory rules. At the moment, these differences are not eliminated by the case law of the European Court of Justice. The available decisions of the European Court of Justice, instead, provide recommendations on determining the scope of application of certain economic sanctions directly^[2] and establishing the compliance of sanctions with fundamental rights (for example, the right to protection, including the right to be heard in court, the right to effective legal protection, property rights, etc.)^[3].

At the UN level, the UN Charter in some cases explicitly authorizes the Security Council to impose or recommend the imposition of sanctions. Thus, Article 39 of the Charter gives the UN Security Council the authority to establish the existence of a threat to peace, violations of the peace or an act of aggression, as well as, according to Articles 41, 42, to make recommendations or decide what measures should be taken to maintain or restore peace and security.

Bilateral agreements deserve special attention. Sometimes the provisions of bilateral treaties may affect the possibility of imposing economic sanctions (here we are talking about the most favored nation regime and the prohibition of discrimination) or may even exclude the application of economic sanctions in the relations of the participating States. Multilateral treaties may also contain provisions relating to international economic sanctions. For example, Article 19 of the Charter of the Organization of American States states: "No State may undertake or facilitate the use of coercive measures of an economic or political nature in order to exert pressure on the sovereign will of another State in order to derive any benefits from it." Or, within the framework of the World Trade Organization system, the General Agreement on Tariffs and Trade of 1947 allows for the imposition of economic sanctions in a number of cases. For example, within the framework of Articles XXI and XIV BIS, the State may impose restrictions on exports, imports, as well as quotas or other barriers for its own security.

Separately, it should be noted that the EU is not directly linked to the economic sanctions imposed by the UN, since it is not a direct member of the UN. The implementation of UN sanctions takes place directly through the EU member States. The EU may also adopt autonomous sanctions to ensure respect for its own values, such as democracy and the rule of law.

The imposition of sanctions by the European Union is conditioned by the norms of the Common Foreign and Security Policy of the EU (Common Foreign and Security Policy) in accordance with Article 25 of the EU Treaty as amended by the Lisbon Treaty of 2007, with the corresponding specification contained in Article 215 of the 1957 Treaty on the Functioning of the EU (as amended by the Lisbon Treaty of 2007). Compliance with restrictive measures is mandatory throughout the EU (territories of the member States), as well as for EU residents - individuals and legal entities, including branches in third countries.

At the same time, the EU member states have freedom of action, albeit limited. First, article 346 (1)(b) of the Treaty on the Functioning of the European Union provides that "each Member State may take measures deemed necessary by it to protect its essential security interests related to the production of or trade in weapons, ammunition and military materials; these measures must not distort the conditions competition in the domestic market in relation to products not intended for specifically military purposes." This provision is limited by the arms embargo, which, accordingly, falls within the competence of the EU member States [Mills, 2016, P. 541, 543]. Secondly, Member States have the right, in accordance with Article 347 of the said Treaty, to take restrictive measures independently in cases of "serious internal unrest affecting public order, in the event of war or serious international tension posing a threat of war, or to fulfill their obligations to maintain peace and international security," provided that that they have consulted with other Member States. Thirdly, migration and visa restrictions are implemented by the legislation of the member states, even if they are introduced within the framework of the Common Foreign and Security Policy of the EU. Fourth, EU legislation implies responsibility for violation of the sanctions regime at the level of a national EU member State.

The introduction of pan-European responsibility for violation of sanctions has been the subject of discussions at the level of EU bodies for a long time. Thus, on July 6, 2023, the European Parliament's Committee on Civil Liberties approved Bill No. 2022/0398 (COD), which provides for criminal liability for circumvention of sanctions on the territory of the EU. The draft law obliges states to establish the types of liability and types of criminal offenses related to violations of EU sanctions. At the same time, the minimum threshold is a fine of 100,000 euros, the maximum threshold is imprisonment for a period of at least 5 years.  For legal entities, a fine of at least 5% of the total global turnover of the company for the financial year is possible. Of course, this bill will have a significant impact on private law relations. Nevertheless, the private law consequences of the application of sanctions are most often determined equally by national legislation.

It is worth mentioning the principle of legal certainty, which is an element of the rule of law. This principle applies to both legislation and judicial practice. Individuals should be able to anticipate the norms applicable to them so that they can adapt their behavior accordingly. The need for this also arises for business entities, who must know the regulatory rules with confidence, allowing them to carefully plan business operations and reduce costs. The introduction of a huge array of sanctions against Russia has led to a violation of the principle of legal certainty.

Legal certainty is a principle both in EU legislation [Tridimas, 2006, P. 242] and in the laws of the Member States, which requires predictability for individuals through clear, precise, defined and predictable rules. In some works of American authors, one can find a categorical statement that the principle of legal certainty, characteristic of the European legal order, is strongly rejected in the United States [Belov, 2010, p. 376].  But in general, the norms of private international law are aimed at ensuring legality and predictability.

With regard to the conflict of laws on treaties in the EU, Rome I in this part refers to legal certainty as the general purpose of regulation.

Legal certainty is of paramount importance in international trade, where the issue of jurisdiction and applicable law is important. Most often, the impact and introduction of new economic sanctions are not foreseen in advance for the parties to the agreement. Moreover, after the imposition of sanctions, business entities cannot always predict with confidence whether the legislation on sanctions by the courts will be applicable within the jurisdiction of disputes from the contract. For example, Russian judicial practice practically does not recognize sanctions as force majeure and has consolidated the approach according to which the imposition of sanctions against the parties to the contract or the subject of the contract is an entrepreneurial risk of the parties. In this regard, it is interesting to see the Decision of the Seventeenth Arbitration Court of Appeal dated 09/01/2023 No. 17AP-9092/2023-CC in case No. A71-2998/2023, in which the court ruled that the fact of imposing economic sanctions against Russia cannot be considered as an unconditional basis for termination of the contract (...), because the impact on business of economic sanctions is taken into account at the state level, it is expressed in the form of additional measures to support entrepreneurship in the country.

According to the teachings of F.K. Savigny, private international law is based primarily on value neutrality. Accordingly, the norms of private international law must be protected from various political influences that change depending on public circumstances. In private international law, public interests can be taken into account in various ways: through a public policy clause or through ensuring public interests in the form of super-mandatory provisions. At the same time, it would be a mistake to assert that the norms of private and public law are not closely related.

Prior to the emergence of a significant number of national acts regulating market behavior in domestic and international trade, private international law was relatively unaffected by public law legislation. Since the twentieth century, states have increasingly intervened in private relations by regulating trade markets [Kreuzer, 1983, S. 89-90].

The application of economic sanctions is one of those cases when States violate contractual relations for foreign policy reasons. The question of how such an intrusion into private relations through economic sanctions should be interpreted in private international law is being updated. It is indisputable that international economic sanctions have a public legal origin. But they may affect private law relations, when, for example, as mentioned above, one of the parties refuses to fulfill the contract because execution would violate the embargo or other economic sanctions. In such a case, the national court or arbitration hearing the case must decide whether to apply an economic sanction. It is private international law that functions as a filter that translates economic sanctions that have a public legal origin into the sphere of private law.

International economic sanctions can affect treaties between States, treaties between States and private parties, as well as treaties between individuals. At the same time, international economic sanctions, affecting the legal relations between private parties, often become the subject of litigation. Private international law faces economic sanctions in different circumstances, and, accordingly, the solutions cannot be the same. The potentially affected contracts are also very diverse – these are sales, service and supply contracts, technology transfer, licensing, insurance contracts, transportation contracts and others.

Thus, even though international economic sanctions are generally imposed against the State, individuals who have commercial contracts with the target State and its persons are actually subjected to equal punishment due to the interruption of normal economic ties and the loss of business opportunities.

We should also focus on international economic sanctions as super-mandatory norms.

Freedom of contract in substantive law is combined with the autonomy of the parties in the conflictus legum. The autonomy of the will is one of the principles of private international law and a conflict of laws binding, according to which the parties have the right to choose for their contract the law that they consider the most appropriate. The autonomy of the will is recognized in most national and international private laws, as well as in regional codifications. However, such autonomy is sometimes limited in order to promote certain interests and goals, most often public ones. From the point of view of private international law, such rules often take the form of super-mandatory norms. Some authors consider superimperative norms, or at least the provisions on the forum, to be unilateral conflict-of-laws norms [Renner, 2011, P. 195, 203].

Superimperative norms demonstrate certain features of a one-sided approach. For example, neither superimpressive rules nor unilateral conflict-of-laws rules are aimed at defining foreign law as a governing law. However, superimpressive norms differ from unilateral conflict–of-laws norms [Merc?deh, 2014, P. 51 - 52]. Unilateral and bilateral conflict of laws rules are on the same level - they indicate the applicable law. However, superimpressive provisions replace the law governing conflict of laws and require application, regardless of the applicable law, to ensure compliance with certain political goals and interests. The choice of applicable law is a prerequisite for the potential application of a superimpressive rule. If the applicable law contains the same rules as the superimperative rules requiring application, there is no need for the intervention of the latter [Heinie, 1981, P. 277, 297]. At the same time, the norms of both private and public law can be superimpressive norms.

Despite the supranational origin of the sanctions legislation, the EU sanctions regulation is applied directly in the EU member States as lex fori. The application of the fundamental imperative norms of lex fori is usually not a cause for concern. However, there are different points of view regarding the application of foreign public law.  

The view that foreign norms of public law cannot be applied has prevailed for a long period of time. But in modern private international law, the principle of the general non-application of foreign public law has been largely overcome. But at the same time, the question remains to what extent foreign norms of public law can be applied or taken into account.

There are two approaches regarding how foreign rules of public law can be taken into account in private law disputes. The first is the application of foreign superimperative norms through conflict of laws rules, the second is their application at the level of substantive law.

Let's take a closer look at the first approach, which is divided according to the criterion of applying foreign primary imperative norms through conflict of laws norms into three theories: the theory of a single link (Einheitsankn?pfunsgtheorie), the theory of special connections (Sonderankn?pfungstheorie), the theory combining them (Kumulationslehre) [J?rgen, 2013, P. 294]. 

The main difference between these theories lies in the question of whether the reference to foreign law includes the norms of the public law of the relevant State or not. Some authors believe that the reference to foreign law includes all the norms of this legal system, both the norms of private and public law, which are important for decision-making (Einheitsankn?pfunsgtheorie theory) [Heiz, 1959].  But with this approach, in addition to the norms of public law of the place of trial, the norms of public law lex causae should also be applied. The application of the lex causae rules of public law can be canceled only because of a violation of public order.

Also, according to this theory, the interests of a foreign state may be protected by international conventions rather than conflict of laws rules. The theory has a number of advantages. First of all, it overcomes the problem of the distinction between private and public law. This approach also corresponds to the Resolution of the Institute of International Law of 1975 on the application of Foreign Public Law (§ A.I.1) - "the public law character attributed to a provision of foreign law, which is designated by a conflict of laws rule, does not prevent the application of this provision, provided that a reservation on public policy". Taking into account this resolution, it can be argued that provisions of public law that are designed to serve primarily or at least also the interests of private individuals, as in the case of labor or consumer protection legislation, should be applied in the same way as any other substantially significant provision of applicable law. The question remains whether the rules of public law serving exclusively the public interest should also be applied, like any provision of the lex contractus, and whether they can be ignored by arbitrators only in cases where their application will lead to a result contrary to the principles of public order. This theory has also gained its place in Swiss private international law. Article 13 of the Federal Law on Private International Law of 1987 provides that the reference to foreign law includes all provisions of the said law applicable to this situation. Accordingly, the applicability of a rule of foreign law is not excluded only on the grounds that it is of a public legal nature.

In continuation of this theory, it is often argued that conflict of laws rules take into account the interests of private parties without the participation of public interests. Public law norms can only be included if they ensure a balance of the parties, for example, in consumer protection cases. Therefore, it may be argued that the reference to foreign law should be interpreted narrowly, limited to the provisions of private law and excluding foreign norms originating from public interest [Vischer, 1992, P. 180].  The reason for this approach is the belief that the lex causae is closely related to the legal situation. This is true if the applicable law is determined by the closest connection. However, in the case of autonomy of will and choice of law by the parties, a close connection between the chosen law and the facts of the case may not exist. The subjective perception of the parties is also important, they rarely consider the application of public law norms of their chosen law when concluding a choice of law agreement [Freitag, 2015, S. 349, 366]. For this reason, most German jurists recognize this theory as untenable.

The second theory (Sonderankn?pfungstheorie) asserts that conflict of laws rules relate exclusively to the private law norms of the law of the State regulating the concluded contract. This is due to the fact that the vocation of private international law is to regulate the interests of individuals directly. A rule of foreign public law should be applied provided that it has some special connection with a legal dispute. It does not matter whether the norm is contained in the lex causae or in the legislation of a third country: any norm belonging to a particular category must have a special connection for application. The application of the norms of foreign public law may be based on a close relationship expressed in general or more specifically (through a legal connection - citizenship, place of residence, location of the parties, place of performance of the contract or location of property) [Kreuzer, 1986, S. 8-9]. It may be necessary that the application of a foreign rule serves the interests of the country of the court or the international community, or at least does not contradict them. Foreign superimpressive norms are applied after they are checked "for sympathy", provided that the content of the foreign norm is compatible with the interests and values of the forum State. Such rules are applicable if there is reciprocity and the State of the place of court has adopted similar provisions that equally limit private autonomy. The starting point in this theory is that there is a categorical imperative to apply those foreign norms that correspond to the domestic legal order through the principle of reciprocity.  This point of view is also supported by the need to reconcile values between substantive justice and justice within the framework of conflict of laws. Moreover, the requirement of a coincidence of interests and values can be explained by the fact that the State of the court is otherwise not initially interested in applying a foreign super-imperative.

It should be noted that it is easier for courts to establish the absence of these necessary conditions of reciprocity than to conclude that the application of a foreign norm violates public order. However, even if it is stated that a foreign superimpressive norm does not meet these conditions, this can be taken into account at the level of substantive law.

The main idea underlying the second theory is that each State has the right to regulate events and assets located on its territory. This theory is not without drawbacks. Firstly, it allows the application of different laws to the contract and thus leads to a split in contractual relations from the point of view of applicable law. In this case, the meaningful unity and harmony of legal relations is sacrificed to the harmony of solutions.

Secondly, there is no uniformity in legal science on the issue of the relevant connecting fact, expressing a special connection between the foreign element and the applicable foreign law. In the absence of an exact connecting fact, the court, theoretically, must take into account all legal systems and their super-imperative norms, each of which can potentially claim to be applied due to the principle of close connection.

The third theory combines the two above-mentioned theories and is called cumulative theory (Kumulationslehre). It interprets the reference to the applicable law in a broad sense, including the provisions of public law lex causae. In this sense, it follows the approach of the first of the considered theories – the theory of Einheitsankn?pfunsgtheorie. However, it is complemented by the possibility of applying the super-mandatory rules of a third State, if this is justified and there is a special connection with a legal dispute. This addition already characterizes the theory of Sonderrankn?pfungstheorie.

Another way to include foreign super-mandatory norms of a public law nature in a court decision is at the level of substantive law. The foreign rule will be included in the applicable substantive law, which also implies that the applicable substantive law must directly contain the rules by which the foreign law as a whole can be applied. Of particular importance here is that in the case of the application of a foreign norm, the private legal consequences are determined by the applicable foreign law, and in the case of the application of a foreign norm through substantive law, its prerequisites and private legal consequences are determined by lex causae, and not by the foreign law itself directly. At the same time, the actual consequences of a foreign norm can be realized through substantive law, even if it contradicts the public policy of the country of the court and as such cannot be applied as a legal norm. But the actual consequences of applying such a rule cannot be ignored, for example, in the case of seizure of sub-sanctioned goods by the authorities of the country of applicable law, even if the lex fori State rejects this super-mandatory foreign rule. The actual consequences are taken into account within the framework of contractual relations, for example, as a basis for termination of the contract or recognition of the impossibility of its execution. At the same time, even in the absence of an actual connection, the court may recognize a foreign mandatory provision as applicable, taking into account the normative content of the norm. If it is compatible with the interests and values of the country of the court, the court will put the rule into force.

Contrary to the approach based on conflict of laws, the purpose of justice can be to consider foreign super-mandatory norms at the level of substantive law, and this method can help the court find a fair balance between the interests of the parties [Bundesgesetz..., 1987]. Some national laws, such as the Swiss Law on Private International Law, as already mentioned, allow the application of the most important mandatory provisions of third States. This was also made possible by Rome I.

The main task of private international law is to choose the applicable law, and conflict of laws rules decide whether a specific international economic sanction applies to contractual relations between the parties or not. Nevertheless, the conflict of laws rules themselves do not determine the legal consequences of the application of international economic sanctions. In cases of economic sanctions, in the absence of relevant contractual provisions between the parties, the court must first take into account the rules providing for economic sanctions. However, these rules in most cases do not define the exact legal consequences of economic sanctions under contracts or define them only partially. Consequently, the substantive consequences can and should be determined on the basis of the general provisions of the lex causae contract law.

Sometimes the legal source that puts an economic sanction into effect determines its legal consequences or legal consequences can be deduced from it. In the absence of this, the applicable national treaty law determines the legal consequences of an economic sanction. Thus, a ban on the export or import of goods during the execution of the contract, which makes it impossible to fulfill the contract, is, according to most force majeure clauses, the basis for releasing the party from liability for non-fulfillment of obligations under the contract.  The 1980 United Nations Convention on Contracts for the International Sale of Goods stipulates that a party "is not responsible for non-performance of any of its obligations if it proves that it was caused by an obstacle beyond its control and that it could not reasonably be expected to take this obstacle into account when concluding a contract or to avoid or overcome this obstacle or its consequences." This means that if the specified convention applies to the relations of the parties, none of the parties is responsible for non-fulfillment of their obligations under the agreement, if this is caused by unforeseen sanctions restrictions. It is worth repeating here that Russian courts are extremely reluctant to interpret sanctions as force majeure, denying their "unpredictability". But still, usually, when the execution of a contract is hindered by an economic sanction, the latter is qualified, for example, in German law, as a ground for impossibility of execution (Unm ? glichkeit) or violation of a goal (Wegfall der Gesch?ftsgrundlage) in German law, force majeure (fait du prince) in French or frustration (frustration, act of state) in English law.

Recognizing the autonomy of the parties, national contract law usually allows the parties to prevent uncertainty related to international economic sanctions in advance by including a clause in the contract providing for force majeure events, such as economic sanctions. At the same time, the parties may provide in the concluded agreement for the legal consequences of the application of economic sanctions, provided that such a provision is not invalid or does not contradict public interests. The parties often condition the fulfillment of the contract on the availability of a special permission from the regulator to violate the sanctions regime – licenses. For example, in 2022, the United States issued and subsequently extended General License No. 6 authorizing transactions with Russia in the field of agriculture and medicine.

As for the conclusion of new contracts after the introduction of international economic sanctions, the legal norm imposing the sanction is applied first, and then the applicable national contract law will determine their validity. Economic sanctions may prohibit the conclusion of a new contract or simply prohibit the execution of existing contracts [Lambert, 1997, p. 46-47].  In the first case, the relevant contracts are usually considered invalid, including due to violation of public order, violation of morality or fraud.  Thus, Article 7 of Regulation No. 269/2014 permits payments under contracts that were concluded before the date of sanctions against the recipient of funds under the agreement, if the payment is credited to a frozen account.

As mentioned above, in EU private international law, economic sanctions are qualified as super-mandatory norms. Article 9 of Rome I restricts the application of the super-mandatory provisions of the country of the court, stating that "the prevailing mandatory provisions of the law of the country where obligations arising from the contract must be or have been fulfilled may be given effect, to the extent that these provisions make the performance of the contract illegal." According to article 9(2) of Rome I, "Nothing in these Rules restricts the application of superimpressive provisions of the law of the country of the court.". This provision provides the legal basis for the application of economic sanctions (imposed by the EU) within the EU, i.e. they are applied uniformly and take precedence over the mandatory norms of the law of the country of the court.

The recognition of foreign economic sanctions based on Rome I raises a number of questions.  First, it is not clear whether mandatory provisions such as international economic sanctions, lex causae, are applicable by the court of the country of consideration of the case. Secondly, on the basis of article 9(3) of Rome I, preference may be given to the super-mandatory rules of the State of execution, and the nature and purpose of the super-mandatory rule and the consequences of its non-application leave the courts with considerable discretion and autonomy.   Thirdly, some researchers and the judicial practice of some countries adhere to a restrictive interpretation of the question of whether there can be superimpressive norms other than those mentioned in article 9 of Rome I. In French jurisprudence, in the decision in the Nikiforidis case (Case C-135/15 Republik Griechenland v Grigorios Nikiforidis ECLI:EU:C:2016:774) The court clarified that "article 9 of the Rome I Rules does not prevent the mandatory provisions of a State other than the State of the court or the State in which obligations arising from the treaty must be or have been fulfilled." This decision confirms the existing jurisprudence of some States-EU members, for example, Germany, where economic sanctions are often considered at the level of substantive contractual law. Thus, the norms of private international law can be abolished through substantive law, which expands the range of possible economic sanctions. But at the same time, there is a debate in the legal literature about whether article 9 of Rome I is a conflict of laws rule at all.

And so, private international law can help to smooth out differences in national judicial practice in cases related to international economic sanctions. At the EU level, such an effect can be achieved by making changes to the norms of private international law or by accurately interpreting existing norms of private international law at the level of the EU Court of Justice. The EU Court of Justice could contribute to the convergence of the judicial practice of the EU member states in terms of sanctions regulation. For example, to make recommendations on some key issues, such as the application of super-mandatory norms and economic sanctions lex causae or under article 9 of Rome I. The issue of the application of extraterritorial US sanctions, which is not part of the applicable law, also needs clarification.The uncertainties associated with the application of the most important super-mandatory lex causae rules, including economic sanctions, could be eliminated by amending Rome I. It should be clearly stated whether super-mandatory norms are applied, in particular of a public legal nature, and if so, automatically or require additional procedures.

Separately, it is worth paying attention to the position of the American courts in this regard. In some cases, US courts completely separate the legal dispute in question from economic sanctions and foreign policy considerations. Thus, in the case "Karen v. Omar" (Karen Maritime Ltd (Liberia) v Omar International Incorporated (US), United States District Court, Eastern District of New York, CV-03-6120, April 23, 2004), the U.S. District Court for the Eastern District of New York rejected the denial of recognition and enforcement enforcement of an arbitration award concerning a charter for the transportation of wheat from Canada to Syria, under a contract in which the shipowner, Karen Company, guaranteed that the ship was not owned or controlled by Israel. The arbitration court in London ruled in favor of Karen's company. When the plaintiff sought enforcement of the award in the United States, the defendant opposed it on public policy grounds in accordance with article V(2)(b) of the 1959 Convention on the Recognition and Enforcement of Foreign Arbitral Awards in the context of current U.S. law prohibiting compliance with the Arab boycott of Israel.  The court found that the contract dispute between the parties concerned Omar's refusal to fully pay for the use of the Karen ship, and had nothing to do with the Arab boycott of Israel. 

In MGM Productions Group v. Aeroflot (US No. 442, MGM Productions Group, Inc. (US) v Aeroflot Russian Airlines (Russian Federation), United States District Court, Southern District of New York, May 14, 2003, reproduced in Jan van den Berg (ed), XXVIII Yearbook of Commercial Arbitration 2003 (Kluwer, 2003)) - an American company entered into an agreement with Aeroflot to advise the latter on the leasing of Iran Air aircraft. Following a dispute between the parties to the contract, arbitration proceedings were initiated in which Aeroflot stated that the consultation agreement was invalid because it violated the US embargo against Iran. But the arbitrators confirmed the validity of the agreement, as they found no violations of the embargo, since the transactions between the parties were not related to goods or services originating from Iran or owned by the Iranian government. Subsequently, the court decision was executed, despite Aeroflot's claim that the fact of execution violates the public order of the United States. The District Court noted that public policy arguments should be treated with caution so as not to impede the enforcement of foreign arbitral awards in the United States, and it is sufficient to establish that the agreement does not violate the basic categories of morality and justice prevailing in the United States.  

US case law shows that foreign policy objectives are not sufficient to refuse recognition and enforcement of a foreign arbitral award, even if such a decision does not necessarily comply with US foreign policy and American sanctions regulation. But the American courts are not bound by any single concept in this part. The explanations of the US Supreme Court regarding the place of sanctions regulation in the exercise of the right to trial and judicial protection would be relevant here. At the same time, the issue of compliance with foreign sanctions in the United States as a whole is not raised due to the unconditional refusal of the United States to apply foreign sanctions that are not included in American regulation.

Unilateral restrictive measures are a national institution of law in line with the foreign policy of a particular State/State association and are aimed at protecting national interests. Being more of a public institution, international economic sanctions have a significant impact on private law relations and require in-depth and comprehensive research in the context of private international law.