Sanctions and Their Effects on Contractual Obligations: From the Perspective of International Instruments and Iranian Law

Abstract

According to the principles of pacta sunt servanda the contract should remain intact as far as possible. Nevertheless, it is highly likely that the parties might be unable to live up to their obligations on ground of occurrence of some unpredictable events. Traditionally, such phenomena may range from war, an earthquake, or a strike to tornadoes. Sanctions or embargoes are new instances of such phenomena that may make contract performance either impossible or extensively onerous. These sanctions involve different legal consequences besides economic, political and social effects. Nonetheless, it should be noted that the main subject of the present article is only confined to examine the effects of sanctions on contractual obligations from the perspective of significant international instruments like UPICC, PECL, the CISG and the Iranian national law. In this respect, we have focused on some important legal concepts like force majeure and hardship and their relationships with the imposition of sanctions. In so doing, after a brief overview of different kinds of sanctions from different perspectives, we have concentrated on correlation with the above institutional norms and its effects on contractual obligations. In the end, we address the available remedies arising out of sanctions impositions.