The current adverse situation resulting from the armed conflict in Ukraine is having negative consequences, whether direct or indirect, even for countries that are not actively involved in the conflict.
The Russian Federation’s aggression has led the European Union to impose various restrictions, particularly in the defense, energy, technology, aviation, and financial sectors. For example, in the form of a ban on conducting any financial transactions with the Russian Central Bank, the introduction of a ban on Russian aircraft flying through the airspace of member states, the exclusion of Russian banks from the SWIFT system, and several others. These restrictions also affect the business activities of Slovak entities in the affected sectors or with certain Russian entities. For example, the export, supply, and sale of certain goods, as well as the provision of certain services—including in the financial sector—are restricted. In this regard, we further refer to the EU Regulation of February 25, 2022.
In the case of business relationships involving assets located within the territory of the Russian Federation or with entities from the Russian Federation, we recommend approaching the conduct of these relationships with particular caution and verifying whether the transaction in question is currently restricted or prohibited under the aforementioned sanctions. Up-to-date information on sanctions imposed on the Russian Federation (as well as other countries), or on specific individuals, can be found, for example, on the EU Sanctions Map website, which is administered by the European Commission, or on the website of the Ministry of Foreign and European Affairs of the Slovak Republic.
Given the current situation, it is reasonable to assume that the current list of sanctions is not final and that further sanctions and restrictions can be expected. If, as part of your business activities, you engage in or operate within relationships with entities of the Russian Federation, or come into contact with their assets, we recommend that you closely monitor the scope of these sanctions. Even though certain activities are not currently restricted by the imposed sanctions, it is advisable to act with caution and verify whether specific restrictions or prohibitions apply to a given transaction (activity), as such a transaction may still be prohibited in the future. A potential future ban could thus affect your ability to fulfill your contractual obligation, which could constitute a breach of contract and result in the imposition of sanctions. Since we are dealing with international law in this regard, invoking force majeure or other circumstances excluding liability under legal norms may be problematic, particularly with regard to determining the applicable law. For this reason, we recommend that contractual relationships in the described situations be sufficiently clearly defined regarding the conditions for performance or non-performance of the contract under certain circumstances. These are contractual clauses through which you can preemptively address the legal consequences of imposed sanctions.
As part of the contracting process, it is certainly advisable to take into account the specific nature of this situation and its potential implications for the conclusion and performance of the contract. This will protect you and your business operations.
In conclusion, we would like to point out that if a business entity were to violate the imposed sanctions, for example by engaging in prohibited transactions, this could not only result in the entire transaction being nullified but, under more serious circumstances, could also lead to the imposition of a fine of up to EUR 1,659,700. Details regarding the manner and amount of sanctions are governed by Act No. 289/2016 Coll.
