Can sanctions be considered as “force majeure”? Articles 227 and 229 of the Civil Code stipulate that if the performance of an obligation becomes impossible for reasons beyond the control of the obligor, the obligor will not be responsible for compensation.
If sanctions make the performance of the contract impossible or unlawful, a force majeure clause may be invoked. However, the foreseeability of sanctions is debatable. Some international courts or arbitrators may argue that sanctions were foreseeable to the Iranian party and therefore do not constitute force majeure.
Another challenge is the inability to fulfill financial obligations. If a bank refuses to make payments due to sanctions, the contract will face significant difficulties. The lack of precise contractual clauses may expose the parties to complex and costly litigation. Also, sudden changes in laws or the imposition of sanctions regulations may make the contract impossible to perform and lead to the discussion of termination or invalidity of the contract.
