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ReferenceInternational Business Law

“No re-export to Russia”: compliant export contracts

Export contracts for certain goods need a “no re-export to Russia” clause from 20 March 2024. Scope, EU model clause, risks under standard terms law.

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Introduction

On 18 December 2023, the Council of the European Union adopted the 12th sanctions package against Russia. It aims to stop the circumvention of EU export bans, in particular where goods are first exported to a third country and from there re-exported to Russia. One of its centerpieces is a so-called “no re-export to Russia” clause (the “No-Russia” clause). Under Article 12g(1) of Regulation (EU) No 833/2014 (consolidated version of 24 July 2026), companies have had to include such a clause since 20 March 2024 when they sell, supply, transfer, or export goods and technologies to third countries. The clause must contractually prohibit re-export to Russia and re-export for use in Russia.

Scope

The “no re-export to Russia” clause has to be included only for the sale of the following goods and technologies:

The duty applies to contracts with companies not established in the EU. Exceptions currently exist for the following partner countries: USA, Japan, the United Kingdom, South Korea, Australia, Canada, New Zealand, Norway, Switzerland, Liechtenstein, and Iceland (see Annex VIII of Regulation (EU) 833/2014).

Three delimitations settle many cases in practice:

  • Purely intra-EU contracts do not need the clause. Where only EU companies are involved and the delivery obligations are to be performed within the EU, Article 12g does not apply, because all parties are bound by the EU sanctions anyway.

  • Returns are covered, however, including a return delivery to a producer in a third country.

  • The clause need not be Russia-specific. A general clause prohibiting re-export to all countries subject to EU restrictive measures suffices, provided it meets the remaining requirements, in particular that it provides for adequate remedies.

Annex XL goods: two further obligations

For Annex XL goods, the common high priority items, two additional obligations apply. These obligations have nothing to do with the re-export clause and are therefore regularly overlooked. Annex XL lists goods found on the battlefield in Ukraine or critical to Russian military systems, such as integrated circuits and the equipment used to manufacture and test them.

Article 12ga: the prohibition covering intellectual property and trade secrets

A party that sells, licenses, or otherwise transfers intellectual property rights or trade secrets related to Annex XL goods has had to contractually prohibit its third-country partner since 26 December 2024 from using them in connection with Annex XL goods destined for Russia. The same applies to a party that grants rights of access or reuse to protected material. The partner must additionally be obliged to pass the same prohibition on to any sub-licensees. For contracts concluded before 25 June 2024, a transitional period ran until 26 June 2025. As with the re-export clause, the Regulation requires adequate remedies and notification of the authority in the event of a breach.

Article 12gb: enhanced due diligence

A party selling, supplying, transferring, or exporting such goods has to identify and assess the risks of export to Russia. It has to document that risk assessment and keep it up to date. And it has to implement policies, controls, and procedures to mitigate the risks. Under the English version of the Regulation and the Commission’s FAQ, the effort is proportionate to the nature and size of the operator; the German version refers instead to the nature and size of the risks. The obligation has applied since 26 December 2024 for Annex XL and since 26 May 2025 for Annex XLVIII. It does not apply to a party supplying such goods only within the Union or to the partner countries listed in Annex VIII. It does apply, however, to a company that owns or controls a company established outside the Union that exports such goods. The owner has to ensure that the company outside the Union meets the requirements too.

Exemption for public contracts

The 14th sanctions package of 24 June 2024 added an exemption that many exporters overlook. Contracts an exporter concludes with a public authority in a third country or with an international organization do not need a “no re-export to Russia” clause. The exemption covers both new and existing contracts and extends to bodies governed by public law.

The exemption comes with a notification duty, however. A party relying on it has to inform the competent national authority, within two weeks for newly concluded contracts. What has to be notified is the legal basis, the contracting partner, and the subject matter of the contract. For contracts concluded before 19 December 2023, the authority may request notification within an appropriate timeframe.

Legacy contracts

Article 12g(2) of Regulation (EU) 833/2014 carves out two cases. The first is the performance of contracts covering certain Annex XL goods, namely CN codes 8457 10, 8458 11, 8458 91, 8459 61, and 8466 93. The second was the performance of contracts concluded before 19 December 2023 covering other goods. This exception applied only until 1 January 2025 or the contract’s expiry date, whichever was earlier. A party still performing such a legacy contract today therefore needs the clause.

Contracts concluded on or after 19 December 2023 must include the “no re-export to Russia” clause from 20 March 2024 onwards.

An exception applies to legacy contracts authorized in an EU Member State under an individual export license, together with an end-use(r) certificate or other re-export assurances. These assurances concern in particular non-re-exportation to Russia and Belarus. Such contracts do not have to be reopened to add the clause.

When the counterparty will not sign the clause

The most common question in practice arises as soon as the bargaining power sits on the other side: what if the customer in the third country simply will not sign the clause?

For legacy contracts concluded before 19 December 2023, the EU Commission accepts a unilateral communication in exceptional cases. The exporter thus notifies its customer that re-export to Russia and for use in Russia is prohibited, without this being agreed contractually. The Commission gives three examples of exceptional cases in which this can suffice:

  • The exporter can show it applied its best efforts to include the clause.

  • A longstanding business relationship exists, the exporter knows the counterparty accordingly well, and its due diligence minimizes the risk of circumvention.

  • The national law of the third country prevents such clauses.

The unilateral communication, too, has to reference adequate remedies the exporter can activate unilaterally.

Two things matter here. First, this is an exception, not a second route: for contracts from 19 December 2023 onward, contractual agreement remains the requirement. If the customer refuses the clause for such a contract, the exporter must not sell or supply the goods to it. The clause has to be agreed at the latest at the time of the sale, supply, transfer, or export. Second, for legacy contracts, document the efforts while you are making them, not once the authority asks. That is what the proof turns on.

EU Commission FAQ

The EU Commission maintains consolidated FAQs (in English only, last updated 25 September 2026) that also address Article 12g of Regulation (EU) 833/2014. They are well worth reading and include a model “no re-export to Russia” clause that complies with Article 12g (see below). Deviating wording is said to be possible and, under German law, also required (see the comments below). The Commission recommends identifying the clause as an essential element of the contract. The clause must contain adequate remedies. The Commission has since spelled out what that means. The remedies should be strong enough to deter. As examples, expressly not cumulative, it names stopping deliveries, suspending, interrupting, or terminating the contract, financial penalties, and the designation of a competent court able to find the re-export contrary to the contract. In the Commission’s view, breaches and circumvention of the re-export prohibition must be reported to the competent national authorities (in Germany, the Federal Office for Economic Affairs and Export Control, BAFA).

EU Commission model clause

Comments on the model clause

Paragraph 1 contains the counterparty’s duty to refrain from sale, export, or re-export to Russia. There is no need to expand its substance. The words “directly or indirectly” could, however, also cover a resale to a dealer. Paragraph 2 of the adapted clause therefore clarifies that circumvention by a third party is not in itself a violation of paragraph 1 by the buyer.

Paragraph 2 contains a best-efforts obligation. It would make more sense to require the counterparty to pass the obligations on along the supply chain.

Paragraph 4 sets out the remedies available to the exporter if the counterparty breaches its obligations.

Language-wise, a few adjustments are needed:

  • A serial (Oxford) comma has to be added throughout the clause at key points (see the highlighted positions below). In a dispute, a missing comma can also have legal and economic consequences. In the Maine overtime case, the court of appeals reversed a ruling for the employer because of the missing comma (Guardian report).1

  • In paragraph (1), it should read “shall not sell, export, or re-export”

  • In paragraph (4), “Any violation of paragraphs (1), (2), or (3)”

  • In paragraph (5), “problems in applying paragraphs (1), (2), or (3)”

  • And further in paragraph (5), “obligations under paragraph (1), (2), and (3)”

  • Finally, modern contract drafting uses “may” rather than “shall be entitled”.

Substantively, the exporter’s right to terminate the contract under paragraph 4(i) is essential.

The contractual penalty in paragraph 4(ii), however, is as a rule invalid under German standard terms law.

  • The penalty clause is drafted as strict (no-fault) and is therefore, under Section 307(1) of the German Civil Code (Bürgerliches Gesetzbuch, BGB), invalid even in B2B where the CISG does not apply. Exceptionally, it can be valid if weighty interests of the exporter justify it.2

  • The penalty also fails to differentiate between a breach of paragraph 1 (the prohibition on sale, export, or re-export to Russia), paragraph 2 (best-efforts obligation), or paragraph 3 (monitoring). In the BGH’s view, the unreasonableness of a penalty clause can already follow from setting a flat amount as a blanket sanction without differentiation by the type, weight, and duration of the breach. Such a sanction would only be permissible if the amount were still reasonable for the typically lightest breach.3

  • Independently of that, the exporter has to think carefully about the amount of the penalty. The amount itself can also be an unreasonable disadvantage to the counterparty, particularly where the sanction is disproportionate to the weight of the breach and its consequences for the counterparty.4

  • The invalidity of the penalty could even extend to all of paragraph 4. The contract would then no longer contain the adequate remedies that Article 12g(3) requires, and the exporter would risk a disadvantage in court and also a breach of the Regulation. In a dispute, however, the exporter could argue that the rest of paragraph 4 can stand on its own linguistically and substantively (the “blue-pencil test”).

  • If only the penalty falls away and the rest of paragraph 4 remains valid, the consequences would not, at first glance, be dramatic. The exporter could not claim the penalty itself in a dispute, but could still claim damages under Section 280(1) BGB or, where the CISG applies, under Article 74 CISG. The exporter would then have to plead and prove the amount of the loss in detail, which is often difficult or impossible in practice.

  • How could the penalty be drafted safely?

  • One obvious move is to make the penalty fault-based. The consequence, however, is that the counterparty can exonerate itself if it breaches, and the penalty does not apply. The amount of the penalty would also still have to differentiate by the type of breach.

  • Another option is a penalty along the so-called “Hamburg practice”, under which the exporter sets the amount of the penalty in its reasonable discretion, with the reasonableness reviewable by the competent court in a dispute (Section 315 BGB). It is also possible to name an amount in the contract that is meant to reflect reasonableness. However, such a clause will in practice lead to litigation (already implicit in the wording).

  • A further alternative is liquidated damages, but the amount has to be proportionate to the exporter’s potential loss, which is hard to forecast at the drafting stage.

  • An individually negotiated agreement (with the consequence that the rules on standard terms do not apply) is not a real option, because the exporter (the user of the standard terms) cannot seriously put the “no re-export to Russia” clause up for negotiation. That, however, is what the BGH’s case law requires – a fact many businesses are not aware of.5

  • A different approach is to address the standard terms problem of the penalty clause and other provisions of the contract (in particular the exporter’s limitation of liability) through an appropriate choice of law. Before considering Swiss law or other legal systems, it is worth looking at the UN Convention on Contracts for the International Sale of Goods (CISG) as part of German law. In practice, many businesses exclude the CISG reflexively and out of unfamiliarity. If it is not excluded, two aspects are interesting. First, a strict (no-fault) penalty would have better prospects. Standard-terms control still applies, because the CISG is not concerned with the validity of contract provisions (Article 4(a) CISG); the yardstick, however, is then the CISG, which does not require fault for liability. The requirements on differentiation and amount set out above still apply. Second, a re-export to Russia would readily be a “fundamental breach” within the meaning of Article 25 CISG. The exporter could then both claim the penalty and terminate the contract under paragraph 4 of the clause or declare it avoided under Article 64 CISG. If the buyer has already paid the price, the exporter must declare avoidance within a reasonable time after it learned, or ought to have learned, of the re-export. A minor breach, such as late information, is usually not a fundamental breach. An arbitration clause instead of a forum-selection clause should accompany this.

  • A party agreeing on the arbitration clause should know its limits, though. Whether an arbitral tribunal applies the EU sanctions at all depends largely on its seat; what holds in Frankfurt or Paris does not necessarily hold in Cairo, Singapore, or Moscow. Enforcement therefore depends on recognition. A foreign award ordering a payment that contravenes EU sanctions is incompatible with public policy and will not be recognized in Germany. How far that reaches is answered differently by the courts. The Cologne Court of Appeal declared an award in favor of a sanctioned party enforceable, but only subject to the proviso that payment must not breach sanctions, that is, must go to a frozen account; on that view sanctions are an obstacle to enforcement, not to recognition. The Stuttgart Court of Appeal refused enforcement outright.6

  • That same Stuttgart decision shows the other, often overlooked direction of protection. Under Article 11(1) of Regulation (EU) No 833/2014, claims in connection with contracts whose performance is affected by the sanctions are not to be satisfied where a Russian person, entity, or body brings them. The same applies to companies listed in the annexes and their subsidiaries outside the EU, to anyone acting through or on behalf of these persons, and to persons and companies from third countries outside the partner countries that supply prohibited goods to these persons or for use in Russia. This “no claim” provision protects European companies from sanctions-compliant conduct turning into damages or repayment claims; on the Stuttgart court’s view it also bars the repayment of an advance payment already made.6 A party unable to deliver in a sanctions case is therefore not without protection, and under Article 11(2) the burden of proving that a claim is exceptionally not prohibited lies with the party asserting it.

  • The phrase “appropriate remedies” used in paragraph 4 could, under German law, be considered not clear and intelligible (non-transparent) within the meaning of Section 307(1) sentence 2 BGB, which could render the clause invalid. The contract would then no longer meet the requirements of Article 12g either. It therefore makes sense to redraft paragraph 4, for example to list the remedies specifically and exhaustively. Another option is to include a fallback rule in a separate paragraph (for the “blue-pencil test”).

Paragraph 5 should be coupled with an audit right for the exporter.

It also makes sense to add a further paragraph with an indemnity obligation of the buyer toward the exporter. It applies where the buyer breaches its obligations under the “no re-export to Russia” clause. The standard terms issues flagged above for the penalty apply here too.

Regardless of standard terms validity, the exporter should include the “no re-export to Russia” clause in its general terms of sale and also in the other contract documents, such as the contract and the offer. The EU Commission expressly accepts standard terms as a route to compliance, but only where they are validly incorporated into the contract. That is precisely what often fails in international trade, whether for lack of valid incorporation or because of a “battle of forms”. The “no re-export to Russia” clause then does not apply. Standard terms are therefore the right place, but never the only one.

Practical recommendations

Companies should first check whether the scope is triggered at all. That is the case if the goods are listed in the annexes above and are sold to counterparties based neither in the EU nor in a partner country.

Where the scope is triggered, companies must include a “no re-export to Russia” clause in their contracts. The EU Commission’s model clause can be adopted. It should, however, be redrafted in wording and substance and supplemented with further provisions (audit, indemnity, and so on). Under German law, the standard terms requirements also have to be observed, as the article “Standard terms in B2B: freedom of contract is the exception” explains.

A party that sells, licenses, or otherwise transfers to a third-country partner intellectual property rights or trade secrets relating to Annex XL goods also needs a clause under Article 12ga. The model clauses in this article do not cover that. A party that supplies Annex XL or Annex XLVIII goods to a third country other than the partner countries must also meet the enhanced due diligence obligations under Article 12gb.

A party can also draft the clause generally from the outset and prohibit re-export to all sanctioned countries. It then does not need to maintain a Russia-specific carve-out and still meets the requirement of Article 12g. That breadth has a limit, however, that is rarely thought through in practice. A clause obliging the counterparty to comply with third-country sanctions may breach the compliance prohibition in the first paragraph of Article 5 of the Blocking Regulation (EC) No 2271/96 to the extent it covers the US sanctions against Iran and Cuba listed in the annex to that Regulation. According to the Frankfurt Court of Appeal, a German seller breached this prohibition by withholding both delivery and the repayment of an advance payment because of US sanctions against Iran.7 Draft the clause by reference to the EU sanctions, therefore, and do not incorporate US requirements wholesale.

Further information

Article 12g of Regulation (EU) No 833/2014 reads as follows in the consolidated version of 24 July 2026:

Adapted model clause

The adjustments to the model clause depend on many factors in each case (chosen governing law, negotiating position, and so on). The wording below is not a substitute for advice from specialized counsel.

  • Included are the language adjustments and the audit right. Under paragraphs 2 and 3 of the adapted clause, the buyer must take reasonable measures against circumvention by third parties and reasonably monitor the supply chain. The penalty is replaced by liquidated damages. Except for a breach of paragraph 8, they do not apply if the buyer is not responsible for the breach.

  • The rights under paragraph 7 apply, as in the Commission’s clause, to breaches of paragraphs 1 to 3, which include the record-keeping duty in paragraph 3, but not to the information duties in paragraphs 4 and 5. Under paragraph 8, they also apply to circumvention by third parties. For a gap in the records under paragraph 3, however, the exporter may terminate only if the buyer fails to close it in time after a written warning.

  • Paragraph 8 is deliberately strict. Under it, the buyer must ensure that no third party circumvents the prohibitions in paragraph 1. If a third party does so nonetheless, the exporter can terminate the agreement under paragraph 7 even if the buyer has met its obligations under paragraphs 2 and 3, and can claim the liquidated damages even if the buyer is not responsible for the circumvention. Before a state court without the CISG, at least the sentence on the liquidated damages is likely to fail, for the same reason as the Commission’s penalty; if only that sentence falls away, the rest of paragraph 8 continues to apply. If paragraph 8 fails as a whole, the rest of the clause remains. Paragraph 8 works best with an arbitration clause in which the parties clearly and visibly exclude the standard-terms rules (Sections 305 to 310 BGB). The BGH has left open whether such an exclusion is valid; several recent law journal articles say it is, although the view is not unanimous. Even then, according to some of these articles, the tribunal has to review the clauses in moderation under the principle of good faith (Section 242 BGB).8

  • For late or missing information, the exporter keeps at least its claims for performance and damages as well as the audit right under paragraph 6. If the buyer does not provide requested information within two weeks, the exporter can suspend further deliveries under paragraph 5 until it receives the information. For Annex XL goods, a persistent refusal by the buyer to provide information is also an indication of a risk of export to Russia that the exporter has to address as part of its due diligence under Article 12gb, for example with an audit or by suspending further deliveries.

  • Not included are an express duty to pass the prohibition on along the supply chain, an indemnity, an exhaustive list of remedies, and liquidated damages graded by the type and weight of the breach, because these points depend particularly on the individual case.

  • Before adopting the clause, list the remedies exhaustively and grade the liquidated damages. Otherwise the clause may be invalid, as described above, and the contract then no longer meets the requirements of Article 12g.

Notes

  1. O’Connor v. Oakhurst Dairy, No. 16-1901 (1st Cir. Mar. 13, 2017). ↩

  2. BGH, judgment of 21 March 2013 – VII ZR 224/12. ↩

  3. BGH, judgment of 31 August 2017 – VII ZR 308/16; BGH, judgment of 20 January 2016 – VIII ZR 26/15. ↩

  4. BGH, judgment of 20 January 2016 – VIII ZR 26/15. ↩

  5. BGH, order of 19 March 2019 – XI ZR 9/18. ↩

  6. OLG Köln, order of 24 May 2024 – 19 Sch 26/23; OLG Stuttgart, order of 13 May 2025 – 1 Sch 3/24, the latter as reported by Bälz, Russland-Sanktionen und Ordre Public, RInPrax 2025, 235. ↩1 2

  7. OLG Frankfurt, judgment of 20 October 2023 – 5 U 217/21. ↩

  8. BGH, order of 9 January 2025 – I ZB 48/24; Leupertz, RInPrax 2025, 2; Pfeiffer, NJW 2025, 866 paras. 2, 13 f.; Kondring, NJW 2026, 1255. ↩

Reference: Poleacov, P. (2026). “No re-export to Russia”: compliant export contracts. INN.LAW. https://inn.law/en/perspectives/no-russia-clause/