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

Export contracts must include a “no re-export to Russia” clause from 20 March 2024. EU model clause, German contract-law pitfalls, and what to add.

Peter Poleacov20 min

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

Introduction

On 18 December 2023, the European Council adopted the 12th sanctions package against Russia. The aim is to combat circumvention of EU export bans, in particular situations where goods exported to third countries are re-exported to Russia. One of the 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 17 July 2026), companies are required from 20 March 2024 to include a clause in their contracts on the sale, supply, transfer, or export of goods and technologies to third countries that contractually prohibits 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, and Switzerland (see Annex VIII of Regulation (EU) 833/2014).

Three delimitations save a great deal of work 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. And 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

A supplier of Annex XL goods, the common high priority items, carries two additional obligations that have nothing to do with the re-export clause and are therefore regularly overlooked. These are 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, or that grants rights of access or reuse to protected material, 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 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, document that risk assessment and keep it up to date, and implement policies, controls, and procedures to mitigate them, each proportionate 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: it has to ensure that this company 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.

It comes at a price, though: a notification duty. A party relying on the exemption 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. First, the performance of contracts covering certain Annex XL goods, namely CN codes 8457 10, 8458 11, 8458 91, 8459 61, and 8466 93. Second, the performance of contracts concluded before 19 December 2023 covering other goods, and then only until 1 January 2025 or their expiry date, whichever is earlier. That transitional period has therefore run out: a party still performing such a legacy contract today needs the clause.

Contracts concluded 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, in particular as regards non-re-exportation to Russia and Belarus. Such contracts do not have to be reopened to add the clause.

When the counterparty will not play along

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 names three constellations in which this holds: where the exporter can show it applied its best efforts to include the clause; where a longstanding business relationship exists, it knows the counterparty accordingly well, and its due diligence minimizes the risk of circumvention; or where 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. Second, 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 17 July 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). In the Commission’s view, the clause must be an essential part of the contract and must contain adequate remedies. What that means has since been spelled out: the remedies have to be strong enough to deter, and the Commission names as examples, expressly not cumulative, 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. Breaches 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

(1) The [Importer/Buyer] shall not sell, export or re-export, directly or indirectly, to the Russian Federation or for use in the Russian Federation any goods supplied under or in connection with this Agreement that fall under the scope of Article 12g of Council Regulation (EU) No 833/2014.

(2) The [Importer/Buyer] shall undertake its best efforts to ensure that the purpose of paragraph (1) is not frustrated by any third parties further down the commercial chain, including by possible resellers.

(3) The [Importer/Buyer] shall set up and maintain an adequate monitoring mechanism to detect conduct by any third parties further down the commercial chain, including by possible resellers, that would frustrate the purpose of paragraph (1).

(4) Any violation of paragraphs (1), (2) or (3) shall constitute a material breach of an essential element of this Agreement, and the [Exporter/Seller] shall be entitled to seek appropriate remedies, including, but not limited to: (i) termination of this Agreement; and (ii) a penalty of [XX]% of the total value of this Agreement or price of the goods exported, whichever is higher.

(5) The [Importer/Buyer] shall immediately inform the [Exporter/Seller] about any problems in applying paragraphs (1), (2) or (3), including any relevant activities by third parties that could frustrate the purpose of paragraph (1). The [Importer/Buyer] shall make available to the [Exporter/Seller] information concerning compliance with the obligations under paragraph (1), (2) and (3) within two weeks of the simple request of such information.

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 or adjust this paragraph.

Paragraph 2 only 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). This is not only a stylistic matter; in a dispute, the missing comma can have legal and economic consequences (as in this case).

  • 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)”

  • Paragraph (4) could also be redrafted; in particular, the phrase “of an essential element” seems superfluous.

  • 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. No adjustment needed here.

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

  • The penalty clause is drafted as strict (no-fault) and is therefore, under Section 307(2) No. 1 BGB, invalid even in B2B.1

  • 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.2

  • 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.3

  • The invalidity of the penalty could even pull all of paragraph 4 down with it. 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”).

  • The consequences of the penalty being invalid 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. 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 is essentially an invitation 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 requires4 – a fact many businesses are not aware of.

  • 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 reaching for Swiss law or other regimes, it is worth looking at the UN Convention on Contracts for the International Sale of Goods (CISG) as part of German law. If the CISG is not – as so often in practice reflexively and out of unfamiliarity – excluded, two aspects are interesting. First, a strict (no-fault) penalty is possible, because the CISG does not require fault. Second, the “material breach” referenced in paragraph 4 of the “no re-export to Russia” clause can be read as a “fundamental breach” within the meaning of Article 25 CISG. The exporter could then both claim a valid penalty and terminate the contract under paragraph 4 of the clause or Article 64 CISG. An arbitration clause instead of a forum-selection clause should accompany this.

  • A party setting the arbitration clause should know where it ends, 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 shifts to 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.5

  • 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. 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. 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. It therefore makes sense to redraft paragraph 4, for example to list the remedies specifically and exhaustively. Another option is to include a dedicated 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 new paragraph 6 containing an indemnity obligation of the buyer toward the exporter for cases 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 not only include the “no re-export to Russia” clause in its general terms of sale but also in the other contract documents (contract, offer, and so on). The EU Commission expressly accepts standard terms as a route to compliance, but only where they are validly incorporated into the contract. And that is precisely what often fails in international trade, whether for lack of valid incorporation or because of a “battle of forms”, with the consequence that the “no re-export to Russia” clause would not apply. Standard terms are therefore the right place, but never the only one.

Practical recommendations

Companies should first check whether the scope is even triggered: whether the goods at issue are on the listed annexes and whether the counterparties are based outside the EU or partner countries.

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, but should be redrafted both in wording and in substance and supplemented with additional provisions (audit, indemnity, and so on). Under German law, the standard terms requirements also have to be observed.

A party that drafts the clause generally from the outset, prohibiting re-export to all sanctioned countries, spares itself maintaining a Russia-specific carve-out and still meets the requirement of Article 12g. That breadth has a limit rarely thought through in practice, however: a clause obliging the counterparty to comply with third-country sanctions, in particular U.S. secondary sanctions, may breach the compliance prohibition of Article 5(1) of the Blocking Regulation (EC) No 2271/96. The Frankfurt Court of Appeal decided such a case.6 Draft the clause along the EU sanctions, therefore, and do not incorporate U.S. requirements wholesale.

Further information

Article 12g of Regulation (EU) No 833/2014 reads as follows in the consolidated version of 17 July 2026:

(1) When selling, supplying, transferring or exporting to a third country, with the exception of partner countries listed in Annex VIII to this Regulation, goods or technology as listed in Annexes XI, XX and XXXV to this Regulation, common high priority items as listed in Annex XL to this Regulation, or firearms and ammunition as listed in Annex I to Regulation (EU) No 258/2012, exporters shall, as of 20 March 2024, contractually prohibit re-exportation to Russia and re-exportation for use in Russia.

(2) Paragraph 1 shall not apply to: (a) the execution of contracts relating to goods falling under CN codes 8457 10, 8458 11, 8458 91, 8459 61, 8466 93, as listed in Annex XL; (b) the execution of contracts concluded before 19 December 2023 and relating to goods other than those referred to in point (a), until 1 January 2025 or until their expiry date, whichever is earlier.

(2a) Paragraph 1 shall not apply to public contracts concluded with a public authority in a third country or with an international organisation.

(2b) Exporters shall inform the competent authority of the Member State where they are resident or established of any public contract they concluded that benefited from the exemption under paragraph 2a, within 2 weeks of its conclusion. The Member State concerned shall inform the other Member States and the Commission of any information received under this paragraph within 2 weeks of its receipt.

(3) In application of paragraph 1, exporters shall ensure that the agreement with the third-country counterpart contains adequate remedies in the event of a breach of a contractual obligation concluded in accordance with paragraph 1.

(4) If the third-country counterpart breaches any of the contractual obligations concluded in accordance with paragraph 1, exporters shall inform the competent authority of the Member State where they are resident or established as soon as they become aware of the breach.

(5) Member States shall inform each other and the Commission of detected instances of a breach or circumvention of a contractual obligation concluded in accordance with paragraph 1.

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.

No re-export to Russia

(1) The [Importer/Buyer] shall not sell, export, or re-export, directly or indirectly, any goods supplied under or in connection with this Agreement to the Russian Federation or for use in the Russian Federation, as covered under Article 12g of Council Regulation (EU) No 833/2014.

(2) The [Importer/Buyer] shall ensure that the prohibitions in paragraph (1) are not circumvented by any third parties in the commercial chain, including by possible resellers.

(3) The [Importer/Buyer] shall establish and maintain effective monitoring mechanisms to detect and prevent any actions by third parties that would contravene paragraphs (1) or (2). This includes keeping detailed records and documentation of compliance efforts, which must be retained for at least [X] years after this Agreement’s termination.

(4) The [Importer/Buyer] shall promptly inform the [Exporter/Seller] of any difficulties in applying paragraphs (1), (2), or (3), including any relevant third-party activities that could undermine the objectives of paragraphs (1) or (2).

(5) The [Importer/Buyer] shall provide the [Exporter/Seller] with the necessary information and documentation to prove its compliance with its obligations stated in this clause within two weeks upon request.

(6) The [Exporter/Seller] may audit the [Importer/Buyer]’s business and production premises at any time to verify the [Importer/Buyer]’s compliance with its obligations stated in this clause. Audits shall be conducted with reasonable notice and within the [Importer/Buyer]’s usual business hours. The [Exporter/Seller] shall protect any confidential information or business secrets encountered during such audits.

(7) Any violation of paragraphs (1) to (5) constitutes a material breach of this Agreement, and the [Exporter/Seller] may seek appropriate remedies, including, but not limited to: (i) termination of this Agreement without notice; and (ii) liquidated damages of [XX]% of the total value of this Agreement or the price of the goods exported, whichever is higher, unless the [Importer/Buyer] is not responsible for the breach.

Notes

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

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

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

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

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

  6. Frankfurt Court of Appeal, judgment of 20 October 2023 – 5 U 217/21. ↩

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