Kate Ekaterina Ursul<\/strong>, Law Clerk, Isakulov Law Group<\/strong><\/p>\n\n\n\n
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In the panel discussion titled \u201cTariffs, Trade, and Arbitration: Navigating Cross-Border Disputes in a Shifting U.S. Regulatory Landscape\u201d hosted by JAMS<\/a> during New York Arbitration Week<\/a> (\u201cNYAW<\/strong>\u201d) 2025, the Brazil Branch of Ciarb (The Chartered Institute of Arbitrators)<\/a> convened leading practitioners from the United States, Asia, Europe, and Latin America to examine recent shifts in trade policies and their projected effects on arbitration disputes in the coming years. These reforms have disrupted the established foundations of the global trading system, creating a volatile environment poised to reshape the landscape of international arbitration.<\/p>\n\n\n\n The event featured a roundtable discussion moderated by former Ambassador David Huebner<\/a><\/strong>, International Arbitrator at JAMS<\/a>, and with the participation of legal professionals serving in diverse roles across multiple jurisdictions, including:<\/p>\n\n\n\n The panel discussed multiple effects of tariffs and sanctions on trade, as well as the most effective mechanisms of protecting clients\u2019 interests while addressing these fast-paced changes.<\/p>\n\n\n\n The panel began with a discussion about contracts, emphasizing how nowadays contracts have to be actively managed, not passively rubber-stamped by legal teams. Force majeure clauses must cover far more possible events than before, including sanctions, pandemics, and export bans, and they consequently require precise drafting to define triggering events and suspension periods.<\/p>\n\n\n\n The discussion touched upon different examples of the importance of force majeure clauses, including:<\/p>\n\n\n\n The panel then touched upon the importance of negotiation clauses which, though weakly enforced in common law, remain useful tools for structuring dialogue between parties. Even though in the theory of international arbitration the party can choose the seat of the arbitration and the procedures, in practice, sanctions can limit the ability of the arbitrators to get paid, and therefore parties have less freedom in their choices if sanctions are placed. Contracts in energy and natural resources sectors commonly include hardship and fairness clauses, and these clauses usually require renegotiation when facing severe cost shifts. Mediation is also a recommended avenue when renegotiating contractual terms. <\/p>\n\n\n\n The speakers, then, illustrated how Delaware common law now provides guidance for interpreting Material Adverse Change\/Effect (\u201cMAC\/MAE<\/strong>\u201d) clauses. Under Delaware law, MAC\/MAE clauses allocate extraordinary, long-term, company-specific risks to the seller. A landmark decision, Akorn v. Fresenius<\/em> (2018)<\/a>, established that a MAE must cause a lasting effect, and the impact must be material when assessed from a reasonable buyer\u2019s long-term perspective. As a result, Fresenius could terminate its merger with Akorn. In general, Delaware courts apply a high threshold before recognizing a MAE.<\/p>\n\n\n\n Clauses invoking impossibility, impracticability, or frustration of purpose are narrowly applied, but they still influence risk allocation in supply contracts. In English law, similar doctrines are applied with nuance in limited cases. Change in law clauses can be solved with remedies such as price re-opener to termination events. Lawyers are advised to employ consistent templates for force majeure, hardship, and cost-sharing clauses to reduce litigation risk.<\/p>\n\n\n\n The panel then turned to discussing the key updates on the subject of tariffs as well as the tools that a lawyer will need to navigate this situation. In today\u2019s world of constant change, unpredictable litigation, and evolving tariffs, lawyers must equip themselves with precise strategies to safeguard client interests. Recent tariff adjustments, implemented with little or no prior notice, have disrupted global supply chains and fueled disputes. Companies now face heightened contract breaches, non-performance, or unforeseen, high costs.<\/p>\n\n\n\n Notably, the discussion emphasized that the process of enforcement is not just about picking a seat in London or Singapore, but actively managing the arbitration with local enforcement realitie. Secondary sanctions, for instance, can jeopardize contract performance even if payments in U.S. dollars or other sanctioned currencies are not involved. The panel highlighted the rising importance of compliance enforcement across multiple jurisdictions. Issues may arise if contract payments are blocked due to newly issued sanctions. Tracking internal compliance metrics closely and monitoring entities subject to sanctions are essential, not optional. Ring-fencing high-risk operations under U.S. and EU laws prevents more than 50% ownership from triggering sanction liability, isolating operations in standalone entities to limit financial and legal exposure. In evaluating enforcement, Chevron v. Ecuador<\/em><\/a> demonstrates the importance of assessing local courts\u2019 receptiveness and political environments. The Ecuadorian judgment of enforcement against Chevron failed in multiple jurisdictions, such as the USA, Canada, Brazil, and Argentina, for multiple reasons, including corruption and public policy. This case illustrates that even a multiple billion-dollar judgement is not effective if it can not be enforced. Legal teams must ensure that final judgments will be enforceable and that local courts are reliable.<\/p>\n\n\n\n The panel explored recent export controls to encompass hardware, software, cloud services, and high-end chips. In connection with these controls, the panel noted the rerouting of trade to China and South Asia. Initially, offshoring had moved to Thailand and Mexico due to tariff cycles, but subsequent changes in tariffs neutralized these benefits, complicating commodity trade. For example, when U.S. supply to China is restricted, companies such as Intel and Apple may reroute supply chains to countries like Vietnam, India, or Malaysia. Legal counsel must anticipate such shifts proactively, incorporating provisions for supplier changes, customs delays, and cost adjustments. Auditing supply chains and revising the definition of controlled items in contracts were recommended as key steps.<\/p>\n\n\n\n The panel then discussed that in matters of sanctions, tariffs, and export controls, ex parte orders may be sought, but cultural and jurisdictional factors should be carefully evaluated. Enforcement of such orders is often limited. Court orders may be useful for urgent shipment issues, though political tensions may affect the choice of arbitration seat. Panelists emphasized that social media disclosure is increasingly relevant, particularly in emergency arbitrations. Other points provided during the panel were that, in some cases, awards were not enforced because local authorities and port officials refused to release containers. Enforcement then proceeded through local courts, highlighting the need for lawyers to devise strategies that integrate arbitration proceedings with local enforcement mechanisms. Under the New York Convention (\u201cNY Convention<\/strong>\u201d), enforceability of interim orders varies; while Article 7 of the NY Convention<\/a> (\u201cmost favorable rights\u201d) can assist, bespoke mechanisms and standby procedures should be incorporated into contracts to address urgent situations.<\/p>\n\n\n\n The panel cautioned that lawyers must monitor tariffs, sanctions, licenses, and export bans in real time. Cost-sharing arrangements can mitigate the impact of tariff increases. In light of significant tariff increases, contracts should include cost-sharing arrangements. For instance, a contract may specify that a buyer bears the cost of a 7\u201310% tariff increase, while increases above 20% trigger mandatory renegotiation. Lawyers should monitor 50% ownership thresholds in subsidiaries to avoid liability exposure. Templates for force majeure, change-in-law, and hardship clauses are recommended. Arbitration should involve experts in sanctions and WTO law, and mediation protocols should be prepared. Panelists observed that for corporate structures, ring-fencing, subsidiary separation, and ownership thresholds can mitigate risk for the clients. Alternative supplier clauses and detailed renegotiation mechanisms with strict timelines should be included. Arbitration seats should be neutral and supportive of interim measures.<\/p>\n\n\n\n\n
Contract Clauses Implicated<\/strong><\/h2>\n\n\n\n
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Sanctions, Tariffs, and Arbitration<\/strong><\/h2>\n\n\n\n
Export Controls and Supply Chain Rerouting<\/strong><\/h2>\n\n\n\n
Navigating Sanctions, Tariffs, and Export Controls<\/strong><\/h2>\n\n\n\n
International Trade Law Considerations<\/strong><\/h2>\n\n\n\n
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