Termination of contracts between foreign belorusian partners

The economic crisis, mutual sanctions of the states-residents of Belarus and foreign countries, force majeure may become the reason that the contract with the Belarusian company becomes unfulfilled or unprofitable. For one or both parties. And it becomes necessary to terminate the contract.

Which country's law is applied at the termination of the contract will tell you the contract itself. If the contract doesn't say anything about it, the answer can be found in the corresponding international treaty (for example, the Treaty between the Republic of Belarus and the Republic of Latvia on legal assistance and legal relations in civil, family and criminal cases (signed in Minsk on 21.02.1994), the Treaty between the Republic of Belarus and the People's Republic of China on legal assistance in civil and criminal cases (signed in Beijing on 11.01.1993), the Convention between the Union of Soviet Socialist Republics and the Italian Republic on legal assistance in civil cases (Rome, 25.01.1097), the Treaty between the Republic of Belarus and the Republic of Poland on legal assistance and legal relations in civil, family, labor and criminal cases (Minsk, 26.10.1994), etc.

How can a foreign company terminate a contract under Belarusian law?

1. The easiest and cheapest way is to negotiate and settle the dispute peacefully. This can be done at any time, regardless of the reasons. The reason is discussed in the process of negotiation, and based on its results, an agreement to terminate the contract is concluded. The agreement is executed by signing one document (an additional agreement, a protocol to the contract) or by exchanging documents (letters, e-mails, faxes). The date of termination will be the date you indicate in the agreement.

The agreement must be signed by all parties to the contract! For example, if the contract is also signed by a guarantor, the agreement must have three signatures, otherwise it will not be valid. Sometimes notarization or state registration of the agreement may be required if the agreement itself was certified by a notary or registered with a state authority (for example, for a mortgage).

It is advisable to specify the consequences of terminating the contract in the agreement: return the supplied goods, the received prepayment, the amount of loan etc. If this is not done immediately, there may be difficulties in returning what you performed (transferred) to the counterparty before the contract was terminated.

Since, according to the law of the RB, what was performed before the termination of the contract is not returned after its termination, unless the parties have agreed otherwise.

2. The second cost-free way to terminate a contract without going to court is to tell the counterparty about your unilateral withdrawal from the contract. The consent of the other party is not required! You can do this only if such a right is provided by law or contract. For example, the Belarusian law allows you to withdraw from the supply contract if the seller does not deliver the goods on time, or if the seller has delivered goods of inadequate quality or incomplete goods. The contract may provide any other grounds for unilateral withdrawal.

The contract is considered to be unilaterally terminated from the moment the other party receives your notice of withdrawal from the contract. Or at any other time specified by you in the notice (contract).

A unilateral withdrawal can be full or partial. You can refuse to deliver or pay for part of the goods, or perform or pay for part of the work. Or refuse all at once. In case of a partial withdrawal, the contract begins to operate in a modified form (different price, different payment term, scope of delivery, etc.). In the case of a complete withdrawal, the contract is terminated.

3. If you cannot reach an agreement with your counterparty about termination or amendment of the contract, you have to go to the Belarusian state court.

Before going to court with a lawsuit, it is necessary to comply with the pre-trial order: to send an offer to terminate the contract and get a refusal of the other party. Or to wait for the expiry of the deadline for the answer. The general deadline for responding to a claim is 30 days (unless the contract specifies a different deadline). For example, to terminate a lease contract, you must first send the other party a letter offering to terminate the contract voluntarily. If the pre-trial procedure is not followed, the court will dismiss the claim.

The types of breaches in which the injured party is entitled to bring a lawsuit to terminate the contract may be set forth in the contract itself. Example of a formulation: "Violation by the customer of the terms of payment under the contract for more than 10 days or repeated delay in payment is a material breach of contract terms and gives the executor the right to demand termination of the contract and compensation for damages caused. In this case, in order to obtain a favorable court decision you will only need to prove the violation.

If, however, the contract does not contain a suitable reason for you, it is still possible to terminate the contract in court. To do this, you will need to prove in court that the breach of contract by the other party is substantial. Belarusian courts recognize a breach of contract as substantial if, because of this breach, further performance of the contract would cause you substantial losses. For example, when due to the delay in delivery of the components you need, you will not be able to deliver the equipment to another company on time. In any case, the evaluation of the violation in each case is given by the court. In this case, you have the right to demand compensation for the losses caused to the company by the termination of the contract (including lost profits).

You can also demand the termination of the contract in court if there is a significant change in the circumstances from which you proceeded when concluding the contract. When conditions have changed so much that the performance of the contract has become economically unprofitable for you. And you could not have foreseen such a change at the conclusion of the contract. For example, the price of the components necessary to produce the goods delivered under the contract has risen so much that you would not have entered into the contract at all, if you could have anticipated such a change. Or you would have entered into the contract on different terms and at a different price. However, you should keep in mind that in each case it is up to the court to evaluate. For example, fluctuations in the exchange rate on the foreign exchange market will most likely be regarded by the court as a normal business risk, and not a significant change in circumstances. The claim shall be filed with the economic court at the location of the debtor or his property. The state duty rate for filing a claim for termination of contract is 215 euros. And if you also claim for back pay and damages, the state fee will increase to 5% of the claim price.

At your request, the court can also determine the consequences of termination. For example, obligate the landlord to return the leased property, delivered goods, transferred advance payment, etc. From the moment the court decision enters into force, the contract is considered to be terminated. When the contract is terminated on any grounds, the obligations of the parties are terminated.