LEGAL PERSPECTIVE
The implications and impact of sanctions and
cross-border trading
For any lubricant business competing in global markets, one of the inescapable challenges to navigate is the ever changing world of sanctions.
Why sanctions legislation impacts how the lubricant industry does business? Sanctions are economic or trade restrictions put in place by an individual country such as the US or a regional organisation such as the EU, usually as a response to an economic, social or military situation and/or for political ends. Additionally, international governing bodies such as the UN often use sanctions as part of a diplomatic arsenal to help protect international peace and security.
The current US sanctions list includes restrictions against entities or individuals based in twenty countries with the EU sanction regime currently covering twenty-two countries. With sanctions having such a broad geographical reach it is clear to see why international business is heavily impacted, with the lubricant industry being no exception.
18 LUBE MAGAZINE NO.151 JUNE 2019
A lack of understanding around the subject of sanctions could lead to a business missing vital new revenue opportunities and competitive advantage. However, breaching any sanctions regime could have a wide reaching, detrimental effect on your business. Penalties for breach can include:
• Director disqualification • Criminal investigations and hefty fines • Regulatory action and increased focus from regulators
• Significant damage to reputation • Damage to banking relationships
Add to this, the restrictions you could face within your daily supply chain and customer relations, potential ancillary legal concerns arising from breach of contract claims and the time that would need to be dedicated to deal with regulators in the event of a breach. Not to mention, the potential further restrictions being placed on doing business going forward if export licences were revoked; getting it right is critical.
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