You're Doing Construction in Russia, Now What?

Maze question mark

For those who have construction projects in Russia, the question is, “How should we proceed?”

May 16, 2022
Anazette Ray & Michael Vardaro - Zetlin & De Chiara LLP

In recent weeks, there has been a long list of companies, from all industries spanning from construction/engineering to fashion and hospitality, that have announced that they are completely severing ties with Russia, while a host of others have announced a temporary halt. See Jeffrey A. Sonnenfeld, Over 400 Companies Have Withdrawn from Russia – But Some Remain, Yale School of Management (Updated Mar. 21, 2022), https://som.yale.edu/story/2022/over-400-companies-have-withdrawn-russia.... For those developers, EPC contractors, and design professionals (engineers and architects) who have construction projects in Russia, the question is, “How should we proceed?”

The U.S. initially stated that it was not issuing a total embargo on business dealings and trade relations with Russia in response to the nation’s invasion of Ukraine. Instead, the U.S., along with many other Western nations, issued targeted sanctions. See Francesco Giumelli, Understanding Targeted U.N. Sanctions: An Empirical Analysis, International Affairs, 91(6), 1351-1368 (explaining the difference between embargoes and targeted sanctions). However, after evidence of war crimes by Russia emerged, President Biden issued an Executive Order prohibiting U.S. individuals, whether in the states or abroad, from new investments in Russia and prohibiting U.S. individuals from transactions with Russian state-owned entities. See April 6, 2022, Presidential Actions, https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/06.... This new Executive Order is said to not affect existing contracts in Russia, but instead prohibits new ones.

Reprinted courtesy of Anazette Ray, Zetlin & De Chiara LLP and Michael Vardaro, Zetlin & De Chiara LLP
Ms. Ray may be contacted at aray@zdlaw.com
Mr. Vardaro may be contacted at mvardaro@zdlaw.com



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