“The conflict in Ukraine saw businesses scramble to understand and navigate the rafts of new international sanctions which were rapidly introduced by individual states and international bodies,” said Hyun Woo Kang, a transportation lawyer with global firm Reed Smith.

“Alongside the challenge of sanctions, the world has felt the further impacts of the war,” he added. “Disruptions to grain exports led the UN to announce at a recent Security Council meeting (SC/14894) that the ‘global food crisis already impacted by the Covid-19 pandemic and climate change, is being driven to famine levels worldwide by the war in Ukraine.’ Global car manufacturing has also suffered setbacks because a key component, electrical wiring, is made in Ukraine.”

The global landscape has changed in many ways, Kang noted, citing as an example that South Korean shipbuilders recently agreed to an 8 percent increase in prices for steel plate. That has delayed their anticipated return to profitability despite increased orders and higher prices for new ships. 

“Against this backdrop, risks may lie in existing contracts, particularly those signed before February, which demand future performance,” Kang warned. “Does your contract require future performance by a party? Are there elements of your contract in which a party stands to suffer as a result of the new economic landscape, for example, pricing of raw materials? Does your contract contain any provisions which allow for adjustments in price to take account of fluctuating global markets or other changing circumstances?”

Charter rates have been “sky-high, but are expected to soften,” Kang said. “Bunker prices have been pushed up. Shipping and other commercial contracts concluded some time ago and filed away for safe-keeping, but requiring on-going performance, would benefit from a fresh look to understand where any enhanced, or completely new, risks may lie.”