Operational and economic sanctions and the peculiarities of their application

This article examines operational and economic sanctions as a mechanism for out-of-court protection of the rights of business entities. It discusses the procedure, legal grounds, and practical challenges related to their application, and presents proposals for enhancing the legal framework regulating their implementation and conditions of use. The legal nature of operational and economic sanctions is explored through an analysis of Ukrainian legislation and the academic contributions of O.V. Kologoyda, A. Buchynska, O.H. Khrimli, V.S. Shcherbyna, and other scholars. These sanctions are characterized by specific features, types, grounds, and procedures for application, which are currently regulated by the Commercial Code of Ukraine, effective at the time of the study. The range and number of applicable sanctions are not restricted by a statutory list but are instead determined by the terms of commercial agreements. A key distinguishing feature of such sanctions is that they may be applied by the parties to a commercial obligation extrajudicially, promptly, unilaterally, and independently of the fault of the violating party, provided they are stipulated in the agreement. The ability of the parties to a contract to determine any operational and economic sanctions not explicitly provided for by legislation ensures the freedom of action for participants in commercial legal relations. It enables the creation of new types of sanctions, taking into account the specific terms of particular commercial contracts. This article examines the procedure and conditions for applying operational and economic sanctions in an extrajudicial manner within the relevant timeframes, the documentation of violations considering practical aspects, as well as problematic issues related to the application of such sanctions after the expiration of the legislative provisions that regulate them. The repeal of the Commercial Code of Ukraine, effective August 28, 2025, will eliminate the legislative basis for operational and economic sanctions, complicating the enforcement of sanctions specified in contracts. Accordingly, the article advocates for incorporating provisions on operational and economic sanctions into a new codified legal act governing economic (commercial) relations in Ukraine. Such provisions should include written notice as formal documentation of their application, as well as defined timeframes for their review and appeal, etc.