## Facts

- A French company (CEP) negotiated with a Dutch company (Sensor) to purchase 2,400 strings of geophones (with initially included spare parts) for resale, with ultimate destination in the USSR.
- On May 19, 1982, CEP ordered the goods by telex; Sensor confirmed the same day. The order price was stated in Dutch guilders, with delivery in 14–16 weeks.
- CEP’s June 3, 1982 purchase order specified FOB Rotterdam, packaging/delivery included, payment by letter of credit, and ultimate destination in the USSR.
- On June 18, 1982, Sensor confirmed delivery before September 20, 1982; on June 28, 1982, the parties modified the order to remove spare parts at a reduced price.
- Sensor was a Dutch corporation wholly controlled, through intermediate subsidiaries, by a U.S. parent corporation.
- After the United States expanded export controls against the USSR in June 1982, Sensor informed CEP on July 27, 1982 that it considered itself bound by U.S. Export Administration Regulations and would not deliver for USSR destination.
- Sensor asserted that violating the U.S. measures could trigger significant U.S. penalties and that this constituted force majeure or excusing circumstances.
- CEP brought summary (injunction) proceedings in The Hague seeking an order compelling Sensor to perform by delivering the geophones by a fixed deadline.

## Issues

1. Under Dutch choice-of-law rules, what law governed the parties’ contract and the availability of exoneration for non-performance?
2. Whether U.S. export-control rules purporting to regulate foreign subsidiaries outside U.S. territory could be recognized as valid grounds for non-performance under Dutch law and international law.
3. Whether threatened foreign sanctions under those U.S. rules constituted force majeure or excusing circumstances under the governing sales law.

## Decision

- The court granted injunctive relief and ordered Sensor to perform the contract by delivering the 2,400 strings of geophones by the specified deadline.
- The court held that the U.S. jurisdictional provision extending the embargo to foreign companies owned or controlled by U.S. companies was incompatible with international law and could not justify non-performance.
- The court rejected Sensor’s defense that the risk of U.S. penalties amounted to force majeure or excusing circumstances under the applicable sales law.

## Legal Principles

- Contractual obligations and defenses in an international sales contract are governed by the law of the country with the closest connection, as determined by the forum’s choice-of-law rules.
- A forum court may refuse to give effect to a foreign public-law measure that asserts impermissible extraterritorial jurisdiction under public international law.
- A party’s fear of foreign sanctions, standing alone, does not necessarily constitute force majeure or excusing circumstances; commercial risks tied to corporate ownership structure do not automatically excuse contractual performance.

## Conclusion

In summary proceedings, the court compelled a Dutch seller to perform a sales contract for goods destined for the USSR, declining to treat U.S. export controls aimed at foreign subsidiaries as a lawful basis for non-performance and finding that threatened U.S. penalties did not excuse performance under the governing law.


Compagnie Européenne des Pétroles S.A. v. Sensor Nederland B.V., 22 I.L.M. 66 (Pres. Dist. Ct. The Hague 1982)