31/07/2025
In recent years, the international trade landscape has undergone a series of transformations, which directly impacted on commercial contracts. Currently, the escalation of tariffs imposed by the United States on several countries, including Brazil, has brought an additional layer of complexity to this already unstable reality, creating new opportunities for dispute resolution through arbitration, as per the recently published piece written by our Partner Silvia Rodrigues Pachikoski for Valor Econômico[1].
The trade war is unfolding in a tortuous international scenario, affected by the Covid-19 pandemic, armed conflicts and economic sanctions. The legal implications of the new tariffs transcend the financial aspects, raising questions regarding the fulfillment of contractual obligations under exceptional circumstances.
Geopolitical instability tends to lead to an increase in the number of disputes involving claims for economic and financial rebalancing of contracts, as well as invocation of fortuitous events or force majeure, in addition to the triggering of hardship clauses for revision or termination of contracts.
However, the possibility of contractual rebalancing invariably depends on the assessment of the specificities of the case, such as contractual provisions – including the previously agreed risk allocation –, the applicable law, and the demonstration of the economic impact of the increased tariffs on contract performance.
Furthermore, as the tariffs primarily affect contracts of global scale, the multiplicity of jurisdictions of the parties must be considered, as well as the lack of uniformity in the treatment of such situations by different legal systems, each one establishing different criteria for addressing issues related to the possibility of economic and financial rebalancing. In situations of this nature, arbitration is frequently chosen as the resolution method for disputes arising from such contracts.
In view of the various issues to be considered in the resolution of this kind of dispute, it is essential that the selected arbitrators be specialized in the law applicable to the contract, as well as be technically qualified to address the impacts of the new tariffs on contractual obligations. Such expertise is necessary since the correct interpretation of the chosen rules and contractual clauses can be decisive for the outcome of the dispute.
It is also important to consider the different legal traditions, given that common law countries – such as the United States and England – tend to reject claims for termination of contracts due to unfavorable economic conditions, while civil law countries – such as Brazil – do not consider contractual rebalancing altogether uncommon.
In this scenario, choosing the right arbitrator for the case is of utmost importance, as it should be a professional with sufficient expertise to analyze the effects of tariff increases and assess the rationale for the rebalancing of the commercial relationship. Likewise, the parties must also be prepared to address the new international landscape through the adoption of preventive contractual strategies, seeking information and evidence to ensure efficient protection of their commercial interests.
L.O. Baptista’s Dispute Resolution team, with its extensive experience in complex commercial contracts and international arbitration, remains available to assist its clients in the increasingly complex landscape of international trade, through analysis of contractual risks and assessment of disputes arising from the current global reality.
[1] The piece “Trade War and contractual fulfillment” written by Silvia Rodrigues Pachikoski, was published on July 21, 2025, by Valor Econômico (Available in Portuguese at https://valor.globo.com/legislacao/coluna/guerra-tarifaria-e-a-execucao-de-contratos.ghtml).
Co-authored by: Silvia Rodrigues Pachikoski, Mariana Dias Sallowicz, José Victor Palazzi Zakia and Julia Guimarães Rossetto
