Sanctions have evolved beyond a compliance issue and into an active enforcement risk, according to the Lex Mundi General Counsel Summit 2025 report.
Sanctions were among the three key regulation areas identified as having the most significant impact on cross-border transactions and operations, along with geo-economic risk and new supply chain disclosure rules.
“In this environment, business leaders have to steer their companies through extreme uncertainty and adjust their strategy as they go along. It is not just the volatility itself; it is the speed of swing within the volatility. This affects every aspect of their businesses, from the deal making which is reeling from the weight of sanctions, regulation, and taxation, to managing an increasingly aggrieved and disillusioned workforce,” said Helena Samaha, Lex Mundi CEO and president, in a statement.
Anticipated rise in sanctions-related litigation
Sanctions-related litigation is expected to tick up as companies battle enforcement actions and compliance concerns, especially if businesses unwittingly engage with third-party suppliers trading with restricted jurisdictions. Legal teams must now anticipate rather than react to such events; thus, summit attendees sought specific knowledge on sanction interpretation and enforcement by regulators.
With sanctions increasing in volume and intensity, businesses struggle to identify trade and investment partners. The report indicated that to sidestep hidden regulatory risks, companies must also outline whole supply chains, including indirect suppliers and intermediaries.
The growing influence of geo-economic risk on deals
National security concerns are blocking or delaying an increasing volume of deals, particularly concerning technology, artificial intelligence, and energy concerns. As foreign direct investment and technology transfer controls become more important than traditional antitrust evaluations, AI, semiconductors, and critical energy technologies are especially prone to review.
The report revealed that geopolitics, energy transition, and AI strongly influence cross-border deals. Thus, legal teams are now called to assess a deal’s geopolitical feasibility before it is structured to mitigate the risk of companies being asked to divest the core aspect of businesses they are acquiring.
New supply chain disclosure rules
Major economies, particularly the European Union, are introducing environmental, social, and governance disclosure mandates for businesses, adding to compliance costs and heightening legal exposure. According to the report, these rules overlapped and were occasionally contradictory.
Businesses must do deep visibility checks on suppliers and commercial partners to determine compliance with environmental and human rights standards. Moreover, companies must prove that ESG risks across supply chains are being mitigated.
According to Samaha, the expanding role of legal teams in light of these challenges highlights the need for greater support.
“Front of line advisers to the boards are the in-house legal departments, who continue to report being very stretched. One silver lining may be innovation in technology and AI, but legal teams still need structured, high-value, legal risk management support from their law firms,” she said in a statement.
The Lex Mundi General Counsel Summit 2025 report obtained insights from over 50 senior in-house counsel at blue-chip multinationals who attended the Lex Mundi General Counsel Summit in Milan in October 2024.