First determine whether payment is prohibited or merely temporarily impossible.
If an applicable freezing order or sanctions prohibition applies, it should be handled according to its object, scope and conditions, and performance must not be used to circumvent the restrictions. If it is merely an internal bank review, a system outage at a counterparty, or insufficient funds on a platform, it is still necessary to determine whether other lawful means of performance exist and whether the customer contract permits an extension. An upstream email citing "compliance reasons" alone is insufficient to confirm that the law already prohibits all relevant payments.
Force majeure must be read from the clause; it is not an automatic button.
In RTI v MUR Shipping, the UK Supreme Court emphasized analyzing obstacles to performance under the contract and considered that a relevant reasonable-efforts clause does not automatically require acceptance of a mode of performance not agreed in the contract. That case is not a crypto payment dispute, nor is it a globally uniform standard, but it points to an important method: the payment currency, alternative performance, notice and reasonable efforts should be agreed in advance. Any third-party failure cannot be directly labeled force majeure, nor, conversely, can it be concluded that every alternative channel must be adopted.
Hypothetical scenario: a frozen channel does not mean all customers are frozen.
Assume an upstream party restricts only one group of transactions pending review, yet the platform stops all settlements for all merchants. It should be examined whether the restricted transactions can be lawfully distinguished from other funds, whether the scope of the suspension is necessary, and whether customer assets are commingled. If the platform has promised all merchants a fixed settlement date, the upstream party's inability to perform may still leave the platform exposed to its own breach-of-contract risk; recovery against the upstream party and liability to customers should be pursued separately.
Establish the decision-making and communication sequence after an interruption.
First secure the evidence, verify the affected amounts and customers, and then determine whether to suspend new orders, switch to permitted channels, or negotiate an extension under the contract. Alternative handling must not circumvent legal prohibitions, nor should customer funds be moved to fill a corporate shortfall. Explain to customers the confirmed status and the schedule for the next update, without disclosing information required by law to be kept confidential; where the recovery time cannot be determined, the uncertainty should be made clear rather than repeatedly promising that funds will "arrive soon."
Backup channels also need to be verified in advance. If only one backup institution has been engaged but customer, currency or limit configurations have not been completed, it may not be able to take over when an incident occurs. Within the scope of lawful business, small-scale switchover drills can be conducted, recording the ability to receive funds, reconcile accounts and process refunds, and making clear who may activate emergency arrangements. If an alternative channel changes the delivery currency, the receiving entity or customer fees, the contract and customer authorization should be re-examined, rather than treating so-called business continuity as a reason for unlimited changes to transaction terms.
Recommended actions
- Require the upstream party to explain in writing the restricted objects, basis, scope and required supplementary documents, and retain the original text.
- Separately assess the lawfulness of performing existing orders, onboarding new orders and using alternative channels.
- Notify the client in accordance with the contract and record mitigation measures, while preserving rights of recourse against upstream parties.
This content is for general information only and does not constitute legal advice. Please consult a qualified lawyer about specific matters.
References
- RTI Ltd v MUR Shipping BV [2024] UKSC 18 (judgment) — Supreme Court of the United Kingdom
- Sanctions Compliance Guidance for the Virtual Currency Industry — U.S. Department of the Treasury, OFAC
- MiCA Article 73: Outsourcing — ESMA / EU legislature
