De-Dollarization: What It Really Means and How It Affects International Contracts

Introduction

Between 2024 and the first half of 2025, a long-standing global trend has accelerated: the gradual abandonment of the US dollar as the dominant currency in international trade. This phenomenon, known as de-dollarization, is reshaping financial and legal frameworks worldwide, with major implications for international commercial law and cross-border contracts.

This in-depth analysis explores the causes, key players, contractual consequences, and legal strategies Italian companies can adopt to protect themselves — including practical examples and relevant legal references.

1. What Is De-Dollarization?

The US dollar has historically dominated global trade in commodities, services, and sovereign debt. However, more and more countries are:

  • Signing bilateral agreements in local currencies (e.g., yuan, ruble, rupee);

  • Using alternative payment systems like China’s CIPS or BRICS Pay;

  • Reducing dollar reserves, which fell from 71% in 2000 to 58% in 2024 (IMF data).

Example:
In 2023, Brazil and China signed trade agreements in real and yuan, eliminating the US dollar. This required suppliers to revise contracts by inserting clauses defining exchange rates and managing currency volatility.

2. Why Are Countries Abandoning the Dollar?

  • Sanctions and Political Risk: Countries like Russia, Iran, and Venezuela, subject to US sanctions, seek to avoid dollar-denominated exposure.

  • Multipolar Realignment: Groups like BRICS and ASEAN promote alternatives to the dollar to assert political and economic sovereignty.

  • New Financial Infrastructure: Payment systems like CIPS (China), SPFS (Russia), and BRICS Pay are making non-dollar payments technically feasible.

Example:
Since 2022, Russia has required gas buyers from “unfriendly countries” to pay in rubles, prompting EU companies to renegotiate contracts with FX conversion clauses and currency adjustment mechanisms.

3. Key Players and De-Dollarization Initiatives

Country Initiative
China Bilateral trade in yuan (with Brazil, Russia, Saudi Arabia); CIPS volume +80% since 2022
India Payments in rupees with Bangladesh, Iran, Russia
Russia Non-dollar energy exports, ruble agreements
Iran Autonomous payment systems; use of yuan and crypto
BRICS Common currency project; BRICS Pay, Clear, and Bridge infrastructure

Example:
Italian exporters to China are increasingly using CIPS, amending contracts to allow non-SWIFT settlements and defining payment terms in yuan.

4. Legal and Contractual Implications for Italian Companies

a) Multi-Currency Contracts

Growing demand for non-dollar payments requires:

  • Clearly defined reference exchange rates and sources;

  • Currency adjustment clauses;

  • Allocation of conversion costs and related risks.

b) Currency Force Majeure Clauses

Sanctions or regulatory restrictions on USD use may qualify as force majeure. Contracts should provide:

  • Temporary suspension mechanisms;

  • Mandatory renegotiation procedures;

  • Alternative payment options in other currencies or systems.

Legal References:

  • CISG Article 79: Recognizes force majeure for unforeseen, uncontrollable, and unavoidable events — applicable to blocked or illegal currency transactions.

  • Italian Civil Code (Art. 1256): Extinguishes obligations if performance becomes impossible due to non-imputable causes.

  • ICC Force Majeure Clauses: Include monetary restrictions and sanctions as valid force majeure grounds.

Sample Clause:

Currency Force Majeure Clause
The Parties acknowledge that extraordinary monetary events — such as regulatory restrictions, international sanctions, sudden changes in convertibility regimes, or the inability to make payments in the agreed currency — shall constitute force majeure under this Contract.

In such cases:

  • The obligated Party shall promptly notify the other Party in writing;

  • The Parties shall negotiate in good faith to find alternative solutions, including suspension, currency substitution, or new terms;

  • If no agreement is reached, either Party may terminate the contract without liability.

c) Choice of Law and Arbitration

In volatile geopolitical contexts, choose:

  • Stable legal frameworks (EU, UK law);

  • Neutral arbitration (ICC, LCIA) to ensure legal predictability.

5. Risk Management and Best Practices

  • FX Risk Hedging: Use financial instruments to manage exposure;

  • Continuous Legal Monitoring: Stay updated on sanctions, monetary policies, and export restrictions;

  • Integrated Legal Teams: Ensure multidisciplinary review of operational and legal impacts.

6. How Studio Legale Rosano Supports Clients

Studio Legale Rosano provides strategic legal assistance for companies involved in international contracts, offering:

✅ Drafting and revision of flexible multi-currency contracts;
✅ Customized force majeure clauses for monetary disruptions;
✅ Expert advice on choice of law and arbitration;
✅ Legal representation in currency-related disputes and international arbitration;
✅ Ongoing updates on legal and geopolitical developments.

Conclusion

De-dollarization is a structural shift requiring businesses to rethink the legal foundations of international agreements. Only a proactive and tailored legal approach can ensure contract stability and commercial continuity in this changing environment.

To draft international contracts today without accounting for monetary and geopolitical volatility is to build on sand.”

Studio Legale Rosano is ready to support Italian companies navigating this new phase of global trade.

09/07/2025