Drafting “take or pay” clauses under Russian law

In long-term commodity contracts — especially in energy, mining, and infrastructure sectors — the “take or pay” clause is a cornerstone risk-allocation tool. Though not expressly codified in Russian civil law, this mechanism is widely used and judicially recognized. It allows parties to agree that a buyer must either take delivery of a minimum agreed quantity of goods or pay for it regardless. This structure protects sellers from the volatility of buyer demand while offering buyers price stability and priority access to supply.

The legal basis for such clauses in Russia rests on the principle of freedom of contract under Articles 1(2), 421(4), and 422 of the Civil Code of the Russian Federation. Grazhdanskiy Kodeks Rossiyskoy Federatsii [Civil Code of the Russian Federation] arts. 1(2), 421(4), 422 (1994) (Rus.) [hereinafter CC RF]. As the Supreme Court of the Russian Federation has clarified, the absence of specific statutory regulation does not invalidate such arrangements — especially in entrepreneurial contexts — so long as they do not contravene imperative norms. Opredelenie [Ruling] of the Sudebnaya Kollegiya po Ekonomicheskim Sporam [Economic Disputes Chamber] of the Verkhovnyy Sud Rossiyskoy Federatsii [Supreme Court of the Russian Federation] No. 305-ES21-10216 (Aug. 20, 2021) (Rus.).

What Is a “Take or Pay” Clause?

The Supreme Court has described the clause as comprising two interrelated obligations:

(1) the supplier undertakes to provide the buyer with agreed performance (e.g., delivery of goods). The buyer retains the right—but not the obligation—to accept such performance; this choice rests entirely within the buyer’s discretion;
(2) the buyer is obligated to pay the agreed sum regardless of whether it exercises its right to receive performance. The supplier’s entitlement to payment is thus independent of the buyer’s actual receipt of performance.

Opredelenie of the Sudebnaya Kollegiya po Ekonomicheskim Sporam of the Verkhovnyy Sud RF No. 305-ES21-10216 (Aug. 20, 2021) (Rus.).

This dual structure ensures that the seller receives predictable revenue, while the buyer secures capacity and pricing advantages. Economically, the arrangement is justified: the buyer receives tangible counter-performance—such as reserved production capacity, guaranteed service availability, or long-term price discounts—even if it does not draw down the full volume.

Five Contractual Models

Parties may implement a “take or pay” clause through several doctrinal frameworks. Below are the five most common models used in Russian practice.

1. Termination Fee (Art. 310(3) CC RF)

Parties may frame the clause as a payment for unilateral withdrawal from the contract—a mechanism expressly recognized under Article 310(3) CC RF. This approach aligns with the Supreme Court’s position and offers strong judicial support. However, as scholar S.A. Sennikova cautions, this model applies only when (a) payment is triggered by a unilateral declaration altering the legal relationship, and (b) the relationship arises in entrepreneurial activity. S.A. Sennikova, Snizhenie Platy za Otkaz ot Dogovora v Komparativnoy, Istoricheskoy i Ekonomicheskoy Perspektive [Reduction of Termination Fees in Comparative, Historical, and Economic Perspective], 3 Vestnik Ekonomicheskogo Pravosudiya Rossiyskoy Federatsii [Bulletin of Economic Justice of the Russian Federation] 102, 142 (2025) (Rus.).

2. Penalty (Liquidated Damages)

Alternatively, parties may treat the clause as a penalty for failure to take minimum volumes. While permissible, this exposes the clause to judicial reduction under Article 333 CC RF if deemed disproportionate to actual losses. This model is common in Gazprom’s long-term gas supply contracts. As D.V. Andriyanov notes, qualifying the clause as a penalty may serve Russian companies when foreign counterparties refuse deliveries citing sanctions or currency restrictions. D.V. Andriyanov, Ogovorka “Beri ili Plati” v Dolgosrochnykh Dogovorakh Mezhdunarodnoy Kupli-Prodazhi Prirodnogo Gaza: Konflikt Kvalifikatsii [The “Take or Pay” Clause in Long-Term International Natural Gas Sales Contracts: A Conflict of Qualification], 6 Mezhdunarodnoe Publichnoe i Chastnoe Pravo [International Public and Private Law] 17, 18 (2022) (Rus.).

Critics, however, argue this conflates lawful withdrawal with breach. A.G. Karapetov observes: “Exercising a right cannot constitute a breach and therefore cannot trigger liability.” A.G. Karapetov (ed.), Dogovornoe Pravo (Obshchaya Chast’): Postateynyy Kommentariy k St. 420–453 Grazhdanskogo Kodeksa Rossiyskoy Federatsii [Contract Law (General Part): Article-by-Article Commentary on Arts. 420–453 of the Civil Code of the Russian Federation] 1280 (2020) (Rus.). This view was endorsed in a 2015 Supreme Court ruling. Opredelenie of the Sudebnaya Kollegiya po Ekonomicheskim Sporam of the Verkhovnyy Sud RF No. 305-ES15-6784 (Oct. 27, 2015) (Rus.).

3. Subscription Fee (Art. 429.4 CC RF)

The clause may also resemble a subscription model, where the buyer pays for the seller’s standing readiness to deliver, irrespective of actual take-up. S.V. Sarbash supports this analogy, noting that such fees compensate for guaranteed availability. S.V. Sarbash, Obyazatel’stva i Ikh Ispolnenie: Kommentariy k Postanovleniyu Plenuma Verkhovnogo Suda Rossiyskoy Federatsii ot 22 Noyabrya 2016 g. No. 54 [Obligations and Their Performance] 384 (M-Logos 2022) (Rus.). However, V.L. Vol’fson distinguishes the two: “The party performing the essential (characteristic) non-monetary obligation under the contract receives guaranteed sales volume—and thus revenue stability—in exchange for offering a discounted price.” V.L. Vol’fson, Printsip “Take or Pay” i Svoboda Dogovora [The “Take or Pay” Principle and Freedom of Contract], 9 Khozyaystvo i Pravo [Business and Law] 61, 64 (2022) (Rus.).

4. Delivery-Based Model

Under this pragmatic approach, the buyer is invoiced for the full contracted volume, with any shortfall treated as deemed delivery. Common in raw material contracts, this model relies on pipeline sensors and monthly set-offs — more a matter of accounting than legal innovation.

5. Option-Based Model

Finally, the clause may be structured as an option: the seller grants the buyer the right—but not the obligation—to purchase a specified volume. Payment secures the option to accept an offer and perfect title. As A.V. Egorov explains, “the buyer pays for the option itself—the right to ‘click and acquire’ ownership… The underlying asset is not the commodity but the option to acquire it.” Civil Law Scholars’ Club Seminar, Usloviye “Beri ili Plati” v Dogovorakh Kupli-Prodazhi i Okazaniya Uslug [The “Take or Pay” Clause in Sales and Service Contracts], Russian School of Private Law (Apr. 28, 2022), https://vk.com/wall-175402540_1477.

Why It Matters

The “take or pay” clause exemplifies how commercial parties can creatively allocate risk within the bounds of civil law. Though not typified in the CC RF, it is fully compatible with Russian contract doctrine—provided it reflects genuine economic exchange and is drafted with precision.

As Vol’fson further notes, the clause “appears, at first glance, to distort the equivalence inherent in synallagmatic obligations, as it permits one party to refrain from performance while the other remains bound to provide agreed consideration.” Vol’fson, supra, at 64 (quoting S.V. Sarbash, Obyazatel’stva i Ikh Ispolnenie, at 380).

Yet this “distortion” is economically rational: it internalizes the cost of capacity reservation and market commitment.

Final Thoughts

When drafting a “take or pay” clause under Russian law, parties should:

• Clearly define triggering events and payment mechanics;

• Avoid labeling payments as “penalties” unless prepared to justify proportionality under Art. 333 CC RF;

• Consider using the termination fee (Art. 310(3)) or subscription (Art. 429.4) models for greater enforceability;

• Document the economic rationale to preempt judicial skepticism.

In an era of geopolitical and market volatility, well-structured “take or pay” clauses offer stability, predictability, and mutual benefit—hallmarks of sophisticated commercial contracting.

Disclaimer: This blawg post is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for advice on your specific situation.

Author: Veronika Semenova
Contact: ver.semyonova@gmail.com