The purpose of this article is to establish the approaches of Russian courts and international arbitration institutions to the problem of recovering costs incurred by a counterpart to a third party as losses (damages). In particular, the following questions should be answered. Is it possible to claim the penalties paid to the other party of the contract as losses (damages)? Can administrative fines paid by one of the parties to the contract be regarded as losses (damages) of this party? Can they be recovered from the counterpart who breached the contract? What are the standards of proof for such damages under national and international law? Specifically, do these expenses meet the criteria of foreseeability of losses? Is there a cause-and-effect link between the incurred losses and the counterpart's actions? What are the possible defence arguments against the aforementioned allegations in the court or arbitration proceedings?

The author uses the general research methods of formal logic, such as the analysis and synthesis, and also uses the specific methods, such as method of comparative law and formal legal interpretation.

The author comes to a positive conclusion based on the analysis of Russian and foreign case law regarding the application of the Russian Civil Code and the Vienna Sales Convention. In particular as case law proves that there is a direct cause-in-effect link between breaches of a contract by a seller and buyer's losses incurred as a result of paying penalties by him to a third party. This link satisfies the criteria for recovering damages under national law. However, one of the obstacles for compensation of damages under some national laws and the Vienna Sales Convention is foreseeability of losses, which should be established by a court in each particular case based on the standard of proof established by an applicable national law. In order to avoid compensation of losses — which could be unexpected and unpredicted by the parties — it is recommended to include limitation liability clauses in the contracts which (clauses) would restrict possible future claims by a certain amount or direct real losses, etc.