Navigating Cross-Border Contracts: A Strategic Approach

In the realm of cross-border contracts, choosing the applicable law and the court for dispute resolution demands meticulous consideration. Typically, the following factors need to be taken into consideration:

Legal landscape

Before selecting a foreign law and a competent court, it’s crucial to confirm that both the seller’s and buyer’s jurisdictions permit such choices. While there is generally no prohibition for cross-border contracts, it is prudent to include this review in routine contract work to manage legal risks.

Strategic considerations

The choice of foreign law and a competent court can act as a strategic barrier. If only one party possesses expertise in foreign law, including local specialists and language proficiency, it has a clear advantage. This is why companies usually insist on their home jurisdiction being stated as the contractual one.

Concessions as an alternative approach

If your counterparty is unwilling to accept the initial proposal, presenting an alternative option as a concession can be effective. However, choosing a jurisdiction that poses barriers, such as language challenges, high litigation costs, or corruption risks, is not a compromise but rather a disservice.

Commercial realism

In cases where the counterparty insists on a foreign law and court, creating a high barrier, a strategic decision might involve accepting their proposal while acknowledging the reduced likelihood of initiating legal proceedings due to prohibitive costs. Understanding these circumstances is vital for assessing the overall commercial risks of the contract.

At Asgard Consulting, we bring clarity and strategic insights to your cross-border contracts, ensuring a robust legal foundation for your international business endeavors.