SIGN UP FOR FREE EMAIL CONTRACT TIPS HERE!

I recently traveled to Bankgok, Thailand, and saw this funny sign at one of the main tourist sites (Wat Po, in front of the famous giant reclining Buddha).

I think it’s safe to assume that the Thai authorities do not want anyone to suffer at the hands of pickpockets, so clearly this sign comes off as highly amusing by suggesting that you only should be pickpocketed by an
official Thai thief!

That said, the sign illustrates one of the core issues people often need to reflect on more when negotiating contracts between parties in different countries speaking different languages, namely, what are the key concerns to consider to avoid a similarly humorous but also financially painful debacle?

SUBSCRIBE TO WHICHDRAFT NOW! Click Here!

English Contract Langauge

First off, if you are negotiating an English contract, and you yourself are most comfortable writing, speaking, and, most important of all, interpreting text in English, than you should include a clause in the contract stating that no matter what language anyone translates the agreement into, the only enforceable version is the English one. The same analysis applies if you are a native Mandarin, Japanese, Spanish, Portuguese or Russian speaker. Use the language that best allows you to understand the language of the contract clauses and all of their nuances, flavors and permutations.

Here’s an example of a clause that makes sense in this context, especially if you are representing a client or customer:

ENGLISH LANGUAGE. This Agreement, as well as all reports, documents and notices required under this Agreement, referred to in this Agreement or requested by Client must be written in the English language. Except as otherwise required by applicable Law, the binding version of all of the foregoing is the English version. “Government Authority” means any governmental authority or court, tribunal, agency, department, commission, arbitrator, board, bureau, or instrumentality of the United States of America or any other country or territory, or domestic or foreign state, prefecture, province, commonwealth, city, county, municipality, territory, protectorate or possession. “Law” means all laws, statutes, ordinances, codes, regulations and other pronouncements having the effect of law of any Government Authority.

Governing Law

Second, you want to be sure that the governing law of the contract is written in the same language that you drafted the contract. So, for instance, let’s say:

• You are negotiating a contract between a Brazilian company and a Russian corporation
• The main focus of the business activities under the deal occur in Brazil
• The contract specifically states that Chinese law governs the contract

In this case, it would be a bad idea to rely on a Russian version of the contact during negotiations or later arguments as to how a clause applies in certain circumstances, let alone during any litigation, because you have a fundamental language gap that could rear its head when comparing a Russian provision with a Brazilian applicable law which damages your ability to persuade an adversary or adjudicator of the rightness of your beliefs.

So, for example, if you already included a language clause like the one above (except that it mandates that the governing language will be Portuguese), then you also want to include the following governing law clause:

GOVERNING LAW. All claims regarding this Agreement are governed by and construed in accordance with the Laws of Brazil, applicable to contracts wholly made and performed in Brazil, except for any choice or conflict of Law principles. “Government Authority” means any governmental authority or court, tribunal, agency, department, commission, arbitrator, board, bureau, or instrumentality of Brazil or any other country or territory, or domestic or foreign state, prefecture, province, commonwealth, city, county, municipality, territory, protectorate or possession. “Law” means all laws, statutes, ordinances, codes, regulations and other pronouncements having the effect of law of any Government Authority.

Of course, you should draft the above clause in Portuguese!

Governing Forum

Finally, if you took the time to mandate a certain language, and require a certain governing law, it would usually be a bad idea for you to then go ahead and allow disputes under the contract to be litigated in a country that uses a different language and legal system. Sometimes this is inevitable, many countries have enormously complex “conflicts of laws” jurisprudence that can plunge the parties into an unexpected foreign court with serious translation challenges, but you should at least make an effort to avoid this possibility in the express text of the contract.

Here’s an example of a clause you might want to try and use:

GOVERNING FORUM. All claims regarding this Agreement must be litigated in the State of [________] regardless of the inconvenience of the forum, except that either party may seek temporary injunctive relief in any venue of its choosing. The parties acknowledge and agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement.

You’ll notice above a reference to giving the parties room to apply for an injunction anywhere. You may or may not want to include this language if your client feels like it might need this level of flexibility, which can be particularly useful in pursuing intellectual property claims.

The reference to the United Nations Convention on Contracts for the International Sale of Goods (which is often referred to as the “CISG” or the “Vienna Convention”) makes sure that you opt out of default rules under that treaty which applies in all CISG contracting states when parties to an international agreement fail to to do so. The CISG default rules provide a uniform international sales law corpus that you may or may not be familiar with or agree with for your own needs (the United States of America is a contracting state). As a result, if you are not familiar with the CISG, it is a good idea to expressly exclude it to avoid later surprises.

Conclusion

Use of harmonious contracting clauses in this manner allows you to provide excellent client service. This way, you ensure that your governing language, laws, and forum are all operating in the same linguistic parlance, and you decrease the likelihood of ambiguities that could later spell unexpected trouble for your client. At the end of the day, removing ambiguity and increasing the chances that everyone involved on both sides will all interpret the contract the same way is your essential goal as a transactional attorney, so be sure to pursue this worthy aim vigorously.

SIGN UP FOR FREE EMAIL CONTRACT TIPS HERE!