Cross-Border Contracts: Governing Law, Forum, Currency, Language, and Enforcement

A cross-border contract should address governing law, court jurisdiction or arbitration, service, interim relief, language, currency, performance, compliance, and enforcement as separate questions. Selecting one state’s law does not necessarily select a court, create jurisdiction, determine an arbitration seat, or guarantee that a judgment or award will be recognized where assets are located.

Drafting should begin with a map of the parties, formation, places of performance, people, goods, services, data, intellectual property, payment routes, taxes, regulators, and reachable assets.

Map the transaction and enforcement reality

Identify each party’s exact legal name, entity form, jurisdiction, registration, authority, ownership where relevant, address, and signatory authority. Confirm where obligations will be performed and where assets exist.

Assess whether a judgment or award would need enforcement in another country before selecting the forum. A favorable clause is less useful if service, interim relief, evidence, or enforcement is impractical.

Separate governing law from forum

A governing-law clause identifies the law intended to govern specified issues. A forum-selection clause identifies a court or location for litigation. Both require scope, mandatory-law, public-policy, and enforceability review in relevant jurisdictions.

Specify exclusivity, permitted interim-relief forums, consent, service, venue, and relationship to related agreements. Do not state that any clause will be enforced everywhere.

Determine whether the CISG applies

The United Nations Convention on Contracts for the International Sale of Goods can apply to qualifying international sales of goods between parties connected to Contracting States, subject to its terms and reservations. It does not govern every transaction or every issue.

Counsel should determine whether the CISG applies, whether the parties should use or modify it where permitted, or whether exclusion should be explicit. A general choice of a country’s law may not answer the CISG question as parties expect. Check current treaty status and reservations.

Design arbitration rather than naming it

If arbitration is selected, address the seat, rules, institution, number and qualifications of arbitrators, appointment, language, confidentiality to the extent lawful, interim and emergency relief, evidence, consolidation or joinder, costs, and award form. The seat affects procedural law and court supervision; hearing location is not necessarily the same.

9 U.S.C. § 201 implements the New York Convention in U.S. law, but convention scope, reservations, defenses, local procedure, and the target jurisdiction still require analysis. Arbitration is not automatically superior to litigation.

Plan service, evidence, and interim relief

Identify valid service methods, agents, addresses, treaty procedures, notice clauses, translation, and proof. Contractual notice and formal service of process may be different.

Consider where evidence, witnesses, systems, goods, bank accounts, and property are located. Emergency relief may require a court or tribunal with effective authority over the person or asset. Data-transfer and secrecy law may restrict evidence movement.

Address judgment and award enforcement

The U.S. Department of State explains that enforcement of U.S. judgments abroad generally depends on foreign law and comity in the absence of a governing treaty. Obtain local advice in likely enforcement jurisdictions.

For arbitration, confirm convention status, commercial and reciprocity reservations, local implementation, required originals or certified copies, translation, time limits, and available defenses. Do not promise recognition.

Define currency, payment, and tax mechanics

State the payment currency, account, timing, conversion source and date, bank charges, withholding, gross-up if appropriate, invoicing, dispute treatment, late payment, and sanctions-screening process. Address currency controls, blocked payments, exchange volatility, and alternative lawful routes.

Tax, permanent-establishment, transfer-pricing, customs, value-added tax, withholding, and reporting questions require specialist advice. A contract allocation may not bind a tax authority.

Clarify language and interpretation

Identify the controlling language, responsibility for translation, treatment of bilingual versions, notices, exhibits, technical terms, and sworn or certified translations for proceedings. Use reviewers fluent in the legal and commercial context, not only literal translation.

Specify units, calendars, time zones, business days, number formats, addresses, and document hierarchy. Small ambiguities become material across systems.

Allocate delivery, title, and performance risk

For goods, address specifications, inspection, acceptance, delivery, title, risk of loss, customs, insurance, packaging, documentation, and remedies. If Incoterms are incorporated, identify the exact rule and current version and coordinate it with title, payment, and insurance provisions.

For services and technology, define milestones, acceptance, dependencies, access, personnel, subcontracting, uptime, data location, security, intellectual-property rights, transition, and export controls.

Build compliance into performance

Identify sanctions, export and import controls, anti-corruption, anti-money-laundering, licensing, competition, privacy, cybersecurity, human-rights, employment, consumer, and sector rules applicable to the parties and performance. Use current official sources and qualified local counsel.

Provide information, audit, suspension, termination, and change-in-law mechanisms that are proportionate and lawful. Boilerplate warranties do not replace operational screening and records.

Preserve change and exit routes

Address force majeure, hardship where relevant, change in law, price adjustment, supply interruption, sanctions, data restrictions, currency controls, termination, transition, data return, inventory, IP licenses, payments, and survival. Define escalation and amendment authority.

Mountain State Attorneys assists with international and Indigenous rights, commercial contracts, business and corporate law, mergers and acquisitions, contract disputes, and securities law. Learn about the attorney or contact the firm.

This article provides general information, not legal advice. Controlling law and available options depend on the facts, date, forum, and jurisdiction of a particular matter.