Entering into an agreement with a foreign Company? Before you sign on the dotted line here's our check list for the must haves in any cross border contract:
- A neutral choice of law clause
The foreigners probably won’t let the contract be governed by Australian law, so it’s likely you’ll need to meet somewhere in the middle on this. Think "neutral" and "global" when negotiating the jurisdiction as you need a governing law which is stable and preferably similar to ours. With Asia being a giant hub for foreign transactions we recommend opting for Singaporean law as a good compromise.
- A reliable dispute resolution process
Your contract needs to have a process for resolving disputes which is reliable, neutral and cost efficient. First, the contract has to be clear about what is required to trigger the dispute resolution process and what each step involves. Courts have found that clauses which simply leave it to the parties to agree on other methods of resolving the dispute before they can proceed to litigation are uncertain and unenforceable. Do you want to hold a meeting between the commercial parties first? Will mediation be optional or mandatory? Will you require an expert to determine any issues that are more technical? All of this must be clearly expressed.
Secondly, we recommend arbitration rather than court litigation. Arbitration allows the parties to agree on where it will occur, what language the proceedings will be conducted in and which rules will apply to how it’s run. Far better than finding yourself in the courts of a foreign land.
- A catch all for anti bribery and foreign corruption laws
If you're entering into a contract with a foreign company then you’re likely to have exposure to the anti-bribery and foreign corruption laws made in recent years by the US, UK and Australia. These countries’ laws catch dodgy conduct by their own nationals or companies, anywhere in the world. The penalties include big fines and imprisonment and the only real safeguard against breach is to have rigorous anti-corruption policies in place. Your contract should address this.