A contract that crosses a border carries risks that a purely domestic agreement does not. The parties may sit under different legal systems, speak different languages, hold assets in different countries and assume different things about what happens when something goes wrong. A contract lawyer working on an international deal spends much of the time on clauses that domestic contracts often treat as boilerplate: which law governs, where disputes are decided, and whether the result can actually be enforced where the other side has assets. This guide explains those clauses, the international instruments that sit behind them, and how to work with contract and business lawyers in more than one country.
This article is general information, not legal advice. The right drafting for any deal depends on the parties, the countries involved and the facts.
Why cross-border contracts need different attention
In a domestic contract, the parties usually share one body of contract law, one court system and one enforcement process. If a dispute arises, there is rarely any doubt about which rules apply or which court can hear it. In an international contract, each of those points can be contested. A party that loses an argument about the merits may still try to win an argument about jurisdiction, or about whether a judgment from one country can be enforced in another. Careful drafting reduces that room for argument.
Three questions shape almost every cross-border contract. First, which country's law decides what the contract means? Second, which forum, a national court or an arbitral tribunal, will decide disputes? Third, can the decision of that forum be recognised and enforced in the countries where it matters? A lawyer who answers the first two questions without considering the third has done only part of the job.
Governing law: choosing the rules that apply
Most legal systems allow commercial parties to choose the law that governs their contract. In the European Union, for example, the Rome I Regulation provides that a contract is governed by the law chosen by the parties, and that the choice must be made expressly or be clearly demonstrated by the terms of the contract or the circumstances of the case (Regulation (EC) No 593/2008, Art. 3). Where no choice is made, default rules decide the applicable law, and those rules may point somewhere neither party expected.
A clear governing-law clause names one legal system, for example the law of a particular country or, in a federal state, a particular province or state. Lawyers usually advise against vague formulas such as "international law" or "general principles of commerce" unless the parties understand exactly what those words will mean to a judge or arbitrator.
The CISG and sales of goods
Contracts for the international sale of goods may be affected by the United Nations Convention on Contracts for the International Sale of Goods, adopted in Vienna in 1980 and known as the CISG. It applies to contracts of sale of goods between parties whose places of business are in different Contracting States, or where the rules of private international law lead to the law of a Contracting State (CISG, Art. 1(1)). The parties may exclude the Convention or vary its provisions (CISG, Art. 6). A governing-law clause that simply names the law of a Contracting State may therefore bring the CISG in rather than keep it out. Whether that is desirable is a drafting decision a contract lawyer should raise expressly.
Dispute resolution: courts, arbitration or mediation
The dispute resolution clause decides where and how disagreements are resolved. The main options are litigation in a named national court, international arbitration, and mediation, often combined in a stepped clause that requires negotiation or mediation before formal proceedings.
Choice of court agreements
An exclusive choice of court agreement names the courts of one state as the only forum. The Hague Convention of 30 June 2005 on Choice of Court Agreements, concluded under the Hague Conference on Private International Law, requires the chosen court of a Contracting State to hear the case, requires courts of other Contracting States to suspend or dismiss proceedings brought in breach of the agreement, and provides for recognition and enforcement of the resulting judgment in other Contracting States (HCCH 2005 Choice of Court Convention, Arts. 5, 6 and 8). Its value depends on whether the relevant countries are parties, which should be checked on the HCCH status table at the time of drafting.
International arbitration and the New York Convention
Arbitration is widely used in international contracts because arbitral awards are often easier to enforce across borders than court judgments. The main reason is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed in New York in 1958 and now promoted by UNCITRAL. Under it, courts of Contracting States must recognise written arbitration agreements and, when seized of a matter covered by one, refer the parties to arbitration (New York Convention, Art. II). Recognition and enforcement of an award may be refused only on the limited grounds listed in the Convention, such as incapacity of a party, lack of proper notice, an award beyond the scope of the submission, or conflict with the public policy of the enforcing country (New York Convention, Art. V).
A sound arbitration clause usually names the seat of arbitration, the institutional rules (or ad hoc rules), the number of arbitrators, and the language of the proceedings. The seat matters because its courts supervise the arbitration and its law governs the procedure.
Mediation and settlement agreements
Mediation can preserve commercial relationships and resolve disputes more quickly. The United Nations Convention on International Settlement Agreements Resulting from Mediation, adopted by the UN General Assembly in December 2018 and known as the Singapore Convention on Mediation, provides a framework for enforcing qualifying international settlement agreements in states that are party to it (UNCITRAL). As with the other instruments, the parties' countries must be checked against the current status list.
A drafting checklist for cross-border contracts
The checklist below sets out points that contract lawyers commonly review in an international commercial agreement. It is a prompt for discussion with counsel, not a substitute for it.
- Parties and capacity: confirm the exact legal names, registration numbers and authority of signatories in each country.
- Governing law: name one legal system and decide whether the CISG should apply or be excluded for sales of goods.
- Forum: choose between exclusive court jurisdiction, arbitration or a stepped clause, and avoid conflicting clauses across related contracts.
- Enforceability: check whether the countries where assets sit are parties to the New York Convention, the 2005 Hague Convention or other relevant treaties.
- Language: state which language version prevails if the contract is translated.
- Currency and payment: specify the currency, payment mechanics and who bears exchange and transfer costs.
- Local mandatory rules: ask local counsel about rules that apply regardless of the chosen law, such as consumer, employment, competition or registration requirements.
- Notices and service: set addresses and methods for formal notices that work in every relevant country.
- Termination and force majeure: define events, notice periods and consequences in language that each legal system will read consistently.
- Signing formalities: confirm whether electronic signatures, notarisation, apostille or stamp duty are needed for the contract to be valid or admissible.
Working with contract lawyers in more than one country
Large international deals often involve a lead counsel who drafts the main agreement under the chosen governing law, plus local lawyers in each country where the contract will be performed or enforced. Local counsel can confirm whether a clause is valid locally, whether registration or approvals are needed, and how a local court is likely to treat a foreign judgment or award.
When engaging lawyers in another jurisdiction, it helps to confirm that each lawyer is admitted and entitled to practise there, to agree in writing on the scope of work and fees, and to clarify who coordinates the advice. The contract law firms and business and corporate law firms pages on Global Law Lists group firms by practice area across countries, and the country law firm lists help locate counsel in a specific jurisdiction. Global Law Lists operates these lists and its international legal network, and listed firms may hold paid memberships; how firms are checked and ordered is explained in the verification methodology.
Common mistakes in international contracts
- Copying a domestic template: domestic forms often omit governing law, forum and enforcement points that matter abroad.
- Inconsistent clauses: a master agreement choosing arbitration and a purchase order choosing a national court can invite a jurisdiction fight.
- Ignoring enforcement: a judgment from a court whose decisions are not recognised where the debtor holds assets may be of limited practical use.
- Unclear translations: two language versions with no priority clause can produce two meanings.
- Overlooking mandatory local law: a governing-law clause does not always displace rules that a country treats as overriding.
Frequently asked questions
What does a contract lawyer do on an international deal?
A contract lawyer drafts and negotiates the agreement, advises on governing law and dispute resolution, checks whether the outcome can be enforced in the relevant countries, and coordinates with local counsel on mandatory rules and formalities.
Is a business lawyer the same as a contract lawyer?
The roles overlap. Business and corporate lawyers often advise on company formation, transactions and governance as well as contracts, while some lawyers focus mainly on commercial contract drafting and disputes. On a cross-border deal, a team may include both.
Should an international contract choose arbitration or courts?
It depends on the parties, the countries and the likely disputes. Arbitration benefits from the New York Convention's enforcement framework, while court judgments may be enforceable under treaties such as the 2005 Hague Choice of Court Convention or under national law. Counsel should compare both against the countries where enforcement may be needed.
Does the CISG apply automatically?
The CISG can apply to international sales of goods when its conditions in Article 1 are met, but parties may exclude it under Article 6. A contract lawyer should address it expressly in the governing-law clause.
How can a lawyer abroad be checked?
The most reliable step is to confirm admission and current standing with the regulator or court that keeps the roll in that country, then confirm the scope of work and fees in a written engagement letter.
Sources
- Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), Arts. II and V; UNCITRAL.
- United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980), Arts. 1 and 6; UNCITRAL.
- Convention of 30 June 2005 on Choice of Court Agreements, Arts. 5, 6 and 8; Hague Conference on Private International Law (HCCH).
- United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation), 2018; UNCITRAL.
- Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I), Art. 3; Official Journal of the European Union, 2008.