International contracting

Publication date: 20 December 2018
Usually the law of one of the countries applies in disputes on international contracts. Thus the other party will immediately be lagging behind: it does not know the law and often does not speak the language. In order to prevent this, the UNIDROIT Principles can be applied: a neutral set of rules regels, drawn up for international contracts. In addition, a choice can be made for a neutral arbitration institution or court to deal with a potential dispute.

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International contracting is the order of the day. However, parties will be faced with different legal systems from which a choice has to be made. This could be a problem, particularly if one of the parties is used to the common law system where everything must be covered by a contract, whereas the other party is used to continental law where many things are provided for in legislation. A choice of law will then be to the detriment of the party that is not familiar with the chosen type of contracting. Not being at the same level as the other is not beneficial for the parties’ negotiations and may adversely affect the relationship right from the start. The UNIDROIT Principles of International Commercial Contracts can be an appropriate alternative to prevent this problem.

UNIDROIT Principles

In addition to the equivalence of the contracting parties, the UNIDROIT Principles offer various other benefits:

  • The Principles were drawn up for international contracts, whereas the national legal systems are (primarily) aimed at the national market.
  • Both ‘common law’ and ‘civil law’ lawyers are able to use the principles. The Principles were in fact composed by 150 experts from different judicial systems and countries. They drew up a well-considered, neutral set of rules.
  • The Principles are available in 15 languages, so that most people can read the rules in their own language. This reduces the risk that words and terms will be interpreted in a different way than expected.

International arbitration

In addition to declaring the Principles applicable, it is advisable to include an arbitration clause in the contract. This clause stipulates that, in the event that the parties have a disagreement, an arbitrator will assess the issue. Besides, it is prudent to also include a choice-of-court clause, where a choice will be made for an international arbitrator or a court specializing in international commercial matters. Soon, the Netherlands Commercial Court will be available for this.

What can we do for you?

With its extensive knowledge and experience in international business, Russell Advocaten can advise you on how to put down in writing arrangements that were made. Through our Primerus network, we can also make an appeal to one of the most important specialists regarding the UNIDROIT Principles of International Commercial Contracts, Prof. Dr. Eckart Brödermann, LL.M., who has recently published an article-by-article commentary on these Principles. Please contact us:

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