Choice of Language Clause

Summary

This choice of language clause template should be incorporated in an international contract drafted in more than one language to designate which version would govern in the event of a dispute. This clause includes practical guidance and drafting notes. This template helps resolve the problem that often arises when common expressions used in one language do not translate fully into a second language, thereby creating ambiguity and eventual conflict. The law of most countries follows the common principle that there must be a meeting of the minds for an agreement to be binding. Consider engaging the services of a translator so that different versions of the same agreement do not contradict each other in any way. In addition to being fluent in both languages, the translator should, ideally, be familiar with all applicable legal concepts, industry norms, and respective business cultures. Additional considerations include: (1) the jurisdiction where the parties are most likely to make a claim against one another; (2) the applicable laws and customs of the jurisdiction where the claim will be heard; (3) the type of claim most likely to arise; and (4) enforceability issues, as there is a very real risk that judgments rendered in one jurisdiction will go unrecognized and unenforced in a different jurisdiction. For example, the U.S. is not a party to any international treaties or conventions that require the recognition of U.S. judgments by foreign jurisdictions. Therefore, even where U.S. federal and state laws apply, a party must rely on the foreign jurisdiction's willingness to recognize and enforce a finally rendered judgment, which is far from guaranteed, particularly when such jurisdiction's public policies, economic condition, political climate, and/or established customs encourage non-cooperation. A party can mitigate the risk associated with judgment non-enforceability by requiring that all disputes be settled by binding arbitration, but only if the parties are signatories to a treatise or convention such as the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (which allows U.S. companies to arbitrate disputes in the U.S., and requires foreign courts in signatory countries to enforce the awards). Note that some jurisdictions have mandatory language requirements for certain types of agreements. Local counsel should be engaged to ensure compliance with local laws and restrictions. If an agreement is silent on choice of language, the parties will not have control over which language will control in the event of a dispute. In such instance, the UNIDROIT Principles of International Commercial Contracts of 2016 ("UNIDROIT Principles") would most likely apply. UNIDROIT is an inter-governmental organization established to harmonize private international law. It currently has 63 member states, including the United States. Specifically, Article 4.7 of the UNIDROIT Principles states that when disputes arise under contracts that were drawn up in at least two different languages, the language used to pen the agreement that was first drafted shall be given priority. For a full listing of related contract clauses, see General Commercial Contract Clause Resource Kit. For additional guidance, see Commercial Contracts in International Jurisdictions, UN Convention on Contracts for the International Sale of Goods, Arbitration in International Jurisdictions, Dispute Resolution in International Jurisdictions, Mediation in International Jurisdictions, and International Trade Resource Kit.