For many companies, strategy, success or mere coincidence imply that they will have to conclude cross-border contracts. In that case, the contract becomes international. We will review six areas within international contracts where the risks are different from the risks normally characterising Danish contracts.

In many respects, it is not important whether the contract is international. Most issues regulating a contract are the same irrespective of whether the contract is international or purely Danish. But the contract's international character must be observed in a number of areas:

1. CULTURAL DIFFERENCES

First of all, the opponent will be foreign meaning that you need to take cultural differences into consideration. Even though many companies are used to working internationally, it does not change the fact that there may be differences as to the mentality of the involved parties, the approach to negotiations and the general conduct depending on where they come from in the world. These differences are often subtle and perhaps nothing you would register during the cooperation. But irrespective of how obvious these differences are, they may have notable consequences. You should therefore get acquainted with the opponent’s (business) culture.

2. INTERNATIONAL NEGOTIATION MEETINGS

An international contract calls for international negotiation. Travelling to negotiation meetings will be required, but the bigger the geographical distance is between the parties, the more it will require that not all meetings are held physically, but instead virtually. Virtual negotiation meetings are excellent tools - provided that the parties are well-prepared and the persons authorised to make the necessary decisions attend the negotiations.

3. ENGLISH AS CONTRACT LANGUAGE

Due to the internationalisation, the negotiations will typically be conducted in English, which also implies that the contracts will be drafted in English. Even though most Danes speak English, also at negotiation level, the linguistic complexity is intensified when it comes to English as contract language. The contract must of course as far as possible be drafted so that the parties can understand it - in plain English - but minor linguistic differences and legal terms in English will often constitute important pitfalls if you are not aware of the importance - irrespective of which country's law is to apply to the contract, see below. In many situations, a simple word many have material importance. So, if you have not already teamed up with competencies that are used to working with contracts in English, you are being careless.

4. CHOICE OF LAW AND JURISDICTION CLAUSE

When the parties are situated in different countries, the question is which country’s courts are to settle a dispute, and which country’s laws are to apply to the contract. These questions are typically settled in a choice of law and jurisdiction clause. Even though the parties hardly expect any disputes when negotiating the contract, it is a clause which the parties should prepare with great care and after thorough considerations. If a dispute arises, it may be very inconvenient if it has to be settled by a foreign court and under another country’s laws - especially if you were not aware of this when concluding the contract.

5. CURRENCY

Currency becomes a theme if the contract’s services are not paid in Danish kroner. Currency fluctuations are a risk if the contract involves import or export, and you should consider how such fluctuations may impact your profit, balance sheet items and cash flow. Your choice of strategy is therefore relevant, even though it will hardly be governed by the contract, but merely be a consequence of the contract’s international character.

6. EXPORT CONTROL

International cooperation involving goods, software and/or technology calls for export of these assets. Consequently, the rules on export control become relevant, which should be governed in the contract. Can the assets be use for both civilian and military purpose (“dual use”)? To where are the assets exported? Where are the assets (or parts thereof) manufactured? Which country’s export control rules apply? These questions and many more may suddenly be difficult to answer.

All six areas contribute to other types of risks than the risk relating to a purely Danish contract, and the handling thereof is decisive to the contract’s risk profile.


contacts

Søren Hornbæk Svendsen

Partner

Andreas Schønbeck

Senior Attorney