Choice of Law in International Contracts

Parties to an international contract should include a clause specifying their choice of law to resolve disputes.

When entering into a contract, whether domestic or international, there may be uniform laws that apply. The parties may also agree that the laws of one of the countries apply to the interpretation of the contract.

International Law

The United Nations Convention on the International Sale of Goods (CISG) has been used as the universal standard in international sales contracts. Other examples of international agreements and norms are the UNIDROIT Cape Town Convention on Secured Financing of Movables, the UNICTRAL Accounts Receivable Convention, UNIDROIT Principals of International Commercial Laws, International Chamber of Commerce INCOTERMS and the International Chamber of Commerce UCP.

Uniform Laws

All American states have adopted the Uniform Commercial Code. Other countries may have adopted similar laws, so it does not matter which jurisdiction is designated to resolve contract disputes.

Choice of Forum

The parties should agree on the choice of forum for the resolution of disputes. The forum is the court that will have jurisdiction over a contract dispute. The parties should choose the jurisdiction of one of the parties to the contract. Agreement in the choice of law ensures that the parties agree to the jurisdiction where disputes can be settled.

References

• UNCITRAL: Choice of Law, Contract Terms and Uniform Laws in Practice
• UNIDROIT: UNIDROIT Conventions