Erdal Nuhbasa – Law and Consulting Firm – Legal Services
ERDAL NUHBASA
LAW AND CONSULTING FIRM
Erdal Nuhbasa – Law and Consulting Firm – Legal Services
ERDAL NUHBASA
LAW AND CONSULTING FIRM
The foundation of international business is made up of commercial contracts, which serve as the main means of facilitating cross-border transactions between businesses. But, because of their risks and complexity, these agreements need to be carefully drafted, subject to strict regulations, and have established dispute resolution procedures.
In reality, you are entering into an international commercial agreement whenever you export or import goods or when you enter into a contract to supply services or goods with a company in another nation. Thus, international agreements encompass nearly all facets of life in the current context, where globalization has peaked.
When you compare now and not twenty years ago, but even only five years ago, research has shown that the likelihood of reaching an international agreement has increased by fifty percent for the companies. This shows us how important international commercial agreements are.
Due to various legal systems, cultural individualities, and economic considerations, international commercial contracts are by their very nature risky. While even contracts between two companies within the same country carry many risks, it would not be difficult to say that the risks involved in international commercial agreements are much higher.
The risks related to the area in which the contract is concluded should be specifically identified, but if we consider the risks in international contracts in general, key hazards include;
A company operating in a politically stable nation, for example, might encounter unanticipated difficulties when entering into a contract with a company located in a politically unstable area. Moreover, differences in the laws governing contracts between different jurisdictions may cause misunderstandings and legal conflicts.
Contract drafting and negotiation are crafts in which the ultimate goal is to secure the interests of the parties involved by accurately capturing their intentions while also staying within the bounds of applicable laws.
Having said that, it is important to realize that international contracts need to be written or reviewed with consideration for the customs, laws, trade, and culture of the nations to which the parties are signing them. Because contracts are subject to the laws of the respective countries, variances in how they should be defined can make it difficult for contracts to be successfully carried out in international transactions. It’s critical to draft contracts precisely in order to reduce these risks.
Every clause should be crystal clear and specific, with no room for interpretation.
All possible outcomes, such as defaults, delays, and dispute resolution procedures, should be covered by the contract. The applicable legislation and jurisdiction, performance requirements, terms of payment, and termination provisions should all be taken into account.
Rules should be followed when entering into international contracts. The choice of law clause, which indicates the legal framework that will be applied in the event of a dispute, is at the forefront. When determining the applicable law in a contract, it is important to determine the country where there are applicable rules and where the problem can be resolved quickly when situations arise where the contract is breached for both parties.
Because after the contracts are concluded, it would make sense to choose the applicable law, especially the law where the performance will take place. Because, for example, if you choose the law of another country for a place where goods are produced, you may not be able to impose sanctions in that country for solving the problems.
In addition, a framework for contracts involving international trade is provided by the United Nations Convention on Contracts for the International Sale of Goods (CISG). To avoid legal ramifications, compliance with the local laws of the relevant jurisdictions is also required.
It is customary for parties to negotiate which party’s laws and courts will apply in a dispute involving a company operating in a foreign jurisdiction. Depending on the issues involved, they may decide to reach a compromise, such as establishing Turkish arbitration or making Czech law the applicable law.
International contract disputes should ideally be settled through;
Arbitration frequently offers a mutually agreeable method of resolving disputes if these fail. Arbitration agreements ought to outline the arbitration’s location, the number and designation of arbitrators, and its procedural guidelines.
A contract must have the following minimum requirements:
Clauses pertaining to governing legislation, force majeure, secrecy, and dispute settlement are also essential. One thing that should never be done is to take a ready-made contract from the internet and use it.
All contracts are different, just like fingerprints, and for this reason, each company must write its own contract, and once you have prepared a careful contract, it will be possible to communicate the contracts you will make with other companies through this contract.
Therefore, it is important for the future of both you and your company to prepare the draft contract once professionally.
The elaborate system of international commercial contracts necessitates careful writing, strict adherence to regulations, a deep comprehension of the risks involved, and effective dispute resolution procedures. Businesses can reduce risks and promote fruitful foreign business partnerships by including all relevant terms and staying current with statistical trends.
The World Trade Organization estimates that in 2023, contracts for international trade made up about %35 of the world economy. Furthermore, statistical patterns show that arbitration is the most popular method of resolving disputes; according to the International Chamber of Commerce, the number of new arbitration cases increased by %15-20 in 2023 over the previous year. This shows us how important international commercial agreements are.
A lawyer who knows international law is necessary for the preparation of international commercial agreements. In this sense, after reading my article, which I will be happy to help you, if you have any questions about the article or if you have any other questions within the scope of an agreement you can contact me ask your questions.
