Speaker 1: Hey everyone, welcome back to the channel. Today we are diving into a critical topic for anyone involved in international business, cross-border contracts. If you are dealing with a party in a different jurisdiction, there are several key areas and risks that you need to be aware of. Cross-border contracts are agreements between parties located in different countries. These contracts are essential for international trade and investment, but they come with their unique challenges and risks. Now, first, let's discuss jurisdiction and governing law. Deciding which country's laws will govern the contract and which the courts will have jurisdiction over in case there is a dispute is important because this affects how disputes are resolved and can significantly impact the outcome. Ensuring that a contract is enforceable in both jurisdictions is vital. Different countries have different legal systems, and what is enforceable in one country may not be enforceable in another country. That is why you should always state that all disputes shall be resolved by arbitration. I will discuss about that later. Second issue to think about, currency and payment. Agreeing on the currency of payment in the agreement, whether it's US dollars, euros, Singapore dollars, and addressing potential currency exchange issues is also essential. You should consider the methods of payment, whether by telegraphic transfer, international transfer, whether by letter of credit, and any associated risks. Third issue to consider, cultural and language differences. Misunderstandings can arise from cultural differences and language barriers. Always ensure that both parties have a clear understanding of the contract terms. Fourth issue to consider, regulatory compliance. Both parties need to comply with the relevant regulations and laws in their respective jurisdictions, which can include import and tax laws, tax regulations, and industry-specific rules. You can address this by having conditions precedent in your agreement so that obligations kick in when all regulatory approvals and consents have been obtained. You can watch my earlier video on conditions precedent. Also, you can include exclusion of liability clauses on the other party so that if the other party breaches his laws and his regulation in his jurisdiction, then it's his problem. Basically, he has to indemnify you. You will not be liable for his breaches in his jurisdiction. Next, consider including a force majeure clause because unexpected events like natural disasters, political instability, pandemics, epidemics, wars, riots can disrupt the contract. Including a force majeure clause can protect both parties by allowing for the suspension or termination of obligations under such circumstances. Next consideration, ensure detailed contract terms. Ambiguities can lead to disputes. Ensure that your contractual terms are detailed and clearly defined. This will include specifications about the product such as quality, delivery timelines, type of material, quantity. Engaging legal and financial advisors for cross-border contracts who are knowledgeable about the laws and regulations in both jurisdictions can help navigate the complexities and reduce the risks. The last issue I want to talk about before I talk about the New York Convention is, consider obtaining insurance to cover potential risks such as political risk insurance or trade credit insurance. This can provide a safety net in case of unforeseen issues or circumstances. I will now move on to the New York Convention. Another critical aspect to consider in cross-border contracts is the New York Convention which is formally known as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Now the New York Convention ensures that arbitration awards are recognised and enforceable in any of the member countries which includes over 160 countries and this provides greater assurance to both parties that a ruling in their favour can be enforced. It is quite pointless to win a lawsuit in one country, for example to win a lawsuit in Italy, but then you cannot enforce it in another country, for example in Singapore, because you have to first get the court judgment of the other country recognised in your country which is usually a very difficult process and by the time that happens, the company that you sued probably has dissipated the assets. This ensures that any arbitration award will be recognised and will be enforced in the member countries. Thanks for watching this video. See you next time.