When entrepreneurs initiate collaboration with a foreign business partner, they engage in negotiations concerning various terms and conditions governing the manner in which it will be carried out. They determine among others:
However, there are situations where a foreign business partner fails make the payment, despite having received the goods that were delivered in accordance with the terms of the contract.
In the domestic trade, entrepreneurs are used to the fact that the lack of payment for the delivered goods, which has no justification, will end up in court, and if the case is not overly complicated, the proceedings should run quite smoothly. In this case, however, the goods were delivered abroad. Consequently, a valid questions emerges – which court holds jurisdiction to hear a lawsuit against a contractor-buyer who has failed on payment for the goods he ordered?
In order to answer this question, it is necessary to analyze the content of the contract concluded between the parties, including its subject matter, as well as international legal acts, including EU regulations.
In legal relations within the European Union, the Brussels I bis Regulation, i.e. Regulation No. 1215/2012, will apply. In the case of sales contracts, this regulation indicates that the competent court to hear a dispute between the parties will be the court of the country to which the goods were or were to be delivered. In practice, therefore, it is most often the court of the country competent for the location of the contractor-buyer.
Yes.
The concluding of a jurisdiction agreement in a specific case depends on the negotiation power possessed by a given entrepreneur. In the vast majority of cases, the party with stronger negotiation leverage will secure a favorable jurisdictional solution for themselves. Even if it is not possible to obtain a solution that allows for a dispute to be brought before a preferred court in a particular contract, it is still worth to know what the agreement entails and which court will have jurisdiction. If it is the counterparty’s court, it is possible to apply other types of safeguards against the risk associated with non-payment, such as a higher advance payment for a given order.
It is therefore essential that the entrepreneur knows his legal situation.
Joanna Lubecka
attorney
However, when there is a dispute in the court, the basic practical difficulty leads to answering the question - where will such a dispute take place. In the contractor country or abroad? Can it be secured somehow?
One of the most important points that needs to be clarified in a B2B contract concluded with a foreign contractor are the terms of payment of the agreed remuneration. Payment after delivery of the subject of the contract or prepayment? And if so, what should be its amount? Which solution to choose? Read below.
Regardless of the form in which the agreement with a foreign partner is concluded, it is important that the parties agree on the most crucial elements of the contract. Incorporating these clauses will enable the parties to execute the contract in a transparent manner, without any ambiguity or uncertainties.
When force majeure events occur in international trade contracts, significant problems may arise in the process of its performance. However, including appropriate clauses in the contract that address such issues can help to manage the situation in a controlled and orderly manner.
As it is for the pandemic the world is slowly returning to normality, and there is much less talking about coronavirus cases, many entrepreneurs still feel the severe effects caused by the pandemic, including: disruptions in supply chains, lack of availability of materials or lack of components.
Case study. Check what Adam forgot when negotiating a contract with a foreign contractor
Although the indicated issues should be clearly regulated in each contract on the basis of which the guarantee is granted, in the case of foreign deliveries they are particularly important.
Below you will find some useful information on how to negotiate contracts concluded with a foreign business partner.
The purpose of the NDA is to secure the confidential nature of information that is provided to the other party in connection with the commencement of negotiations, determining the terms of possible cooperation between the parties, the concluded contract, cooperation or employment.
The standard practice is to start reading each document from the beginning. In the case of B2B contracts concluded with a foreign contractor, it is worth reversing this order.