What is Applicable Law in International Contracts?

The demand for trade with Vietnam from merchants worldwide is on the rise. This implies that the number of international commercial disputes will also increase. Many traders have not paid enough attention to issues in contracts, particularly the applicable law in case of contractual disputes. People often think that disputes rarely occur need contract lawyers in Vietnam most when it comes to handling disputes.

 What is Applicable Law in International Contracts?

In reality, contractual disputes pose a risk that needs to be considered because unexpected events leading to disputes can arise from unpredictable factors. Examples include price changes, variations in product quantity, insufficient quality from suppliers, personnel issues, transportation challenges, weather conditions, and seasonal factors, all of which can impact contract fulfillment. To ensure the best protection of their rights in the event of a dispute, traders should thoroughly investigate the agreed-upon law at the time of contract formation.

What Is International Commercial Contract?

An international commercial contract is a legal form of international commercial activity, an agreement between merchants to establish, modify, or terminate the rights and obligations of the parties in carrying out international commercial activities.

What Does the Applicable Law in International Contracts Include?

When the parties agree on the applicable law in international commercial contracts, they can choose:

International Conventions:

• International Conventions: International conventions are written international agreements between countries and legal entities under international law, regulated by international law. The regulated content of international trade law includes goods, services, intellectual property, and foreign investment.
• Example: When signing an international sale of goods contract, parties can choose the applicable law as the United Nations Convention on Contracts for the International Sale of Goods (CISG).

National Laws:

• National Laws: National laws are a legal system of written or unwritten rules set or recognized by the state to regulate legal relations between legal entities arising within the territory or jurisdictional authority of that state.
• Example: When entering into an international commercial contract, the parties can choose the national law as the governing law for the contract (it could be the law of either of the contracting parties or the country where the contract is enforced).

International Trade Practices:

• International Trade Practices: International trade practices are long-established principles of conduct widely used in international commercial activities.
• Example: UCP (used in L/C payments), INCOTERMS (used in international sale of goods).

Principles for Choosing the Applicable Law in International Contracts:

Respecting the Agreement of the Parties – “Lex Voluntatis”:

• Parties to the contract have the right to freely choose the applicable law. In case of a dispute, the dispute resolution body must respect this decision of the parties.
• The dispute resolution body can only request the parties to use a different legal source if the law chosen by the parties is impossible or insufficient to resolve the dispute.

Choosing the Law Most Closely Related to the Contract:

• This principle is applied when the two contracting parties have not agreed on the applicable law or the chosen law is not sufficient to resolve the dispute.
• In international conventions and national laws, there are provisions specifying how to determine the most closely related law to the contract.

While intellectual property law generally does not have conflicting laws, in contracts for the transfer of intellectual property rights, conflicts of law can arise since these are contracts with foreign elements. Choosing the law of the recipient country is suitable for Vietnam’s circumstances because currently, and in the future, Vietnam is likely to be the country receiving more intellectual property transfers than transferring them. Therefore, this provides a basis to legitimately expand Vietnam’s legal jurisdiction.

The choice of applicable law in international contracts is a critical decision. It directly affects the resolution of potential disputes and the protection of the rights of the contracting parties. For Vietnamese businesses engaging in international trade, understanding the nuances of the applicable law and seeking legal assistance, including contract lawyers, is crucial. Contract lawyers in Vietnam, with their expertise in international trade laws, can guide businesses in making informed decisions, drafting contracts that align with the desired legal framework, and ensuring compliance with international conventions or national laws. By leveraging the knowledge and skills of contract lawyers, businesses can enhance their legal standing, protect their interests, and navigate the complexities of international trade more effectively.

Leveraging Contract Lawyers in Vietnam to Safeguard Business Interests and Mitigate Risks

In the dynamic landscape of international commerce, businesses engaging with Vietnam encounter diverse challenges. Navigating legal complexities, ensuring contractual compliance, and mitigating risks are paramount for safeguarding business interests. Contract lawyers in Vietnam play a pivotal role in this landscape, offering invaluable expertise to clients seeking to protect their best interests and minimize potential risks.

1. Expertise in International Trade Laws:

Contract lawyers in Vietnam possess specialized knowledge of international trade laws, including conventions such as the United Nations Convention on Contracts for the International Sale of Goods (CISG) and other relevant regulations. This expertise ensures that contracts align with legal frameworks, reducing the likelihood of disputes.

2. Tailored Contract Drafting:

Crafting contracts tailored to the unique needs of businesses is a key strength of contract lawyers in Vietnam. They structure agreements that not only reflect the intentions of the parties but also anticipate potential issues, providing a solid legal foundation for business relationships.

3. Choice of Applicable Law:

Guiding clients through the selection of the applicable law is a critical aspect of risk mitigation. Contract lawyers in Vietnam assist in choosing the most relevant legal framework, considering factors such as international conventions, national laws, and trade practices.

4. Dispute Resolution Strategies:

In the event of disputes, contract lawyers formulate effective resolution strategies. Whether through negotiation, mediation, or arbitration, their expertise ensures that clients’ interests are protected while seeking swift and cost-effective resolutions.

5. Mitigating Intellectual Property Risks:

Businesses involved in intellectual property transactions face unique challenges. Contract lawyers in Vietnam help mitigate risks by ensuring that contracts for the transfer of intellectual property rights align with the laws of the recipient country, providing a solid legal basis for such transfers.

6. Compliance Assurance:

Staying compliant with international trade laws and regulations is crucial. Contract lawyers in Vietnam regularly update clients on legal changes, ensuring that contracts remain in compliance with evolving standards and reducing the risk of legal complications.

7. Proactive Risk Identification:

Contract lawyers in Vietnam conduct thorough risk assessments, identifying potential challenges before they escalate. This proactive approach allows clients to address issues preemptively, minimizing the impact on business operations.

8. Negotiation Support:

During contract negotiations, contract lawyers in Vietnam act as strategic partners, safeguarding clients’ interests while fostering positive business relationships. Their negotiation skills contribute to the creation of mutually beneficial agreements.

9. Due Diligence and Research:

Offering due diligence and research services, contract lawyers in Vietnam provide clients with comprehensive reports on potential partners, helping them make informed decisions. This meticulous approach contributes to risk mitigation by uncovering crucial information.

10. Compliance with Local Laws:

Understanding local laws and regulations is vital for businesses operating in Vietnam. Contract lawyers in Vietnam ensure that contracts comply with Vietnamese laws, safeguarding clients against legal challenges that may arise due to non-compliance.

In conclusion, leveraging the expertise of contract lawyers in Vietnam is a strategic investment for businesses seeking to protect their interests and mitigate risks in the complex realm of international trade. With their specialized knowledge, these legal professionals empower clients to navigate contractual complexities, ensuring that agreements are robust, compliant, and conducive to sustainable business relationships.

About ANT Lawyers, a law firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi,  and Danang, and will help customers in doing business in Vietnam.