Things To Consider When Entering Into a Cross Border Agreement

Typically, the two most concerning provisions of cross border agreements is the arbitration and termination provisions. Often times, these agreements are not well thought out and disputes as to their content and enforceability are disputed.

With regard to arbitration provisions, parties should consider whether arbitration is preferred rather than resolving disputes in court. When permitting arbitration, parties should consider whether it is perceived by all parties as being faster and cheaper than litigation. Parties should also consider the most effective location, the scope of discovery rights and confidentiality. While arbitration in international disputes is generally preferable because proceedings are private, speedy and often confidential, the downside includes limited remedies (such as injunctive relief, etc.) and great expense.

Parties should spend time considering the scope and language of termination provisions. For example, will the agreement expire on a specific date, are there scenarios where early termination would be beneficial? Can or should the agreement be renewed? What would be grounds for immediate termination (e.g. failure to comply with certain provisions, bankruptcy, etc.) or is termination without cause desirable?

In sum, these types of agreements are typically negotiated when the parities are cooperating and have a positive relationship. Prior to entering into an international agreement, it is strongly advisable to consider your ultimate goal and to think about what provisions can be included or strategically drafted that can directly address these goals. Also, ask yourself if you are more likely to be a defendant or plaintiff if the deal falls apart. The answer to this will likely affect the contents of the agreement.