United States: International Deal-Making: Top Ten On The Checklist

In cross-border deals—whether an acquisition, a financing or a new project—non-U.S. aspects may have  unanticipated impacts on the economic model and negotiations. A transaction may be "cross-border" for any number of reasons, including foreign deal participants, non-U.S. assets or the application of non-U.S. laws, to name a few. Identifying, assessing and mitigating deal risk in this environment requires an understanding of these potential impacts. Though by no means an exhaustive list, following are some useful reminders of issues for the negotiating team to consider:

1. Be Attuned to Potential Differences Early On. Avoid pitfalls during the "pre-contractual" phase by ensuring you do not inadvertently assume unwanted risks or become committed earlier than you intend (for example, under letters of intent). In some countries, such as France, the parties may be subject to a duty to negotiate in good faith to reach agreement on a transaction once discussions commence. Verify requirements under local law for parties to be contractually bound as these may differ from country to country. Failure to include required contract provisions (for example, omitting a "purpose" clause) or signing without adequate evidence of your legal authority can sometimes call into question the validity of the agreement and limit available remedies. Engaging effective local counsel early on to assist in navigating these waters can avoid unintended consequences.

2. Choice of Law Clauses Matter. Choice of law to govern your agreement matters if a term turns out to be unclear and a court must ultimately decide. U.S. courts may look to the parties' behavior to establish intent, but many foreign courts in civil law countries look only to the four corners of the contract. You may encounter "mandatory" laws that parties cannot waive or "opt out" of, even if they agree to another (U.S.) law to govern their agreement. When possible and practicable, seek to negotiate application of laws with established commercial precedents (such as New York, U.K. or Dutch laws) that offer greater certainty if a contract is challenged in court.

3. Formalities of Contract. In many foreign jurisdictions, noncompliance with required procedural formalities may impair the validity of a contract. Formalities may include a requirement to appear before a notary in order for the contract to be transcribed into a "public" deed. Notaries in civil law jurisdictions often play a greater role than do their U.S. counterparts, and their presence may be required under local law for your transaction to close.

4. Dispute Resolution. Related to choice of law is specifying which dispute resolution mechanism will apply to your contract. One way to avoid having a dispute filed in local courts is to agree to international arbitration, preferably in a neutral forum under established rules. If the foreign investment may be protected under bilateral treaty investment regimes, these protections should be expressly built into the contract.

5. Ownership of Property. Proper structuring of ownership of foreign property, along with determining the attendant tax consequences, may determine the economic success of a transaction. Local law issues to consider include choices of entity available for the investment, authorizations needed to do business and any prohibitions (and any incentives available) for the investment. In some civil law jurisdictions, for example, common law trusts may not be recognized and therefore cannot be used to hold or secure property. Increasingly, some developing countries, have laws or practices requiring local content—meaning the development of local skills, technology transfer, and the use of local manpower and local manufacturing—that may impact the economics for development of a "greenfield" project, effectively require the transfer of assets or otherwise affect the ownership of property.

6. Contracting with States. If the counterparty is a sovereign state (or a state-owned enterprise), it may not always be possible to provide for foreign law or international arbitration. Whether or not sovereign immunities can be legally waived by the governmental counterparty needs to be carefully assessed, as well as the possibility of providing for dispute resolution under arbitration regimes that the state has agreed by treaty or law may apply to its contracts. Watch for specific sovereign rights, such as (in a few countries) a unilateral termination right of the state under local law that is not waivable by contract.

7. Change in Law; Hardship of Contract. The parties may negotiate protection from adverse changes in local law through so-called "stabilization clauses" aimed at restoring the economic equilibrium of the parties. In common law systems, these provisions  generally are not binding on the parties unless negotiated and reflected in the contract. However, in many civil law countries, similar principles are codified in local law and will apply whether or not agreed to by contract. An unaware party may thus find itself obligated by its counterparty to renegotiate a contract under local law based on changed economic circumstances.

8. FCPA Compliance and Similar Regulatory Issues. U.S. companies doing business abroad are subject to the Foreign Corrupt Practices Act and similar U.S. regulatory regimes in their dealings with agents and foreign counterparties, especially businesses that are wholly or partly owned by foreign governments. U.S. parties must make sure their existing due diligence and compliance programs support the cross-border transaction as well as the related record-keeping requirements.

9. Currency and Repatriation Issues. For any cross-border investment, identify barriers to repatriation of profits and seek to mitigate these through proper contract structuring, insurance, payment arrangements or other avenues. Depending on local law, resolution may be as straightforward as registering with a central bank (for example, to repatriate dividends) or may require obtaining assurances from a governmental party as to currency availability and convertibility (to ensure foreign currency can be repatriated). Currency exposure or changes in currency exchange rates may make the transaction uneconomic unless the risks can be hedged on acceptable terms.

10. Force Majeure. The old adage is that things happen when least expected. To avoid surprises in case of a force majeure event, include a well-drafted, country-specific force majeure clause. In the absence of a negotiated provision, less advantageous force majeure provisions in local law may apply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions