Introduction
When entering into agreements with foreign counterparties, Russian businesses frequently encounter legal risks that could have been avoided with properly drafted contracts.
Choice of Governing Law
One of the most critical issues is the selection of governing law. The contract should clearly specify which country’s legislation governs the parties’ relationship. This is especially important when disputes arise.
Recommendations:
- Specify the governing law expressly — do not rely on default rules
- Consider where the counterparty’s assets are located
- Consult with an attorney regarding the advantages of each jurisdiction
Arbitration Clause
For resolving international commercial disputes, it is advisable to include an arbitration clause in the contract. International commercial arbitration offers several advantages over state court proceedings:
- Enforcement of awards in 170+ countries under the New York Convention
- Confidentiality of the proceedings
- The ability to select neutral arbitrators
Currency Provisions
In the current environment, it is especially important to protect against currency risk. Include provisions in the contract addressing:
- The payment currency and the accounting currency
- The mechanism for recalculation upon a material exchange rate change
- The right to terminate the contract upon force majeure
Conclusion
A well-drafted contract with a foreign counterparty is the foundation of successful international business cooperation. If you need assistance drafting or reviewing such a contract, please contact our specialists.