Enforcing international agreements/contracts
I'm just curious about how a contract between two parties in different countries would handle breaches/consequences of said contract.
Let's say between two parties in USA and Asia. If the contract says that it will be governed by Asia law, and in the event of a breach, there is consequence/penalty of $x for each violation occurrence.
If there was a breach by the party in USA, how exactly would that contract be enforced by the party in Asia? Considering:
- Do laws of one country apply to parties in another?
- Not every culture honors written contract and prefer verbal contracts
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+1: Excellent question. It's a very bad idea to assume other countries handle contracts and breaches the way yours does, or that a judgment in one country can be enforced in another. For instance, a lot of US companies have gotten burned doing business in Korea because their approach to contracts is fundamentally different. – Bob Murphy 12 years ago
2 Answers
First: IANAL
Typically the aggrieved party has to file a lawsuit in the jurisdiction where the contract is governed, win the case and then collect the damages.
To collect the damages you have to locate any assets, then get a judge in that jurisdiction to award you the assets.
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So the party in Asia would have to file a lawsuit in Asia, win, then also get a judge in the USA to award the assets? – Dustin Davis 12 years ago
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That's how a lawyer explained it to me. The point he was making was how difficult it was to really, truly, enforce your contracts – James 12 years ago
The "International Private Law" contains rules on what happens if there is a conflict between members of two different countries. Check out the Wikipedia entry:
http://en.wikipedia.org/wiki/Conflict_of_laws You need to take into account the justice system and the associated costs of suing in the other country. When we were in the situation that we needed to sue someone from the U.S. we were surprised how expensive this is in the U.S. compared to Western Europe. If you need to be present in court, the price is even higher, you need to pay for flights to the U.S., hotels etc.
If your chances of winning the dispute are good, you can find a lawyer, who sues on your behalf on a contingency basis. This is often a better option than dropping the law suit. We have done this successfully.
