Governing Law and Forum Selection
Boilerplate Language in International Contracts
USA-Brazil Trade: Rules of Trade
Other Important Agreement and Laws Governing U.S. and Brazilian Trade
Comparison of Arbitration in South Carolina and Brazil
Conflicts arising out of contracts between international trading parties are on the increase with the rise and increase in international business and international trade. The courts that would hear and decide matters related to business conflicts between trading partners would look to the express terms of the contract as well as the applicable law within which the contracts have been formed and agreed upon by the two parties belonging to two different countries when one party considers the other party's actions to be a breach of the contract. The legal contract and the contents of the contract would be the basis on which courts would decide in arbitration cases and in cases of business dispute.
However given the context of international trade and the proliferation of bilateral as well as universal international trade and commerce laws and regulations, the arbitrators and the courts deciding on business conflicts would also consider and interpret international contracts and international trade laws along with bilateral trade agreements between the two countries where the companies originate (Boundy).
For any contract the actual meaning and relevance lies in the fine print or what is written in the contract. Therefore it can be apt to say that the "the devil is in the details" when it comes to contracts and the devil is in the boilerplate language. Such boilerplate language in a contract essentially is standard language that is used universally and is generally found at the end of every contract. Clauses relating to governing language, governing law, forum and dispute resolution and arbitration limitations would be found in the form of clauses. However in the presence of international laws and bilateral trade agreements, using standard boilerplate language can have undesired consequences.
This paper would deal with the contract formation, arbitration and conflict resolution for the company based in South Carolina in the U.S. and a company based in Brazil.
One of the important things for formation of contracts with a Brazilian company is to decide on the language of the contract. English is the preferred language when contracts are formulated between a Brazilian company and an American company to be negotiated and not in Portuguese, which is Brazil's national language. However in cases where the power of arbitration lies with a Brazilian court or arbitrator, it would be necessary to translate the contract into Portuguese.
The English version will still need to be translated into Portuguese by a sworn translator even if the contract states that the English version of the contract will prevail. In cases where the Brazilian courts arbitrate matters, the officially translated English version of the contract would be used to resolve issues (Bahmani-Oskooee, Harvey and Hegerty).
Governing Law and Forum Selection
For a company based in South Carolina, it is only obvious that the company would try to select, impress and include governing law and forum selection clauses relevant to South Carolina. This is a common practice in international trade that the parties to include governing law and forum selection clauses that are more favorable to the party that drafts the contract. Therefore in this case at hand it is important that the while drafting the contract, the South Carolina-based company would include the clause that would state that the governing law will be the law of the State of South Carolina and the forum for disputes will be a particular city within the legal jurisdiction of the state of South Carolina.
While both of the parties are free to choose the governing law and forum in international contracts, parties would tend to choose a particular forum or governing law which would be more favorable to them. This is a decision that the parties would have to decide for themselves no matter what the forum chosen. Therefore in this case the South Carolina-based company would choose some forum and arbitrator regulations within the U.S. and if favorable, within the state of South Carolina.
To create an alternative method of dispute resolution, many a times, the contracting parties tend to include certain...
It is said that arbitrations are handled faster and at a cheaper rate than court cases and battles and those in the U.S., particularly in the case of international contracts. Therefore the South Carolina-based company can opt to select a Brazilian court area or arbitrator body to be the arbitrator in case of business conflicts (Berger).
There are some important considerations about arbitration that need to be kept in mind while formulating a contract. These considerations include answers to questions like how many arbitrators will there be, who will be the arbitrator(s), who will pay for the arbitration, what language will the arbitration be conducted, will the arbitration award be final, where will the arbitration be held among others.
Boilerplate Language in International Contracts
While the Brazilian and American contract laws have a lot of similarities and about the manner they are applied, however important details in the contract's boilerplate language should not be overlooked under the influence of the apparent similarities (Berger).
USA-Brazil Trade: Rules of Trade
Trade laws and regulations are essential to create a level playing field for all parties in a global marketplace where there is presence of unequal partners. While the primary laws and regulations are formulated by the World Trade Organization (WTO) and these laws primarily define and determine the international trade rules. These rules were negotiated and ratified with the aim to promote and expand trade among the 153 member nations of the WTO. The rules were so formed that every member of the organization is able to achieve economic growth and prosperity.
The first law or rule that would govern any contract or instances of arbitration or litigation would be governed by the rules and regulations that are formed by the world trade organization as both the United States and Brazil are members of the international trade body. The South Carolina-based company as well as a Brazilian company would have to agree to and adhere to the General Agreement on Tariffs and Trade (GATT) for goods as formulated by the WTO.
The other rules and regulations and conventions that would govern the contract between the two companies include the General Agreement in Trade in Services (GATS) and the Trade Related Aspects of Intellectual Property Rights (TRIPS). There are also other agreements and conventions that govern the contract and the litigation mitigation clauses between the two companies (Ahmadi and Ahmadi). As an overall watchdog of the international trade disputes, the WTO Secretariat in Geneva, Switzerland, serves as watchdog. This body administers and monitors the application of agreed rules, reviews trade policies and helps in settlement of disputes between member countries. In this context the U.S. based company would be governed by the agreements of the WTO that the U.S. had agreed to follow and adhere to. For example, in June 2008, Brazil claimed that U.S. agricultural subsidies on upland cotton were illegal under the WTO Agreement on Agriculture. The WTO intervened and granted Brazil $147.4 million in sanctions for Fiscal Year 2006. The WTO also arbitrated that this amount would determine the compensation to be paid to Brazil in the subsequent years (Ridley and Devadoss).
There are many other conventions and regulations and bilateral agreements that govern trade with the Brazilian company as well as the arbitration and conflict settlement. One such regulation or trade guidance is the UCC - Sales departs from the regular American statutes in as much it is a very comprehensive code. Contract formation, parties' obligations, warranties, methods of payment, title, performance, breach and remedies are the aspects of international trade that are indicated and governed by this code and which is applicable for the South Carolina-based company while it negotiates and does trade with the Brazilian company.
The governments of the United States and Brazil have engaged in a number of bilateral agreements and set up bodies and institutions comprising of representatives from both sides to facilitate trade and commerce between the two countries as well as reduce trade barriers. One such example is the establishment of the Brazil-United States Commission on Economic and Trade Relations through the Agreement on Trade and Economic Cooperation between the Government of Brazil and the United States. This body has the onus of facilitation and liberalization of bilateral trade and investment and enhancement of cooperation on shared objectives in the World Trade Organization. The commission would also increase cooperation in the United States -- Brazil Consultative Committee on Agriculture, sanitary and phytosanitary and identify and remove technical barriers to trade. The commission is also entrusted with the upholding of intellectual property rights and the identification and decision making on regulatory issues that affect trade and investment. And finally the commission would also look into and intervene…
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