International contracting is the cornerstone of global trade, enabling the circulation of goods, services, and capital across borders. However, a contract only acquires an international character if it contains elements that connect it to more than one State. This condition not only affects its interpretation and execution, but also determines the applicable law and international jurisdiction in the event of a dispute.
Elements That Make a Contract International
Within the framework of Private International Law, a contract is deemed international when it includes at least one of the following characteristics:
🔹 Location of the parties in different countries
If the contracting parties are based in different countries, the agreement will be transnational.
Example: A Spanish company signing an agreement with a Japanese supplier.
🔹 Performance of the contract in a country other than that of the parties
Even if both parties are domiciled in the same country, if the contract is executed in a different territory, it will be international.
Example: A Mexican company agreeing to build a factory in Argentina.
🔹 Subject matter of the contract located in different countries
If the contract involves goods or rights situated in different jurisdictions, it will be considered global.
Example: A U.S. company purchasing real estate in Italy.
🔹 Relevance to international trade
Certain contracts may be international due to their direct connection to the global market, even if both parties are domiciled in the same country. A clear example is the sale of goods transported between different countries.
Impact of a Contract’s International Nature
📌 Applicable Law and the Rome I Regulation
The law governing the contract may be chosen by the parties or determined by international rules such as the Rome I Regulation, which establishes connecting factors to identify the lex contractus.
📌 International Jurisdiction and the Brussels I bis Regulation
In the event of a dispute, which court has jurisdiction? The answer lies in instruments such as the Brussels I bis Regulation, which determines the competent forum for international contractual disputes.
📌 Mandatory Rules and Public Policy Laws
International contracts may be subject to overriding mandatory provisions (lois de police), which prevail over the law chosen by the parties.
Example: Trade restrictions imposed by international economic sanctions.
📌 International Commercial Arbitration
To avoid lengthy court proceedings, international arbitration offers an efficient alternative for resolving commercial contractual disputes.
Conclusion
International contracts are essential for globalization and cross-border trade. However, managing them effectively requires knowledge of the applicable law, proactive dispute resolution mechanisms, and awareness of the potential impact of mandatory rules and trade sanctions. Strategically selecting the lex contractus, carefully drafting the agreement’s terms, and including jurisdiction clauses will ensure a secure, effective contract that complies with Private International Law.
