3 Things to Know Before Doing Business Overseas

Many businesses enter into legal relationships with parties overseas. If you are a business that is dealing with parties outside of Australia, it is important to be aware of the possible issues you may face down the line, especially when it comes to litigation. This article will run through a few pointers to make sure you know how disputes are resolved when there are cross-border issues.

Jurisdiction and Governing Law

When two parties commence a legal relationship, it is often prudent to have a formal written contract in place, so both parties are aware of their obligations to each other. Contracts usually require clauses dealing with the jurisdiction and the governing law. The governing law refers to the laws of the country (or territory within the country) which will apply to the agreement. The jurisdiction refers to the judicial system of the country (or territory within the country) where a disputed matter will be heard. If you are an Australian business entering into a contract with a party overseas, it is useful to have access to Australian courts and to negotiate that the contracts reflect this.

Obtaining a Judgment in Australia

If you face a dispute and your legal relationship, as noted above, is under the jurisdiction of Australian law, you will have access to the Australian courts to hear and decide upon the matter. The court process will commence and finish in Australia, and if the court happens to decide in your favour, you will receive a judgment.

Enforcing a Judgment

It is difficult for litigants in Australia to enforce a judgment against a party that is based overseas and this needs to be an early consideration before any party commences litigious proceedings. However, although this adds an extra hurdle, and most likely increases costs to the process, it is not impossible. The Foreign Judgments Act 1991 (Cth) comes into play at this point as it allows for reciprocal arrangements between Australia and several other countries, including New Zealand, Canada, France, Germany, Hong Kong, Japan, Singapore and the UK, to name a few.

These countries will usually have similar legislation in place to the Foreign Judgments Act 1991 (Cth). This means that the enforcement process may differ from country to country, and this may include a registration process or a process whereby the matter is reviewed and examined in the country where the judgment should be enforced.

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If you are considering commencing litigation against a party based overseas, it is useful to understand the terms of your written agreement and weigh up the possible costs in enforcing a judgment before commencing proceedings. If you have any questions, ask our litigation lawyers on 1300 544 755.