International Law

International Law and legal communication

A purchase or delivery contract (hereinafter referred to as a “purchase contract”) is international if, for example, buyers and sellers are located in different countries and the products/goods are delivered to another country. Take the following situation as an example: a German salesman sells machines to a French corporation and delivers the goods direct to the polish branch office of the French company. The German seller has to know in which court shall he, for instance, file a payment claim (German, French or Polish?); and even when the court of law is established, the law that will be applied to this case is not defined (German, French, Polish or United Nations Convention on Contracts for the International Sale of Goods).

On a case-by-case basis, a foreign law process can be advantageous, but every situation has to be considered individually. Without a previous legal consultation and a competent legal expertise, the decision to choose a foreign legislation can become really risky and expensive. It is important to find a German specialist for foreign and international law in order to be correctly advised throughout all the legal process; this kind of legal consultation is normally much more expensive than a general advice on German Law. Nevertheless, it is to consider that the process will take place in another language and this means that additional translation and interpreting expenses will occur; not to mention the involved travelling costs.

The competent court will decide which legislation shall apply; but firstly is fundamental to determine which court is actually competent.

Jurisdiction of German courts in EU-Law

The competent court shall be determined:

By the contract agreements or
According to international civil procedure law.

Within its scope, the Brussels Ia Regulation (EU) No 1215/2012 determines jurisdiction in civil and commercial matters. Relevant grounds include the defendant’s domicile, special contractual jurisdiction and valid jurisdiction agreements. Consumer, insurance and employment contracts have protective rules. For sales of goods, important connecting factors include:

The defendant company’s statutory seat, central administration or principal place of business under Article 63;
The place in a Member State where the goods were delivered or should have been delivered under the contract, where Article 7(1)(b) applies.

A German seller is not invariably required to sue abroad. The buyer’s domicile, the contractual delivery location and a valid jurisdiction agreement may be relevant. The contract and applicable jurisdiction rules must be assessed.

Delivery in Germany may establish jurisdiction for a contractual claim under Article 7(1)(b). It does not automatically mean that every claim against a German buyer must be brought exclusively in Germany or that German substantive law applies.

Delivery in another state requires assessment under the applicable jurisdiction rules. Delivery to a non-EU third state does not itself confer jurisdiction there under Article 7(1)(b) Brussels Ia.

Legal relations outside the EU

Relations between Germany and the non-EU countries are characterized by numerous bilateral and multilateral agreements. Both the agreements and the completely different legal practices can lead to very different results.

In many cases these stipulations can help:

In the application of the German Law
In the application/exclusion of a UN-Purchasing Law
In an arbitration clause (enforcement clause).

A valid German jurisdiction clause may benefit either buyer or seller. It does not replace a choice-of-law clause. Formal validity, protective provisions and enforceability abroad require separate examination.

Applicable rights

UN-Purchasing Law

The CISG may apply to an international sale of goods where the parties have places of business in different Contracting States or where conflict-of-laws rules lead to the law of a Contracting State. Exceptions, declarations and a valid exclusion must be checked. Article 10 addresses parties with more than one place of business.

UN-Purchasing Law applies only for the sale/purchase of goods in exchange of money.

UN-Purchasing Law does not apply to:

Auctions sales,
Purchase Agreements on real estate, ships, securities, electrical energy
Service Agreements
Contracts in which the preponderant part of the supplier’s obligations consists of labour or other services (Article 3(2) CISG); the CISG does not exclude all supply-of-goods contracts.

The implementation of UN-Purchasing Law can be excluded and regulated in the contract.

One party’s location in a Contracting State is not sufficient for every contract. Articles 1–6 CISG, including exclusions such as certain consumer purchases, must be assessed. UNCITRAL publishes the current treaty status and declarations.

UN-Purchase Law, however, regulates only the core of the purchase agreements, such as the condition of the contract, the obligations of buyer and seller, warranties etc.

Certain general matters of the contract are not regulated by the UN-Purchasing Law, but are ruled by the domestic applicable law (representation, appeal, transfer of ownership, effectiveness of general terms and conditions, etc.).

International Private Law (IPR)

Private international law determines the applicable substantive law. For contractual obligations before German courts, the Rome I Regulation applies within its scope, alongside relevant international conventions and supplementary national conflict-of-laws rules.

According to the German IPR:

For a sale of goods without an effective choice of law, Article 4(1)(a) Rome I generally points to the seller’s habitual residence, subject to special rules and exceptions.
For companies, Article 19 generally locates habitual residence at the place of central administration.
For a contract made in the course of a branch’s operations or for which that establishment is responsible for performance, Article 19(2) may point to that establishment.
Where the applicable law is that of a CISG Contracting State, the Convention must be considered within its scope unless effectively excluded. Choosing German law alone does not automatically exclude the CISG.

Whether the applicable law benefits a buyer depends on the contract, risks and remedies. The seller’s foreign location alone does not establish a disadvantage.

Checklist for German sellers

Arrange as much deliveries as possible in Germany ( for instance, German subsidiaries, business partners;
Arrange a (additional) place of jurisdiction;
Arrange that German Law will apply to your contracts.

Any intended exclusion of the CISG should be explicit. Which domestic sales law then applies, and whether it is preferable, requires separate assessment.

Parallel proceedings are governed in particular by Articles 29–34 Brussels Ia. Under Article 31(2) and (3), a court designated by a valid exclusive jurisdiction agreement may have priority. An earlier foreign action therefore does not automatically defeat the agreed German forum.

Checklist for German buyers

Arrange as much deliveries as possible in Germany ( for instance, German subsidiaries, business partners;
Agree on the validity of German Law.

If the business partner does not reside in a member state of the UN Convention and does not agree with the validity of German Law, it may be advantageous to agree on the UN-Purchasing Law in order to avoid serious legal uncertainties.

Further precaution in International Law

Risk management may include negotiation, appropriate liability provisions, security, choice-of-law and dispute-resolution clauses and, where suitable, insurance. Insurance is not the only available safeguard.

If you have been sued abroad, it is advisable to consult one of our specialists in international and foreign law, at your earliest convenience. Our German specialists always have partner-offices abroad and this can be really helpful especially in case of enforcement, because not all the judgments can be discussed in every country.

What topics can we handle for you?

international contracts
cross-border transactions
inclusion of national representatives who are well acquainted with a national jurisdiction
cross-border claims collection and international court proceedings

The increasing internationality of goods and services is leading to an increasing number of cross-border activities and contacts.

International Law and International Jurisdiction / application of law

For cross-border disputes, jurisdiction and applicable substantive law are separate questions. International civil procedure determines jurisdiction; private international law selects the applicable law. A public-policy exception may prevent application of a foreign rule if its result would be manifestly incompatible with fundamental principles of the relevant legal order. A difference between legal systems alone is insufficient.

International Private Law, Commercial and Corporate Law

In addition to all those matters regarding international private law, international law also deals with various legal instruments of the European Union (international jurisdiction of the courts as well as the recognition and enforcement of decisions). Nowadays, the trade relations between German companies are not particularly limited and a “worldwide” commerce is possible. Corporate law participations, joint ventures and other matters of international commercial and corporate law facilitate the practical implementation of economic activities. Private international law is formed from the entire private law (contract law, commercial law, corporate law, inheritance law, naming right, personal right, etc.).