Input
The deal, the country, the risks, each side's position.
LATIN AMERICA / 23
Contracts with partners in the region: governing law, arbitration, payments and sanctions clauses
A contract with a partner in Brazil or Mexico rarely fails over price. It fails over issues nobody discussed up front: where and under which law to resolve disputes, what happens if a payment is blocked, who obtains permits and who is responsible for sanctions checks. We draft bilingual contracts that settle these points and review the drafts your partner sends.
- Practice
- Latin America
- Format
- Moscow and remotely; contracts in Russian, English and Spanish
What is happening
A Chilean distributor has sent its standard contract in Spanish, governed by local law with local courts. The Russian manufacturer wants to know what is dangerous in it and what can realistically be changed.
A buyer from Peru asks for deferred payment, and the seller fears it will not be able to recover the debt and that the payment may get stuck at a correspondent bank.
A company is discussing a joint project with a Brazilian partner and wants to record the arrangements before the main contract without disclosing too much about its technology.
What the law says
- Parties must negotiate in good faith; a party that negotiates or breaks off negotiations in bad faith must compensate the other party's losses (Article 434.1 of the Russian Civil Code), if Russian law governs the negotiations. The negotiation procedure and confidentiality can be set out in a separate agreement.
- Disputes can be referred to international commercial arbitration, including the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry (ICAC), under Russian Law No. 5338-1 of 7 July 1993 on International Commercial Arbitration. Abroad, awards are recognised under the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), if the country of enforcement is a party.
- The jurisdiction of Russian arbitrazh courts over cases involving foreign parties and the recognition of foreign judgments and arbitral awards in Russia are governed by Chapters 31 and 32 of the Arbitrazh Procedure Code; where restrictive measures target the Russian party, Article 248.1 of the Code applies.
- Exporting dual-use goods and technologies requires permits under Federal Law No. 183-FZ of 18 July 1999 on Export Control; the contract states who obtains them and what happens if they are refused.
- Payments under the contract go through currency control at an authorised bank under Federal Law No. 173-FZ of 10 December 2003 on Currency Regulation and Currency Control, so the currency and payment terms are aligned with these rules.
What we do
- We draft supply, distribution, agency and service contracts tailored to the deal and the partner's country.
- We review the partner's drafts and propose changes, explaining what is critical and what can be conceded.
- We choose the governing law and dispute resolution method based on where the partner's assets are and where a decision would need to be enforced.
- We draft clauses on currency, correspondent banks, delayed and blocked payments, changes in sanctions and the right to suspend performance.
- We allocate responsibility for permits, export control, customs and certification.
- We prepare confidentiality and negotiation procedure agreements ahead of the main contract.
- We produce a bilingual version in Russian and Spanish or English. We can work in Spanish, with an interpreter where needed; documents in Portuguese are translated with the help of a translator.
- We check the mandatory rules of the partner's country together with a local specialist.
What we will need from you
- A description of the deal: goods or services, volumes, timing, currency, delivery terms.
- The partner's draft contract or your standard form.
- Details of the partner: name, country and tax number, if known.
- Correspondence on the key terms.
HOW THE WORK IS BUILT
How the work is built
Basic partner check
Sanctions lists and registration data; in-depth checks are a separate service.
Draft or mark-up
A contract or a table of changes with comments.
Agreeing the text
Discussing changes with the partner, in Spanish with an interpreter if needed.
Signing
Language versions, signatories' authority and annexes checked.
NEARBY
Other services in this practice
- Counterparty checks in Latin America
- Disputes with Latin American partners
- Oversight of local accounting and reporting
- Interpreters for work with Latin American partners
- Negotiations with partners in the region on your behalf
- Entering Latin America: turnkey support
- Choosing a country and a company form
- Company registration through local specialists
QUESTIONS
Frequent questions
Which law should we choose: Russian law or the partner's?
It depends on where a decision would be enforced and where the partner's assets are. Sometimes a neutral law and arbitration make more sense. The mandatory rules of the partner's country apply whatever you choose, and a local specialist confirms them.
Which is better: state courts or arbitration?
In international deals, arbitration is the more common choice because awards are recognised abroad under the 1958 New York Convention. But you need to check that the country where the award would be enforced is a party to it.
Which language version of the contract prevails?
Contracts are usually bilingual, and the parties state expressly which version prevails if they differ. We check both versions so that they do not.
Can a contract protect us against sanctions?
It can provide for the right to suspend performance, to change bank or currency, and for termination if new restrictions arise. Such clauses do not lift sanctions, but they set out in advance who does what if a payment or delivery becomes impossible.
NEXT STEP
Let us discuss your situation
The consultation is free of charge when an engagement agreement is signed: on it we say what has to be done and by when.