The enforcement of International Contract (i.e. a legally binding agreement between parties, based in different countries, in which they are obligated to do or not do certain things[i]) is necessary to ensure that the parties involved fulfill their obligations and honor the terms agreed upon in the contract.
The enforcement of international contracts is essential to ensure contractual stability, protect party rights, preserve business relationships, promote trade and investment, uphold the rule of law, provide certainty and consistency, and foster international legal cooperation. It provides a framework for resolving disputes and holding parties accountable for their contractual obligations, contributing to a healthy and thriving global business environment.
In order to enforce an international contract in any country the general steps that are followed are Signing, apostilles, notarisation.
Signing:
The contract should be signed by the parties along with mentioning their legal titles, Power of attorney (if any), In case of partnership the signature block should clarify how and by whom the partnership is represented. Any other person whose signature is required as per the country’s laws, for instance Under the laws of several EU member states, statutory provisions exist requiring that the partner of a natural person who is married in a ‘community of property’ must give his or her consent to important transactions by the partner.
Apostille:
It refers to legalisation of documents for use in another jurisdiction. Apostille ascertains that the signature of the legalised document is authentic. A‘legalised document’ is accepted in the countries that have signed the Hague Convention. Where the country issuing apostille is not a party to the Hague Convention, an additional diplomatic or consular confirmation of authenticity is necessary.
The necessary stamp duties should also be paid in order to make the document legally valid. For instance, document executed outside India is, even if already stamped with the duty chargeable under the law of the foreign country where it was executed, liable to stamp duty, provided the document is received in India.
Even, according to the laws of England stamp duty has to be paid in a contract which is generally attached with the acceptance.
Notarisation:
An apostille is attached with a stamped legalisation statement signed by an official. The public official, by means of the apostille, legalises the authenticity of the signatory of another official, typically a civil notary. The latter has actually investigated and ascertained what needs to be established in the relevant context the formalities up to the notary’s signature, are sometimes called ‘notarisation’.
In relation to the execution of an agreement, the legalised document should establish: (i) the names of the persons duly entitled to represent the relevant contracting party; and (ii) whether that representative and not another person has indeed signed the legalised document.
CONCLUSION:
In conclusion, the enforcement of international contracts is a critical aspect of conducting business in the global marketplace. It serves as the backbone of contractual stability, ensuring that parties can rely on the fulfillment of their obligations and the protection of their rights. The necessity of enforcing international contracts lies in the preservation of business relationships and the promotion of trust between parties. It allows for the resolution of disputes in a structured manner, fostering cooperation and negotiation rather than resorting to contentious actions that could harm long-term partnerships. Moreover, enforcement mechanisms contribute to the certainty and consistency of international transactions. Parties can have confidence that their contractual rights will be recognized and upheld across borders, reducing the risks and uncertainties associated with cross-border business. The enforcement of international contracts also promotes international legal cooperation, as it requires coordination and collaboration between different jurisdictions. It helps build mutual understanding and trust among countries, facilitating smoother cross-border trade and investment. In essence, the enforcement of international contracts plays a vital role in supporting global commerce, protecting party interests, and upholding the principles of fairness and justice. It is an essential pillar of the international legal framework, contributing to a thriving global business environment and driving economic growth.
[i] https://www.globalnegotiator.com/international-trade/dictionary/international-contracts/#:~:text=International%20contracts%20refers%20to%20a,written%20in%20a%20formal%20way.
Author: Abhishek Gupta, Senior Associate (assisted by Esha Sarda)
Disclaimer: The content of this article is intended to provide a general guide to the subject matter and that the same shall not be treated as legal advice. For any queries, the author can be reached at info@samistilegal.in
