Drafting multiple-language contracts: common problems and tips
The first thing that parties must consider when engaging in business negotiations with foreign parties is whether the final contract should be in English, the foreign language, or both. If the contract will be written in more than one language, which will be official? Which will prevail in case of a conflict?
The answer «English!» is not always right and appropriate. Complex considerations affecting a lawyer’s choice of contract language in a cross-border contract include a consideration of the likely claims to arise, likely venue for conflict resolution, and enforceability of any judgments obtained.
Unfortunately, in many situations, attorneys write these types of contracts in English with little thought to other languages involved in the transactions.
The most common languages for multilingual business contracts are English, Chinese, Korean, German, Spanish, and Russian.
The following are two classic examples of clauses selecting choice of language:
1) This agreement has been prepared in [language 1], and the [language 1] version thereof shall prevail and be binding even though a [language 2] translation may also be prepared.
2) This agreement has been prepared in both [language 1 and language 2]. In the event of any inconsistency, the [language 1] version shall apply and be binding upon the parties.
What is the problem with these clauses? Why don’t they resolve the problem of priority of language? After all, both clauses reflect that the contract is written in two languages and only one is the binding version. If there is a conflict, the first language will prevail. So there should never be any disputes between the parties about how to interpret the contracts. But there are some pitfalls when using a wording like this.
Poor translations cause loss of precise language.
In many cases a firm lawyer tries to save costs for the client by using a nonlawyer to translate contracts. Stories exist of people using secretaries to translate contracts or using computer programs. Even receiving blanket translations from translation services can cause problems when they do not explain the range of potential translations that might arise from a particular legal phrase. A translator may have to choose between three, five, ten, or zero words in a foreign language for a particular legal concept the attorney originally described in a legal contract.
A translator who is not an attorney may not fully understand the goods or services being described, the terms of custom and usage in the industry being used, or the significance of being precise in that description. Unless these are taken into account in making the translation and the legal implications of word choices are understood, the impact of the attorney’s carefully drafted contract language may be completely lost upon translation into a second language.
The only way to ensure an accurate translation is to review it point by point, clause by clause for inconsistencies. In an ideal situation, a translation will be conducted by an attorney who can provide a legal opinion regarding the proper language to be used in the translation. In situations where this is not possible, translation companies with experience in drafting legal documents and explaining the implications in word choice should be employed, so that the attorney who does not speak the foreign language will be able to make choices about word selection.
The problem of enforceability.
When working with multilingual contracts, you have to consider where a dispute is most likely to be brought if you have to enforce it.
If you intend to have the dispute resolved in an arbitration forum where the arbitrators usually conduct proceedings in English, then it does make sense to have English as the official language of the contract. However, if the chosen forum is the local courts of Russia then you should put the extra time and expense into making Russian the official language of your contract.
The reason for this is simple: If you expect to litigate in a Russian (or any foreign) court, the personnel in that court are not going to speak English. They are not going to read English. Even if they do read English, the court’s rules of procedure are going to require that the documents be translated into the local language.
Why is this necessary?
The contract law of most nations follows the familiar principle that there must be a meeting of the minds in order to establish a binding contract. If this does not exist, there is no contract. Each foreign nation has different rules of evidence regarding what is admissible into evidence when proving what the parties understood that they were receiving for the benefit of the bargain.
Many laws allow the use of parol evidence. For example, the United Nations Convention on Contracts for the International Sale of Goods allows courts that are applying it to consider “all relevant circumstances” of the contract—this would apply to both the original language contract as well as the translation.
