As a global law firm, Michalsons drafts a lot of global agreements for clients who operate in multiple jurisdictions. A service provider based in one country, such as the UK, may have customers in multiple jurisdictions around the world. Can an agreement with a customer in one jurisdiction be the same as an agreement with another customer in another jurisdiction? Yes, but the agreements may not be exactly the same – there are likely to need to be certain key differences.
The 80/20 rule and global agreements
We believe that just because we draft an agreement that applies to a customer in the UK doesn’t mean that it can’t apply to customers in other places, either in Europe or South Africa. We believe that there can and should be at least an eighty-twenty percent split in the contents of multiple-jurisdictional or global agreements, with eighty percent being what’s similar across the various agreements.
One of the common threads in all agreements that we draft is that they are in plain language. We don’t use unnecessary jargon or legalese. We draft in simple terms that can be understood by laypersons, lawyers, and judges in different jurisdictions, without there being room for confusion or ambiguity. This approach is crucial to managing the relationship between the parties across many legal systems, and significantly narrowing the window for disputes. The more people can agree on the meaning of words in an agreement, the easier it is to enforce that agreement.
The 20% are the clauses specific to a particular jurisdiction, for example:
- jurisdiction – the clause stipulating the law that applies to the agreement
- dispute resolution – the clause regulating dispute resolution mechanisms
But even in those dispute resolution clauses, there’s still room to be generic, to generally stipulate that the parties will first go to a negotiation, mediation, and then arbitration. From there, it gets much more specific, because the specific rules of dispute resolution follow what a specific country requires. For example, in SA there’s a body that can nominate arbitrators on your behalf, and London has the same.
When not wanting to be locked into a specific country’s dispute resolution mechanisms because the organisation’s business operates in multiple jurisdictions, then, they have to have roving jurisdiction or arbitration clauses. These clauses stipulate that the jurisdictions organisations are incorporated in when they enter into an agreement are the jurisdictions whose laws apply, irrespective of which jurisdiction the counterparty to the contract belongs to. But, these clauses have certain disadvantages – such as how they can make an agreement less clear and harder to enforce.
Actions you can take
- Conclude relationships with customers or vendors in other jurisdictions by asking us to draft you global agreements.
- Avoid disputes in your transactions by asking us to review your agreements.