In our interconnected world, creative collaborations often cross borders. Filmmakers, musicians, designers, and other creatives now frequently partner with individuals or companies from different countries. While these international projects can bring incredible opportunities and diverse perspectives, they also present unique legal challenges, especially when it comes to deciding governing law and jurisdiction.
In this blog post, we’ll explain what governing law and jurisdiction mean, why they are crucial in international collaborations, and the risks of not addressing these points in your agreement.
When you collaborate with someone in another country, you need to decide which country’s laws will govern your agreement and which country’s courts will have the authority to resolve any disputes. These are two key legal concepts:
• Governing Law
This refers to the set of laws that will apply to interpret and enforce your contract. For example, if you choose England and Wales as the governing law, your contract will be interpreted according to the legal principles of England and Wales, even if one party is based in the United States.
• Jurisdiction
This is about where legal disputes will be resolved. If you agree that the jurisdiction is England and Wales, then any disputes arising from your contract must be settled in the courts of England and Wales.
Selecting the governing law and jurisdiction for your contract helps to avoid confusion and costly legal disputes. Without this clarity, if a conflict arises, you may face uncertainty about:
• Which laws apply to the contract
Different countries have different laws, especially regarding copyright, contracts, and business practices. Choosing the governing law ensures that everyone knows which rules apply.
• Where to resolve disputes
If you don’t specify a jurisdiction, you could end up in a legal battle in an unfamiliar country, which can be time-consuming, expensive, and complicated.
1. Clarity and Certainty
Specifying a governing law provides clear guidance on which country’s legal rules apply, reducing confusion. This clarity helps both parties understand their rights and obligations, making the contract easier to enforce.
2. Predictability in Dispute Resolution
With a defined jurisdiction, both parties know where any disputes will be resolved. This predictability helps you prepare in advance, potentially saving time and legal costs if a disagreement arises.
3. Avoids Costly Legal Disputes
Without an agreed governing law, disputes can turn into lengthy battles over which country’s laws should apply. This not only delays resolution but also increases legal expenses. A governing law clause helps prevent these arguments, allowing the focus to be on resolving the actual issue.
4. Protects Against Unfamiliar Legal Systems
Choosing a familiar jurisdiction gives you control and minimizes the risk of facing an unfamiliar legal system, which can be complex and challenging. This is particularly important if the other party is more familiar with their local laws, potentially giving them an advantage.
5. Enhances Enforceability of the Contract
Including a governing law clause makes it more likely that your contract will be enforceable. Different countries have varying rules for contract enforcement, and selecting a reliable legal system (e.g., England and Wales) can increase the chances that the contract terms will be upheld.
6. Reduces the Risk of Forum Shopping
Without a specified jurisdiction, one party may try to initiate legal proceedings in a country where they believe they have a legal advantage (known as forum shopping). This can lead to unfair outcomes and complicate the dispute resolution process.
7. Simplifies Legal Proceedings
By agreeing in advance on which courts will hear disputes, you avoid the time and complexity of determining the right forum. This simplification can speed up the legal process and make it easier to resolve issues efficiently.
When deciding on the governing law and jurisdiction for your international collaboration, consider the following factors:
1. The Location of the Parties
The most straightforward choice is where the main parties are located. For example, if you are based in the UK and your collaborator is in the US, you would likely choose either England and Wales for your convenience and cost effectiveness, unless there is a specific reason not to.
2. Neutral Jurisdiction
In cases where the parties are from different countries and neither wants to use the other’s legal system, you can choose a neutral jurisdiction. Countries like Switzerland or Singapore are sometimes chosen because of their well-regarded legal systems and neutrality.
3. Industry Standards
Certain industries may have standard practices for choosing governing law and jurisdiction. For example, many international film production agreements use the law of California (due to Hollywood’s influence) or England and Wales (due to its strong IP laws).
To help you understand what this might look like in practice, here’s an example of a governing law and jurisdiction clause:
“This Agreement shall be governed by and construed in accordance with the laws of England and Wales. Any disputes arising from or in connection with this Agreement shall be subject to the exclusive jurisdiction of the courts of England and Wales.”
This clause makes it clear that the laws of England and Wales will apply, and any legal disputes must be resolved in the courts of England and Wales.
International collaborations offer incredible creative and business opportunities, but they also come with increased risks. By taking the time to agree on the governing law and jurisdiction at the start, you can help ensure that your project runs smoothly and any disputes are resolved fairly.
If you’re working on an international project and need help drafting an agreement or deciding on the right jurisdiction, we can assist. Let’s make sure your collaboration is set up for success, no matter where your creative partners are located.
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