1. Why Enforcement Is the Real Cross-Border Question
Governing law, dispute forum, and enforcement abroad are three separate questions in your international contracts. Addressing them together helps you judge whether relief won in one country can be recognized or collected where the counterparty holds assets.
Arbitral Awards Travel; Court Judgments Often Do Not
Under the New York Convention, a covered arbitration award may be recognized and enforced in more than 170 contracting states, subject to the Convention's defenses and local procedure. No comparably broad convention governs ordinary US court judgments, so recognition usually depends on the enforcing country's own law and treaties. That difference is why many cross-border deals choose arbitration.
Choosing New York Law and a Neutral Seat
General Obligations Law Section 5-1401 lets parties choose New York law for many deals of at least $250,000 even without other New York ties, subject to statutory exclusions. Section 5-1402 permits an action in New York on a qualifying transaction of at least $1 million when the agreement chooses New York law, submits to New York jurisdiction, and meets the statute's other conditions. For arbitration, the seat fixes the procedural law and the supervising courts, so choose one with an established framework, such as New York, London, or Singapore.
2. Federal Rules That Restrict Cross-Border Performance
US sanctions and export controls are primarily federal matters, and they can restrict or block performance even when the contract is otherwise valid. Screen the deal for federal exposures before you sign.
- Whether the counterparties, owners, banks, or end users are sanctioned or restricted.
- Whether the goods, software, or technology need an export license.
- Whether the destination, end use, or end user triggers an embargo or license requirement.
Sanctions Screening
The Treasury's Office of Foreign Assets Control may impose civil penalties on a strict-liability basis, so a person under US jurisdiction can face liability without knowing a transaction was prohibited. Screen relevant parties against applicable OFAC lists and the 50 Percent Rule, not the SDN List alone. Add sanctions representations, notice duties, and suspension or termination rights for later changes.
Export Controls
The Commerce Department's Bureau of Industry and Security administers the EAR, while the State Department's DDTC administers the ITAR for defense articles, technical data, services, and related activities. Determine whether your item or activity falls under the export control rules, and classify it where required. Review the destination, end user, and end use, since even an EAR99 item can need a license for some users or uses.
3. Clauses That Change When a Deal Crosses Borders
Several terms that feel routine at home behave differently across borders. The table shows where a domestic assumption needs adjustment.
| Clause | Domestic assumption | Cross-border adjustment |
|---|---|---|
| Payment | US dollars, standard terms | Name the currency and who bears exchange risk |
| Force majeure and change in law | Weather or disaster | Add currency controls, sanctions, and license or law changes |
| Governing law | One state's law | Confirm it works where performance occurs |
| Sale of goods | State UCC applies | Decide whether to keep or exclude the CISG |
Currency and Payment
Exchange swings can erase a margin, so name the payment currency and allocate exchange risk directly. For higher-risk counterparties, a letter of credit or bank guarantee shifts payment risk to a bank. Address what happens if a foreign government blocks or restricts currency transfers.
4. The Cisg Default for Goods
The CISG generally applies to qualifying sales of goods between parties whose places of business are in different contracting states, unless the parties exclude it. Its scope, exclusions, and any treaty reservations still need checking for the countries involved. A general New York choice-of-law clause may not by itself exclude the Convention, so state your intent expressly.
5. Frequently Asked Questions
If our overseas contract is in two languages, which version controls?
Whichever version your controlling-language clause names, so always include one. Without it, each side can argue from its own translation, and a tribunal must decide which meaning governs. Local law may still require a certified translation or apply mandatory local-language rules.
Do US sanctions apply if the deal happens entirely overseas?
They can. OFAC restrictions commonly apply to US persons and transactions involving blocked property or the US financial system. Separately, the EAR may regulate exports, reexports, and in-country transfers of US-origin items and certain foreign-produced items. A deal is not covered simply because it is international, so identify the specific US connection.
What law governs an international sale of goods if the contract is silent?
For a qualifying sale between parties in different CISG contracting states, the Convention generally applies unless they exclude it. A general reference to a state's law may not exclude it, so state expressly whether the CISG applies. Other cases turn on the applicable choice-of-law rules.
20 Mar, 2026
