International Contract Jurisdiction & Arbitration: A Guide for Cross-Border Businesses

Introduction

When a Belgian freelancer sells software to a French client, or a Dutch SME supplies components to a Spanish manufacturer, the contract is the safety net. But what happens when payment is delayed or the product doesn't meet expectations? Without a clear jurisdiction or arbitration clause, you could find yourself defending a lawsuit in a foreign court, applying unfamiliar law, and paying costs that dwarf the original contract value.

Common mistakes we see at Akordans:

"We'll sort it out if it happens" – no clause at all.
Copy-pasting a forum selection clause from an old contract without checking compatibility.
Mixing "exclusive jurisdiction of the courts of England" with "arbitration under ICC Rules" in the same agreement.

These errors create expensive ambiguity. This guide explains how governing law, forum selection, and arbitration work in cross-border contracts, and gives you practical steps to protect your business.

Governing Law & Forum Selection

What's the difference?

Governing law – the legal system that will interpret the contract (e.g., "this contract shall be governed by Swiss law").
Forum selection – where disputes will be heard (e.g., "exclusive jurisdiction of the courts of Amsterdam").

You can pick the law of one country and the courts of another, but mixing them adds cost and complexity. Courts apply foreign law less fluently, increasing legal fees.

Typical choices for European SMEs

English law – widely used for international trade; predictable, flexible, and pro-contractual freedom. But English court litigation is expensive, and post-Brexit, enforcing judgments in EU states requires additional steps.
EU Member State laws – French, German, Dutch, Belgian, Spanish law are common. They are familiar to local parties and benefit from the Brussels I-bis Regulation (Regulation 1215/2012).
Swiss law – neutral and well-regarded for commercial contracts, especially when neither party wants the other's home law.

Forum selection under EU rules

For disputes within the EU, Brussels I-bis determines jurisdiction:

Default: courts of the defendant's domicile.
But parties can agree on an exclusive jurisdiction clause (e.g., "courts of Paris"). That choice overrides the default, provided the clause is clear.
For consumers or small businesses, some protections may limit enforcement of jurisdiction clauses.

Outside the EU, the Hague Choice of Court Convention (for non-EU states that signed) may apply. Always specify the forum in writing.

Practical takeaway

Choose a governing law that aligns with your contract's language and the most likely dispute venue. If you regularly trade with French clients, French law + French courts may be simplest. If you trade across multiple countries, a neutral law (Swiss) + arbitration might be safer.

Arbitration Overview

When is arbitration better than litigation?

Arbitration is a private dispute resolution process. It's preferable when:

Enforceability matters – arbitration awards can be enforced in 172 countries under the New York Convention (1958). Court judgments cross borders only with bilateral treaties or EU regs.
Confidentiality – court hearings are public; arbitration is private.
Neutrality – each party fears the other's home court.
Expertise – you can choose arbitrators with industry knowledge.

Major arbitration institutions

ICC (International Chamber of Commerce) – premium, well-established. Costs can be high.
WIPO – specialised for IP/tech disputes.
UNCITRAL Rules – ad-hoc (no administering body) but widely accepted.
LCIA (London), SCC (Stockholm), VIAC (Vienna) – regional options.

Costs and speed

Arbitration is not cheap – ICC filing fees plus arbitrator fees easily reach €25,000+ for a €200,000 claim. But it can be faster than national courts (12–18 months vs 2–4 years). For smaller disputes, consider expedited rules.

The New York Convention – why it matters

An arbitration award rendered in, say, Belgium can be recognised and enforced in Brazil, China, nearly everywhere. Court judgments require a separate enforcement action, often with grounds for refusal. This makes arbitration the gold standard for cross-border disputes.

Important nuance: seat vs. venue

The seat of arbitration determines the procedural law and which courts can supervise (e.g., set-aside applications). Venue is just a physical location. Always state the seat clearly (e.g., "Paris, France").

Drafting Common Mistakes

1. Conflicting clauses

"Any dispute shall be finally settled by arbitration under the ICC Rules. The courts of London shall have exclusive jurisdiction." This is a contradiction – which route applies? Courts usually resolve the ambiguity, but at great cost. Solution: pick one path: litigation or arbitration, never both.

2. Vague language

"Disputes arising out of this contract shall be resolved by arbitration." – Which institution? Which seat?
"The governing law is that of the United Kingdom." – England? Scotland? Northern Ireland?

Solution: be specific: "The seat of arbitration shall be Geneva, Switzerland, and the arbitration shall be conducted in English under the ICC Rules."

3. Omitting the seat of arbitration

Without a seat, a party may apply to multiple courts for interim measures, creating chaos. The seat defines the "curial law" – it should be a country with a modern arbitration act (e.g., Switzerland, England, the Netherlands, France).

4. No appeal/review mechanism

In arbitration, appeals on the merits are extremely limited. If you need a safety valve, consider ICC's Optional Appellate Arbitration or agree on a clause allowing an appeal to a second arbitration tribunal. Rare, but sometimes wise.

5. Ignoring mandatory rules

Even if you choose Swiss law, a Belgian court may apply mandatory Belgian consumer protection rules if the contract involves a consumer. Tip: for B2B SME contracts, this is less of an issue, but be aware of public policy exceptions.

6. Not updating after Brexit

Contracts written before 2021 may still refer to "EU law" or "courts of an EU Member State." Review and update for Hague Choice of Court Convention or arbitration.

Catch these drafting mistakes before signing – our Contract Review service (€19) scans your contract for conflicting clauses, vagueness, and missing seat details. Need a full redraft? Use Contract Negotiation (€79) to get a custom jurisdiction or arbitration clause tailored to your cross-border deal.

Akordans Escalation Path

At Akordans, we believe in preventing disputes before they happen. Here's how our services fit into your contract lifecycle:

Before signing – worried about jurisdiction, arbitration, or other clauses? Our contract-review service (€19) identifies mistakes and suggests improvements.
During negotiation – if your counterpart pushes back on dispute resolution terms, our contract-negotiation service (€79) redrafts the clause to protect your interests while keeping the deal alive.
After a dispute arises – if a disagreement has already occurred, our case-assessment (€29) gives you a clear opinion on your legal position, enforceability of your clause, and best next steps.

We serve SMEs and freelancers across BE, NL, FR, ES, IE, UK – making cross-border contracts safe and simple.

FAQ

Can I change jurisdiction after signing? Yes, but only if both parties agree in writing. If a dispute has already started, the court or tribunal may need to approve. Better to get it right upfront.

Is English law always safer for non-English parties? Not always. English law is well-developed but litigating in English courts post-Brexit requires separate enforcement of judgments. For intra-EU contracts, a neutral EU law (e.g., Swiss) may be simpler.

Do arbitration awards hold up internationally? Yes, thanks to the New York Convention. Over 170 countries recognise and enforce awards, with very limited grounds for refusal (e.g., public policy). Court judgments have no such global reach.

What happens if my contract has no jurisdiction clause? Without a clause, the default EU rule (defendant's domicile) applies. You could be sued in the other party's country, under their law. That's expensive and uncertain.

Should I always choose my home country's law? Only if you typically sue at home and have more bargaining power. Otherwise, you may scare off partners. A neutral law (e.g., Swiss) is often a fair compromise.

Can I have arbitration with no institutional rules? Yes, but it's risky. Ad-hoc arbitration relies entirely on the parties' agreement. Without a framework, disputes over arbitrator appointment or procedure can stall the process. Use institutional rules unless you have a good reason not to.

This article provides general information and does not constitute legal advice. For your specific contract, consult a qualified professional or use Akordans' review services.