Cross-Border Agreement Checklist Things to Consider When You Finalise Your Deal in Australia

If you are in the process of entering into a cross-border agreement and have chosen to settle in Australia, there are a few things you will need to take into account. While each situation is unique, there are some key factors that will be relevant in most cases. In this article, we will provide a checklist of things to consider when finalising your cross-border agreement in Australia. 

Your Structure

Consider how your operations will be organised and, more importantly, where it will be based. Another incentive is to legally optimise your tax obligations. However, the regulations that govern your operations may also be influenced by this (for things like consumer protection and employment law). You might wish to consider offshore firms not just for asset protection, but also as a means to manage the many arms of your business in different jurisdictions.

 Choice of Law

 An important part of your agreement will be to determine the appropriate choice of law. This is the law that will be used to interpret and enforce your contract (ie., the law that will apply to the substantive issues under your agreement, eg., to IP laws, privacy laws, contract laws). You may even obtain a legal opinion from a local lawyer in another country about the consequences of your agreement in their state. Otherwise, if you have any doubts about which law should apply, you should seek legal advice.

Cross-Border Intellectual Property Protections

In the case of intellectual property, remember that, whereas there are international regulations for IP protection (eg. in the case of certain patent registrations), intellectual property laws may differ by country.

Cross-Border Restraints of Trade

If your agreement is multi-jurisdictional, this may affect the range of areas in which restraints may be imposed. You might consider the appropriateness of a greater jurisdictional range on your restrictions of trade, given your agreement has already crossed borders, presumably operations may do so also.

Cross-Border Privacy Laws

Also, be aware of the many privacy and confidentiality rules that may apply across borders regarding the use of data. Each jurisdiction will have its own privacy regime like for instance the General Data Protection Regulation (GDPR) in the European Union, that may affect party rights and liabilities under your agreement.

Cross-Border Tax Liabilities

Keep an eye on the different tax rules that may apply to your contract. Consult your accountant or a tax advisor regarding taxes. You should also be aware of any possible GST implications.

International Treaties

Finally, as part of determining the choice of law, it is also important to consider whether any international conventions or treaties will be relevant. For example, the United Nations Convention on Contracts for the International Sale of Goods (CISG) is a treaty that governs the interpretation and enforcement of contracts for the sale of goods between parties from different countries. If your contract falls within the scope of the CISG, then it will be interpreted and enforced in accordance with its provisions.

Foreign Risk

If your business operations will extend into those nations under your contract, you should consider the foreign risk of doing business in those countries, and whether this needs to be accounted for in your agreements prior to execution. For instance, if there is a risk that a foreign government takes action which was not anticipated, and which the parties may dispute, then how should that risk be managed under your agreement? Having said that, the extent to which you consider such foreign risks will depend largely on the extent to which you carry out operations in that jurisdiction and interact with those foreign jurisdictions to perform your contract.

Governing Jurisdiction

Another key factor to consider is the governing jurisdiction. The governing jurisdiction will be the jurisdiction in which your agreement is interpreted and enforced. When a contract is disputed but lacks an appropriate governing law provision, it will generally result in more legal work and hearings before a judge or arbitrator to decide which country's legislation and court should apply. And, of course, by that time, each side will be defending the choice to go with the law and court that best suits them.

 Enforcement & Dispute Resolution

When you consider governing law, you should also consider enforcement options and dispute resolution. Enforcement means the option to go to a court and get orders or relief (eg., an injunction) in order to enforce the terms of your agreement. Just because your agreement is a a cross-border agreement does not mean it's unenforceable or uncommercial to consider the option to enforce it. Before claims may be properly filed, certain forums, such as the Australian Federal Court, require evidence of genuine steps taken (form 16). Arbitration is sometimes required by law. So you'll want to consult with your lawyer about your dispute resolution options, what happens in the case of a dispute, and what would work best for you in those events.

 Currency

Finally, if currency is to be transferred under the agreement, you should consider all the things that could go wrong with this. Not only should you be explicit about the appropriate currency, but you should think about how currency will be sent and received, and any liabilities that will come with that. (For instance, consider the transfer, exchange and dishonour payment fee costs that may be incurred.) Avoid holding currency in accounts in foreign jurisdictions with no protections - it's not unheard of for governments to seize currency in accounts owned by foreigners, sometimes up to tens of millions, without any recourse. Don't forget in Australia, transactions over $10,000 must be reported to AUSTRAC. What would happen if you were due to receive funds but there's a reporting issue with those funds? This is one of the many considerations that you will want to cover off when you're trading currency across borders.

If you'd like assistance with settling your cross-border agreements in Australia, please contact BlackGold Legal. 

 Author: Jamie Nuich

Sources

Federal Court of Australia, Applicant’s Genuine Steps Taken Form (Form 16).

General Data Protection Regulation (EU). 

Kerneis, P. 2021. “The Landing Zone in Trade Agreements for Cross-Border Data Flows”,  Jean Monnet Network TIISA Working Paper No.2021-12, September, 2021.

Office of the Australian Information Commissioner, 2018, Australian Entities and the General Data Protection Regulation.

Ronald A. B, 2019, “The CISG: Applicable Law and Applicable Forums Ronald A. Brand University of Pittsburgh School of Law”, University of Pittsburgh School of Law.

The Law Firm Network, 2017, “Cross-Border Contract Guide”.

United Nations Convention on Contracts for the International Sale of Goods 1988.