Enforcing international agreements/contracts

Enforcing a contract where the parties to the contract are from different countries is very difficult. The reason is that even if you win from a legal perspective, you still need to collect damages, and in order to collect damages you probably need to file suit in the country of the other party.

In the U.S., at least, there is a strong principle of freedom of contract. If the contract states that the laws of Timbuktu control the contract, then generally U.S. courts will apply the laws of Timbuktu in addressing any breach of contract issues.

One problem you may run into, however, is that you can only sue a person in a U.S. court if that court has personal jurisdiction over the defendant. If the defendant is in Timbuktu and does very little in the U.S., then U.S. courts will probably determine that they do not have personal jurisdiction over the defendant and dismiss the suit.

Even if you get over that hurdle, and you win the lawsuit and the court says that the defendant owes you $1 million, you have to be able to collect that money from the defendant. If the defendant does not have any assets in the U.S., then the only way to collect money would be to sue the defendant in a country where the defendant has assets, and that country may not honor the judgment of the U.S. court.

In summary, if you have a contract with a party in Timbuktu and that party breaches the contract, you should just write it off and move on because the likelihood of collecting any damages is minimal.

The "International Private Law" contains rules on what happens if there is a conflict between members of two different countries. Check out the Wikipedia entry: http://en.wikipedia.org/wiki/Conflict_of_laws

You need to take into account the justice system and the associated costs of suing in the other country. When we were in the situation that we needed to sue someone from the U.S. we were surprised how expensive this is in the U.S. compared to Western Europe. If you need to be present in court, the price is even higher, you need to pay for flights to the U.S., hotels etc.

If your chances of winning the dispute are good, you can find a lawyer, who sues on your behalf on a contingency basis. This is often a better option than dropping the law suit. We have done this successfully.