Contracts and legal matters when trading with other countries

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Concluding a contract with someone in another country can be more complicated than drawing up a contract within Sweden. In most cases, you should enlist the help of someone who knows the rules and legal culture of the other country.

Contracts between companies 

When you conclude a contract with another company, freedom of contract applies within the framework of the legislation applicable to the contract. When you are trading with other countries, you may need to conclude different kinds of contracts. 

If you are going to conclude a contract to purchase goods, the International Sale of Goods Act may apply to the contract. It is applied by Sweden and other countries that have signed up to the United Nations Convention on Contracts for the International Sale of Goods. 

Choice of language 

A contract should be written in a language that reduces the risk of misinterpretation which may arise if there are different language versions. You should therefore choose a language in which both parties are fluent. This will often be English. If you want to translate a contract into another language, a notary public can validate the translation. A notary public is an individual appointed by the County Administrative Board. 

Dispute resolution 

When concluding different kinds of export contracts, it can be important to agree on how and where any disputes should be resolved. 

There are different forms of dispute resolution procedures, such as court proceedings, arbitration, mediation, alternative dispute resolution (ADR) and settlement negotiations. 

They all have different advantages and disadvantages. You should consult with someone who can help you choose the right form of dispute resolution and the legislation that is to apply to the contract. 

If you do not make any choices, you must follow the rules of international private law. They determine which country’s court and which country’s legislation shall be applied when a legal matter relates to more than one country. This prevents the contract parties from suing each other in their own countries and pursuing two parallel legal processes who may end in different judgments. 

Execution of judgments 

There is a big difference between disputes involving contract parties domiciled within the EU or EFTA and when one of the parties is domiciled outside the EU or EFTA area. 

The ruling of a Swedish court can be executed in another EU or EFTA country and a court ruling in another EU or EFTA country can be executed in Sweden in accordance with common EU rules. 

If a court settles a business dispute in which one of the parties is domiciled outside the EU or EFTA, the judgment can in principle only be executed in the country where the dispute is settled. 

The situation is different with arbitration. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards allows arbitration to be enforced in the 156 countries that have ratified the Convention. 

Contracts between companies and consumers 

Do you sell goods and services to private individuals through distance commerce? If so, you need to find out whether it is the Swedish consumer protection rules that apply, or the consumer protection rules in the buyer’s country. The latter can be the case if your commercial activities are directed towards that country. 

Business Sweden’s e-commerce guide provides you with information about relevant local laws and regulations in around 20 different e-commerce markets, both inside and outside the EU. 

If you are selling goods and services within the EU, EU consumer legislation applies. This gives the consumer the right to change their mind, complain about faulty goods and get a refund in the event of non-delivery. 

When you are selling goods and services to consumers or companies in the EU, you need to consider the EU’s Geoblocking Regulation. This prohibits certain types of discrimination against customers on grounds of nationality or place of residence. It also prohibits visitors from being automatically redirected to their national website.

Dispute resolution 

Within the EU, there are restrictions on the right to choose which country’s legislation is to be applied for consumer contracts. The buyer always has the right to demand that any mandatory rules on protection in the legislation of the buyer’s home country shall be applied in the event of a dispute. 

An EU consumer can request to have their case heard using alternative dispute resolution methods instead of going to court. 

Execution of judgments 

The ruling of a Swedish court can be executed in another EU or EFTA country. In precisely the same way, a court ruling in another EU or EFTA country can be executed in Sweden in accordance with common EU rules. 

Collecting payments through debt collection 

If you are not paid for goods and services that you have sold abroad, you can try to recover what is owed to you through debt collection. But it can be difficult to come to terms with the rules that apply in the other country. You should therefore contact a Swedish debt collection company.

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Responsible: Swedish Agency for Economic and Regional Growth

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