While roaming the SEC’s EDGAR system today I happened upon the following, in a form of indemnification agreement between a company and one of its directors:
3.4 Exclusions.
Notwithstanding any other provision of this Agreement, the Company will not be obligated under this Agreement to provide indemnification in connection with the following:
…
(c) If a court of competent jurisdiction has made a final and binding judgment that the act or omission of the Indemnitee can be characterized as a result of willful misconduct (opzet), willful recklessness (bewuste roekeloosheid) or serious culpability (ernstig verwijt) under Applicable Law.
In this contract, “the Company” is Frank’s International N.V., a Netherlands company. The notion of stating legal concepts in English and Dutch seems a sensible one. Stated more generally, if an English-language contract is governed by the law of a jurisdiction where the courts use a language other than English, it might be a good idea to state hot-button terms of art in English and that other language. I assume that it would be best to state which version controls, to avoid any argument over faulty translation.
But the quoted contract is governed by Texas law, and the contract states that Texas courts have exclusive jurisdiction. So I don’t know whether the Dutch terms are relevant (and I’m not inclined to research the issue). Perhaps the terms were translated into Dutch for the benefit of Dutch executives.
I’d be interested to hear from people (including translators) who are used to dealing with transactions involving more than one language.
Suppose the Dutch terms are relevant in one legal context but not another (say battery but not breach of fiduciary duty). Probably relevant to demonstrate what the parties actually bargained for, even in Texas, no?
It’s seems like asking for trouble to invoke Dutch legal terms if the contract is governed by Texas law and any dispute would be before Texas judges.
Entirely possible that a Dutch court under certain circumstances might overrule the jurisdiction clause, and that this might have been done with that in mind?
In other (more unusual) circumstances I have seen terms of art explicitly drafted around, with alternative defined terms created, and then multi-lingual/multi-jurisdictional issues handled in the defined term. Not sure it’s an ideal solution, but may be workable in certain circumstances.
Agreed as a matter of principle. Maybe I’m less disturbed than you are because (at least in California) extrinsic evidence demonstrating a latent ambiguity is coming in anyway (i.e. declarations that these terms mean something different in Dutch legalese). At least this way the bounds of the ambiguity appear to be limited by the four corners of the contract.
Ken:
It is an odd approach. Typically, when I work with documents that need to have a translation, I will try to get the paragraphs side by side. So, in one column, there will be the English version. In the column next to it will be the Spanish or Chinese version. (Except for short documents, I’d use a table to make sure that the paragraphs lined up with each other. What a pain.) There would then be a provision saying that the non-English version is for convenience, is not to be used for interpretation, that the English version prevails, etc. But I’ve never seen one that mixes language this way.
Chris
I’ve had instances way back where we had to translate a contract into Spanish. I always put a clause in there that stated, unequivocally, that the English-language contract was the controlling document in the event of any discrepancies between the two.
It certainly looks like a convenience matter, analogous to section headings, best covered, as Chris Lemens says, by a provision concerning a drafting convention, again similar to the one used for section headings.
Chris’s language looks good: the non-English version is for convenience, is not to be used for interpretation, and the English version prevails.
Ken, I know you like few provisions concerning drafting conventions, but I forget whether you bless one that says section headings are for ease of reference only.
If you do bless such a provision, then I guess expanding it a little to cover parenthetical (or parallel) translations isn’t a big deal.
In my post I take it as a given that you’d have a provision along the lines Chris suggests. I think such provisions are way more useful provisions regarding headings, which in MSCD chapter 15 I group under “Provisions That Should Be Redundant.”
Ken, in my work I’ve often done English law concept contracts with foreign owners/concessionaires (A) and foreign contractors (B) in a country (C) where neither side has a history. Often those contracts have been based on head concession contacts with the government of country C, and our contracts are therefore required to be ‘back to back’ with the concession, which specifies the law of jurisdiction C.
We find ourselves exactly in this situation – applying the head contract concepts in a contract drafted on English/common law principles, but having to acknowledge the legal concepts applicable to country C. In those cases, we use an English language approximation of the concept, with the applicable law term in its native language – because we know that is the concept that will actually apply.
The contracts are governed by English law, but some of the legal concepts are territorial (or back to back) and just can’t be avoided. Here, the English is for convenience, and the foreign phrase sets out the law that will apply. I agree with your characterization – the foreign phrase IS actually what the parties have bargained for, even though the contract it’s in is the only contract governing the bargain between A and B.
This is useful to know. Thanks.