{"id":1107,"date":"2026-09-30T15:26:46","date_gmt":"2026-09-30T15:26:46","guid":{"rendered":"https:\/\/cooperation.law\/?page_id=1107"},"modified":"2026-10-01T07:10:12","modified_gmt":"2026-10-01T07:10:12","slug":"across-borders","status":"publish","type":"page","link":"https:\/\/cooperation.law\/en\/across-borders","title":{"rendered":"Across borders"},"content":{"rendered":"\n

The question<\/h2>\n\n\n\n

Which law applies when the partners in a cooperation are based in different countries? And before which court or arbitral tribunal will they argue if it comes to a dispute?<\/p>\n\n\n\n

In brief<\/h2>\n\n\n\n

Some law always applies. The partners can choose it for their contract themselves; if they do not, the law determines it by fixed connecting factors, such as the place where a party is based. Consumers keep the protection of the law where they live. Separately, the partners should settle where disputes are heard, by a choice-of-court or an arbitration agreement, and which language version of the contract prevails.<\/p>\n\n\n\n

The law<\/h2>\n\n\n\n

Choice of law<\/h3>\n\n\n\n

For contractual obligations with a cross-border element, the Rome I Regulation (Regulation (EC) No 593\/2008) applies in the EU. Under Article 3 a contract is governed by the law chosen by the parties. The choice may be express or clearly demonstrated by the contract or the circumstances. It may cover only part of the contract and may be changed later. Any state’s law may be chosen, including that of a non-EU state (Article 2).<\/p>\n\n\n\n

The choice has limits. Where all elements of the situation are located in one state, that state’s mandatory rules, which cannot be contracted out of, still apply (Article 3(3)). Where they are all located in the EU, the same goes for mandatory EU law (Article 3(4)). Overriding mandatory provisions, for example of export control or competition law, apply regardless of the choice (Article 9).<\/p>\n\n\n\n

Without a choice<\/h3>\n\n\n\n

If the parties make no choice, Article 4 Rome I applies. A contract for the sale of goods is governed by the law of the seller’s habitual residence, a contract for services by that of the service provider (Article 4(1)). Otherwise the law of the habitual residence of the party performing the characteristic obligation applies, which usually means the party delivering goods or services rather than the one paying (Article 4(2)). If the contract is manifestly more closely connected with another state, that state’s law applies (Article 4(3)).<\/p>\n\n\n\n

For cooperation agreements this often leads nowhere: where both sides contribute equally, there is no characteristic performance, and the law of the closest connection (Article 4(4)) is hard to predict. Cooperations in particular should therefore choose.<\/p>\n\n\n\n

Consumers<\/h3>\n\n\n\n

Where a business that directs its activities to the consumer’s country concludes a contract with a consumer, a choice of law is permitted. It may not, however, deprive the consumer of the protection of the mandatory rules of the law of their habitual residence (Article 6(2) Rome I). In effect, whatever is more favourable to the consumer applies.<\/p>\n\n\n\n

Non-contractual obligations<\/h3>\n\n\n\n

Claims outside a contract, for instance in tort, fall under the Rome II Regulation (Regulation (EC) No 864\/2007). In principle the law of the country where the damage occurs applies (Article 4(1)). Parties pursuing a commercial activity may also choose the law in advance by a freely negotiated agreement (Article 14(1)(b)). No choice is possible for unfair competition or infringement of intellectual property (Articles 6(4), 8(3)).<\/p>\n\n\n\n

Choice of court<\/h3>\n\n\n\n

Which law applies does not yet say where disputes are heard. Under Article 25 of the Brussels Ia Regulation (Regulation (EU) No 1215\/2012), parties, wherever they are domiciled, may agree on the jurisdiction of the courts of a member state. The agreement must be in writing, oral with written confirmation, or in a form that accords with the parties’ practices or trade usage. Electronic communication providing a durable record counts as writing (Article 25(2)). The chosen jurisdiction is exclusive, so that other courts have no jurisdiction, unless agreed otherwise. Against consumers, choice-of-court agreements are effective only to a limited extent (Article 19).<\/p>\n\n\n\n

Since 1 April 2025 the German federal states have been able to set up Commercial Courts, where business disputes can also be heard in English (Sections 119b, 184a Courts Constitution Act (GVG)).<\/p>\n\n\n\n

Arbitration agreement<\/h3>\n\n\n\n

An arbitration agreement submits disputes to an arbitral tribunal (Section 1029(1) Code of Civil Procedure (ZPO)). It must be contained in a document signed by the parties or in exchanged letters or other means of communication that provide a record (Section 1031(1) ZPO). Stricter forms apply to consumers (Section 1031(5) ZPO).<\/p>\n\n\n\n

Its great advantage across borders is enforceability: under the 1958 New York Convention, awards are recognised in more than 170 states. In June 2026 the German government adopted a bill to modernise arbitration law which would, among other things, relax the form requirement and expressly provide for video hearings. The Bundesrat delivered its opinion on it on 25 September 2026.<\/p>\n\n\n\n

UN Sales Convention<\/h3>\n\n\n\n

The UN Convention on Contracts for the International Sale of Goods (CISG) has applied in Germany since 1991. It is part of German law and applies automatically where the parties have their places of business in different contracting states (Article 1(1)(a) CISG). Choosing “German law” therefore includes it. The parties may exclude it (Article 6 CISG), as often happens. Whether that is wise depends on the case: the CISG is balanced and widely known, while national law is more familiar to one’s own lawyers. As a rule it does not apply to consumer purchases (Article 2(a) CISG).<\/p>\n\n\n\n

Language of the contract<\/h3>\n\n\n\n

Where a contract exists in two languages, it should say which version prevails. Legal terms carry the meaning of their legal system with them. The German Treu und Glauben<\/em> does not map exactly onto “good faith”, and an English text governed by German law is interpreted according to German law. Before German courts the language of proceedings is, as a rule, German (Section 184 GVG).<\/p>\n\n\n\n

International communities<\/h3>\n\n\n\n

Questions of company law are excluded from Rome I (Article 1(2)(f)). For companies from EU states, freedom of establishment means the law of the state of incorporation applies (CJEU, Centros, \u00dcberseering, Inspire Art). For companies from non-EU states the Federal Court of Justice (BGH) applies the real seat theory: what counts is the law of the place of actual management (BGH, judgment of 27 October 2008, II ZR 158\/06). A non-EU company that is in fact run from Germany may thus be treated as a German partnership with personal liability.<\/p>\n\n\n\n

Online<\/h2>\n\n\n\n

Even those who work with partners in many countries purely online are, in the eyes of the law, always somewhere. The connecting factors remain the same: residence, place of business, place of damage, seat of management. Working online changes only where they point in a given case, and sometimes makes the answer harder to predict.<\/p>\n\n\n\n

One example is the seat of a community that meets only online and has no articles. Under German law the seat of a civil-law partnership (GbR) is the place where its business is actually conducted (Section 706 sentence 1 German Civil Code (BGB)). Where that is when everyone contributes from different places has not been settled. A registered GbR may choose a contractual seat in Germany (Section 706 sentence 2 BGB).<\/p>\n\n\n\n

Three clauses therefore belong in every cross-border agreement, however short: the governing law, the court or arbitral tribunal, and the prevailing language. They spare the parties the first dispute of every dispute: where, and under which law, to argue.<\/p>\n\n\n\n

Relevant phases<\/h2>\n\n\n\n