Glossary
An agreement between two states establishing protections for foreign investors, including rights to fair treatment and compensation for expropriation.
Choice of Law and Jurisdiction
from International Transactions
Every cross-border contract must specify its governing law (the legal system that determines the parties' rights and obligations) and the mechanism for resolving disputes (court litigation or arbitration, and where). English law is the most widely chosen governing law for international commercial contracts, thanks to its well-developed body of case law, certainty, and the expertise of the English courts. The choice is governed by common law principles in the UK and the Rome I Regulation (retained in modified form post-Brexit). Jurisdiction clauses determine which courts can hear a dispute, and their enforceability depends on the specific rules of the relevant legal systems. Getting these clauses right at the drafting stage prevents enormously expensive satellite litigation later.
Recent Trends
from International Transactions
De-globalisation — or, more precisely, the reorganisation of global trade along geopolitical lines — is reshaping cross-border commercial activity. Concepts like friend-shoring (relocating supply chains to allied countries) and near-shoring (moving operations closer to home) reflect a shift from pure cost efficiency towards resilience and political alignment. Bilateral investment treaty (BIT) arbitration, where foreign investors bring claims against host states for expropriation or unfair treatment, has grown steadily — often involving claims worth billions. The proliferation of foreign direct investment screening regimes across the G7 means that cross-border deals increasingly face government review on national security grounds, adding time and uncertainty to transaction timetables.
Governing Law
The legal system chosen by the parties to determine their contractual rights and obligations — English law is the most common choice for international commercial contracts.
Jurisdiction Clause
A contractual provision specifying which courts have the power to hear disputes arising from the agreement.
Sanctions
Restrictions imposed by governments on trade, financial transactions, or dealings with specific countries, entities, or individuals for foreign policy or security reasons.
Export Controls
Laws restricting the export of military, dual-use, and sensitive goods and technology to certain destinations or end-users.
ISDS (Investor-State Dispute Settlement)
The arbitration mechanism through which foreign investors bring claims against host states under bilateral or multilateral investment treaties.
Transfer Pricing
The rules governing how transactions between related entities in different jurisdictions are priced, designed to prevent profit shifting to low-tax jurisdictions.
Force Majeure
A contractual clause excusing performance when extraordinary events beyond the parties' control (war, natural disaster, pandemic) make it impossible or impracticable.