Professional language translation and court interpretation services play an important role in private international law. The questions is, under the umbrella of private international law, how are cross-border mergers and stock swaps viewed? In an international M&A, corporation X acquires the assets of or shares in corporation Y. In return, Y receives either shares in X or money. This entire process is governed by internal procedures, guided in some way by generally accepted rules and regulations known as private international law. According to private international law, the theory of conflict of laws applies, meaning the contract between X and Y is regulated by the rules and regulations of the jurisdiction in which the contract was entered. However, according to internal procedures, X’s actions would fall under the laws of the jurisdiction where it is incorporated and Y where it is incorporated.
Clearly, this lays the groundwork for a potential conflict, as shareholders from either X or Y would want to have assurance that they are not being disadvantaged by a foreign jurisdiction. For this reason, it is essential that prior to the M&A, X and Y negotiate a mutually agreeable contract as to controlling jurisdiction, which in some cases may be split between different issues or put in a neutral location. Needless to say, when this is done with a foreign corporation or in a foreign jurisdiction, it is essential that the contract have a foreign language translation.
Up Next: Professional Translation Services, International Estate Planning and Tax Considerations