Technique of Drafting International Agreements

1. LAWPLUSLAWPLUS
www.lawplusltd.com
Technique of Drafting International Agreements
Kowit Somwaiya
Managing Partner
LawPlus Ltd., and LawPlus Myanmar Ltd.
World Business Forum
25 January 2018
Pullman Bangkok Grande Sukhumvit Hotel

2. LAWPLUS 1
• Factors of IA drafting technique
• Determining practical structure and key elements of IA
• Addressing legal and regulatory issues unique to different
jurisdictions of parties to IA
• Applying best-practice techniques in negotiating drafts of cross-
border commercial and service agreements
• Negotiating mechanism for control and management of risks and
disputes in IA
Technique of Drafting International Agreements (“IA”)

3. LAWPLUS 2
Factors of IA Drafting Technique
Important
Factors of
IA Drafting
Execution
Implementation
Assessment
Termination
Amendment
Renewal
Parties
Who is who
LDD
Advisors
Lawyers
Negotiators
MOU
LOI
TOR
Heads
Key
elements
Key
provisions
Language
Communications
Culture
Dos and Donts
Negotiations
Strategies
Logistics
Types
Forms
Objectives

4. LAWPLUS 3
Determining Practical Structures and Key Elements of IA
Practical
Structures
Key Legal Issues
- Representations
- Warranties
- Term and Termination
- Breach, default
- Dispute resolution
- Notice
- Governing law
- Force majeure
Types of Transactions
- JVA
- SPA
- Distribution
- Licensing
- Franchising
- Services
- Financing
Key Commercial Elements
- Specifications of transaction
- Delivery / performance
- Acceptance
- Payment
- Quality control
- Report and inspection
Parties to Agreement
- Two / bilateral or multiple
- National
- Legal status
- Capacity, authorization

5. LAWPLUS 4
• Establishment of JVCo (registered capital, objectives, Articles of Association,
license, permit, approval, etc.)
• Shares and payment for subscription of shares
• Conditions precedent: upon receipt of funds from the parties, fulfillment of
obligations for completion, etc.
• Relationship of shareholders, exercise of rights and voting rights of the parties
• Management of JVCo, (operation control, management control, appointment of
directors/managing director/CFO, bank mandates, quorum necessary for BOD
meeting, quorum necessary for the meetings of shareholders, matters requiring
BOD’s approval or shareholders’ approval)
• Budget and account
Key Elements of International JVA (1)

6. LAWPLUS 5
• Dividends
• Protection of Business: Non-Solicit and/or Non-Competition
• Pre-emption Rights and Share Transfers
• Intellectual Property
• Representations and Warranties
• Events of Default and Consequence of Default
• Term and Termination
• Confidentiality
• Miscellaneous Provisions: Assignment, Waiver, Entire Agreement, Notice,
Amendments, Severability, Governing Law and Jurisdiction, Arbitration
• Attachments: Articles of Association, Distribution Agreement, Trademark License
Agreement, Confidentiality Agreement, etc.
Key Elements of International JVA (2)

7. LAWPLUS 6
• Legal and regulatory issues
- “Foreigner” is defined differently in each country
- Foreign ownership limits are different
- Land ownership is prohibited in most countries
- Long-term land leases are not allowed in some countries
- Foreign exchange control is stringent in some countries
- Unilateral termination of agreement is not allowed is some countries
- Some types of services or business activities are not allowed to foreigners
• How to address legal and regulatory issues
- Obtain legal advice
- Obtain investment promotion certificate or other exemptions
- Obtain required permits and licenses
- Include required permits and licenses as conditions precedent
- Use law of third party country as governing law
- Use off-shore holding company or off-shore account
Addressing Legal and Regulatory Issues Unique to Different
Jurisdictions of Parties to IA

8. LAWPLUS 7
Applying Best-Practice Techniques in Negotiating Drafts
of International Commercial and Service Agreements (1)
Best-Practice
Techniques in
Negotiating Drafts of
International
Commercial and
Services Agreements
Know
the other
party
Use various
forms of
communications
Seek
assistance,
advice and
opinion from
lawyers and
consultants
Obtain
sufficient
information
and
documents

9. LAWPLUS 8
• Know the other party
(1) accept language and cultural differences
(2) maintain good relationship throughout negotiations
(3) negotiate with decision makers
(4) negotiate promptly and responsively
(5) make sure that all parties have same understanding of terms and conditions
Applying Best-Practice Techniques in Negotiating Drafts
of International Commercial and Service Agreements (2)

10. LAWPLUS 9
• Seek assistance, advice and opinion from lawyers and consultants
(1) comply with laws and regulations in full
(2) do not use a standard template or a one-sided template without a legal review
(3) determine negotiators and drafting lawyers at early stage
(4) determine practical agreement structure from day one
(5) focus on key terms and conditions more than on minor issues
Applying Best-Practice Techniques in Negotiating Drafts
of International Commercial and Service Agreements (3)

11. LAWPLUS 10
• Obtain sufficient information and documents
(1) make sure that you have sufficient information and documents for negotiations
(2) disclose information and documents needed for negotiations in good faith
• Use various forms of communications
(1) face-to-face meetings
(2) telephone conference call
(3) video conference calls
(4) emails
(5) social media
Applying Best-Practice Techniques in Negotiating Drafts
of International Commercial and Service Agreements (4)

12. LAWPLUS 11
• Major risks in relation to IA
- contractual risk
- legal risk
- financial risk
- operational risk
- local political risk
- geopolical risk
Negotiating Mechanism for Control and Management of
Risks and Disputes in IA (1)

13. LAWPLUS 12
• Risk control and risk management mechanisms
- allowing variation of agreement upon occurrence of material adverse changes
- limiting maximum amount of compensation and indemnity for breach
- indemnification for delay or damages caused by delaying or breaching party
- insurance, guarantee, performance bond, retention of fees
- termination of agreement for material breaches
• Dispute settlement mechanisms
- amicable negotiations
- mediation
- arbitration
- litigation
Negotiating Mechanism for Control and Management of
Risks and Disputes in IA (2)

14. LAWPLUS 13
Arbitration as dispute settlement mechanism
• Agreement must have an arbitration clause
(1) parties agree to submit dispute to arbitration
(2) arbitration tribunal appointment
(3) choice of arbitration rules
(4) venue (forum) and language
• Key advantages of international arbitration
(1) enforcement: 148 countries are signatories of the New York Convention on Recognition
and Enforcement of Foreign Arbitral Awards, which provides for recognition and
enforcement of arbitral awards, with limited grounds for challenges. Thailand is a
member state.
(2) neutrality: International arbitration allows parties to resolve their disputes in a neutral
forum.
(3) confidentiality: Parties can agree that they will have to maintain the confidentiality of the
arbitration.
Negotiating Mechanism for Control and Management of
Risks and Disputes in IA (3)

15. LAWPLUS 14
Litigation as dispute settlement mechanism
• Court of jurisdiction as agreed in the agreement
(1) country of a party
(2) third party country
(3) specialized international courts
• Governing law:
(1) substantive law of country agreed in the agreement
(2) procedural law of country where court is located
• Good points:
(1) some countries have an international trade court
(2) in some countries judgments can be appealed directly to specialized appeals court
• Weak points:
(1) local courts do not readily recognize and enforce judgments of foreign courts
(2) courts in some countries take years to give a judgment.
Negotiating Mechanism for Control and Management of
Risks and Disputes in IA (4)

16. LAWPLUS
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Tel. +66 (0)2 636 0662, Fax +66 (0)2 636 0663
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Tel. +95 9 505 6667 and Tel. +95 92 6111 7006
www.lawplusltd.com
Contacts:
Kowit Somwaiya, Managing Partner
kowit.somwaiya@lawplusltd.com
Prasantaya Bantadtan, Partner
prasantaya.bantadtan@lawplusltd.com
Naddaporn Suwanvajukkasikij, Partner
naddaporn.suwanvajukkasikij@lawplusltd.com

17. LAWPLUS
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