Governing law determines under which legal system a contract is interpreted, and a jurisdiction clause determines which court will handle any dispute. In trade with a foreign partner, this is one of the most important provisions, even though it receives the least attention. The difference is practical: a dispute conducted abroad under foreign law means a foreign lawyer, translations, travel, and costs many times higher, which for a smaller claim will exceed its value. An alternative is arbitration at an agreed venue, which tends to be faster and whose decision is enforceable in most countries. If the parties do not agree, jurisdiction is determined according to international rules, which need not turn out in favour of the Slovak company. The clause needs to be dealt with in the first contract, not only once a dispute arises.
See also: Due diligence on a foreign partner, Contractual penalty in business relationships, Export financing and insurance.
