International Business Law Negotiating, drafting and executing international commercial contracts

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1 International Business Law Negotiating, drafting and executing international commercial contracts Professors: Emmanuel Breen Ann Y. Du Class time: Mondays from 5:30-7:30 pm, Amphi 120 and salle 345 Course aim: Introduce students to the complexities and key features of negotiating and drafting international business contracts through interactive workshops. HANDOUT N 1 Document 1 : Syllabus Week One: Introduction to international business law (review) Week Two: Introduction to international contracts Part I: Negotiating a Contract Week Three: Negotiating a Contract Pre-contract period o Letters of intent and memoranda of agreement o Preparatory contracts The ethics of negotiations o Unfair business practices o Unconscionable and unequal contracts Week Four: Types of Contracts Week Five: Typical and Model Contract Clauses Part II: Contents of a Contract Part III: Execution of a Contract Week Six: Principle of Good Faith and Contract Flexibility Principle of Good Faith o Interpretation of good faith clauses o Party practices Contract flexibility o Amending a contract o Framework contracts, administrative orders, purchase orders 1

2 Week Seven: Respect for National Law Mandatory rules and default rules Risk of penal consequences (fraud, corruption, etc.) and contract voidance Part IV: Settlement of International Commercial Disputes Week Eight: Amicable Methods for Dispute Resolution and the Jurisdiction of State Courts Determining the applicable law (review) Amicable methods for dispute resolution o o Clauses requiring parties to meet before resorting to formal processes (Escalation Clauses, Tired Dispute Resolution Clauses) Mediation and conciliation Jurisdiction of state courts o o Types of state courts and tribunals Determining the competent tribunal Week Nine: International Arbitration Arbitral procedures Consequences of arbitration Arbitration in practice Goal of promoting international investments Week Ten: International Arbitration Arbitral procedures Consequences of arbitration Arbitration in practice Goal of promoting international investments Document 2 : Selected Bibliography F. Bortolotti, Drafting and Negotiating International Commercial Contracts : a Practical Guide, ICC, 2013 R. August, D. Mayer and M. Bixby, International Business Law, Pearson, 6th ed., 2013 H. Wevers, A Basic Guide to International Business Law, Noordhoff, 2012 N. Rouiller, International Business Law, Schulthess, 2015 H. Kenfack, Droit du commerce international, Dalloz, coll. Mémentos 2

3 Document 3: The heterogeneity of International Business Law Examples of National Laws Examples of Regional and International Laws Examples of Soft Law Instruments Lex societatis French Commercial Code Delaware Company Law (USA) EU: Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company AFEP / MEDEF (French Associations of Companies), Code for Corporate Governance of Listed Companies (amended November 2015) OHADA (Organisation for the Harmonization of Business Law in Africa): Uniform Act on Corporate Law and Economic Interest Grouping (entered into force on 5 May 2014) Lex contractus French Civil Code Lebanese Securities and Contracts Code UNCITRAL (UN Commission on International Trade Law): -United Nations Convention on Contracts for the International Sale of Goods (Vienna, 11 April 1980) ( CISG ) -United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (2008, New York) ( Rotterdam Rules ) Hague Conference on Private International Law: Convention Relating to a Uniform Law on the International Sale of Goods (The Hague, 1 July 1964) CISG Article 9: (1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned. UNIDROIT: UNIDROIT Principles of International Commercial Contracts (1994, 2005, 2010) & Model Clauses for Use by Parties of the UNIDROIT Principles of International Commercial Contracts ICC (International Chamber of Commerce): Incoterm Rules, Model International Sale Contract 3

4 Commission of European Contract Law: Principles of European Contract Law Rules regarding conflict of law and choice of jurisdiction French law Algerian Civil Code EU: Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) ICC: Model International Sale Contract (A-15 Resolution of Disputes) UNIDROIT: Model Clauses for Use by Parties of the UNIDROIT Principles of International Commercial Contracts (Model Clause to be used after a dispute arises, 4.b) Mandatory laws French law: Article 3 of the French Civil Code: Statutes relating to public policy and safety are binding on all those living on the territory. Immovables are governed by French law even when owned by aliens. Statutes relating to the status and capacity of persons govern French persons, even those residing in foreign countries. OECD (Organisation for Economic Cooperation and Development): Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 17 December 1997 AU (African Union): Convention on Preventing and Combating Corruption of 11 July 2003 ICC: -ICC Rules on Combatting Corruption -ICC Antitrust Compliance Toolkit UN: -Global Compact: invites companies to respect the 10 principles covering three overarching themes (human rights law, environmental law, anticorruption law) EU: Article 21 of the 2008 Rome I Regulation on the Law Applicable to Contractual Obligations : The application of a provision of the law of any country specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum. 4

5 Document 4 : F. Bortolotti, Drafting and Negotiating International Commercial Contracts : a Practical Guide (p.11-19, extracts) In fact, one of the main difficulties for those who deal with international contracts, without having specific legal expertise in this field, is the lack of information about the rules and principles that govern cross-border contracts. Without the knowledge of a number of basic principles of international trade law, it is very difficult to understand what is going on when certain legal issues are raised and, consequently, to decide which actions should be taken. This is particularly true for traders, who can avoid a number of pitfalls if they have learned to understand some major issues in international contract law. A few examples can be helpful to support the above view. Example 1-1 Reacting to a claim brought before a foreign court Mr Francois Dubois, a French manufacturer of painted tiles, is notified by a Polish customer of a claim before the courts of Warsaw for defectiveness of the goods and pretended damages suffered by the purchaser. The exporter contacts a lawyer from the buyer s country who advises him to defend himself before the court in the customer's country. In the course of the proceedings difficulties arise. The seller knows that the alleged defects are not his responsibility, but language and communication problems make it difficult to prove his case before the court. When the court decides against the seller and awards damages to the purchaser, Mr Dubois discovers that he could have objected to the jurisdiction of the Warsaw court and that he lost that possibility by defending himself before this court without raising the exception. Comment: It is rather common that a local lawyer not specialized in international trade law - will not consider raising the question of a possible lack of jurisdiction of his country's courts. If Mr Dubois had known that under the EU jurisdiction rules (Regulation 44/2001, infra ), one must in principle, claim before the defendant's courts and that exceptions to this principle are limited, he could have insisted on this point with the local lawyer, or could have requested the advice of an expert. The above example shows how a better understanding of the basic principles of jurisdiction in the ED would have given the exporter a chance to avoid a wrong decision. Of course, the businessman will not be in a condition to verify (without the advice of a lawyer) if the jurisdiction of the foreign court can actually be avoided in the specific case, and whether this would be the most appropriate solution. But if he knows that this is a critical issue, he will be aware that the strategy proposed by the local lawyer should be verified by an expert. Example 1-2 Excluding the indemnity due to a foreign agent A foreign principal made clear, before appointing an agent in Germany, that he did not want to pay an indemnity when the contract terminated. The German agent convinced the principal to put a clause in the contract stating that German law would govern the relationship, and agreed at the same time in the contract that no compensation would be due in case of termination. The parties signed the contract on the assumption that no goodwill compensation would be due at contract termination. When the case was brought to arbitration, the arbitrator decided that, since German law was applicable, and since under German law the termination indemnity cannot be excluded contractually, the goodwill compensation was due. (ICC arbitration case No. 8161/95). 1 1 Published in ICA Bull., 2001, No. 1,

6 Comment: If the principal had been aware that one cannot exclude the application of mandatory rules of the law that governs the contract (infra, ), and that consequently the clause excluding the right to indemnity would be ineffective, he could have looked for a different solution or, if this were impossible, he could have considered the indemnity in the calculation of his costs when negotiating the contract. This second example shows how important it is for those who negotiate cross-border deals to understand the basic principles of the law of international contracts. Of course, this knowledge will not be sufficient when looking for an alternative solution, for which the assistance of a specialized lawyer will be required. But here too, the businessman will be in a far better position if he has some general ideas about the possible alternatives (choice of another law, change of the economic balance (by, for instance, reducing the commission), although he will need to verify this with the assistance of an expert. It can therefore be concluded that it is essential, especially for the non-lawyer who negotiates international contracts, to understand, even if only in general terms, the basic legaljarinciples which apply in such a context. This will allow him to avoid clearly wrong decisions and will help him identify dubious situations where he will need to seek additional advice. ( ) 1.2 INTERNATIONAL AND DOMESTIC CONTRACTS: MAIN DIFFERENCES In the case of contracts between companies from the same country (domestic contracts) the rules governing the contract are those contained in the national law of the parties and the courts having jurisdiction in case of a dispute will be those of that country. But when the contract is ''international, the situation becomes much more complicated. Which law will apply to the contract? The domestic law of one of the parties? The law of another country? International conventions? Trade usages? Transnational rules of law not belonging to a domestic legal system? Moreover, in case of a dispute, which court will have jurisdiction? The courts of the seat of the claimant? Or those of the defendant? Or an arbitral tribunal? These and other problems, which do not arise (or are less critical) in a domestic context, are typical of the issues which must be dealt with in cross-border contracts. While in domestic trade there is a clear legal framework applicable to the contract,- in international trade the rules to be applied will be different from case to case, according to the laws that have a connection to the specific case. Thus, the absence of a uniform and foreseeable legal framework makes the negotiation of international contracts considerably more complicated: when drafting a cross-border contract, a variety of alternatives must be taken into account which need not be considered within a purely domestic framework. Of course, the problem of dealing with these issues is not new; international trade has existed for centuries, and traders have always been obliged to deal with them, However, while in the past the problems had to be faced by a relatively small group of specialized undertakings involved in international trade, who had developed specific skills in the field, in recent times cross-border transactions have become the day-to-day business for a growing number of companies. This is particularly the case in the European Union, where goods and services circulate freely within a common market while the rules governing contracts are still contained in domestic laws that differ from country to country. This is why the law of international contracts has become more important, both for traders and their lawyers. 1.3 THE BASIC ISSUES: APPLICABLE LAW AND JURISDICTION As noted, the two main issues arising with respect to cross-border contracts are those regarding the applicable law and jurisdiction. These arise due to the absence of an adequate legal framework for cross-border transactions. While traders of the same country can make reference to the rules of their domestic law, 6

7 known by both of them (or at least by their lawyers), and to a court system for resolving possible disputes they are familiar with, parties from different countries cannot count upon a common legal framework. There is at present no law of cross-border contracts placed above the domestic legal systems, to be applied when a contract is international, nor is there a common judicial system for international trade as an alternative to the domestic courts. All of this gives rise to an unsatisfactory situation, which the parties try to overcome through a number of devices that characterize the law of international contracts Applicable law In principle, international contracts are governed by the domestic rules 2 (national law) of one of the countries involved. 3 Such rules - normally intended to govern domestic relations - will often be inappropriate for an international transaction: they normally reflect a local view of the relevant legal issues which does not necessarily correspond with the way the same problem is seen in the context of international commerce. Moreover, the application of a national law - which will almost always be the law of the country of one of the parties - tends to create an unbalanced situation by giving one party the advantage of applying its own rules. Finally, if the parties have not made an express choice of the applicable law in their contract, it may be difficult to foresee which law will actually apply, since the rules that determine which law is the proper law of the contract rarely provide clear and definite answers Jurisdiction In case of a dispute, the parties must in principle (unless they choose international arbitration) have recourse to the domestic courts of one of the countries involved and, if the judgment must be enforced in another country, they must obtain its recognition in that country. The courts will apply rules of procedure peculiar to their own country, which will often be surprising to a foreign party; the judges will all be nationals of the country of the court, and the only admissible language will be that of this country. All of this makes litigation more difficult and onerous, particularly for the party that needs to appear before a. foreign court; and if a party is able to bring the claim before its own courts, it will thereafter need to enforce the judgment before the courts of the other party s country, which implies a double proceeding Conclusion The above problems would not exist if there were a special legal system for international contracts with uniform rules automatically applicable to all cross-border contracts and supra-national courts having jurisdiction over cross-border disputes and whose judgments would be effective all over the world. Although businesspeople at times wrongly assume that such a supra-national legal system exists (because they cannot believe that such a logical solution has not yet been put in place), this is unfortunately not the case. As discussed later, some important attempts have been made to overcome these problems, for example by creating uniform laws on certain international contracts, 4 by facilitating the recognition and enforcement of foreign judgments 5 and especially by favouring in various ways international arbitration? 6 In any case, the above efforts are not sufficient, and the fact remains that the present 2 The possibility of applying a-national rules instead of domestic legal systems will be examined later: see Normally, the law of one of the two parties; but also other legal systems may come into consideration, for example when the contract is to be performed in a third country or where the parties have chosen the law of a third country as the applicable law. 4 Such as, for instance, the Convention on the International Sale of Goods (Vienna 1980): infra, Particularly in the European context, through the Brussels and Lugano Conventions and regulation No. 44/01: infra, Infra,

8 legal framework, based on a variety of diverging domestic systems of law, does not offer an adequate environment for international contracts, and consequently obliges traders (and their legal advisors) to look for solutions that can nevertheless provide a reasonable degree of certainty and predictability. 1.4 THE CENTRAL ROLE OF THE CONTRACT If business people engaged in international trade (and the lawyers assisting them) have been able to overcome, to a great extent, the difficulties described above, this is mainly because they have found a way to fill the gaps in the system through recourse to party autonomy, i.e., to the freedom to establish the rules governing their relations, a freedom recognized in most modern systems of law. In other words, in the absence of a uniform and foreseeable legal environment, parties tend to create such a framework by making an extensive use of their freedom of contract The various aspects of party autonomy (contractual freedom) Since the legal framework of international contracts is uncertain, parties will, as far as possible, work out contractual solutions that can increase certainty and predictability by choosing the applicable law, by determining in advance the way to solve possible disputes and by defining in detail in the contract their rights and obligations. The main aspects of party autonomy relevant for international contracts are the following: the parties can choose the domestic law (or, in certain cases, a system of a-national rules) governing their contract; the parties can decide which institution (arbitral tribunal or state court) will deal with possible disputes arising between them; the parties can determine the specific contents (clauses) of their contracts and so establish a set of rules appropriate to their needs. Through these means, the parties can overcome many of the obstacles arising from the absence of a uniform and global legal environment: they will try to submit the contract to a system of law acceptable to both of them; they will negotiate neutral solutions for solving possible disputes; they will work out contracts that reflect the standards used by business in the global market more than those typical of a specific country The parties contractual freedom is not unlimited However, the parties freedom of contract is not absolute. In all legal systems there are mandatory rules that limit the parties' autonomy in order to prevent the exercise of their contractual freedom from conflicting with other interests at stake. As discussed in detail later, a choice of law which would deprive a party of the protection granted by its domestic law may, under certain circumstances, be ineffective; or it may be that the jurisdiction of a given court cannot be lawfully excluded through the choice of other courts; or that certain contractual provisions agreed by the parties are not effective because they conflict with mandatory rules of the applicable law. Among the main issues one must consider when negotiating and drafting international contracts are precisely those regarding the use of party autonomy and its limits, which implies the need to: (1) identify the sphere within which party autonomy can be effectively exercised in the specific case when choosing the applicable law or jurisdiction and when determining the contents of the contract, and (2) identify the contractual solutions appropriate for the best protection of the interests of each party. See, infra, 2.7 where the issues regarding the effectiveness of a possible choice of the applicable law will be examined in detail. 8 This issue is not dealt with exhaustively in this book (since it would require a study of all legal systems worldwide in order to check which mandatory rules limit the parties' autonomy). I will only indicate, with respect to a number of contracts frequently used in international trade, some typical trends in domestic laws which can interfere with the parties' autonomy: see Chapter 7. 8

9 The first issue is concerned with the main points dealt with in this book, i.e the extent of the parties freedom: to choose the applicable law (see Chapter 2); to determine the jurisdiction of national courts or arbitration (see Chapters 3-5); and to identify the various limits that parties encounter when determining the contents of their contract. 11 The second issue, i.e the identification of the most appropriate contractual solutions, which combines legal and "business" considerations, will be examined in the context of the various types of contracts (Chapter 7). ( ) 1.6 MAIN ORGANIZATIONS ACTIVE IN INTERNATIONAL COMMERCIAL LAW Before approaching the specific issues regarding the negotiation and drafting of crossborder contracts, it may be useful to conclude this introductory chapter by giving a short overview of some of the main institutions active in the field of international commercial law. Considering the subject matter of this book, I will concentrate on the organizations that play a significant role in establishing legal rules applicable to international contracts The United Nations Commission on International Trade Law (UNCITRAL) The United Nations Commission on International Trade Law (UNCITRAL) was established by the General Assembly of the United Nations in The Secretariat of UNCITRAL is in Vienna, Austria, The main purpose of UNCITRAL is to reduce and remove obstacles to international trade resulting from disparities in national laws by furthering the progressive harmonization and unification of the law of international trade. UNCITRAL has played a substantial role in preparing the United Nations Convention on Contracts for the International Sale of Goods (Vienna 1980), the Convention on the Limitation Period in the International Sale of Goods (New York, 1974) and the United Nations Convention on the Carriage of Goods by Sea, 1978 (the Hamburg Rules ). UNCITRAL has also been actively involved in the field of arbitration and conciliation. In 1976, it approved the UNCITRAL Arbitration Rules, a set of rules frequently used in the context of ad hoc arbitration. A new, revised version has been published in In 1980 UNCITRAL established a set of conciliation rules for parties wishing to settle their commercial disputes amicably. Another important achievement in this field is the UNCITRAL Model Law on International Commercial Arbitration, designed to assist states in reforming and modernizing their laws on arbitral procedure to take into account the particular features and needs of International commercial arbitration. The Model Law has been enacted into law by a large number of countries. UNCITRAL is also promoting the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. UNCITRAL s other fields of activity include public procurement and /n/rastructure development, construction contracts, international payments, electronic commerce and cross-border insolvency. UNCITRAL has also established a system for collecting court decisions and arbitral awards relating to the conventions and model laws it has worked out thus facilitating the circulation of case law regarding international uniform rules The International Chamber of Commerce The International Chamber of Commerce ( founded in 1919, is the principal organization representing the interests of business worldwide. ICC plays an important role in establishing rules and standards for international trade. These rules, which have no binding force as such, have nevertheless become international standards due to their wide acceptance by the business world. They 9

10 include, for example, the following: Incoterms 2010, a set of international trade definitions (FOB, CIF, CCP etc.) which have become the standard in international trade, used all around the world; 10 The ICC Uniform Customs and Practice for Documentary Credit (UCP 600), the rules generally applied by banks dealing with documentary credits; The ICC Force Majeure Clause 2003 and the ICC Hardship Clause ICC has also drawn up and published several model contracts for use in international trade, some of which can be found in Chapter 8. ICC also offers dispute resolution services through the International Court of Arbitration ( the leading organization in the field of international commercial arbitration (see 4.2.4) The International Institute for the Unification of Private Law (UNIDROIT) The International Institute for the Unification of Private Law (UNIDROIT) is an independent intergovernmental organization with its seat in Rome. Its purpose is to study needs and methods for modernizing, harmonizing and coordinating private and commercial law between states. UNIDROIT has drawn up several international conventions establishing uniform laws of great importance for the law of international contracts, for example: The 1964 Hague conventions relating to a Uniform Law on Contracts for the International Sale of Goods and their formation. These two conventions have been the basis for the United Nations Convention on the International Sales of Goods, which has replaced them. The 1988 UNIDROIT Convention on International Financial Leasing (Ottawa). The 1988 UNIDROIT Convention on International Factoring (Ottawa). A very important achievement of UNIDROIT is the set of Principles on International Commercial Contracts (UNIDROIT Principles), a restatement" of the law on contracts, which is becoming a powerful instrument for the development of international commercial law, as we will see hereafter (infra, 2.8.2) The Hague Conference on Private International Law The Hague Conference on Private International Law is an intergovernmental organization the purpose of which is to work for the progressive unification of the rules of private international law. Its principal activity is to draft multilateral conventions in the different fields of private international law. The Hague Conference has adopted several conventions in the field of private international law. Among those of particular interest for international contracts, the following should be mentioned: The Convention of June 1955 on the Law Applicable to International Sales of Goods; The Convention of 14 March 1978 on the Law Applicable to Agency; The Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters. On June 30, 2005, the Hague Conference adopted the Convention on Choice of Court Agreements, which, if ratified by a great number of countries, is likely to become an instrument of substantial importance for facilitating international trade. The aim of the convention (which will be examined in more detail in 5.2.3) is to make exclusive choice of forum agreements as effective as possible and to warrant recognition and enforcement of judgments made by the courts agreed upon by the parties. Although the convention's scope of application is more limited than that of other conventions dealing with the recognition of foreign judgments (which conventions normally also cover the recognition of judgments in the absence of a forum selection clause), it will nevertheless fill a major 10

11 gap in international trade law by facilitating the circulation of judgments among different countries. The Hague Conference is at present working on a set of principles on the choice of law in international contracts, 12 which could become a very useful tool, especially in the context of arbitration Other organizations Finally, there are other organizations less involved in establishing rules governing international contracts, though some of them may be more important in their scope than those examined above The World Trade Organization (WTO) The World Trade Organization (WTO), established in Geneva ( administers the WTO trade agreements. The main agreement reached under the WTO regarding international contracts is the Agreement on Trade-Related Aspects of Intellectual Property Rights TRIPS, which establishes minimum levels of protection that each government has to accord the intellectual property of fellow WTO members The World Intellectual Property Organization (WIPO) The World Intellectual Property Organization (WIPO), with headquarters in Geneva (www wipo.int), is a specialized agency of the United Nations dedicated to promoting the use and protection of intellectual property rights. It administers the principal international conventions on intellectual property The United Nations Conference on Trade and Development (UNCTAD) The United Nations Conference on Trade and Development (UNCTAD) promotes the development-friendly integration of developing countries into the world economy in the fields of investment, finance, technology, enterprise development and sustainable development The International Trade Centre (ITC) The International Trade Centre (ITC), Geneva, ( is the technical cooperation agency of the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO) for operational, enterprise-oriented aspects of trade development. ITC has drafted a model contract for the international commercial sale of perishable goods and a contractual joint venture model agreement. 12 See "Consolidated version of preparatory work leading to the draft Hague Principles on the Choice of Law in Internati Contracts, preliminary document No. 1 of November 2012 drawn up by the Permanent Bureau of the Hague Confere 11

12 Document 4 : Example of a Company s model «Partner Program Agreement» Partner Program Agreement [Direct Reseller Model] between [COMPANY] and <@@ Partner Name> 12

13 CONTENTS 1. GLOSSARY SCOPE SALES TERRITORY AND MARKET SEGMENTS APPOINTMENT [COMPANY] CONTRACTING PARTIES PARTNER CONTRACTING PARTIES ASSIGNMENT AND SUBCONTRACTING RELATIONSHIP OF PARTIES NO HIRING BUSINESS ETHICS AND COMPLIANCE MATTERS TRADEMARKS AND LABELLING [COMPANY] SOFTWARE LICENCE AND DOCUMENTATION [COMPANY] PRODUCT AND PROFESSIONAL SERVICES PRICING PRICING & DISCOUNT TERMS CURRENCY PRICE ADJUSTMENTS CREDIT LIMIT ORDERING PROCEDURE PLACEMENT OF PURCHASE ORDERS ACCEPTANCE OF PURCHASE ORDERS MODIFICATION OR CANCELLATION OF PURCHASE ORDERS PURCHASE ORDER EFFECTIVE DATE PAYMENT AND INVOICING TERMS DELIVERY PROCEDURE DELIVERY TERMS INSPECTION OF DELIVERIES TESTING OF DELIVERIES TITLE STANDARD WARRANTY REGULATORY APPROVALS ENVIRONMENTAL PROVISIONS IMPORT AND EXPORT PERMITS LIABILITY CONFIDENTIALITY INTELLECTUAL PROPERTY RIGHTS USE OF CONFIDENTIAL INFORMATION AND IPR OWNERSHIP INDEMNIFICATION NOTICES AND COMMUNICATION FORCE MAJEURE TERM AND TERMINATION GENERAL TERMINATION FOR DEFAULT TERMINATION FOR INCONSISTENCY OF INTEREST EFFECTS OF TERMINATION SURVIVAL SEVERABILITY

14 29. AMENDMENTS MISCELLANEOUS PROVISIONS SETTLEMENT OF DISPUTES APPLICABLE LAW ENTIRE AGREEMENT EXHIBIT 1 SALES TERRITORY & MARKET SEGMENTS PERIMETER END-CUSTOMER EXCLUSION LIST EXHIBIT 2 END-USER SOFTWARE LICENCE AGREEMENT GENERAL TERMS RESTRICTIONS OF USE OF [COMPANY] PRODUCTS SOFTWARE LICENCE TERMS AND CONDITIONS EXHIBIT 3 CONTACT MATRIX GENERAL PARTNER SALES MANAGER STEERING COMMITTEE PURCHASE ORDER AND BILLING MAINTENANCE SERVICES SUPPORT CERTIFICATION TRAINING & ACCREDITATION SERVICES SUPPORT EXHIBIT 4 GLOSSARY OF TERMS DEFINITIONS

15 THIS PARTNER PROGRAM AGREEMENT (THE AGREEMENT ) IS MADE THE <@@ DD> of <@@ MM YY> BETWEEN: <@@ [COMPANY] >, with its registered office at <@@ full address>; (hereinafter referred to as "[COMPANY]"), <@@ PARTNER NAME>, with its registered office at <@@ full address>; (hereinafter referred to as "Partner"), [COMPANY] and the Partner are hereinafter individually referred to as a "Party" and collectively referred to as "Parties". The Parties agree to cooperate based on the following terms and conditions: 1. GLOSSARY For the purpose of the Agreement and whenever they appear in the context of the Agreement, the capitalised terms and acronyms shall have the meanings as defined in Exhibit SCOPE a. The purpose of this Agreement is to define the terms and conditions pursuant to which [COMPANY] and the Partner will co-operate - in the frame of [COMPANY] s Global Partner Program - to establish a Partner Program Relationship enabling the Partner to market and sell [COMPANY] Products/Solutions and Services to End-Customers under a direct reseller business model. b. [COMPANY] s Global Partner Program is a standardized framework of cooperation between [COMPANY] and its channel partners. The Partner Program Rules published on the Partner Portal describes the main rules of the Global Partner Program including but not limited to Accreditation Requirements, accreditation level descriptions, marketing rules, rules of sales planning and forecasting and other practical aspects of the cooperation between [COMPANY] and its partners. By signing this Agreement the Partner agrees to follow these rules of the Global Partner Program in order to benefit out of the benefits of the Program such as, but not limited to, discount structures foreseen in the Pricing Rules, [COMPANY] technical support etc.. c. The Parties agree that the Partner shall act under this Agreement as a direct reseller only which means that Partner shall market and sell [COMPANY] Products/Solutions and/or Services only to these End-Customers that are planning to buy and/or buying [COMPANY] Products/Solutions and/or Services for their own use or providing telecommunication and/or data services to its End-Customers and not with an intention to further resell it to a Third Party. For the avoidance of doubt the Parties hereby confirm that the Partner shall not establish any further resellers, distributors, dealers, agents etc. for the purpose of marketing and selling [COMPANY] Products/Solutions and/or Services. Any breach of this Article 2.c by Partner shall be considered to be a material breach of the Agreement. d. Notwithstanding the foregoing, the provisions of Article 2.c above shall not apply to an occasional sell to Contracting & Engineering Companies that resell [COMPANY] Products/Solutions and/or Services as a part of much bigger projects assuming such sell is executed on a per project basis and is not executed as a part of a long term reselling program. In case of any doubt, the provisions of Article 2.c above shall apply unless a written waiver is obtained by Partner from [COMPANY]. 3. SALES TERRITORY AND MARKET SEGMENTS a. The Partner agrees not to exercise any of the rights granted in this Agreement for any End-Customer outside the Sales Territory and Market Segments as further specified in Exhibit 1, including companies which are subsidiaries or branches of End-Customers located in the Sales Territory. 15

16 b. Notwithstanding the foregoing, in the event that opportunities arise outside the current Sales Territory and/or Market Segment, the Parties may discuss such prospect(s) and mutually agree in writing to pursue the opportunity prior to any engagement by the Partner. c. However, nothing herein contained shall restrict the Partner from making Passive Sales in member states of a Free Trade Area that incorporates the Sales Territory in which allowing for a Passive Sales is mandatory. d. The Partner is not authorized by this Agreement to sell [COMPANY] Products/Solutions and/or Services directly or indirectly to the United States Government or its agencies whether or not located in the Sales Territory. 4. APPOINTMENT a. As of the Effective Date and subject to the provisions of this Agreement, [COMPANY] appoints the Partner as a non-exclusive reseller authorized to market and resell the Products/Solutions and Professional Services and sublicense the Software to End-Customers in the Sales Territory and Market Segments, and also the right to use data and know-how made available to the Partner by [COMPANY] for purposes properly associated with such distribution. b. Nothing contained herein shall be deemed to restrict [COMPANY]'s rights to supply the Products/Solutions, Services directly to End-Customers in the Sales Territory and Market Segments nor to provide technical support to the Products/Solutions in any way in the Sales Territory and Market Segments, nor to appoint other Third Parties within the Sales Territory and Market Segments as partners or other type of resellers. 5. [COMPANY] CONTRACTING PARTIES [COMPANY] shall be entitled - upon prior notification to the Partner - to assign and/or subcontract and/or otherwise transfer its rights and obligations under this Agreement and/or any subsequent Product Purchase Order and/or Maintenance Purchase Order, in whole or in part, to any [COMPANY] Affiliate. 6. PARTNER CONTRACTING PARTIES a. Upon prior screening by [COMPANY] and at its sole discretion, [COMPANY] may agree to sell/sublicense [COMPANY] Products/Solutions and/or Professional Services to Partner s Affiliates. The Partner s Affiliate may order Products/Solutions and/or Professional Services only upon signing by all parties to it of an Adoption Agreement. b. Upon signing of the Adoption Agreement the Partner s Affiliate shall adhere to all conditions and all obligations of the Partner described in the Agreement or in any of the Purchase Orders issued by this Partner s Affiliate unless the text of the Agreement or the text of the Adoption Agreement clearly provides otherwise. The Partner shall remain jointly and severally liable for all obligations of the Partner s Affiliate under the Agreement, the Adoption Agreement and any relevant Purchase Order. a. Such Adoption Agreement may amend provisions of this Agreement by establishing specific conditions that will apply to the particular Partner s Affiliate and all its Purchase Orders. [COMPANY] s agreement in the Adoption Agreement to amend conditions of the Agreement in respect to a particular Partner s Affiliate shall not be understood and construed as a promise or agreement to apply similar terms to the Partner or any other of its existing or future Affiliates. 7. ASSIGNMENT AND SUBCONTRACTING Save as provided for in Articles 5 and 6, the Parties shall not be entitled to assign, to subcontract or otherwise transfer its rights and obligations under this Agreement and any subsequent Purchase Order, in whole or in part, to a Third Party without the prior written agreement from the other Party, such agreement not to be unreasonably withheld. Any purported assignment of rights or transfer of obligations in violation of this Article is void. 8. RELATIONSHIP OF PARTIES Either Party hereby declares and represents that they are engaged in an independent business and perform their obligations under this Agreement as independent contractors. It is understood that Partner shall buy and resell the [COMPANY] Products/Solutions and/or Professional Services in its own name and for its own account and that neither Party hereto shall be constituted as an agent or representative of the other nor shall have the power to assume or create any obligation or responsibility on behalf of or in the name of the other Party or to bind the other Party in any manner. For the avoidance of doubt, the Parties are not engaging in any joint or cooperative venture or in any partnership arrangement. 16

17 9. NO HIRING a. The Parties agree that for the duration of the Agreement, including extensions or modifications thereto, and for an additional one (1) year after expiration or termination thereof (or such shorter period as required by local law), neither Party will actively recruit, or solicit permanent employees of the other Party who are on active payroll status and are currently participating in a Partner Program Relationship, without the prior written consent of the Party whose employee is being considered for employment. b. The Parties hereby irrevocably agree that in the event of breach of Article 9.a above, the infringing Party shall pay to the other Party compensation equal to one year's salary, including related social security charges, of the employee(s) concerned. The Parties agree that the compensation payable pursuant to this paragraph is payable by way of liquidated damages and is a genuine pre-estimate of the loss likely to be suffered by the injured Party as a consequence of a breach of this Article BUSINESS ETHICS AND COMPLIANCE MATTERS a. Partner acknowledges to be fully acquainted with the Electronic Industry Code of Conduct (as updated from time to time and available at and undertakes to apply the principles set out therein with respect to the performance of this Agreement, in particular with reference to nondiscrimination of employees, combating bribery of domestic and foreign public officials, combating commercial bribery, protection of international human rights, environmental responsibility and conflict of interest. Partner recognizes that violation of such principles will be considered as a material breach of the Agreement. b. In addition, the following compliance matters shall apply: (i) (ii) (iii) (iv) (v) Partner warrants that it as well as its directors, officers, employees and shareholders, in the Sales Territory and other countries, have not been convicted of or pleaded guilty to an offence involving fraud, corruption or money-laundering and that is not now listed by any government authorities as debarred, suspended or otherwise ineligible for government procurement programs. Furthermore, Partner shall immediately inform [COMPANY] of any conviction, or investigation proceedings initiated against, of any of its directors, officers, employees and shareholders. Partner shall not offer, promise or give any undue pecuniary or other advantage to any public official for any purpose which may contravene any prevailing laws, including but not limited to those of the Sales Territory and such laws and regulations as may be enacted pursuant to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or the United Nations Convention against Corruption. The Partner shall deliver to [COMPANY] as soon as available, and in any case within one hundred and eighty (180) calendar days of the end of each fiscal year, its balance sheets as at the close of that fiscal year and its income statements for that fiscal year, prepared in accordance with generally accepted principles of good accounting practice, applied on a basis consistent with that used in preparing its audited financial statements for prior years, certified by a firm of independent accounts of international standing. Upon reasonable notice, [COMPANY] shall be given access to and have the right to audit, or to appoint an independent auditor to audit during Business Hours, Partner's files, books and records, policies, internal controls, licensing records, and trainings, to the extent they pertain to the performance of the Parties obligations under this Agreement, including but not limited to this Article 10, notwithstanding the termination or expiry date of this Agreement. Partner undertakes to retain all corresponding records for the later date of either five (5) years after the termination or expiry date of this Agreement, or the minimum period as required by the prevailing laws or regulations in the country of incorporation of Partner. Partner acknowledges that exports and re-exports of [COMPANY] Products/Solutions and Documentation, or the provision of Professional Services under this Agreement may be subject to the export regulations of France, the United States and other countries. Partner agrees not to export or re-export such [COMPANY] Products/Solutions and Documentation, or to provide Professional Services under this Agreement unless the proper export authorizations have been obtained from applicable export regulatory agencies as further stipulated in Article

18 (vi) Partner shall operate in a sustainable manner that protects the environment and the health and safety of it employees, contractors, customers and the communities where it conducts business and shall ensure that their employees or contractors engaged in field activities associated with Products and/or Services comply with the prevailing laws, including those on labour and immigration. Partner shall ensure that installation, commissioning and maintenance work is risk assessed, risk mitigation undertaken where possible, and that only trained competent persons are used to undertake the work. Safe systems of work shall be used and adequate supervision undertaken to minimise the risks of accidents. Safety performance shall be included in the Partner Program Relationship review. c. In the event [COMPANY] reasonably believes that a breach of any of the representations and warranties in this Article 10 has occurred or may occur, and provided that [COMPANY] gives to Partner prior written notification explanatory of such belief, [COMPANY] may withhold further delivery to Partner. In case Partner fails to deliver - within fifteen (15) Business Days from the date of the receipt of the notification - a confirmation to the satisfaction of [COMPANY] that no breach has occurred or will occur, [COMPANY] shall be authorized to terminate the Agreement with the Partner. [COMPANY] shall not be liable to the Partner for any claim, losses or damages whatsoever related to its decision to withhold delivery under this provision. d. Any proven violation of any of the principles indicated or referred to in this Article 10 will be considered as a material breach of the Agreement, allowing [COMPANY] to terminate the Agreement with Partner with immediate effect, without [COMPANY] incurring any liabilities in respect of such termination and without prejudice to any remedies [COMPANY] may have in law or in contract in respect of such breach. e. Within two (2) months after the signature of the Agreement, Partner s Partner Sales Manager, marketing, sales and pre-sales staff, who are engaged in the Partner Program Relationship, shall successfully complete [COMPANY] s Business Ethics & Compliance Course that is available at no cost to the Partner. Partner accepts that this training module is a required and integral part of the Certification and Accreditation Program. f. In case [COMPANY] incurs any costs and/or damages due to the violation by the Partner of the business ethics referred to in this Article 10, the Partner undertakes to fully indemnify [COMPANY] for such costs and damages incurred. 11. TRADEMARKS AND LABELLING a. The Parties are authorized to use each other's Trademarks for the sale and/or promotion of the Products/Solutions, in accordance with the terms and conditions of the Agreement. Such an authorization - which is non-exclusive and non-transferable - does not give any right to the other Party with respect to the Trademarks, but grants solely the possibility to use the Trademarks for the purpose of this Agreement. b. Unless otherwise agreed upon by the Parties in writing, the Partner shall mark and distribute the Products/Solutions - under the name and style provided by [COMPANY] - and shall not remove, alter or cover up such [COMPANY] labels and other identification as there may be on the Products including but not limited to any Trademarks, patent numbers, labels, serial numbers or the like affixed to any Product, related materials or packaging. c. The Partner recognises that the Trademarks used on or in association with the [COMPANY] Products/Solutions are the property of [COMPANY], and Partner shall take all necessary and reasonably expected steps to ensure that the property in the Trademarks shall vest in and remain vested in [COMPANY]. Partner also owns and uses its own Trademarks, and [COMPANY] shall take all necessary steps and reasonably expected to ensure that any Partner's Trademark used by [COMPANY] remain vested in the Partner. d. The Partner shall ensure that any documents received from [COMPANY] or parts thereof, [COMPANY] Trademarks or other information provided by [COMPANY] and included into a document by the Partner such as, but not limited to, catalogues, price lists or any publication issued by the Partner, shall be marked as [COMPANY] proprietary. e. Without prejudice to Article 11.b above, the Partner will from time to time advise [COMPANY] of its advertising and promotional programs related to [COMPANY] and provide copies of publicity material. Should [COMPANY] disapprove of any particular style, material or activity, the Partner agrees to respect [COMPANY] s aspirations and adopt a version acceptable to [COMPANY]. 18