If you have a bilingual contract, perhaps even with contractors based in different countries, there may be confusion about the laws that will govern the whole agreement by the country. In any event, they want to avoid a situation in which one of the parties claims the applicability of its laws because it is more favourable to them or simply more familiar. A clause clarifying the situation will go a long way to avoiding this potentially stressful situation. Your client can tell you, ”I can`t read a Chinese contract. What am I going to do with it? I don`t know what I have to do. It may be quick, cheap and easy when we have a conflict in China, but it seems to me that is not the case at the moment. The simple solution is to provide your client with a translation for his own use and daily reference. Is it the same as the recommendation to include in the treaty a clause stipulating that the Chinese version of the contract is official and that the English translation applies, except in the event of a conflict? No no. The English translation is only for reference purposes – it does not even need to be made available to the other party, and it does not need to be signed by them. The mere copy of a contract means that there is only one language negotiation, a sentence negotiation and a version of the contract that could never be controversial. As a result of my article on whether it is normal to award English-language contracts in Austria, I felt that I shared some common problems that I encountered in bilingual contracts, especially when I was written by German speakers. I use this as a checklist in my own contract design process to make sure I avoid these pitfalls.
PR 63 seeks to clarify appropriate market practices by stating that the parties can agree on the dominant language in the event of a different interpretation. However, some issues remain unclear, including the extent to which the dominant language clause can be invoked in an agreement and whether a foreign investment firm (LDC) is considered an Indonesian or foreign party. In essence, Law 24 and PR 63 stipulate that a foreign language can only be used if the agreement (melibatkan) concerns a foreign party. It is not certain that a PMA PT can be considered a ”foreign party” within the meaning of Law 24 and (ii) whether the ”participation of a foreign party” can be broadly interpreted to cover a scenario in which a foreign person participates in the negotiation and preparation of the agreement (for example. B as president of the PMA PT), but is not a contracting party. With this approach, the parties will have a bilingual document containing both the Indonesian and foreign language versions that were signed at the same time. In practice, the only difference with this recommended new approach is that the Indonesian version, signed, is signed in a bilingual version (and not just in Indonesian, which is now a common practice). Unfortunately, in many situations, lawyers write these types of contracts in English with few thoughts involved in other languages in transactions. The most commonly used languages for multilingual commercial contracts are English, Chinese, Korean, German, Spanish and Russian. Sometimes lawyers think, at the last second, to add a basic language that indicates that English is the ”official language” of the contract – while acknowledging and denouncing the fact that the other party is not a native English speaker. The obvious arrogance and repulsive tone with which this clause is often formulated also undermines cordial multicultural trade negotiations. Before PR 63, where Indonesian and foreign-language versions could not be signed simultaneously, it was common practice to conclude the agreement first in the foreign language.
The Indonesian version would then be prepared and signed within an agreed time frame.