International Business and Agreements: Learning about Legal Culture

Over the years I have negotiated a number of international agreements, typically representing domestic clients. My more recent work with EU-based clients, however, has given me additional insights about the U.S. and other legal systems.

These clients have established technology businesses in Europe. Each recently set up operations here in the Bay Area and asked that I adapt existing agreements for use in the U.S. As I work with these clients, two differences between the U.S. and the European Union jump out at me.

Length of Agreements

First, in the U.S. we often have longer agreements. European contracts tend to rely on, and implicitly or explicitly incorporate, detailed statutory provisions that do not exist here in the U.S. Furthermore, agreements here tend to include more business details and legal protections in case the relationship sours and ends up in litigation. For example, one client shared its existing reseller agreement. I found the document charming in its brevity and the abundance of white space on the page. By the time I added everything that is considered normal here in the U.S., the new version had four times as many words!

Still, not every agreement need take on Brobdingnagian proportions. One client’s European license agreement covered very much the same ground as license agreements here in the U.S. After I tightened and simplified it, the new version ended up 15% shorter than the original.

Protection of Data

Second, there are major differences in data protection laws. The EU takes a comprehensive approach based on the General Data Protection Regulation (GDPR).

The U.S. approach, in contrast, is both less comprehensive and more complex. At the federal level, privacy laws and regulations apply only to certain industries. For example, HIPAA (the Health Insurance Portability and Accountability Act of 1996) governs individually identifiable health information. Similarly, the Gramm-Leach-Bliley Act of 1999 (15 U.S.C. Sections 6801-6809) governs personally identifiable financial information.

In addition to national laws, states can add their own privacy requirements. For example, California’s Attorney General provides links to privacy laws and related resources at the Privacy Enforcement and Protection page. The complex interaction of federal and state laws – with federal superseding state in certain instances – sometimes makes privacy compliance here even more difficult than in the EU.

Working with these clients reminds me of a point that I have known for years: Just as a company should learn about the local human culture before doing business in a new country, it should learn about the local legal culture, too.

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.