Legal News

Dual-Language International Contracts Double your Disaster Chances

dual language contract law

Got an interesting email the other day regarding the language to use for a contract. It went as follows:

I was talking to someone who was bragging about how great their employment contract was. He said “my contract is in both Chinese and English, and it says that in the case of a difference in the translation, the English language version takes precedence.”
Am I the only person who sees the potential abuses of this, when given to someone who cannot read Chinese? If the Chinese language version says the opposite, he’s screwed, right?
If you choose to answer this question, please answer it on your blog as I’m sure everyone considering employment in China would like to know the answer.

The answer is yes, if the Chinese language version says the opposite of the English “he’s screwed.” And here is why. And this holds true for all contracts, not just for employment contracts.
In China, Chinese language contracts take precedence over any other language, unless the Chinese language portion of the contract specifically states that some other language controls. So if a contract is in both Chinese and English and the Chinese portion of the contract says the Chinese language controls and the English language version says English controls, the Chinese language version will control. Even if the Chinese language version is silent as to which version controls, the Chinese language version will actually control.
Chinese companies know this and they will all the time put in the English language portion of the contract that English (or both languages) control, but at the same time knowingly put in the Chinese language portion that the Chinese language portion controls. The really smart ones leave the Chinese language portion silent regarding the official contract language. Then from there they write good things for themselves in the Chinese portion.
Years ago, my firm was representing a Russian company that had an agreement with a dishonest American company (guess what people, it is not always the “foreigners” who pull this stuff). The English language version said that the English language version would control and the Russian language version said that the English and Russian versions had “equal weight.” On one critical issue, the English language version said one thing and the Russian language version said either the same thing or something else, all depending on how one interpreted the Russian version. We argued that the Russian version said “something else” and the American company argued that, no, the Russian version, “of course” said exactly the same thing as the American version. We settled before a ruling, but I was not optimistic our interpretation would carry the day even though we had an email from the American company that helped our argument.
I have written on this before but it bears repeating. If you are going to have your contract in multiple languages, make sure you know for certain which language is going to control. This means making sure you know exactly what all of the contract says, whatever the language.
Having two languages with equal weight is pretty much always the worst “solution” because all that does is increase the room for interpretation and delay if there is ever a dispute. If you end up litigating on a contract that says two languages control, you are going to be fighting off what each language says and over what the two languages mean in combo. In other words, it will be like you are litigating over three contracts and trust me when I tell you that will greatly increase your costs.
It will always be far cheaper and more sensible to get the meaning clear before signing a contract than to pay your lawyers to fight about it later.