In the world of international business, it is not uncommon for companies to enter into agreements with entities in different countries. In such cases, the question often arises as to whether an agreement can have two governing laws. The short answer is yes, it can.
To understand how this is possible, it is important to first understand what is meant by the governing law of an agreement. The governing law is the law that will be used to interpret and enforce the terms of the agreement. In most cases, the governing law is the law of the country where the agreement was formed or where the parties involved are based.
However, in certain situations, it may be advantageous or necessary to have more than one governing law. For example, if a company based in the United States enters into an agreement with a company based in China, both parties may want the agreement to be governed by the laws of their respective countries. This can help ensure that both parties are protected by the legal systems in their home countries.
To make an agreement subject to two governing laws, the parties involved will typically include a choice of law clause in the agreement. This clause will specify which laws will be used to interpret and enforce the agreement. For example, the clause might state that the agreement will be governed by the laws of both the United States and China.
It is important to note that having two governing laws can also create some complications. If the laws of the two countries are in conflict, it may be difficult to determine which law should take precedence. Additionally, enforcement of the agreement may be more difficult if the parties need to go to court in two different countries.
Overall, the decision to have an agreement subject to two governing laws should be made carefully and with the advice of legal counsel. If done properly, however, it can help ensure that both parties are protected by the legal systems in their home countries.