Understanding the Difference Between Jurisdiction and Governing Law in International Contracts: How to choose the right jurisdiction in Brazil-USA contracts?

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When drafting an international contract between Brazil and the USA, one of the most important decisions is determining jurisdiction and governing law—two terms often confused but with very different impacts on your business.

Jurisdiction refers to which court will have the authority to resolve disputes arising from the contract. For example, will your case be heard in a Florida court, a São Paulo court, or through arbitration?

Governing law (or applicable law) defines which country’s laws will be used to interpret and enforce the terms of the contract, regardless of where the dispute is being resolved.

Why does it matter? Choosing the right jurisdiction and governing law can:

• Provide clarity if a dispute arises.

• Avoid conflicts of interpretation between Brazilian and American laws.

• Help in enforcing the judgment or arbitration award internationally.

  
  

Considering this, how to choose the correct jurisdiction in Brazil-USA contracts?

First, it is important to evaluate where the performance of the contract will primarily occur. After that, consider the ease of enforcing judgments in each country. Assessing the familiarity of each party with the legal system is also a relevant factor. Then, consider using arbitration clauses to ensure neutrality and enforceability. Lastly, always seek legal advice from professionals familiar with cross-border transactions.

The choice of jurisdiction and governing law should align with the commercial reality of your contract, helping you prevent costly disputes and uncertainties.

Need help drafting your Brazil-USA contract with clear jurisdiction and governing law clauses? Contact us to ensure your international agreements are secure and enforceable.