Collaborating with partners outside Europe means partnership with companies from non-EU jurisdictions — US, UK, China, India, MENA, Latin America. At Musch Legal, we assist Dutch clients daily with cross-continental cooperation. Legal themes: choice of law, dispute resolution, IP protection, sanctions screening, FDI restrictions, bilateral investment treaties (BITs), exit mechanisms. Proper structuring is essential: without protection, you are in a weaker position than in EU cooperation.
What is the legal problem? (Which themes differ outside the EU?)
Differences outside the EU: legal systems (common law US/UK, civil law China/MENA, hybrid India), dispute settlement effectiveness (varies significantly), IP protection (weaker in many jurisdictions), FDI restrictions (China, India, MENA strict), currency restrictions (China, India), corruption risks, sanctions exposure. For JVs: local partner requirements (China-VFI, India 51% local in some sectors). For exit: more complex than in the EU. Good legal preparation is essential — not just handing over the Dutch contract to the local partner.
What does the law say? (Which frameworks apply?)
For investment protection: bilateral investment treaties (BITs) — the Netherlands has 80+ BITs (UNCTAD). BIT offers fair and equitable treatment, expropriation protection, and dispute settlement via ISDS (Investor-State Dispute Settlement). For disputes between private parties: arbitration with New York Convention execution (170+ countries). For sanctions: EU Regulation 833/2014 (Russia), 2010/204 (Iran), Sanctions Act 1977. For FDI in specific countries: local legislation (China FIL 2020, India FDI Policy, Saudi FIL). For anti-corruption OECD Anti-Bribery Convention, US FCPA, UK Bribery Act 2010.
EU FDI Screening Regulation 2019/452 for inbound investments from non-EU.
Region
Core risk
Mitigation
US
Litigation, extraterritorial sanctions
Strong contract, US counsel
China
IP, JV requirements, currency
Local BV (WFOE), SIAC arbitration
India
FDI restrictions, inertia
BIT, structuring via Singapore
MENA
Politics, sanctions exposure
DIFC/ADGM Arbitration, BIT
Latam
Political uncertainty, currency
BIT, hard currency clauses
Region
Core risk
Mitigation
US
Litigation, extraterritorial sanctions
Strong contract, US counsel
China
IP, JV requirements, currency
Local Limited Company (WFOE), SIAC arbitrage
India
FDI restrictions, inertia
BIT, structuring via Singapore
MENA
Politics, sanctions exposure
DIFC/ADGM arbitrage, BIT
Latam
Political uncertainty, currency
BIT, hard currency clauses
What risks do companies face? (What threatens without preparation?)
IP theft by local partner (especially China, India). Currency restrictions blocking dividends. Political risks: expropriation, change of policy, sanctions. Corruption exposure under the FCPA and UK Bribery Act with extraterritorial effect. For JVs: deadlocks without mechanisms. For exit: local partner can block via local court. No dispute resolution certainty without arbitration (local courts can be biased or corrupt). For financial losses without BIT protection: often no recovery possible.
Practical example from our practice (How Musch Legal structured China JV)
Musch Legal structured a JV for a Dutch mid-cap company with a Chinese partner for production and sales in China. We coordinated: 51/49 JV structure (Chinese partner with a majority for local operations, Dutch partner with a minority blocking on strategic decisions), establishment of a Wholly Foreign Owned Enterprise (WFOE) in parallel for IP stance (no IP in the JV), shareholders' agreement under Hong Kong law with SIAC arbitration in Singapore, deadlock mechanisms (Russian Roulette after escalation), currency hedging structure via Hong Kong, exit mechanisms (drag-along, tag-along, put options). No contract without a local Chinese specialist. Operational success within 18 months; exit flexibility crucial for the client.
What can you do? (Which cooperation strategy are you building?)
Conduct local due diligence: financial, legal, anti-corruption, sanctions screening. Identify BIT protection via the Dutch BIT network (UNCTAD database). Structure via stable jurisdictions where possible (Singapore, Hong Kong, Luxembourg, the Netherlands). Choose arbitration with international enforcement (ICC, SIAC, HKIAC, LCIA). Engage local counsel for regulatory aspects. Plan exit mechanisms in advance. Implement anti-corruption compliance. Engage Musch Legal for a cross-continental cooperation strategy.
International joint ventures: legal pitfalls