A multilingual contract is an agreement drafted in two or more languages. For international parties, this seems practical — both parties read in their own language. Legally, however, it is risky. Translations often deviate subtly from the original. In our practice, we have handled disputes that revolved entirely around translation differences of a single word. A well-thought-out language priority clause virtually eliminates these problems.
What is the legal problem?
Translations are never perfectly identical. Legal terms carry a different meaning in every language. "Limited liability" and "limited liability" are not exactly the same in scope. Without a language clause, you do not know which version the judge will follow. Some judges read all versions, which leads to inconsistent interpretation and unpredictable outcomes.
What does the law say?
Under Dutch law, freedom of party is the starting point: parties may choose which version is leading. Under French law, the French language is mandatory for consumer contracts and certain B2B agreements under Article 5 of the Loi Toubon (Law 94-665 of 4 August 1994). China requires a Chinese version for disputes before Chinese courts (Article 4 of the Civil Procedure Act). The Vienna Sales Convention contains no language requirement.
Internationally, the UNIDROIT Principles (Article 4.7) provide rules of interpretation for multilingual contracts: in case of doubt, the version in which the contract was originally drafted prevails. Under Dutch law, the intention of the parties carries weight under Haviltex.
What risks do companies face?
You risk a judge applying a translation that deviates from your intention. Differences in meaning can lead to the loss of a limitation of liability or confidentiality clause. In administrative proceedings or registrations, language requirements can lead to the rejection of your contract. Without a settlement clause, the judge ultimately decides, resulting in unintended outcomes.
Practical example from our practice
We advised a Dutch company with a bilingual (English/French) contract with a Belgian client without a language priority clause. In a dispute regarding a non-compete clause, the Belgian judge referred to the French version, which was broader than the English one. The client lost the case and had to pay 280,000 euros. When renegotiating contracts, we incorporated an explicit language priority clause ("the English version prevails in the event of discrepancies") and had both versions checked by legal translators.
What can you do?
Always include a language priority clause specifying which version prevails in the event of discrepancies. Have translations produced by legally trained translators. Carefully compare versions based on key terms such as liability, termination, confidentiality, and disputes. Align the leading version with the applicable law and the place of enforcement. See also our article on How to avoid unclear contracts with foreign parties?