Legal risks of international business are the potential financial losses arising from differing foreign regulations, unfamiliar procedural law, and cross-border obligations. At Musch Legal, we observe that entrepreneurs underestimate these risks as soon as they start exporting or establishing a foreign branch. A structured risk analysis in advance often saves hundreds of thousands of euros in claims and fines.
What is the legal problem? (What risks are involved when I export?)
International trade touches upon multiple areas of law simultaneously: contract law, IP, privacy, sanctions, tax law, and sectoral law. Different rules apply per country. What is standard under Dutch law may be void elsewhere. Without a well-considered legal structure, entrepreneurs run the risk of unexpected liability, costly litigation, and enforcement measures by foreign regulators.
What does the law say? (Which regulations apply to you?)
Within the EU, Rome I (Regulation 593/2008) and Brussels I-bis (Regulation 1215/2012) govern choice of law and choice of forum. For B2B sales, the Vienna Sales Convention (CISG) often applies. GDPR (2016/679), CSDDD (2024/1760), EUDR (2023/1115), and sanctions regulations impose additional obligations. Regulation 2021/821 applies to export controls. Under Dutch law, Books 6 and 7 of the Civil Code govern general contractual relationships; Specific sectors are subject to their own supervision.
Risk category
Example
Possible consequence
Contractual
No choice of law
Procedure under foreign law
GDPR/Privacy
Data transfer outside the EU
Fine up to 4% of worldwide turnover
Sanctions
Delivery to a sanctioned party
Criminal prosecution Sanctions Act
ESG/CSDDD
Human rights violation in the supply chain
Fine up to 5% of global turnover
IP
No trademark registration in China
Loss of trademark due to first-to-file
Risk category
Example
Possible consequence
Contractual
No choice of law
Procedure under foreign law
GDPR/Privacy
Data transfer outside the EU
Fine up to 4% of global turnover
Sanctions
Delivery to sanctioned party
Criminal prosecution Sanctions Act
ESG/CSDDD
Human rights violation in the supply chain
Fine up to 5% of global turnover
IP
No trademark registration in China
Loss of trademark due to first-to-file
What risks do companies face? (What specific damages threaten?)
Unexpected jurisdiction, higher claims, bad debts, and fines quickly amount to several percent of turnover. Reputational damage with end customers undermines long-term relationships. For SMEs, an incorrect international contract can be an existential threat. Accumulation of risks during rapid international expansion remains a major cause of loss.
Practical example from our practice (What happened to a Dutch exporter?)
Musch Legal advised a Dutch SME exporter who supplied Italian, Spanish, and German customers without well-considered choice of law and forum. In the first dispute involving 250,000 euros, the client had to litigate in Spain. Estimated costs were 180,000 euros. Upon renegotiation, we incorporated NAI arbitration, CISG exclusion, and a sanctions clause into the standard model. Subsequent disputes were settled within 12 months under Dutch law with a 70 percent recovery.
What can you do? (What steps are you taking today?)
Conduct a risk audit of your export contracts. Incorporate choice of law, choice of forum, and sanctions clauses into all contracts. Implement GDPR compliance for data transfers outside the EU. Assess CSDDD applicability for your supply chain. Register trademarks and designs in all relevant markets via the Madrid Protocol. Engage Musch Legal for an international risk framework. See also our article on The Contract Checklist for International Business.
The Contract Checklist for International Business