Podcast Companion — Episode 22: Governing Law

Pairs with InglésLegal Podcast, EP22

Episode 22 returns to a theme close to Episode 10, but from a drafting angle: the Governing Law clause itself — what it actually controls, and how to write one that holds up.

The Concept

A governing law clause specifies which jurisdiction’s substantive law will interpret the contract’s terms, rights, and obligations. It’s distinct from jurisdiction or venue clauses, which determine where disputes are litigated, and from arbitration clauses, which determine how they’re resolved.

Courts generally respect the parties’ choice of governing law when there’s a reasonable connection to the transaction and the choice doesn’t violate a strong public policy of the forum where enforcement is sought. Without one, courts apply their own conflict-of-laws rules to figure out which law governs — a process that adds cost, delay, and unpredictability.

Applied Example

A licensing agreement between a U.S. licensor and a Latin American licensee specifies that the contract is governed by the law of Delaware. If a dispute over royalty calculations arises, the court hearing the case — wherever that is — must apply Delaware contract law to interpret the royalty provisions, regardless of where the parties are based.

Key Expressions from This Episode

Substantive law
Meaning: the body of law that defines rights and obligations, as opposed to procedural rules.
Spanish equivalent: derecho sustantivo

Public policy exception
Meaning: a court’s power to refuse to apply a chosen law if doing so would violate a fundamental local policy.
Spanish equivalent: excepción de orden público

Silent contract
Meaning: an agreement that fails to specify governing law, leaving the question to default conflict-of-laws analysis.
Spanish equivalent: contrato silente en cuanto a la ley aplicable

Professional Tip

Draft the governing law clause as its own standalone provision, distinct from jurisdiction and dispute resolution clauses, even if they appear in the same section. Choose a law you and your client actually understand — the most “prestigious” jurisdiction isn’t useful if nobody on your team can predict how its courts would rule.

Why It Matters

A governing law clause is a substantive risk decision disguised as boilerplate. Treating it as an afterthought is one of the most common — and costly — drafting mistakes in cross-border work.

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For the full discussion, including a stand-alone governing law clause, listen to Episode 22 — Governing Law — on the InglésLegal podcast.