The Rules On The Execution Of A Contract By A Foreign Company May Not Be As Protective As You Thought

In the not too distant past, it was uncertain how a foreign company could validly execute a document governed by English law other than by its common seal. If it had no common seal, the best advice, strange as it may seem, was probably that it should use a plain wafer seal, and adopt that as its common seal for the purpose of executing the document.

That problem was dealt with by regulations first introduced in 1994, and now found in the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009, to the effect that execution can be in any manner permitted under the laws of the company's territory of incorporation. The question remains, however, when dealing with such a company, how far it was necessary to check what those laws actually permit. A case reported last year, but initially rather overlooked, shows that this issue has not gone away.1

The question was whether the signature of a single officer (prokurist) of a Swiss incorporated company could bind it to a supply contract, when under Swiss law the signatures of two such officers were required "to create rights and obligations on behalf of the company by their signature". The court held that this was a matter for the company's constitution, as broadly interpreted, and was not governed by the Rome I Regulation2,but by common law conflict of law principles. These meant that the issue was governed by Swiss law, and that the single signature did not bind the company to the contract. The 2009 Regulations did not save the contract because it could not be said, as they require, that the contract "purported to be signed" by a person who, in accordance with Swiss law, was acting under the authority (express or implied) of the...