What is an International Confidentiality Agreement?
An international confidentiality agreement broadly refers to a legal contract that is designed to protect confidential information that is shared between parties who are located in two different countries. In a global business environment, it is increasingly necessary for businesses to develop long-term partnerships with those who may be located overseas. The process of sharing private, sensitive information with overseas companies can carry significant risk, particularly if sensitive business practice information or intellectual property are shared.
An international confidentiality agreement is often used to protect sensitive project specifications , confidential procurement information or future employment arrangements. While each agreement will vary, the confidentiality element is always expressed as an obligation on one or more parties not to use or disclose protected information to third parties. No matter where a project or business is based, effectively protecting sensitive information by using a properly drafted international confidentiality agreement can significantly reduce the risk of information being leaked.
Key Parts of an International Confidentiality Agreement Template
While there is no single international confidentiality agreement template, there are some fundamental elements that should be present regardless of the juristic and legal environment in which the parties operate. These basic elements include definitions, the obligations of the parties, the duration and jurisdiction.
First, there are certain common definitions that should be agreed to in any international confidentiality agreement template. For example, the term "confidential information" should be broadly defined and should encompass a wide range of information so long as it has been explicitly identified by the disclosing party as having value and not generally publicly known. The threshold question is whether the information is sensitive and proprietary to the disclosing party. A definition of "party" should clearly include associated companies, affiliates, subsidiaries, officers, directors, employees, agents, or other representatives who have a legitimate purpose for learning of the confidential information. Explicitly prohibiting information access by the receiving party’s former employees should also be included as an aspect of this process.
Second, international confidentiality agreement templates should discuss the obligations of the parties that stem from the use and receipt of confidential information. This generally involves a set of affirmative obligations-including how the information can and cannot be used, how it should be protected from disclosure to unauthorized persons, and how it should be returned or destroyed upon request. These affirmative obligations should be spelled out clearly so that there is no doubt among the parties about what actions are necessary to satisfy the terms of the agreement.
Third, the duration of the confidentiality agreement should be expressly laid out so that the parties know how long the obligations to protect the confidential information shall last. Generally, a reasonable period of between two and seven years is appropriate. Finally, the jurisdiction of the agreement should be provided. If possible, the parties should aim to provide for an international forum and to eliminate or reduce any substantive choice of law issues.
Domestic v International Confidentiality Agreements
International confidentiality agreements require a broader understanding of the possible legal jurisdiction and dispute resolution forums where enforcement actions would take place. Because laws in different countries vary surprisingly, an international confidentiality agreement also may require the additional flexibility of allowing alternate dispute resolution methods, such as arbitration or mediation, to take place in one agreed upon forum, such as the United States. This means that both parties to an agreement may have to agree to submit all conflicts to a single forum without pre-existing laws governing their agreement. Otherwise, if both parties reside in or do business in the same jurisdiction, they can take their dispute to court without any forum requirements.
The legal remedies for breach of contract are also different among the laws and jurisdictions of various countries. For example, some countries have no legal basis for injunctive relief, which is a primary remedy for breach of confidentiality. It is also important to keep in mind the potential effect of cultural differences on the interpretation or fiscal interpretation of certain confidentiality agreement provisions. For example, the law in some countries and cultures may regard what would be considered a trade secret in the United States in some Asian cultures as merely a competitive advantage.
There is also the problem of enforcing a judgment obtained by one party in his or her home country against a party in another country. Quite simply, the lower courts in some countries will occasionally denied enforcement of a judgment under some circumstances, and higher courts do not necessarily overturn a judgment of a lower court. In many cross-country relationships, however, there are international agreements in place to promote cooperation, such as the 2005 Hague Convention on Choice of Court Agreements, that are designed to ease such judgments.
Working With an International Confidentiality Agreement Template
When it comes to customizing a confidentiality agreement template for your specific international business needs, the process is not entirely different than it would be for a domestic agreement. However, some additional considerations must be made in the event that the agreement is to be bound by the laws of a foreign country.
The first step to follow is to ensure that you have captured all relevant information in your agreement template. This means that you should include the full names and contact information of the parties, as well as a clear definition of any terms that you will be using throughout the agreement to avoid confusion. An additional step that is relevant in the context of an international agreement is to either describe the relevant country or countries where the agreement will be in effect, or include a "territory" clause where you can specify this information.
Another important aspect of an international agreement is to specify the governing law for the agreement. In the event that there is a dispute over the agreement, the governing law is the body of law that will govern that dispute. You may also want to include a jurisdiction clause that establishes which country’s courts will hear the dispute. Many businesses will decide to allow jurisdiction in their home country.
One potential consideration when it comes to contracts that are to be governed by a foreign country’s laws is to look into whether that country enforces choice of law clauses. These clauses specify the governing law of the agreement, and some countries do not allow them. In these cases, you should consult with a lawyer about the options available to you.
If you are conducting business in a foreign country, the language of the agreement should be closely considered because if the agreement goes to court in another country, the court may only recognize a version of the agreement that is in its official language. Similarly, some courts may only recognize an agreement that is in their official currency, so it is often helpful to include the agreement amounts converted into that country’s currencies.
These are just some of the many factors that can come into play when you are modifying a confidentiality agreement for use in another country. It is best to have an experienced business attorney review your agreement before it is distributed, especially if it will be used internationally.
Legal Issues and Considerations
Using international confidentiality agreement templates can lead to significant legal issues. If you do not incorporate elements which protect the signatories according to their laws, you may be at risk. Protected Information may not be protected after the termination of the relationship. You may not have any protection if protected Information is disclosed in a manner which you have not prohibited. The Parties may not be able to rely on the International Confidentiality Agreement Template in their own respective countries’ courts of law.
In the electronic age, where information can be transmitted across borders as quickly as you can press send you also need to consider the legal consequences of data protection laws and how they apply across borders . You cannot rely on a generic statement in a confidentiality template which states that the confidentiality obligations shall apply regardless of how the protected information is transmitted. You need to consider whether the laws in either country apply if the information has been sent across an international border, to understand the impact of your confidentiality agreement.
There are also technical issues in the transmission of information which you need to consider when using an international confidentiality agreement template. How Will Protected Information be tracked? How will you know if it has been copied or has been disclosed to a third party altogether? If you do not address this in your agreement can you still enforce the confidentiality obligations?
Common Errors
With the importance of using the right international confidentiality agreement template, it is also critical to avoid common mistakes.
1 – Limit the Scope and Types of Data
It is common for a confidentiality agreement to be vague and non-specific. This increases the risk of an issue. Always ensure the confidentiality agreement is clear about the types of information being protected. It is also important to clearly define the purpose of the disclosure and the permitted uses of any confidential information.
2 – Be As Specific As Possible
While you want to ensure the description of the confidential information is specific, you also need to be sure the definition is comprehensive. Overly general definitions can cause you problems down the road. In some cases, you may even be better off eliminating this section altogether by including it within the list of examples of confidential information. This way, your agreements stand a better chance of being applicable in practice.
3 – Give a Time Limit
This is one of the most crucial elements to international confidentiality agreement templates. The agreement should clearly state how long the information needs to be kept private from other parties. Typically, confidentiality agreements last for three years, but this is flexible based on the industry. The time frame is often particularly important in fields where there is a specific time when the information is no longer considered confidential or sensitive. Without a time limit, you could be inadvertently be putting yourself at risk of the person breaching the confidentiality and using the information however they wish.
There are some instances when information doesn’t contain a definitive timeframe for confidentiality. For example, medical research results may be considered confidential until a certain amount of time passes after the medical industry addresses the study. However, these rules can vary from one court to another, and some judges have been known to subjectively decide what is reasonable and what isn’t.
4 – Consider the Parties Involved
Some people tend to use one of the international confidentiality agreement templates designed for employees to protect information belonging to a business or employer. However, the needs of an employee making disclosures and an employer are much different. Each party tends to have different rights and obligations in this regard and it is important to clearly cover them all. For instance, if you are attempting to use an agreement in place of a noncompete, it needs to be clear that the agreement is a substitute, but does not provide the same negative implications.
How to Implement a Confidentiality Agreement Internationally
Once the appropriate template agreement has been executed in the local language, then steps should be taken to support the confidentiality agreement thereafter to underpin its impact. Each organisation will need to find ways to implement the agreement at the local level, but some ideas are set out below.
Deployment and Training Organisations should consider including an explanation, translation or guidelines into their local policy for the confidentiality agreement (often this will be deployed as an attachment to the main local policy) and the policies of the wider group. The top-level documents should explain what the confidentiality agreement is, why it has been produced, when it needs to be used, and where further information or support can be obtained. Its purpose should be to help someone understand what the document is about and what they should do with it. The finer details will be in the attachments and schedules. It may be helpful to include an FAQ document.
It is good practice to then roll out a training programme to the appropriate employees so that they are aware of their obligations under the agreement. This might include training and testing on confidentiality duties, how to use the agreement, and what to do when someone wants to use it or to access confidential information. Where the agreement is applicable to a specific project, there should be training on the project and the agreement. Where an execution of a confidentiality agreement is part of local practice , it will be important to incorporate training on that practice and the agreement into on-boarding and on-going training for all relevant personnel, together with an appropriate communication plan for any changes that might occur. An appropriate system of e-archiving should also be adopted to track and record who has received copies of the policy and the agreement, as well as providing a failsafe storage process for the executed documents.
Ongoing Monitoring Perhaps the most important step in implementing the use of confidentiality agreements is to have a clear way of making sure that they are being monitored and enforced, and that there are robust procedures dealing with breaches of the agreement. In terms of detecting breaches, implementation should include clear guidelines about the risk assessment in advance of the proposed disclosure, and how to escalate the process if the risk is unacceptable. Where a confidentiality agreement has been violated, think about how the confidentiality agreement will be enforceable. For example, it may be appropriate to have a local attorney issue a letter to confirm and enforce the confidentiality obligation, or it may be that enforcement will be necessary by local courts.
Where the confidentiality agreement provides for pre-disclosure security measures to protect against the risk of unauthorised access to the confidential information, consider how those measures will be monitored, and how compliance with them will be communicated to the owner of the information. Monitoring and enforcement is a crucial step in the international implementation process.