Cross-Border M&A NDA Considerations

In cross-border M&A, the choice of governing law and dispute resolution mechanism can significantly impact enforceability, remedies available, and the overall risk profile of the NDA. Consider both commercial and practical factors.

Common Governing Law Choices

Dispute Resolution Options

• International Arbitration: Often preferred for cross-border NDAs due to enforceability under New York Convention, neutrality, and confidentiality. Common institutions include ICC, LCIA, SIAC, and HKIAC.
• Exclusive Court Jurisdiction: May be appropriate when one party has significant leverage or when interim relief is critical. Consider whether judgments will be enforceable in relevant jurisdictions.
• Hybrid Clauses: Some NDAs allow either party to seek interim relief in courts while requiring final disputes to go to arbitration.

This Agreement shall be governed by and construed in accordance with
the laws of England and Wales, without regard to its conflict of laws
principles.

Any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity or termination,
shall be referred to and finally resolved by arbitration under the
LCIA Rules, which Rules are deemed to be incorporated by reference
into this clause.

The number of arbitrators shall be one. The seat, or legal place,
of arbitration shall be London, England. The language to be used
in the arbitral proceedings shall be English.

Notwithstanding the foregoing, either party may seek interim
injunctive relief from any court of competent jurisdiction.

When M&A due diligence involves personal data of employees, customers, or other individuals, GDPR and other data protection laws impose strict requirements on how that data can be shared and processed.

Key Requirements for M&A Due Diligence

• Legal Basis: Establish a lawful basis for processing (typically legitimate interests for due diligence). Document the balancing test and consider data minimization.
• Data Minimization: Share only the personal data strictly necessary for due diligence. Use anonymization or pseudonymization where possible. Aggregate employee data rather than sharing individual records.
• Transfer Mechanisms: If transferring data outside the EEA, implement appropriate safeguards such as Standard Contractual Clauses (SCCs), adequacy decisions, or binding corporate rules.
• Data Processing Agreement: If the buyer is processing data on behalf of the seller, a DPA may be required in addition to the NDA.

Cross-Border Transfer Mechanisms

Data Protection. The parties acknowledge that Confidential Information
may include personal data as defined under applicable data protection
laws, including the General Data Protection Regulation (EU) 2016/679
("GDPR") and similar laws in other jurisdictions.

The Receiving Party agrees to:
(a) Process any personal data contained in the Confidential Information
    only for the Purpose and in accordance with applicable data
    protection laws;
(b) Implement appropriate technical and organizational measures to
    protect personal data against unauthorized or unlawful processing
    and against accidental loss, destruction, or damage;
(c) Not transfer personal data to any country outside the European
    Economic Area unless adequate safeguards are in place, including
    Standard Contractual Clauses approved by the European Commission;
(d) Promptly notify the Disclosing Party of any personal data breach
    affecting Confidential Information;
(e) Upon termination of discussions, return or securely destroy all
    personal data received, except as required by law.

The parties shall execute Standard Contractual Clauses in the form
approved by the European Commission if required for cross-border
transfers contemplated under this Agreement.

Sharing technical data and certain types of information across borders may trigger export control obligations. This is particularly critical in technology, defense, aerospace, and dual-use sectors.

Key Export Control Regimes

• US Export Administration Regulations (EAR): Controls dual-use items and technology. Even sharing technical data with foreign nationals ("deemed exports") may require a license.
• International Traffic in Arms Regulations (ITAR): Stricter controls on defense articles and technical data. ITAR-controlled information generally cannot be shared with non-US persons without authorization.
• EU Dual-Use Regulation: Controls exports of dual-use items from EU member states. Enhanced controls on cyber-surveillance technology.
• Sanctions Programs: OFAC (US), EU, and UK sanctions may prohibit transactions with certain countries, entities, or individuals. Screen all parties involved.

Due Diligence Best Practices

• Conduct early classification review to identify export-controlled information
• Screen all recipients against OFAC, EU, and other sanctions lists
• Establish "clean team" arrangements for highly sensitive information
• Consider US person-only data rooms for EAR/ITAR controlled information
• Obtain necessary export licenses before sharing controlled technical data

Export Controls and Sanctions Compliance. The Receiving Party
acknowledges that Confidential Information may be subject to export
control laws and regulations, including without limitation the Export
Administration Regulations (EAR), the International Traffic in Arms
Regulations (ITAR), and EU Dual-Use Regulation.

The Receiving Party agrees:
(a) Not to export, re-export, or transfer any Confidential Information
    in violation of applicable export control laws;
(b) Not to disclose Confidential Information to any person or entity
    that is listed on any applicable restricted or denied party list,
    including the OFAC Specially Designated Nationals List, Entity
    List, or equivalent lists maintained by other jurisdictions;
(c) To promptly notify the Disclosing Party if it becomes aware that
    any Confidential Information is or may be subject to export
    controls;
(d) To implement appropriate access controls to prevent unauthorized
    disclosure of export-controlled information to foreign nationals.

The Disclosing Party shall use reasonable efforts to identify and
mark any Confidential Information that is subject to export controls
prior to disclosure.

Cross-border NDAs often require versions in multiple languages. Careful attention to language provisions can prevent interpretation disputes and ensure enforceability.

Key Considerations

• Controlling Language: Always designate one language version as controlling in case of conflicts. English is typically preferred for international deals.
• Local Language Requirements: Some jurisdictions require contracts to be in the local language to be enforceable against local parties (e.g., certain contexts in France, Quebec, Indonesia).
• Translation Quality: Use qualified legal translators familiar with M&A terminology. Have translations reviewed by local counsel.
• Technical Terms: Some legal concepts don't translate directly. Consider including defined terms with explanations or leaving key legal terms in the original language with explanations.

Language. This Agreement is executed in the English language. Any
translation of this Agreement into another language is for convenience
only, and the English language version shall prevail in the event of
any conflict, ambiguity, or inconsistency between the English version
and any translation.

[For jurisdictions requiring local language:]

This Agreement is executed in both English and [Local Language].
Both versions are equally authentic. In the event of any conflict
between the two versions, the parties shall first attempt to resolve
such conflict through good faith negotiation. If no resolution is
reached within [30] days, the [English/Local Language] version shall
prevail, except with respect to [specific provisions governed by
local law], for which the [Local Language] version shall control.

When a transaction involves multiple entities across different jurisdictions, consider how to structure the NDA framework to provide comprehensive protection while remaining practically manageable.

Structuring Options

Key Structural Considerations

• Affiliate Coverage: Define "Affiliates" broadly to cover all related entities, and specify whether affiliates can receive Confidential Information directly or only through the signing party.
• Representative Access: Clarify which advisors (legal, financial, technical) can receive information and any nationality restrictions for export control purposes.
• Liability Allocation: Address whether each party is liable for breaches by its affiliates and representatives, and whether liability is joint and several or several only.
• Information Flow: Consider creating data room access tiers based on jurisdiction and need-to-know to manage export control and competition law concerns.

Affiliates and Representatives.

(a) For purposes of this Agreement, "Affiliate" means any entity that
    directly or indirectly controls, is controlled by, or is under
    common control with a party, where "control" means ownership of
    more than 50% of the voting securities or equivalent interests.

(b) "Representatives" means a party's and its Affiliates' directors,
    officers, employees, attorneys, accountants, financial advisors,
    consultants, and financing sources who (i) need to know the
    Confidential Information for the Purpose, and (ii) are bound by
    confidentiality obligations no less restrictive than those herein.

(c) The Receiving Party may disclose Confidential Information to its
    Representatives, provided that:
    (i)   The Receiving Party shall be responsible for any breach of
          this Agreement by its Representatives;
    (ii)  The Receiving Party maintains a list of all Representatives
          who have received Confidential Information and provides such
          list to the Disclosing Party upon request;
    (iii) Any disclosure to Representatives located outside [specified
          countries] requires prior written consent of the Disclosing
          Party.

(d) Affiliates of the Receiving Party may become parties to this
    Agreement by executing a Joinder Agreement in the form attached
    as Schedule A.

Even with a well-drafted international NDA, local counsel involvement is often essential to ensure enforceability and compliance with jurisdiction-specific requirements.

When Local Counsel is Critical

• Target Operations: Engage local counsel in each jurisdiction where the target has material operations or assets, particularly for employment, regulatory, and real estate matters.
• Regulated Industries: Sectors like financial services, healthcare, and telecommunications often have specific confidentiality requirements that local counsel can identify.
• Data Protection: Local counsel can advise on country-specific data protection requirements, transfer mechanisms, and regulatory notifications.
• Enforcement Risk: If there's meaningful risk of breach, understand local enforcement mechanisms and remedies available.

Local Counsel Coordination Tips

• Engage local counsel early, before NDAs are signed in complex jurisdictions
• Provide clear instructions on scope - don't pay for full NDA review if you only need specific issues addressed
• Ask for practical guidance, not just legal analysis - what actually happens in practice matters
• Consider using local counsel's standard NDA for purely local transactions within their jurisdiction