The Importance of Accurate Contract Translations
Your contract with your Chinese co-party is your key to a successful China venture and your lifeboat should the business relationship go awry. That being the case, I am always amazed how often people essentially ignore the translation of their contract. Inaccurate contract translations can both generate more disputes and make disputes tougher and more expensive to resolve.
Real-Life Translation Mishaps
Many years ago, the Shanghai Maritime Court heard a case that involved obvious translation goofs. “Drydocking” had been mistranslated as “tank washing”, and “domestic service” was translated as “domestic flights”, all of which a bilingual translator with any knowledge of the contract’s subject matter would have caught immediately. The frustrated judge wrote: “There are loads of translation agencies in Shanghai and in the nation, but the quality is varied and professional translators that have expertise in a particular aspect are scarce.”
My law firm’s international lawyers have certainly seen their share of translation disasters over the years. My favorite (which I see around a half dozen times a year!) is an English language contract that says “A” and a Chinese language contract that says “not A.” The Chinese language portion of the contract then makes clear that in any dispute the Chinese language version of the contract will control. The foreign party believes they signed a contract saying “A”, but in reality, they agreed to “not A.
At least a dozen times I’ve dealt with situations where a company came to us believing its China joint venture agreement required the joint venture entity use our client as its exclusive distributor of the Joint Venture’s products outside China, but the contract actually made our client the exclusive distributor of the Chinese joint venture partner’s products (not the joint venture itself). The problem was always that the Chinese company joint venture partner was not even making a product in which our client company had any interest.
Then there are the countless times a word like “must” gets changed to “may.” I once had to tell an American company that it’s multi-million case had no validity because the official version of their contract said “may” and not “must.” They were not happy.
These instances are more than just minor hiccups. They’re indicative of a pervasive problem in cross-border deals that can have severe implications.
Improper translations don’t just lead to disputes; they can result in financial losses, damaged business relationships, and even potential legal sanctions. Such mishaps not only cost money but also time, as the parties involved may have to renegotiate or even terminate their agreements.
Guidelines for Ensuring Accurate Translations
1. Identify the Importance of Your Document and Act Accordingly
Understand the gravity of your document. If it’s a high-stakes agreement like a joint venture or a fifty-million-dollar M&A deal, it demands meticulous attention to translation by a bilingual attorney you trust. If it’s to buy an $800 piece of equipment, Google Translate probably will suffice.
2. Employ the Right Drafting Process
Once your document is translated, have it reviewed by a lawyer familiar with both languages. They can point out any discrepancies or potential areas of misunderstanding. My law firm does virtually all of our translations in-house, usually with a bilingual paralegal with a final review by a bilingual attorney. We find this to be the best combination of price, efficiency, and quality.
3. Choose Clarity Versus Literalness (Sometimes)
Sometimes, a literal translation does not convey the intended meaning. Ensure your translator understands the spirit of the contract and can translate its essence without being strictly literal. This typically requires that your translator know your situation, your goals and the laws encompassed in the agreement they will be translating.
4. Maintain Regular Communication
Translation isn’t a one-off task. Maintain open channels of communication with your translator throughout the process to address doubts, provide clarifications, or make necessary adjustments. I told you about the case we could not bring because the contract clearly said “may” and not “must.” I had another case where one critical word could have been interpreted to mean either “may” or “must” and we paid a fortune to a top linguist to argue that in that particular circumstance, it “clearly” meant “must.” The other side never fully bought this argument, but it was enough to get a decent settlement, rather than just have to walk away.
Good legal translators are rare, and yet accurate translations are usually a necessity. It isn’t just about words—it’s about preserving the integrity and intent of your agreements, and ultimately, safeguarding the future of your business.
When it comes to selecting a translator for your contract, insist on experience and specialization. The best solution — by far — is a bilingual attorney who works exclusively for you on the particular project.
We welcome your best “lost in translation” horror stories.