If English law governs contract, are parties necessarily required to comply with UK law?

[mommybunny]

I feel I'm losing my mind in a contract I'm negotiating and would like a sense check.

I am representing a client in a Southeast Asian country who is looking to enter into a business relationship with a UK entity. The agreement is governed by "English law". The UK entity is seeking to impose obligations on my client to comply with certain UK laws regarding money laundering, modern slavery and tax evasion. The obligation is phrased in such a way that the client has to comply with the specified legislation. The client does not have an in-house legal department to keep on top of the legislation.

While I am happy for my client to agree that it will comply with specified policies of its UK counterpart, i.e., actions it must and must not take in furtherance of these compliance aims, and also that it will comply absolutely with analogous legislation in its home country, I do not see why the client should give a blanket warranty of compliance with foreign laws. The UK counterpart has argued that because the contract is "subject to UK law" (their words), the client is already deemed to be on notice of these laws and any updates, and will not amend the obligation.

That's nonsense, isn't it? The parties have merely elected that English contract law governs their agreement - compliance with legislation is a completely separate matter to be agreed by the parties, isn't it? They basically can't be bothered to update their policies as and when legislation/interpretation changes, and so want to put the burden on my client to stay on top of them.

Am I missing something? It worries me because the UK entity is represented by a big-name London firm.

No that's bollocks, assuming I am understanding you correctly. I would take the same approach as you - no blanket agreement to comply with a load of legislation (on the basis that this simply isn't possible for your client).

My only cautionary note is that this may genuinely be a deal breaker for them - their procurement policy may well be quite strict on this point.

Thanks splendide. As I said, I'm happy for my client to comply with a written policy of the UK entity that gets the undertakings they need - and they can duplicate the legislation word for word for all I care. I just don't see how/why my client should bear the burden of being up to date with the legislation when the compliance burden is actually the UK entity's.

I've worked in banks' legal departments and seen their compliance policies for their employees. They are always very specific about actions employees may and may not take and wouldn't dream of relying on a vague "must comply with legislation" for their own protection. Why should this be any different?

The Bribery Act is just like this I'm afraid.

Did you sort it?

Don't most UK firms dealing with suppliers abroad specify things like - no child labour, minimum wages etc and have their own staff check for compliance on a regular basis?