Practical consequences of the choice of language in a contract | In Principle

The choice of the language used in a contract is of great importance for interpreting the intention of the parties as expressed in the agreement.

Apart from certain limitations e.g. in the Polish Language Act and the Public Procurement Law, Polish law does not impose restrictions on the language in which a contract is made. The choice of language (or languages) of a contract thus rests with the parties, and the freedom of the parties in this respect is interpreted broadly. The parties to a contract are not even required to use a language commonly spoken in everyday life, but may, for example, enter into a contract in a dead language (e.g. Latin) or an artificial language (e.g. Esperanto).

In order to make a binding contract in writing, it is sufficient to draw up the contract in any language chosen by the parties and then for the parties to sign the text. In practice, however, when the parties do not speak the same primary language, they often prepare documents in the languages of each of the parties.

According to the case law of the Supreme Court of Poland, the text of a contract, interpreted in accordance with linguistic rules, constitutes the basis for assigning the meaning to the text that it has in the given language. The parties should understand the text of the contract in a manner consistent with the rules of syntax and meaning of the language in which the document is written.

If a contract is made in more than one language, and the meaning of specific provisions is different in each of the languages, an issue of contractual interpretation is presented. The correct translation of one language version of a contract into another generates numerous difficulties in practice, and major contractual disputes may turn on subtle differences in linguistic meaning. In such situations, a proper understanding of the contract requires not only discerning the meaning of specific provisions under the rules of one language, but also reconciling the results of this interpretation with the results of the interpretation in the other language.

A practical solution to this problem that is typically used in contracts to avoid doubts in interpretation in the case of a discrepancy between the language versions of the contract is to specify that one version will be controlling.

If the controlling version of the contract is a non-Polish version, there are significant practical consequences in the event of a dispute. Pursuant to Art. 256 of the Civil Procedure Code, if the parties submit a dispute to a Polish court arising out of a contract whose controlling version is in a foreign language, the court may require that the contract be translated into Polish by a sworn translator. Creation of such a translation may give rise, in turn, to discrepancies between the sworn translation of the controlling foreign language version and the original Polish version of the same contract.

Significant problems in interpretation may also arise when the parties failed to identify in the contract which version was controlling. In that case, each version of the contract ranks equally and should be reflected in the process of interpreting its provisions, in order to decode the intention of the parties as memorialised in the document.

It is accepted in the jurisprudence that in order to resolve discrepancies between different language versions of the same contract, determining the language in which the contract was originally made is of primary importance. To this end, it should be determined, for example, which language the negotiations were conducted in and which version of the contract served as the basis for preparing a subsequent translation into the other version.

In practice, particularly in the case of negotiation of M&A transactions, the work is often conducted simultaneously in two or more languages, making it impossible to identify a single baseline language version of the document. In such a case, it would appear to best serve the purposes of the parties to determine which of the equally valid language versions was of predominant importance at the time of drafting.

Maciej Szewczyk, Mergers & Acquisitions Practice, Wardyński & Partners