This Report addresses a subject that has never before been the sole focus of a bar association report: third-party legal opinions given by U.S. lawyers in cross-border transactions. It embodies years of work by lawyers experienced in the field.
As international transactions have become more common, requests to U.S. lawyers for cross-border opinions have increased. These opinions often raise issues that differ from those presented in purely domestic U.S. transactions, particularly when the agreement entered into by the parties chooses the law of a jurisdiction outside the United States as its governing law. These issues and other factors, such as language barriers and differences in legal systems, customs, and expectations, often make giving opinions in cross-border transactions more difficult and costly than in domestic U.S. transactions.
The recipients of cross-border opinions often are located in countries whose opinion practices are very different from those followed by U.S. lawyers. The linchpin of this Report is that the customary practice of the jurisdiction whose law is covered by an opinion letter should govern the meaning of standard language used in it and the work opinion preparers are expected to perform in preparing it.
This Report points out that some opinions that are standard in domestic U.S. transactions present challenges in a cross-border setting, and offers practical ways to address those challenges. It also analyzes special issues raised by opinions that are normally given only in cross-border transactions and suggests how they could be worded. The Report notes that sometimes legal uncertainties exist for which the parties to a cross-border transaction cannot look to a third-party legal opinion as the solution; instead those uncertainties must be dealt with by the parties in other ways with advice from their own counsel.
The purpose of this Report is to promote a better understanding of opinion practice in cross-border transactions. We hope that U.S. lawyers who give cross-border opinions and lawyers, both U.S. and non-U.S., who advise the recipients of those opinions will find this Report helpful.
Timothy G. Hoxie,
Chair, Legal Opinions Committee, ABA Business Law Section
Ettore Santucci, Reporter,
Vice Chair, Legal Opinions Committee, ABA Business Law Section
As a condition to closing financial transactions in the United States, legal counsel for one party often delivers to the other party a letter expressing counsel’s opinion on various legal issues relating to its client and the transaction. That opinion letter is commonly referred to as a “third-party closing opinion” or simply a “closing opinion.” U.S. lawyers sometimes are asked to deliver closing opinions to non-U.S. parties in similar transactions that involve both U.S. and non-U.S. parties (cross-border transactions).2 Those closing opinions, which this Report refers to as “outbound opinions” because they are given by U.S. lawyers to non-U.S. recipients on matters of U.S. law, are the subject of this Report.
In the United States opinion givers and opinion recipients share a common conceptual framework for preparing and interpreting closing opinions. U.S. customary practice3 is well established with regard to many standard opinions, and guidance on what specific opinions mean, and the work required to support them, is available in bar association reports and other materials. Applying this guidance in cross-border transactions, however, is not always straightforward, and in some cases what is appropriate in a …