A foreign governing-law clause can materially affect an engineer’s Professional Indemnity exposure.
Before accepting the contract, check:
- which country’s law governs the agreement
- where disputes can be heard
- whether arbitration is required and where it will take place
- whether the PI policy covers claims in that jurisdiction
- whether the contract imposes liabilities broader than would usually apply under Australian law
A contract can be governed by foreign law even where the engineer performs all work from Australia.
This matters because the policy may contain jurisdictional restrictions, and the legal costs, procedure and potential liabilities can differ significantly from Australia.
The insurer should be told about material foreign-law contracts before they are signed where the exposure falls outside the firm’s normal activities.
Insurance review and legal contract review address different issues. Confirmation that the policy can respond does not mean the contractual terms themselves are acceptable.
