A contract is concluded in accordance with German law and translated into English. What is the legal status of the English translation? Is the German version always prevailing and the English text is for information only when it comes to interpretation and legal assessment of the contract?

A translation becomes legally effective only if the language in question is additionally stipulated as a language of contract. If there is no clause about the languages of contract, the language to be applied (regardless of any subsequent translations) will result from the place of jurisdiction and the law applicable for the contract.
In the event that German law is applicable and no languages of contract are specified, the English translation will merely be for information purposes and not legally binding. Within the international contract law this applies mutually for cases subject to foreign law as well. It is vital to keep in mind that in the case of multiple languages of contract one of them should be given priority, guaranteeing unambiguous interpretation should any misunderstandings arise.

What needs to be taken into account to make sure a contract drafted in two different languages becomes legally binding in both countries?

For a contract written in several languages to become effective in all countries involved it is important to include specific terms and conditions. Legal terms must be selected that will make the agreement enforceable in all countries it applies for. In practice, as much as 90% of all international commercial contracts are subject to arbitration. In those cases, enforceability must be taken into consideration as well.

You will find more information on legal translation here.

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