Cross-border commercial disputes are growing in both volume and complexity, driven by global trade, geopolitics, regulation, and increasingly sophisticated contracts that span multiple jurisdictions and languages. These contracts are becoming longer, more technical, and more fragmented, creating more opportunities for interpretive gaps and linguistic ambiguity. Such ambiguity poses a significant risk for cross-border deals, as it can shift the outcome of high-value cases, change jurisdiction, and even determine whether an agreement is enforceable at all. 

Two cases in point

IBSA Institut Biochimique S.A. v. Teva Pharmaceuticals USA, Inc. was a U.S. patent case about a thyroid‑hormone formulation where a translation choice in a cross‑border filing effectively sank the patent. The patentee first filed in Italian and described the dosage form as semiliquido. When the patent was later pursued in the United States, that term was translated in the U.S. application as “half‑liquid.” In the ensuing infringement litigation against Teva, the meaning of “half‑liquid” became central: IBSA argued that a skilled person would understand it as a familiar “semi‑liquid” pharmaceutical form, while Teva argued that “half‑liquid” had no clear, established technical meaning and left the claim scope uncertain.

Both the district court and the Court of Appeals for the Federal Circuit sided with Teva, holding that “half‑liquid” was an indefinite claim term and invalidating the patent. Later attempts to introduce a more accurate certified translation of the Italian priority document, using “semi‑liquid” instead of “half‑liquid,” could not overcome the fact that the U.S. file history and granted patent used the ambiguous expression. 

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Another famous instance of ambiguity in translation with serious repercussions can be found in the high-stakes arbitration of Occidental Petroleum v. Ecuador (2012), which resulted in a massive USD 1.77 billion damages award (initially). A central issue, highlighted in the dissenting opinion of Professor Brigitte Stern, involved the translation of the Spanish term solemnidades, which played a critical role in shaping the tribunal’s conclusions on liability and quantum

In the Spanish legal documents regarding the invalidity of the contract, the term solemnidades (referring to formal, solemn legal requirements) was translated into English as “legal requirements”. Professor Stern argued that the tribunal, relying on this translation, incorrectly concluded that a breach of a general “legal requirement” (such as not obtaining government authorization for a contract assignment) resulted in the same legal consequence as failing to respect a solemnidad (a specific formal requirement that makes an act legally “inexistent”). The majority of the tribunal relied on this translation to rule that the contract transfer was “inexistent” under Ecuadorian law. Stern’s dissent pointed out that the interpretation of solemnidades as simply “legal requirements” was misleading and that a correct translation would not have supported the majority’s conclusion on the harsh penalties imposed.

Linguistic ambiguity in cross-border contracts 

Cross-border contracts sit at the intersection of different legal systems, languages, and drafting traditions, resulting in multiplied opportunities for misunderstanding. Even when parties agree on the words to be used, they may not always share a common understanding of their legal effect. Similar words such as “best efforts,” “reasonable efforts,” and “material breach” do not map neatly across legal cultures. 

Courts and tribunals will often treat a contract as ambiguous when its language is reasonably susceptible to more than one meaning, and modern cross-border agreements, layered with multiple language versions, often fit that description: vague language that may be normal in a certain jurisdiction may be dangerously indeterminate in another; structural differences in contracts – such as the common law preference for detailed, exhaustive drafting as opposed to the more concise style of civil law – can encourage overtranslation and oversimplification; and the frequent use of bilingual or multilingual versions of contracts can lead to divergences over time which may result in “dueling texts” in litigation. 

Common patterns that are susceptible to ambiguity if improperly translated include:

• Obligation vs. discretion: words like “shall” and “must” express a clear duty in English, but the closest equivalent in another language may read more like a recommendation or statement of intent. In some cases, this has led courts to treat a clause as optional in the governing language even when the translated version looked mandatory.

• Undefined or homonymous terms: words that have multiple meanings, such as “charge,” “security,” and “assignment”, often have several possible translations, and selecting the wrong one can change the nature of the right or obligation created.
• Structural inconsistencies: when the source contract is amended, but the translation is not properly updated, parties can go to litigation to establish which version reflects the relevant agreement.
• Latent ambiguity: certain phrases can become ambiguous when applied to a specific context: for example, a geographic term, a description of goods, or a method of calculation. Does “Paris” refer to the city itself or to the greater metropolitan area? Should “net revenues” be translated as “ingresos netos” in a specific context?

Specialized legal translators – who combine linguistic precision with an understanding of the relevant legal systems – reduce the risk of cross-border litigation by spotting, managing, and documenting ambiguity before it reaches a court or tribunal. Their translations function as legal instruments in their respective languages, capturing the intended meanings of the original text.