For foreign companies and professionals doing business in Colombia, a well-drafted commercial contract is the first line of defense against disputes, regulatory issues, and unexpected costs.

Too often, we see contracts copied from foreign templates, translated, and signed without adapting them to Colombian law. This approach can turn a “binding agreement” into a document that offers little real protection in practice.

At Colombia Legal Edge, we specialize in bridging international business expectations with local norms. We’ve chosen the five clauses that demand your close attention the most when drafting or reviewing a commercial contract in Colombia.

1. Governing Law and Jurisdiction: Who Will Resolve your Dispute?

In Colombia, parties are free to agree to apply foreign law, but if the contract is executed or performed within the country, Colombian procedural rules may still apply. This is especially important for contracts involving local suppliers, customers, or employees.

Example:
A Canadian company contracted a Colombian distributor with a governing law clause stating “Ontario, Canada.” When a dispute arose, the Colombian court accepted local jurisdiction, thus dismissing Ontario, because the performance of the contract (distribution) occurred in Colombia. The result? The case proceeded under Colombian procedural law — and the Canadian company’s carefully negotiated “foreign” protections were largely irrelevant.

CLE’s Recommendation:

• If most obligations are performed in Colombia, consider governing law that matches the jurisdiction where enforcement is most likely to occur.
• Avoid generic “exclusive jurisdiction” clauses without analysing the enforcement stage.
• Where international arbitration is preferred, ensure your clause is drafted in compliance with Colombian arbitration laws.

2. Language: Spanish is Not Optional

While you can sign a contract in English, Colombian courts operate exclusively in Spanish. Without a Spanish version, you’ll need an official translation (traducción oficial) for any legal proceedings. Although not horribly expensive, you lose the opportunity to negotiate a Spanish version, which can make or break your case.

Example:
A US-based services agreement in English was presented to a Colombian court without a Spanish version. The judge paused the proceedings until an official translation was provided — delaying the case by nearly 6 months and adding significant cost and unfavorable terms for the US company.

CLE’s Recommendation:

• Always prepare bilingual contracts (Spanish/English) when a foreign party is involved.
• Ensure both versions are signed and include a clause stating which version prevails in case of discrepancies.

3. Termination Clauses: The Cláusula Resolutoria Expresa

Colombian law recognizes the cláusula resolutoria expresa: a provision that allows termination upon a specific breach reasons without going to court. However, to be enforceable, it must be explicit, clear, and accepted by both parties in the contract.

Example:
A European company’s contract in Colombia stated it could be “terminated for breach.” When the counterparty defaulted, the company tried to terminate immediately. The court ruled the clause was too vague, forcing the parties into litigation that lasted 18 months and cost 2.5x the amount established in the contract.

CLE’s Recommendation:

• Specify precise triggers for termination (e.g., non-payment after 30 days, breach of confidentiality clause carefully drafted).
• Reference Article 1546 of the Colombian Civil Code to align with legal standards.

4. Payment Terms, Currency, and Foreign Exchange Compliance

Colombian regulations require certain cross-border payments — including payments linked to Foreign Direct Investment — to be channelled through authorised currency exchange intermediaries (canales cambiarios oficiales).

Example:
A US investor acquired shares in a private company and paid in USD directly into a personal bank account. The payment bypassed the official exchange channel, triggering an investigation by the Central Bank (Banco de la República) and causing significant tax consequences.

CLE’s Recommendation:

• Clearly state the currency of payment and compliance procedures in the contract.
• If paying in foreign currency, specify that the transaction will be channelled through authorized exchange intermediaries.
• Include a clause requiring both parties to comply with Colombian exchange control regulations.

5. Dispute Resolution: Getting It Right the First Time

Arbitration is popular in Colombia, but it must be drafted correctly to be enforceable. An invalid arbitration clause can result in disputes defaulting to local courts.

Example:
A tech company included “arbitration in Miami under ICC rules” in its Colombian contract — but failed to include formalities required by the Colombian Statute of Arbitration. The arbitration was declared invalid, forcing a long and tedious litigation in Bogotá

CLE’s Recommendation:

• If using international arbitration, specify the institution, location, applicable law, language, and procedural rules.
• Ensure compliance with Law 1563 of 2012 (Colombian Arbitration Statute) for enforceability.
• For domestic disputes, consider Colombian arbitration centres like the Bogotá Chamber of Commerce for speed and expertise.

Final Word: Contracts Are Only as Strong as Their Local Enforceability

In Colombia, the “standard” contract from your headquarters may not protect you the way you think. A Colombian commercial contract must reflect both the business deal and the local legal environment to be truly effective and save you from the real risks that may arise.

📩 If you’re entering the Colombian market or partnering with local businesses, a legal review isn’t a formality — it’s your protection against delays, disputes, and losses.

At Colombia Legal Edge, we draft and adapt contracts that protect your interests under Colombian law while meeting international standards.