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Foreign legal opinion


A foreign legal opinion (or foreign law opinion) is an opinion of a law firm issued in cross-border commercial transactions certifying the effectiveness of the transaction under the applicable foreign law. Foreign legal opinions have become highly standardised over time, and most foreign legal opinions follow a fairly regimented format. The issuance of such opinions has become something of a sub-legal specialisation in itself, and books and articles are written on the subject of foreign legal opinions. A number of organisations issue template format opinions to indicate issues which are intended to be covered by such opinions, or standard form checklists for contents.

The original purpose of foreign legal opinion is grounded in the historical doctrine of ultra vires. The concern was that when doing business with a corporation formed in a foreign country, proper due diligence required that a legal opinion be sought to ensure that the relevant foreign company had the necessary capacity and power to enter into the transaction, and that it would be binding upon it. Over time opinions expanded to cover related aspects of foreign law, such as whether payments might be subject to exchange controls or usury laws, whether it was necessary for any of the other parties to hold any licences or permits under the regulatory laws of the foreign country, whether there would be adverse tax consequences under the laws of the foreign country, whether foreign judgments were recognised and enforced in that country other collateral matters.

During the 1970s and 1980s with the expansions in cross-border lender by financial institutions, banks became increasingly concerned to ensure that foreign companies to whom they lent money provided a foreign legal opinion certifying the legal validity of the loan transaction and the enforceability of the banks' rights (including any security interests). In time these requires came to be reflected in the Basel capital adequacy requirements for banks, resulting in different, more favourable, capital weighting for loans supported by opinions.


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