Virtualization offers several benefits for optimal resource utilization over traditional non-virtualized server farms. With improvements in internetworking technologies and increase in network bandwidth speeds, a new era of computing has been ushered in, that of grids and clouds. With several commercial cloud providers coming up, each with their own APIs, application description formats, and varying support for SLAs, vendor lock-in has become a serious issue for end users. This article attempts to describe the problem, issues, possible solutions and challenges in achieving cloud interoperability. These issues will be analyzed in the ambit of the European project Contrail that is trying to adopt open standards with available virtualization solutions to enhance users' trust in the clouds by attempting to prevent vendor lock-ins, supporting and enforcing SLAs together with adequate data protection for sensitive data.