Introduction
Being well informed of the procedures and considerations on how to address international legal and ethical issues is crucial in the development of strong business relationships with foreign businesses. Many issues involved in resolving international legal disputes including selecting local counsel, full understanding of the local laws, due diligence, and the choices surrounding law and dispute resolution must be measured in order to make good choices when performing business abroad. Through the simulation, there were many factors that could work against the decision for CadMex to grant sublicensing agreements but with good understanding of the law it was a good deal for the company. Laws and customs in different countries can be conflicting, especially when businesses are managed by the government. Resolving legal disputes in international transactions
Selecting local counsel
In a business transaction, local counsel should be selected in both countries involved. This is an important step to be completely sure that all legal aspects have been covered. In the case of partnerships, both organizations should be well educated about the law related to their transaction through counseling. Selecting a law firm that has expertise in international business can be possible in most countries. One detail to consider is the fact that not all foreign lawyers follow the same standards as lawyers in the US. It is important to fill a confidentiality agreement to make sure that the information would not be divulged. The lead counsel is responsible for selecting local counsel with the expertise necessary to provide guidance and orientation to the client. Sometimes more than one firm can be needed to achieve the maximum expertise necessary for the client. The reason is that some firms are experts in an area and others in other areas. The lead counsel choose the best local counsel for the client but keeping his expertise a priority. Maximum Understanding of Local Laws
After the selection of proper local counsel, the goal is to have all the information needed regarding local business related to the transactions that are being made. Many of these laws are related to foreign exchange controls, environmental issues, required governmental consents, to name a few. This information will guide the lead counsel in how to continue with the case or how to provide advice to his client. Time is an important factor of legal counseling because some of the issues that could be addressed can have deadlines or time limits. Due Diligence
An investigation or research of the assets, operations, finances, and even policies is necessary before closing a business deal between organizations. Some lawyers have due diligence questionnaires designed to create an image of a company and its position in a market to consider the possibilities of purchase or partnership. The proficiency of the language can become an issue in multi-jurisdictional transactions where both countries have different languages. However, the documentation used in cases like this is pressed in both languages to avoid confusion. Carrying a decent process of due diligence has many advantages, if the lead counsel can read, write, and understand different languages (especially the both languages involved) has even more advantages for the client. The examination of contracts and other documents is mostly focused on the commercial terms. However other issues that could represent financial responsibilities for an organization have to be considered, for example pensions or settlements.
Choices of Law and Dispute Resolutions It is common that both clients involved in international transactions would like that their laws would be controlling every transaction that they are involved in. Hopefully the clients have lawyers who are willing to compromise and find solutions before the differences in the laws become a big issue. An example is an agreement of a Colombian publisher and a distribution company from Puerto Rico established a partnership to press local versions of a Colombian magazines portfolio. Both companies had to be aware of the local laws related to their transaction. In this case the laws from Puerto Rico will be ruling because the business is created in the island. However, intellectual property rights would be worked through the Colombian laws of copyright because the content is created in the South American country. Some contracts of international transactions can have created a customized dispute resolution system. The dispute resolution system would be the channel for claims of any kind within the life of the relationship or contract regardless of the country the business is being done. Legal action against a foreign business partner
The selection of the most adequate law clauses that parties agree to base their business on is one of the most crucial decisions in international business. In the case of CadMex and Gentura, the Candorean Regulations for Technology Import Contracts would be the best choice because it would cover both parties’ interests and Candore is not a signatory to the CISG, which is a requisite to be covered by the other option (University of Phoenix, n.d.).
In this particular issue the Candorean government and its law will prevail. Other factors that should be considered when taking legal action against foreign business partners include regulations, political and employment issues, culture and religion, and the image of the organization. All of these considerations are vital to the success of business abroad. Granting sublicensing agreements
Sublicense agreements would be the best option for CadMex during an emergency because it would avoid losses and a contract breach. Although many other factors need to be considered when making these type of agreements. The factors that could work against the company in these cases include time and cost increases, maintaining high standards of production, and make sure that these partners are capable of creating the same product in quality. The difference in the price is an issue that should be considered, not only in this case but in any case related to sublicensing because the price of generic products is significantly lower than the original’s. It may be difficult but not impossible for the company to find qualified partners. How Companies Should Handle Domestic and International Issues
During the first week readings a few cases were discussed where most organizations had a negative outcome. The fact is that domestic law has nothing to do with international law and companies should be ready to face any issue that could appear. The second week material offered more information on how to handle international issues. The forum selection is the most important thing to do when trying to avoid future conflicts of law. Litigation and arbitration are the best options for organizations involved in international disputes. Legal advice or counseling is a useful resource that could help avoid confusions and setbacks in the future; it is always better to be prepared. Conclusion
Being aware of the considerations that have to be reviewed before engaging in international business is the key to avoid problems or misunderstandings that could damage business relationships. In some cases the relationships between the countries involved could suffer damages as well. The legal aspects of business in foreign countries, the influence of politics and religion, the government regulations, and the channels and procedures that can be applied have to be considered and evaluated before making business abroad or creating a contract.
References
Melvin, S. P. (2011).
The legal environment of business: A managerial approach: Theory to practice. New York, NY: McGraw-Hill/Irwin University of Phoenix. (n.d.).
Addressing International Legal and Ethical Issues [Multimedia]. Retrieved from University of Phoenix, LAW421 – Contemporary Business Law website.