Legal and Ethical Issues

592 words | 2 page(s)

Anytime a company chooses to do business overseas, it invites a tremendous amount of uncertainty and even more difficulty. There are many legal issues that come into play when working through these transactions. Perhaps most importantly, legal disputes in the international realm involve questions of choice of law. Which country’s law will govern the dispute? Likewise, venue is a concern, as choosing a place to resolve the dispute can be a major problem. In many cases, these transactions are resolved through binding international arbitration, but that brings into play questions of whether various courts around the world will honor or enforce any judgment gained in an arbitration setting.

There are practical issues to work through, as well, when one tries to deal with international transactions. If one wants to take action against an international business partner, one will be forced to confront the reality of costs. Taking legal action in a single country against a domestic partner is already quite exhausting for a budget. Going abroad requires extensive legal expertise from an international lawyer, raising the costs even more. In addition, it requires tremendous costs if the matter ever gets to a trial or arbitration hearing. Depending on the venue, there can be direct financial costs and also time costs associated with playing out the hearing to its logical end.

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Likewise, there are certain customs that a businessperson would need to consider before bringing an international action against a partner. Different countries have vastly different ways of dealing with disputes between partners, and any smart businessperson would want to understand these customs in order to predict the potential outcome of a lawsuit against a business partner. Likewise, a businessperson looking to do business with future international partners may run into trouble. If one gets a reputation for making life difficult on international partners, one may find it difficult to attract partners for projects in the future.

When businesses go abroad to conduct transactions and create partnerships, they are making a decision to work within the rules, customs, and boundaries of the host nation. These companies go into an international business transaction with the understanding that things are bound to be markedly different in the country where they are doing business. They cannot simply expect to operate by a different set of rules in light of this. The country where they operate sets up the structure by which companies and transactions are regulated, and because of this, a company that takes advantage of that system is necessarily consenting to being bound by those laws. In terms of customs, it just makes good business sense for a company to understand and respect local customs. While this might create some problems for a business – especially when customs involve things like bribery – the business should be understanding of the fact that it is choosing to play ball in a market where those things are commonplace. This does not mean that a company must necessarily change its values. In some cases, that company may choose to abstain from those activities that run afoul of its core principles.

Domestic and international issues do present some different challenges. In the international realm, it is important to tread carefully, as there is more uncertainty. One can reasonably predict how litigation is going to go in domestic courts, and one can be reasonably certain that any judgment in a domestic court is going to be enforceable. It is much riskier to rely on a certain outcome in international courts, so companies would be wise to be careful when dealing abroad.

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