The issues involved in resolving legal disputes in international transactions
International commercial transactions entail business undertakings spanning across national boundaries. This has been necessitated by globalization, which has turned the world into a great village where individuals can conduct their business in any part of the world. The parties engaged in international commercial transactions are international bodies, states, multinational organizations as well as individuals.
Based on their nature, international transactions are unwaveringly sensitive as diverse cultures and opinions are merged to facilitate survival of these organizational in the tumultuous business environment. Therefore, regulation of these business entities is paramount in order to ensure that cultural orientations are accommodated within legal and moral boundaries. Thus, these dictate the role of law not only in regulating and ensuring the harmonious coexistence of the trading parties but also in negotiating and determining the results of the disputes arising for the contractual relationships.
In this regard, some of the legal issues affecting international dispute resettlement include the choice of law and the jurisdiction of the courts. For instance, in the United States, the state courts have wide-ranging jurisdiction while Federal courts have restricted jurisdiction. In this light, when two business entities enter into a contact and dispute emanated from the contract, it becomes difficult to determine the courts with the jurisdiction of hearing the case. In this regard, dispute determination clause should be in place to cater for any chances of violation indication the way of the dispute resolution like arbitration, procedure and the court’s jurisdiction.
In addition, issues like the enforceability of the contacts remain a major challenge of the organizations. Disputes arising from transactions between states can be settled in a diplomatic way between the warring countries or can be solved by the United Nations, International Court of Justice or by the World Trade Organization depending on the nature of the dispute.
Practical considerations of taking legal action against a foreign business partner based in another country
Organizations entering into commercial trade with other businesses and companies must put into consideration some special factors that interplay within these particular transactions. The organization should ensure that the contract it is entering into is enforceable by both the domestic legislations and the legislation of the place where the contract is to be undertaken, while putting into consideration the manner in which any potential dispute can be resolved. In this light, It is appropriate that the contracting organizations pay adequate attention to such issues like the law and oversee the adjudication in the event of any future dispute if the forms of alternative dispute resolution mechanism, such as arbitration and mediation, can be employed instead of the common traditional litigation.
In the event that alternative dispute resolution is not selected, the country will solve any eminent conflict between the parties and the type of pre-hearing or pre-trial discovery that will be mutually agreed to during the litigation process. Another very paramount factor to put into consideration is the time the arbitration process can take. For instance, in many cases, the arbitration process is very protracted hence the organizations involved in the dispute end up losing even more in the hearing process.
For instance, in a country like the USA, the arbitration process takes 6 months in average, while in other international countries, the process can take upto even one year. This might result in distortion of the organizational public image and financial loss. In this light, it is advisable for organization to solve most of their cases diplomatically out of court to for immediate and long-term benefits.
Though parties that are planning to enter into a business relationship do not anticipate that they might enter into any kind of litigation whatsoever, it is of utmost important to address these issues at the time of commencement of the contractual relationship. Due to that fact, the most appropriate opportunity for negotiating conducive dispute resolution mechanism is only when the parties are negotiating for their contractual relationship since the attention paid at the beginning of the relationship will save the parties from much huge expenses when they enter into the confrontational posture.
Factors against CadMex’s decision to grant sublicensing agreements
CadMexPharma is one of the leading pharmaceutical development companies in the world. The company has about 85 year in the industry. It is based in Florida, USA. CadMex and Gentura entered into a business relationship in 2007 whereby CadMex licensed its technology and provided Getura with the requisite Know how. One of the major factors that could adversely distress CadMex’s operations in its decision to award sublicensing contract is based on the quality assurance of the issues.
This is particularly true in the event that an organization that entered into sublicensing agreement to manufacture drugs does not conform to the required standards of operations held by CadMex. This includes being enshrined in the international standards. If the product is of poor quality and a customer is at risk due to the substandard products, then CadMex will have to pay the damages both publically and legally, which can adversely affect its image.
It is evident that even the employees in the sublicensing can sue a business because of the relationship emanating from the sublicensing agreement. This can result from the failure of CadMex to formulate a comprehensive contract with all the provisions in case of any accident. This is in line with Melvin (2011) argument that a company may have a problem with the existing sublicensing contract after making decision in creation of numerous agreements, hence increasing the organization’s possibilities of engaging in lawsuits against them. In the event that the company overlook any paragraph in the contract revealing any legal issue in the agreement, then the organization will be responsible for any incurred financial implications.
Therefore, it is imperative to appreciate that when there is a dispute amid the law and the local clienteles, it depends on the circumstances and whether the international or local law should triumph.
The local customs and laws vs. the customs and laws of an organization operating abroad
In the event that the local legislation and custom are not in harmony with the laws of the business entity operating a broad, laws of the host country should be used in deciding on the existing dispute between the trading parties. Different countries have different cultures and legal framework, and therefore, it is upon the organization to ensure that it fully understands the legal provisions of the host countries. It is evident that parties for different prerogatives will always want the law of their particular jurisdictions to govern their contacts. To avoid such cases, it is often advisable to be governed by the law of the third jurisdiction.
In this regard, individuals, organizations and states that are engaged in international businesses have the responsibilities of understanding and learning both the regulation and the laws governing the countries where they run their business.
Resolving domestic and international issues
Normally, when two business entities decide on establishment of a contractual agreement, each will desire their own jurisdiction with which they are quite conversant to be applied in the contract, as they know that their laws will protect them. When conducting business activities in their own countries, these organizations are aware of the specific clauses that can protect their activities. Since these businesses are not accustomed to the provisions of other countries, they tend to favor their country’s legislations over the legislations of the others. In this regard, it is important that these organizations hire competent lawyers who are familiar with the provisions of the countries they are intending to operate in.
In this way, the lawyer will be able to assist in the preparation of the contract that will be able to protect both parties. In solving international disputes, the organization with foreign operations is to consider the host countries legal frameworks, which are mainly formulated based on the culture, customs and norms of the native people, as the company’s activities may affect the locals’ lifestyle, hence impacting on their contractual relationships. On the other hand, in domestic issues, the company is only obliged to the domestic provisions.
Reference List
Melvin, S. P. (2011). The legal environment of business: A managerial approach: Theory to practice. New York, NY: McGraw/Hill/Irvin.