Addressing International Legal and Ethical Issues Simulation Summary November 25 2012
CadMex developed a business relationship with Gentura and starting doing business in Candore as a result. Candor was not a member of the WTO or any other international entity in the beginning but showed promise. Candore was a dictatorship and so was a politically unstable country, but it did have a working government and legal system. The purpose of the simulation was to safeguard the interests and intellectual property of CadMex both at home and overseas. Through choosing certain contract clauses, I was to create the best outcome either short-term or long-term for CadMex during each scenario presented to me.
What are the issues involved in resolving legal disputes in international transactions?
When resolving legal disputes in international transactions, the issues involved should include international arbitration. International laws and cultural differences vary so there is an importance for a reputable third party to facilitate binding or non-binding agreements. If the businesses are part of the World Trade Organization, such as was one scenario in the simulation, the WTO can do the international arbitration. A forum selection clause should be added to contracts made to decide who will do the arbitration and where along with which countries laws will preside. A dispute resolution clause should also be added then to the contract agreements.
What are some practical considerations of taking legal action against a foreign business partner based in another country?
The first consideration is the international laws because the laws upheld in the United States are not applicable in another country because each has their own laws. Knowing the laws of both would be beneficial to make a reasonable decision. Understanding each countries cultural and ethical differences would also need to be taken into consideration. All contracts that deal with outside countries must have some type of legal implementation (Melvin, 2011). Before taking any legal action, another very important idea to consider would be the future of the business relationship and how the decision will affect the relationship of both businesses long term. .
What factors could work against CadMex’s decision to grant sublicensing agreements?
Sublicensing would require CadMex to train and oversee the facilities and workers creating their product. If the quality of the medicine is jeopardized, CadMex would be liable. If a sublicensed facility did injure a person because of carelessness, CadMex could be held for negligence. Non-disclosure and non-compete agreements could also be at stake.
When the local customs and laws conflict with the customs and laws of an organization operating abroad, which should prevail? Explain why.
The laws in the country that the business is operating should prevail, along with the laws outlined in the contract or agreement that was set up before such an incident occurred. Unless the businesses or countries are signatories of international governing or rule making bodies and agree on specific laws, the laws of the land the incident happens upon hold jurisdiction.
How would you compare the issues in this simulation to the domestic legal issues discussed in your Week One readings? How should companies resolve domestic and international issues differently?
When looking back at week one readings, I compare the forum selection clause to learning about arbitration and litigation. Litigation in the simulation would not have provided the best outcomes for the companies. Creating a forum selection clause for international business is important because it plans out ahead of time and simplifies the processes of dispute resolution. Companies both domestic and international should define their dispute resolution processes early in their relationships. They differ because of the international laws along with cultural and ethical differences. Problems need to be addressed more carefully because of the differences. A sociological extension of this inquiry would be to take stock of the diverse social interests that account for differences in the conflict of laws from one national system to another and to work toward a set of solutions on the basis of mutual interests (Sciences, 1986).
Melvin, S. (2011). The legal enviroment of business: A managerial approach: Theory to practice. New York: McGraw=Hill/Irwin. Sciences, I. E. (1986). Conflict of Laws. Retrieved from Encyclopedia.com: http://www.encyclopedia.com/topic/Conflict_of_Laws.aspx