The “Addressing International Legal and Ethical Issues” simulation explored the factors one must consider when an American corporation enters an international contractual relationship with a foreign business partner. The issues presented are as follows: What are the issues involved in resolving legal disputes in international transactions? The legal issues involved in resolving legal disputes in international transactions are the selection of which set of laws to follow and the forum used for dispute resolution.
Specificity used in writing international contracts provides a clear structure for resolving potential legal issues. When defining the set of laws to follow in an agreement, one’s selection must consider the respective laws and regulations of the countries of origin for both companies as well as the involvement of any multi-national organizations such as the World Trade Organization, also known as the WTO. When selecting a forum, one must select between local courts of either business partner or international arbitration, either binding or non-binding.
What are some practical considerations of taking legal action against a foreign business partner based in another country? Local political climate, impact to future business, length of time for proceedings, and effect on local public goodwill are practical considerations when deciding on whether to take action against a foreign business partner. These factors will decide if the potential financial gain of such a move will outweigh the long term financial, ethical, and legal impact to all parties involved.
Additionally, one must consider possible intervention from the American or foreign governments as well as prevailing international organizations. What factors could work against CadMex’s decision to grant sublicensing agreements? Deciding to sublicense the production of CadMex’s drugs creates potential concerns of quality, time, and costs. CadMex must ensure it protects the quality of generic versions of its products by sublicensed manufacturers. Both CadMex and the local companies in companies must review the costs involved with establishing manufacturing in Candore.
CadMex has the additional responsibility of factoring the cost of sublicensing to its earnings. Finally, the time needed to establish sublicensing agreements and local manufacturing may be an obstacle to success in this arrangement. When the local customs and laws conflict with the customs and laws of an organization operating abroad, which should prevail? Explain why. Situation dictates whether local customs and laws or the laws and customs of an organization operating abroad will prevail during a conflict.
This is due to the potential impact of any legal action to the companies involved, the local population, and the governments of both organizations. In the “Addressing International Legal and Ethical Issues” simulation, CadMex was required to consider local religious practices, the potential impact of a union strike and lawsuit, as well as any potential violation of American labor laws. 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? The Week One readings reviewed the advantages and concerns with arbitration compared to litigation as a forum for resolving domestic legal issues in business. When resolving international issues, the laws of both countries affect which forum provides the best resolution, although international arbitration is recommended to avoid bias in local courts or the time and expense involved with litigation in either country.
References Apollo Group, Inc. (2004). Addressing International Legal and Ethical Issues . Retrieved October 12, 2013, from University of Phoenix eCampus: https://ecampus. phoenix. edu/secure/aapd/vendors/tata/UBAMSims/business_law1/busine ss_law1_intl_legal_ethical_simulation. html Melvin, S. P. (2011). The Legal Environment of Business: A Managerial Approach: Theory to Practice. . New York, NY: McGraw-Hill/Irwin.