Week 2; Addressing International Legal and Ethical Issues
LAW 421
Forum selection should be determined during contract negotiation and execution so in the event of a dispute both parties know if the dispute will be settled in a U.S court, a local court or by either binding or non-binding arbitration. If both parties are members or the World Trade Organization (WTO), they are encouraged to try arbitration first, but if it is unsuccessful, they can turn to the WTO Disputes Settlement Body.
When deciding to take legal action against a foreign business partner based in another country, it is important o consider their local cultures and customs. It is also important to have an understanding of their local laws.
Other factors that CadMex needs to consider is the amount of time and increases costs involved with maintaining standards of production after sublicensing. Allowing the sublicense will generate goodwill, but the generic brands will be significantly less expensive than the original brand name. This will impact the Candorean GDP and as a result, the Candorean government may not approve the sublicense agreements
The prevailing law should be established during contract execution to prevent disputes in the future, however, when local customs and laws conflict with the customs and laws of an organization operating abroad the conflict needs to be examined and determined on a case by case basis. In most cases, it is in the best interest of the companies to work within the laws and customs of the local company. To force foreign laws and customs of another country could back-fire and lead to employee strikes, work stoppage, and negative publicity. Employee moral will be very low if their local customs are not taken into consideration and respected.
The simulation is similar to the “How to take (legal) action” article which talks about how different rules