Addressing International Legal and Ethical Issues Simulation Summary

Legal and Ethical Issues Simulation Summary

A wide range of legal and ethical issues can occur in the international business world. The goal of this analysis is to understand many of the issues involved in resolving legal disputes in international transactions. Some of the issues discussed include selecting local counsel, fully understanding the foreign laws, due diligence, and choosing the right law and dispute resolutions. This paper also highlights some of the factors that could possibly work against CadMex when it comes to its decision on sublicensing agreements. Some of the factors discussed in this paper include time and cost increases in addition to price differences between generic brands in Canada and CadMex’s brand. The paper will also discuss some of the ways local customs and laws can conflict and how to deal with the situation. Finally, this paper will also cover how companies should resolve domestic and international disputes differently than the companies discussed in the week one readings.

Understanding how to address international legal and ethical issues is essential in creating a strong business relationship with other businesses abroad. There are many issues involved in resolving international legal disputes including selecting local counsel, full understanding of the local laws, due diligence, and the choices surrounding law and dispute resolutions. After completing the simulation, it became apparent what factors could work against the decision for CadMex to grant sublicensing agreements. It was also interesting to find out what happens with the laws and customs of the foreign country conflict with the local laws and customs. As the simulation continued things began to make more sense and pieces started fitting together.

In each jurisdiction where the shares or assets of the transaction(s) are located, local counsel must be selected. The seller might also need to obtain local counsel in their area as well. It is essential to choose the right firm. The right firm will be competent, take confidentiality seriously, committed to the needs of their clients, and be honest at all times.

It is important to understand that not all foreign lawyers will adhere to the same standards as American lawyers. Since information is so valuable, it is important to ensure that information is given on a need-to-know basis. To fully ensure the confidentiality of a lawyer, the client may ask the lawyer to fill out a confidentiality contract ensuring that information shared stays confidential. Usually this is not a ridiculous request assuming that contract is reasonable. The responsibility of selecting local counsel becomes the responsibility of the lead counsel. Usually the firm has the knowledge and expertise to work the best local firms. An existing relationship between the local counsel and the lead counsel should be relevant making the choice for local counsel easy.

The lead counsel should know whether the local counsel has the expertise necessary to work the case the most effectively for the client. Many times it may be necessary to obtain the help of more than one local firm to achieve the maximum expertise necessary for the client. This may happen if one firm has more knowledge in one area but another firm has more knowledge in another essential area. The lead counsel is responsible to choose the best local counsel for the client keeping the local counsel’s expertise as a priority.

Maximum Understanding of Local Laws

After the lead counsel has obtained local counsel, the next step is to have the local counsel answer a number of questions regarding the local jurisdiction. Many of these questions could regard foreign exchange controls, environmental issues, required governmental consents, among many other questions. The answers to these questions will help the lead counsel decide how to continue the case. It is vital that these questions are answered as soon as possible following the acquisition of local counsel because many of the issues involved in the case may be time sensitive.

About Due Diligence

Many lawyers have due diligence questionnaires. It is essential to edit the answers to focus on the specific issue at hand. In addition, the proficiency of the language will most likely become an issue in situations that require multi-jurisdictional transactions. Many times the documentation used in cases like this are in multiple languages. Since the advantages are great for the lead counsel to carry out the required due diligence, having a lead counsel who can read, write, and understand different languages can be a positive thing for the client. The due diligence examination of contracts and other documents will usually focus on the commercial terms. In other cases regarding things like pension plans and government subsidies, among other issues, should have the documentation reviewed by local counsel to ensure its completeness and accuracy.

Choices of Law and Dispute Resolutions

Clients from different jurisdictions will argue that their laws should be the controlling laws. If the clients do not make a big deal about differences in the laws, their lawyers usually will. Hopefully the clients have lawyers who are willing to compromise before it gets ugly. Normally this decision is based on financial gain. One client is not able to pay local counsel to review the contract or other documentation. If money is an issue, there is usually always a solution. Many times the lawyers, with the clients, are able to agree on a third jurisdiction.

When this is the case, the clients need to be fully aware of the specific laws and particularities of that jurisdiction. As an example, a recent agreement involved an argument over whether the controlling law in international business dealing would be Massachusetts or New York. The client from Massachusetts wanted to use their states’ law as the governing law. The client from New York wanted to use their states’ law as the governing law. The client from New York argued that the courts in New York are more likely to allow a purchaser to sue on a representation breach even when the buyer was aware of the breach at the time of the contract signing.

It is customary for contracts that deal with international transactions to contain some sort of dispute resolution system. Though there are many different recourses available, impartiality is both a civil and reasonable accord. No matter which client assumes “home field” advantage, it is often a determining factor in what type of dispute resolution should be used.

Practical Considerations

Choosing the correct law clauses to agree upon during negotiations is one of the most vital considerations of taking legal action against a foreign business partner. In the situation of CadMex, the Candorean Regulations for Technology Import Contracts would be the best selection (University of Phoenix, n.d.). This situation would be the most beneficial because Candoria would most likely impose their government and regulations.

Besides this consideration there are many more that should be addressed. Some of these include cultural and employment issues along with governmental regulations and policies. Each of these considerations can have a monumental effect on how the businesses do abroad.

Factors that Work against CadMex’s Sublicensing Decision

Sublicensing would most likely work very well for CadMex. However, there are a number of other factors that need to be considered when making a decision to grant sublicensing agreements. One of the most apparent issues is the extreme amount of time and cost increases that are a part of maintaining high standards of production following the sublicensing agreement. Even though this is the case, it will meet all of the requirements by Candorea relating to control and keep the company’s goodwill at the same time.

Another significant factor that should be considered is the price differences between the CadMex brand and the country’s generic brands. Hindering on the population, the authorities in Canada may not allow the sublicensing agreements between CadMex and Candorea (University of Phoenix, n.d.).

When Local Customs and Laws Conflict

When the rules of arbitration and alternative dispute resolution fail, there are broken contract agreements, or the conflict increases to an extreme level, the Constitution of the United States and the Federal supremacy make the final judgment. They are considered to be the law of the land. The Constitution along with all laws and treaties are to take precedence over any local laws and customs.

How Companies Should Handle Domestic and International Issues

In the week one readings, companies did not resolve domestic and international issues in a competent manner. Many of the cases discussed became very messy and each party came out of the situation worse than before (Melvin, 2011). It is apparent that companies should resolve domestic and international issues much differently.

Litigation and arbitration are the favorable way to go for companies dealing with transnational disputes. However, when that does not work, it is important to have a firm and lead counsel who not only have the contacts to ensure a favorable outcome, but also the experience and expertise.


Understanding what the legal, ethical, and cultural factors that is exclusive to international disputes is an essential component to ensuring a specific case like the CadMex case is handled in the most effective manner possible. Understanding the customs and traditions of the foreign country being dealt with can also ensure the case will have a fair and favorable outcome.


Melvin, S. P. (2011). The legal environment of business: A managerial approach: Theory to practice. New York, NY: McGraw-Hill/Irwin.

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