Essay on "International Disputes When Business Internationally"

Essay 4 pages (1422 words) Sources: 4

[EXCERPT] . . . .

Arbitration is underlined by a philosophy that an agreeable arrangement can be reached for all parties. "The enforceability of a court judgment vs. that of an arbitral award also favors using arbitration. No effective international treaty facilitates the enforcement of foreign judgments whereas the same is not true with respect to arbitral awards…June 2008 marked the 50th anniversary of the 1958 signing of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention" (Aliment 2009: 13).

However, when engaging in discussions about how to conduct the arbitration, care must be taken to ensure both parties are well aware of the different approaches of both of their legal systems. Even when it comes to arbitration, "the civil law of continental Europe and the common law of the United Kingdom have basic differences in the style and content of pleadings, the role and probative value of documents and testimony, the examination of witnesses, the disclosure of information, the rules of evidence, and the relationship and roles of counsel and the arbitrator(s)" with that of the United States (Aliment 2009: 13). It is essential that both the impartial arbiter and also the representatives of both sides are well-versed in the laws of the nations involved in the transaction.

However, at times the conflict cannot be settled in a dispute, resulting in a court case which eventually is taken to litigation. Legal actions by either party can also fall afoul of international laws regarding the ethics of business. "International law and national law each have what we might call their own conflicts rules: rules that determine whether a case with links to more than one jurisdiction is governed by the law of the forum or the law of one of those other jurisdictions" (Knopp, Riles, & Michaels n.d.). The extent to which what nations are affected may be the presiding factor that determines what nation's laws predominates in a conflict; or it can be the decision-making of the presiding body. In practice worldwide, however, there is seldom consistency in terms of what legal worldview is upheld through litigation.

One example of an intractable dispute was when Wal-Mart opened up operations in Germany: Wal-Mart traditionally has strongly discouraged unionization and also tends to favor hiring workers part-time to minimize benefits. All of these factors are anathema to generally-accepted German business practices and soon caused legal conflict with German's largest union. "Wal-Mart clashes regularly with the ver.di union, which says it has organized every Supercenter in Germany. According to the union, Wal-Mart repeatedly ignores German co-determination rules, which give employees a say in corporate decisions that affect working conditions. The union also complains that Wal-Mart has not kept it adequately informed about store closings" (Wal-Mart: Struggling in Germany, 2005, Businessweek). Ultimately, Wal-Mart was forced to leave Germany, partially because of its failure to adhere to German labor laws. In the U.S., "the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign government officials and officials of public international organizations" by U.S. companies even when abroad, although the definition of bribery may vary greatly between the U.S. definition and that of another nation where 'gifts' are an accepted part of doing business (Weiner 1999).

Litigation is thus sometimes inevitable, but decisions reached through the process can be arbitrary, even if there is the satisfaction of a final winner. Given the costs of the legal process, however, when there is a conflict about the applicability of laws, companies would be well advised to prefer arbitration over litigation, where the terms can be established for both parties in a mutual fashion that reflects both sides' values.

References

Aliment, R. (2009). Alternative dispute resolution in international business transactions. The Brief, 38.4

Knop, K., Michaels, R. & Riles, A. (n.d.). International law in domestic courts: A conflict of laws approach. scholarship.law.duke.edu. Retrieved:

http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2629&context=faculty_scholarship

A new way to resolve international business disputes in Illinois (2013). Chicago International

Dispute Resolution Association (CIDRA). Retrieved: http://www.cidra.org/a_new_way

Wal-Mart: Struggling in Germany. (2005). Businessweek. Retrieved:

http://www.businessweek.com/stories/2005-04-10/wal-mart-struggling-in-germany

Weiner, K. (1999). Doing it right -- overseas. ABA. Retrieved:

http://apps.americanbar.org/buslaw/blt/9-2overseas.html READ MORE

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