International and Commercial Risks - Law 421 Essay example

The case study selected for week three centers on a liability and assumption of risk case study. In this case study, Brent Thomas and George Banks are facing liability charges after Ricky Watts sustained a serious injury during hockey practice (Essex, 2016). In this situation, Thomas is the school principal, and Banks is the hockey coach as well as the gym teacher (Essex, 2016). Ricky obtained injuries after improperly blocking the puck (Essex, 2016). This case study was selected because it highlights a situation that will likely be faced by all future school leaders. Sports are popular among students, and there is inherent risk in each sporting event. A school is open to liability if they do not ensure that proper protocols are met.

Safety checks should be carried out to eliminate the risk of putting the safety of people attending a sporting event at risk.

The issues are what jurisdiction shall be used to govern the deal between the parties, issues with the formation of the agreement, warranties, warranty damages, consequential damages, search costs, lost profits, recession.

b. New accounts added to the chart of accounts, foreign currency and exchange rates and the risk of falling rates, hedging, whether or not it is profitable for a company to invest overseas, financial reporting for overseas operations, international taxes, tariffs, fees associated with intercompany

This section is an excerpt from the book “Negotiating International Business - The Negotiator’s Reference Guide to 50 Countries Around the World” by Lothar Katz. It has been updated with inputs from readers and others, most recently in March 2008.

Even in binding arbitration, the parties will not be able to appeal the arbitrator’s final decision.

Companies seeking to take legal action against a foreign business partner must consider what type of agreement exist between the international businesses. Which laws and court system of each company will prevail? The agreements between international businesses should consider if International arbitration will be used to settle disputes and if the arbitration is binding or nonbinding. International organizations who follow a system of Arbitration which has a high level of acceptance may incur less expense and still maintain a working relationship. Arbitration awards are enforceable in many countries as long as arbitration is international according to the treaty of 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Melvin, 2011. p. 637).

Most of the companies in the word have the need to negotiate to obtain the resources they require to produce, transport or sell their services or products. Negotiation is a process that requires two or more parts involve that need something that only the counterpart can offer. Is in that moment when the negotiation begins, so the parties can find a solution that will satisfy the needs they have. In this process, the parties may assume they have different interest that can go against their best interests, based on the impression or stereotype they have of the counterpart. This mistrust may increase when the parties are from different cultures or have different backgrounds, since negotiations are not only between companies from the same country, but also with companies from different countries. An example of this is the negotiations between international companies from American and Asian countries, a situation that is increasing a cause of the globalization. An even though this cultures know that negotiations is a significant component in business, there are differences in how this process is approached by American and Asian cultures.

When there is no treaty between the countries of two parties in dispute, the United Nations Convention on Recognized Enforcement of Arbitral Awards offers a mechanism between the more than 120 signatory countries worldwide to readily recognize and enforce arbitral awards from each other’s countries, a major advantage over court litigation in such circumstances where the foreign MNE could be in a disadvantageous position when facing a domestic firm.

Negotiation is used to handle differences and conflict, to create bridges where there are barriers, and to transact business in a global world. But however important the skill of negotiation is, many people fail at it and can cause long-term resentments between cultures or firms (Dolan and Kawamura, 2015). International negotiations can be put into three different categories which including security, political and trade negotiations (Druckman, 2001). Trade negotiation is the main theme in this paper. In the negotiation process, there are two parties are involved at least. They could be individuals, small groups, or more complex social units (Rubin and Brown, 1975). Negotiation involves the presentation of demands or proposals by one party, evaluation of these by the other party, followed by concessions and counter proposals.

An assessment of the business’ current situation and goals is critical. The types of legal and business issues involved in deciding whether to do business internationally include:

There has been a wide range of debate to create a more expeditious dispute resolution method for settling commercial disputes amongst businessmen and lawyers who are involved with international trade across national borders.[footnoteRef:2] Until recently, commercial courts were congested due to the number of commercial disputes pending before them. There was a need for other dispute resolution methods to bridge this gap, expedite matters and to promote business transactions. Arbitration, mediation and conciliation were adopted by states to supplement the normal court system. However, we are yet to reach that point where one can boldly say that, the alternative dispute resolution methods to the courts are expedient. [2: Herbert Buston, ?Arbitration of International Commercial Disputes? (1964-1965) 6 Boxton College Industrial & Commercial Law Review 569]

International commercial contracts consist of parties who are almost always from different countries. This characteristic of international commercial contracts makes arbitration preferable as a dispute resolution method rather than submitting the dispute to another parties’ national court. Parties may either appoint an arbitrator from another country or request an international arbitral institution to make an appointment. In this way they acquire neutrality in the choice of law, venue, procedure and tribunal. (Sutton et al.,

In considering the relative cost and speed of international arbitration versus litigation, it is important to take into account the likelihood of jurisdictional disputes and parallel proceedings. Suppose Japanese and a French company enter into a long-term sales agreement, which leads to disputes. Assuming there is no agreement to arbitrate such disputes, what is likely to occur after efforts to amicably settle the disputes fail? Where is the Japanese company likely to want the parties’ disputes resolved? The French company? What happens if both companies pursue their favoured means of dispute resolution? What happens if each company succeeds in obtaining a judgment in its favour from its local courts?

For multinational businesses to be successful they must continue to grow and make drastic moves to find new markets where there is a need and want for their products. For any business that wants to conduct themselves in a new environment they must understand the cultural norms but must also understand the nuances of local and federal laws that govern the operations of businesses in that country. The same effort must be made to understanding the host countries laws while conducting business in an external nation and international laws and mandates. All these aspects are part of