One of the issues involved in resolving legal disputes in international transactions is confirmation of the enforceability of the resulting decision. This includes a decision arrived through a court process or through arbitration. In international transactions, parties usually get into contractual agreements. One thing that a party involved in international transaction should ensure when getting into a contractual agreement is the legal enforceability of a contract. This implies that the contract must clearly protect the interests of the foreign country against all eventualities, given that disputes and disagreements are common in international transactions. Sometimes, a party may fail to abide by a resulting decision in resolving legal disputes if the enforceability of such as decision is not clearly stipulated in the terms of agreement (the contract).
When taking legal action against a foreign business partner based in another country, consideration is given to the nature of the counterparty (Dispute Resolution in International Transactions, 2007). This entails evaluating whether the counterparty has legal powers or corporate authority to enter into international transactions. This is because, in cases where the counterparty does not have legal powers/corporate authority to enter into international or a specific form of international transaction, then the resulting decision is unenforceable because the nature of transaction between the parties that existed is invalid. In addition, the nature of the counterparty is considered in order to determine whether the party is a sovereign entity, which enjoys sovereign immunity in international transactions. For sovereign entities, which enjoy immunity in matters concerning international transactions, specific methods of resolving legal disputes are applied.
In addition, consideration is given to the location of the assets of the foreign business partner when taking legal action. This is to determine whether a judgment can be enforceable from that location or the counterparty should seek to have the judgment delivered from another location. When taking a legal action against a foreign business partner, consideration should also be given to the nationality of the partner. This is to help determine the political risk involved in such an action. If there is a high probability of political risk in either of the business partners’ countries, then the parties consider other methods of resolving their differences apart from legal action (Dispute Resolution in International Transactions, 2007).
One of the factors that are likely to work against Cadmax, if it grants sublicensing agreements to Candore is decline of its ability to enforce quality control standards and specifications (Structuring licensing programs and agreements, 2009). This is because the licensee (Candore) is the original manufacturer of the drug, Therefore, Candore will use its expertise in the manufacturing process regardless of whether the process meets the quality control standards and specifications of Cadmax or not. In addition, granting sublicense agreements to Candore is likely to work against Cadmax in terms of maintaining its reputations and goodwill. A single act of the licensee can destroy the entire reputation and goodwill of Cadmax. Besides, the sublicense agreement is likely to work against Cadmax due to the increased burden of monitoring the operations of the licensee (Structuring licensing programs and agreements, 2009).
In intentional transactions, when the local customs and laws conflict with the customs and laws of an organization operating abroad, the local customs and laws of the country in which the organization operates prevails. When a business organization has locations in more than one country, then it must comply with the local customs and laws prevailing in those countries. However, in a legal action arising from a conflict between local customs and laws, and the customs and laws of a business organization operating abroad, the customs and laws that prevail are those of the country where the legal action is taking place.
Both domestic legal issues and international legal and ethical issues recognize the importance of legal enforceability of a contract. In both simulations, a contract must be drawn between or among the parties involved in a business transaction, and the contract should be legally enforceable. Lack of legal enforceability of a contract renders business transactions, both domestic and international, null and void. Companies can resolve domestic and international issues differently by observing the laws that govern each form of trade. This implies that in resolving domestic issues, companies should observe the domestic laws that govern trade in their countries, while in resolving international issues; companies should observe international laws that govern trade, which the countries where they are operating are signatories.