University of Phoenix - ####### Learning Center
Upon completion of the University of Phoenix simulation "Addressing International Legal and Ethical Issues," I have outlined below several concerns that must be addressed prior to entering into any legally binding business contracts with international organizations. Prior to entering into international contractual business agreements it is important to take into consideration the rules and laws of all countries that are to be bound by those agreements, as well as any multinational governing bodies such as the WTO. Among the many issues that should be considered include the political stability of the countries involved, copyright and patent protection laws, economic issues including pricing policies and taxation, employment laws and regulations, ethical and cultural diversity matters, and environmental concerns.
Outlining strict dispute resolution guidelines in advance avoids additional pressure on all parties if future conflicts do arise. Careful research of the laws of the countries bound by the agreements is imperative. However, even in the most well thought out contracts, when dealing with other cultures it is important to tread very lightly when bringing up any disputes. Any clash could result in losing the agreement with that country completely. Disputes must be discussed openly with all involved parties, several solutions must be explored, and all cultural differences must be taken into account.
Once all parties discuss the dispute, and any necessary action is taken, hopefully a smooth resolution can be obtained. If not, the contract will direct how to proceed, whether by referring the matter to the WTO Dispute Settlement Body, utilizing alternative arbitration services, or in extreme cases settling the dispute in the courts of a pre-determined country. The importance of careful consideration of many options was emphasized in the simulation and the concerns of the CEO's of both companies as well as the legal counsel for the American company, CadMex, were expressed. This was helpful in forcing us to actively consider the given options from several different viewpoints before making our decisions as to how we each individually felt was the preferred method for solving any future legal disputes.
No matter how carefully a contract is constructed however, it is impossible to pre-define how to proceed in every situation, as the simulation succinctly showed us. During a deadly viral epidemic in Candore, where CadMex had formed a business alliance with a locally owned drug manufacturing company, Gentura, it was agreed amongst the CEO's, legal counsel and ourselves, that the best way to fulfill the immediate needs of the Candorean population, would be to grant sublicensing agreements to other drug companies under our control. By doing so, it was possible to deter the Governments desire to bypass the patent of ViroBlax, the only drug found to cure those who had become ill, and allow generic forms of the drug to be dispensed. This practice, called compulsory licensing, is legal in the incidence of catastrophic epidemics, however CadMex was concerned that once the cat was let out of the bag, then it would be impossible to regain control of their patent rights. This was a gamble on the part of CadMex as they also had the option of offering ViroBlax to the Candorean Government at a subsidized price, which would still have secured their patent rights but would have cut deeply into their operating profits. The Government was not required to take CadMex up on their offer and they could have lost a lot more through compulsory licensing than through subsidizing.
If CadMex and Gentura had chosen to take legal action against the Candorean Government rather than attempting to come to a mutual agreement about how to handle supplying citizens with a cure during an epidemic, they would have risked alienating those citizens and ultimately the world. Not only is it imperative that a company be compassionate to those that they serve, they must also be very careful to honor any local customs and laws of the countries where they are doing business. As long as United States laws do not disallow compliance with local laws on legal or ethical grounds, such as the widespread practice of utilizing child labor, then local laws should be respected and adhered to. Not doing so could work against the company and potentially cause widespread discontent and the possibility of an uprising by local as well as worldwide activist organizations.
Jane P. Mallor, A. James Barnes, L. Thomas Bowers, & Arlen W. Langvardt. Business Law: The Ethical, Global, and E-commerce Environment (12th ed.). McGraw Hill, 2004 Burr Ridge, IL
University of Phoenix Simulation: Addressing International Legal and Ethical Issues. Retrieved October 21, 2006 from http://www.phoenix.edu