Increasingly, Arizona companies are looking to overseas markets to do business. In this ever-evolving landscape of internationalized business, it is important for Arizona businesses to carefully consider the legal implications associated with their international business dealings. The best strategy, of course, is to be well-informed about the key legal considerations for a local business entering the international marketplace and to identify advisors who take a holistic approach.
No distinct body of law governs all international business. Rather, international business law is an amalgam of private contract law, U.S. and foreign domestic law, and international treaties. An evaluation of the effect of these various laws, and the ability to reach private agreements that incorporate or offer an alternative to these laws, is critical to optimizing a company’s ability to act globally.
Naturally, it is important to seek the assistance of legal counsel who has a keen understanding of how to best structure private international agreements and the ability to call upon a network of advisors who can provide particularized knowledge. Among those areas in which specialized expertise is advised are intellectual property, business formation, tax, employment and dispute resolution.
It is critically important to assess the intellectual property regulations and enforcement mechanisms in force in the country in which one plans to do business before engaging in any activity that may jeopardize a company’s intellectual property.
Identifying the proper corporate entity and structure for an international business venture is vital for limited liability, capitalization and tax reasons. Advice of foreign counsel with knowledge of foreign corporate requirements, the nuance of foreign bureaucracy, and the relevant timelines for formation and compliance is crucial in these areas.
Every foreign jurisdiction has localized tax and accounting regulations. In every case, the impact and requirements of U.S. tax law must be evaluated, and counsel skilled in international tax is imperative.
Perhaps the area of law with the greatest variance internationally, and that creates the most challenge for small and medium-sized business, relates to employment. Depending on the transaction at hand, there are myriad local, national and even multinational employment regulations that may need to be evaluated for their impact upon a company’s ability to conduct business in a foreign locale and procure a work force.
It is imperative to plan in advance to manage disputes that may arise in the course of international business. Dispute resolution processes differ throughout the world and are influenced by local laws and cultural norms. The result is that, absent a contractual designation by the parties of a governing set of laws, forum or dispute resolution process, there is uncertainty as to how, when and where disputes will be resolved. The parties should, at the very least, agree in advance to the forum, choice of law, and arbitration and/or mediation provisions, and make certain that these provisions will be enforced in selected jurisdictions.
Engaging in the global marketplace can provide tremendous opportunities for Arizona companies. However, the challenges posed by transacting business where different and conflicting laws apply, or where there are limited legal protections in place, must be evaluated by companies considering doing business internationally.
For more information, contact Keith Galbut at Galbut & Galbut.
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