- Execution: The need to address multiple legal systems, languages and time zones can significantly complicate challenges that also exist in domestic transactions.
- Closing a transaction that requires multiple wire transfers on and from several time zones can create a significant logistical problem that does not exist when all parties are located in the same place.
- Legal Enforceability and Risk: Substantive differences between the laws and legal systems of different jurisdictions create many issues that require attention. Doing transactions in non-U.S. jurisdictions, particularly in countries with unknown and/or undeveloped legal systems creates different dynamics and increases the risk profile of a transaction.
- Not only may the law may be different, but the underlying concepts may differ beyond the simple provisions of the contract or governing law.
- For the Anglo-American common law business person and lawyer, for example, who is used to a “caveat emptor” regime, the requirement to negotiate in good faith, which is implied into any contract governed by civil law, has real and unexpected consequences, such as discovering that its “non-binding” letter of intent actually creates binding obligations.
- A contract is only as good as a party’s ability to enforce it. Where a party’s comfort with the contract is diminished it must emphasize its ability to conduct due diligence and assess the business risks, rather than rely on the legal documents.
- Cultural: In transactions, the parties need to be able to work together to accomplish the joint goal. That is a greater challenge in a cross-border transaction.
- Differences in culture can also create significant communication challenges, requiring additional coordination of expectations and advance planning.
- While in domestic transactions certain issues can be resolved by agreeing to do what is “customary”, that solution is not a good alternative when there are two or more relevant customs.
Ch. 24 Dispute Resolution Issues in Drafting Agreements in the International Context
II. Types of Issues Related to Cross-Border Transactions
* Not Yet Admitted