M1A3 Application of International Law

Application of International Law

Business Law and Corporate Ethics | BUS212 A01

Instructor:

Consistent laws may apply when entering into a contract, whether domestic or international. The parties may also agree that the laws of one of the countries apply to the interpretation of the contract. This tends to be the case with Monarch Associates, a U.S. computer parts manufacturer, when they entered into a joint venture with a Russian computer technology company, Vladir Unlimited. The joint venture agreement was signed by both parties but created by Vladir and had an arbitration clause that called for all legal and non-legal disputes, to be arbitrated in Russia. Vladir could also choose arbitrators from a panel maintained by the Russia Arbitration Institution. The panel members live in Russia. Monarch now contends that a legal dispute with Vladir should be handled in the United States. Vladir insists that the dispute should be handled in Russia.

International business contracts raise particular distresses that should be addressed in the text of the agreement. Supplementary terms must be discussed due to the fact the parties are dealing with diverse legal systems, customs, and languages. Choice of language, terms of payment, force majeure, government approval, arbitration clause, choice of forum, and choice of law are some of terms and or clauses that should be enforced in and international contract. (Legal aspects of international business) The choice of language clause is used to allocate in which language the contract will be written in. If a conflict in regards to the contract emerges, this clause determines the language of interpretation. The official language of the contract and the language of interpretation are normally the same, for agreeableness. The medium of exchange that is to be used in disbursement as well as the venue of the payment is paramount in the terms of payment clause. Having this clause in place prevents inconsistency of the money that is being used in the purchase of future contracts between the parties. The venue of the payment is substantial also because some forms of cash are not able to leave its specific country. If there is ever a lack of success between the two parties that are involved in the international contract due to natural disasters, wars, or stock market crash, the force majeure clause excuses these circumstances. The government approval clause states who is accountable for retrieving any essential licenses, permits, or government permission for any proceedings between the two parties. In the arbitration clause, both parties agree to solve any contractual conflict before deciding to file any type of lawsuit. (Axelryd, Dandenell & Advokatbtra, 2012) Some of the people that are involved with international arbitration are “The American Arbitration Association has rules and facilities for international arbitration, as does the International Chamber of Commerce. The International Center for the Settlement of Investment Disputes has arbitration rules and facilities for certain kinds of arbitration, as does the United Nations Commission on International Trade Law, UNCITRAL.” (Legal aspects of international business) In case a lawsuit were to come about, the choice of forum clause allows adjustability in appointing which country the lawsuit will be filed in. Once the lawsuit is in place the choice of law clause comes into play. The parties decide which country’s laws will be implemented to any conflict that may emerge out of the contract. “The choice of forum and choice of law clauses do not have to designate the same country. A contract can specify that any dispute arising out of the contract will be tried in the United States, but the law of another country will apply.” (Legal aspects of international business)

The Russia Arbitration Institute is the judicial system of where the concluding case of marketing disagreements are handled in Russia. (Russian European Chamber of Commerce, 2010) Plus, it administers the production of the subjacent courts of arbitration. It contributes understanding of laws and clarification of their applications, in which are binding for their subjacent courts. “Russia’s Law on International Commercial Arbitration of 1993 is based on the UNCITRAL Model Law on international commercial arbitration and applies to arbitration with respect to the international commercial disputes that take place in the Russian Federation. This law governs arbitrations that arise out of foreign trade or economic contracts between parties, at least one of which has its place of business abroad, or is an international organization or a company with foreign investments in Russia.” (Russian European Chamber of Commerce, 2010) The Federal Arbitration Act for the United Stated is also based on the UNCITRAL Model Law. It was legislated in 1925. (Botts, Bull & Lennon, 2012) From the research that I have gathered about the arbitration clause, in my opinion, I believe the dispute between Monarch Associates and Vladir Unlimited should be handled in Russia. They both agreed to have all conflicts to be dealt with in Russia. It should be taken care of as stated in the contract to prevent less tension on the disagreement as possible.

Some advantages Monarch Associates have under the arbitration arrangement is by having the arbitration arrangement it is more casual than having to go before the court of law. There is less exposure to punitive damages and run away juries, coming from defensive point of view. Restricted standards of evidence are not put into use. Any and everything can be used as evidence as long as it’s appropriate. Some disadvantages that they may have is if there is a panel of arbitrators, the process may be drawn out and expensive. In a claimant’s point of view, not having a jury may be a major disadvantage. If I were a Monarch Associates’ in-house counsel my advice to them on negotiating future joint ventures with Russian businesses and any future contracts with foreign companies is to be the host country of the contract so that they can have the upper hand at setting the conditions of the contract from the beginning.

References:

Axelryd, M., Dandenell, H., & Advokatbtra, F. (2012, Aug 21). Global arbitration. Retrieved from

www.globalarbitrationreview.com/reference/topics/61/jurisdictions/23/united-states/Russia

Botts, B., Bull, R., & Lennon, M. (2012, July 31). Commercial arbitration. Retrieved from

http://www.globalarbitrationreview.com/know-how/topics/61/jurisdictions/23/united-states/

Legal aspects of international business. (n.d.). Retrieved from

http://www.bvtpublishing.com/files/BV15Chapter12.pdf

Russian European Chamber of Commerce. (2010) Arbitration involving Russia. Retrieved from

http://www.ruscham.com/en/rossinfo/db/9.html