Home' micenet eMag : micenet AUSTRALIA June July 2014 Contents D
oing business overseas is potentially lucrative and has
all that added excitement that the prospect of jumping
on a plane can generate. And it also has some special
problems that need special thought – and special legal attention.
The first thing to remember is that your legal obligations will be
governed, of the most part, by your contracts, just as here in
Oz. Other laws will apply of course, and you’ll also have your
duty of care to avoid negligence – but your contracts will be the
key to protecting yourself.
The following is a list of issues that will need attention: What
law applies to the contract? We will generally want Australian
law to apply. It is more familiar to us; we understand it better.
Not all jurisdictions will apply Australian law, or if they do, it may
be but a faint impersonation of Australian law – but it is almost
always best to expressly choose Australian law as the governing
law of the contract.
Where will disputes be resolved? This is equally important.
The legal costs of travelling to foreign parts and running litigation
there can be horrendous. Consider the huge legal bills that you
might receive in the USA to the translation and evidentiary costs
you might incur in a non-English speaking place – to say nothing
of the fact that the court procedures overseas can be very
different and the outcomes unexpected.
Enforcement of legal rights overseas can be very difficult.
Even if you get a court judgement in Australia, having it enforced
overseas can involve additional legal proceedings and in some
countries Australian judgements are not automatically
recognised; it depends on whether the country is a signatory to
international treaties on the recognition of judgements.
Watch your credit risk. Given the cost and difficulties of taking
legal action overseas, make sure that you are paid up-front or by
other secure means – and don’t have to go galavanting off to
recover what you are owed.
Watch your exchange risk. If you are being paid in the foreign
currency, you will need to convert that to Australian dollars. If the
value of the Aussie dollar rises against that currency, you’ll suffer
an exchange loss. It is always best to be paid in your own
currency – that way the other part bears the risk. If you hit a
stalemate on that issue, there are some compromise options –
or you could (at a cost you could pass on to the other party) buy
a hedging contract.
Insurance. This is a big issue. Do your insurance policies
cover you for liability to overseas claimants? Do your policies
cover you for legal actions commenced overseas? Insurance
policies often have a “North American” exclusion that denies
cover in such circumstances. You may need to get an extension
Local laws may differ from ours. If you are doing work in a
country – say, The Grand Duchy of Fenwick, then the laws of the
Grand Duchy of Fenwick apply to that activity. Work health and
safety, anti-trust, tax... you name it! You may need to brief a
lawyer in the Grand Duchy of Fenwick to assist.
Privacy laws, recently amended substantially here in Australia,
differ all over the world. Sending personal information about
individuals from Australia to overseas recipients can be a breach
of our Privacy Act.
Tax is another obviously important issue – get advice!
Language and culture are different – that’s precisely why
overseas travel is interesting and exciting. But language and
cultural differences can have a huge impact. For example, in
Australia, we hold the sanctity of the contract dear. In other
countries, a contract is not upheld as such a binding set of
obligations - more of a guideline for what the parties had in
mind, but fluid and up for re-negotiation at any time. It’s a risk
that you need to consider, so do some homework; ask
colleagues who may have worked or done deals there.
Sovereign risk needs to be considered in some places. Your
business plans may come adrift if there is a coup, general strike,
terrorism, war, civil commotion or change of law or government.
Geo-planetary stuff, such as bird flu, unpronouncable volcanic
eruptions, asteroid impact, earthquake, nuclear accident, etc,
can happen (and recently have done). What does your contract
say about this – and about cancellation generally?
A lot to think about, isn’t there? I return to my starting point.
Having well written contracts is soooooo important! Happy
Matt Crouch recently took to the stage at the MEA conference
in KL to discuss legal issues affecting international business. He
provides a snapshot of the subject here.
Top tips for
BY MATT CROUCH
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