International Legal Challenges Discussion Questions

Project 2: Making Decisions That are Legal and EthicalStep 5: Review Colossal’s International Legal
Challenges
Successfully completing the Turnip Plaza report, you’re ready to review your next assignment:
the International Legal Challenges case file.
You open the file and read over the specifics of this situation. You soon see that VP Dodger is
concerned about some of the risks involved with a number of Colossal’s international projects.
In the next step, you will gather the information you need to identify important issues for the VP.
Step 6: Gather and Analyze the Information
While you have some general awareness that there are many ramifications of international
transactions from a legal perspective, including dispute resolution provisions, you realize that
you need to know a lot more about this subject before you can attempt to respond to the VP’s
questions.
You begin by researching international law, international contracts, an introduction to alternative
dispute resolution, and international dispute resolution.
Discussion with Colleagues
Now that you’ve gathered and analyzed information on the International Legal Challenges case
file, Vice President Dodger would like you to discuss your thoughts with the other members of
his special investigations team. He sends you two requirements for this discussion:
First, each participant is to post an initial response to at least two of the five questions noted in
the International Legal Challenges file. This should be completed during Week 5 and should
meet the following requirements:
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•
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Include a specific recommendation of what action, if any, the VP should take based on your
analysis and conclusions.
Support your conclusion with references to legal principles and laws.
These posts can be as long or as short as you need in order to effectively make your points.
Second, each participant must provide a substantive response to at least one posting from a
colleague in the discussion, critiquing the initial post by appealing to legal and business
considerations. This should be completed during Week 5.
1. Colossal management also needs to know whether arbitration is a good idea for a
dispute resolution provision for both domestic and international contracts and why.
Alternative dispute resolution (ADR) is a great idea for both domestic and international
contracts. ADR is an alternative to resorting to litigation. There are a few options of ADR;
mediation, where a third party facilitates a settlement, and arbitration, where a third party decides
the legal dispute (UMGC, 2022). Arbitration is a good idea because resulting to litigation, more
often the business relationship between parties is ruined. Arbitration helps preserve the ongoing
business relationship between each party (UMGC, 2022). Arbitration costs can be cheaper then
litigation costs and each party has full privacy of the legal issue whereas the courts will have
public records of the dispute. The last advantage of arbitration is there is no jury and the people
talking to the parties are hired experts on the legal situation at hand which would naturally be
more practical (UMGC, 2022).
In international disputes arbitration’s biggest advantage is enforceability. Under the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards, most of the world’s trading
nations have agreed to have their courts enforce arbitral awards given in foreign nations (UMGC,
2022). Because arbitration potentially saves the parties money, gives each party full privacy to
legal matters, preserves the business relationship between the parties, a hired professional gives
finality to the situation, and enforceability I think the VP should look into implementing this
provision for domestic and international contracts.
2. Finally, one of Colossal’s suppliers in the country of Edfin no longer wants to supply
needed raw materials for Colossal’s factories in the United States, unless Colossal
agrees to pay them by opening a letter of credit. Up to now, the company has paid
them after delivery to the United States, which has allowed Colossal to inspect the
quality of the shipments before sending payment. What are the ramifications of
granting Edfin’s request?
Letters of credit (L/C) were designed to help sellers more than buyers and were made to help
encourage international trade (UMGC, 2022). To grant Edfin’s request for a letter of credit
means that Colossal will have to look into a few things. First, they have to understand the
importance of the bill of lading document and the draft document. The bill of lading is how the
buyer can obtain the goods. The document must be indicated as clean (no damage), negotiable
(value is able to be transferred), and blank endorsed (whoever has the check can cash it)
(UMGC, 2022). The draft document is the executing document in a documentary transaction
and must be included. Colossal also must also accept the rules set out in the Uniform Customs
and Practice for Documentary Credits (UCP). Which cover circumstances that can arise in a
documentary credit transaction. Another ramification is Colossal must have a contractual
agreement between a bank authorizing another bank to make payment to the seller (UMGC,
2022).
This agreement is different from the contract Colossal, and the supplier have already.
Documentation must match what is described in the L/C or the bank won’t honor the L/C. This is
the requirement which raises the most issues in disputes over payments under L/Cs (UMGC,
2022). Great care needs to be taken to ensure the terms in the L/C and in the documentation
match correctly (UMGC, 2022). I would suggest the VP bring these requirements to the board
when talking about opening an L/C for the supplier. If the supplier is that important, then
Colossal should take steps to granting their request but if there can be a supplier change and their
fine with how Colossal was doing business before Edfin wanted to change I would change
suppliers. Because the L/C naturally looks out for the suppliers and all the extra requirements
and small details to look out for while opening an L/C I might look to change suppliers.
Course Resource
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International Legal Challenges File
Notice: Contains Confidential Information
The vice president is concerned that the company is undertaking a number of international
projects without a complete understanding of the risks that such activities entail. Specifically, the
VP would like further thoughts on the following issues:
1. In one case, a subsidiary of Colossal Corporation has negotiated a contract that calls for
any disputes to be settled in the courts of Zintar, a relatively small African country that
supplies raw materials for some of Colossal’s European operations. The VP would like a
discussion on the wisdom of this contract provision and thoughts on possible alternative
approaches if the contract were to be renegotiated.
2. In a second case, a Colossal subsidiary in Bartan, an Asian country, wants the company
to enter into a sales contract with a subsidiary there, using the UN Convention on
Contracts for the International Sale of Goods (CISG) as the controlling law. The VP
needs to know the ramifications of this option and decide whether it is a good idea.
3. Colossal management also needs to know whether arbitration is a good idea for a dispute
resolution provision for both domestic and international contracts and why.
4. The parent company, Colossal Corporation, has been sued in the country of Notso in
South America. The lawsuit claims millions of dollars in damages due to supposed
pollution at a mine that Colossal owned there. Since Colossal has already decided to exit
that country and sold the mine there, the company’s regional VP believes there is no risk
if the company is taken to court in Notso. He says that even if Colossal loses there and a
court judgment is rendered against it, there is no danger because the company will have
left the country. The VP needs to know if he is right.
5. Finally, one of Colossal’s suppliers in the country of Edfin no longer wants to supply
needed raw materials for Colossal’s factories in the United States, unless Colossal agrees
to pay them by opening a letter of credit. Up to now, the company has paid them after
delivery to the United States, which has allowed Colossal to inspect the quality of the
shipments before sending payment. What are the ramifications of granting Edfin’s
request?