Companies are being increasingly challenged by complex and costly cross border disputes according to a recent survey of multinational corporations.
The report, which surveyed 146 senior lawyers from 18 different industry sectors, found that disputes involving two or more countries were predicted to grow significantly in the next few years and almost half of those surveyed said that cross border litigation has become more frequent in the past two years.
Customers and suppliers were reported to be the main sources of cross-border disputes, but other problems areas included competition and intellectual property issues.
England, China, France, Germany, and the U.S.A were the countries found to be the most common places for cross-border disputes and the U.S.A, China, Brazil, and India were reported to be the most challenging jurisdictions.
Respondents said that difficult factors include having to comply with unfamiliar overseas rules and legal systems and overcoming practical issues such as differences in time zones, cultures and languages.
However the report found that the greatest challenge was finding quality lawyers in overseas jurisdictions.
Company directors faced with having to commence or defend cross border legal proceedings will have many concerns not least the question of who do they turn to advise them in an unknown territory and the amount of these legal costs. Cross border litigation is expensive as it invariably includes more than one legal team as both local and foreign lawyers will usually be instructed.
Difficulties with the local laws can cause more anxiety for companies who find themselves in the hands of overseas lawyers. Some systems can be particularly complex and lengthy. It can also be difficult to enforce a court order or judgment awarded in one country in another. It is vital that the right foreign lawyer is instructed to competently guide you through the process.
It is not all doom and gloom however as many of the respondents in the survey indicated that when skilfully handled, cross-border disputes can be powerful strategic tools and pursuing cross border disputes can in fact provide opportunities to protect or promote a company’s market position.
It is also now becoming easier to commence cross border litigation and obtain redress for losses suffered due to mutual legal arrangements between most major countries. Even if there are no such arrangements in place, lawyers are generally becoming more used to dealing with litigation from abroad. The global approach to litigation also means that judgments from other countries are becomming more easy to enforce (although, not always).
The ability to choose which country’s law and jurisdiction are applied to disputes can have a significant advantage. Depending on the dispute, some countries legal systems will be more advantageous than others. For example not all systems can award injunctions, not all award reimbursement of legal costs and the calculation of amounts awarded (known as damages) can significantly vary. More and more companies are choosing a jurisdiction that they consider best suits their situation, which might not be the laws or jurisdiction of their own country.
The survey highlights the costs and challenges associated with cross border litigation. It is therefore critical to anticipate and address any disputes before they occur. This can included ensuring that your contract terms provide for what would happen in the event of a dispute and contains appropriate clauses such as choice of law and jurisdiction clauses to ensure you are in the best position possible.
The increase in cross-border litigation is inevitable in the modern world and the trend is unlikely to slow. Legal systems are generally learning to move along with it. It is however vital to instruct quality independent foreign lawyers with an understanding of the markets within which you are trading when entering cross border contracts. You should also obtain appropriate legal representation as soon as possible if involved in an overseas dispute to ensure that your position is protected and to help reduce the anxiety associated with cross border litigation.
If you need advice from a specialist lawyer in relation to a cross border dispute or to assist you with your international trading terms and conditions contact Worldwide Lawyers who will be able to put you in touch with a lawyer who can help.