The Challenges and Opportunities of Globalization: Local Companies and International Law

At a trade show in Saint Louis, a Beverly graphic design firm finds a new, faster, and more reliable printing press that would be perfect for its business, manufactured by a large, well-established German corporation. They decide to order a unit modified for the business. When it arrives six weeks later, there are significant differences from what was ordered. Thinking that they are covered by applicable provisions of the Uniform Commercial Code (the “UCC”), they write a strong letter demanding that the press be altered at the manufacturer’s expense. But the manufacturer replies, stating that under the Convention on the International Sale of Goods (the “CISG”), the press is fully conforming and any changes will be made only for the account of the buyer. Who prevails? Without proper advice, probably the German firm.

A Manchester, New Hampshire jewelry store ships two jeweled collector’s watches valued at $35,000 each to a retailer in London who had a customer that wanted them. Insured for full value with an international shipping company, the watches disappear while at the shipper’s New Jersey warehouse. Upon filing a claim for the insurance, the claim is limited to $1,000 by the insurer as the “fine print” in their voluminous tariff states that insurance on international shipments of jewelry is limited to $500 per item. Are they correct? The answer: under GATT’s Harmonized Tariff Schedule, no.

A Gloucester, Massachusetts company that has developed a patented process for making carbon-fiber molded turbine blades for wind-driven generators is contacted by a large, multi-national company from Japan that wishes them to supply them with their requirements for such blades. This order would “make” the local company, but counsel to the Japanese firm asks if they have an export license from the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”). Do they need one? If so, how can they get it? If at a later time there is a dispute and the local company obtains a judgment against the Japanese firm, how can it be enforced? Will the Japanese courts even recognize the judgment?

What do these three cases have in common? All three were actual, typical cases that Mr Wise has addressed and does address regularly. More importantly, however, they are typical of the unavoidable need to have international law expertise readily available to a business in its daily life, as the forces of Globalization continue to cause this planet to shrink.

International Law Is Not Just About Law

There is far more significance to the realm of international transactions than in the few cases listed above. International trade offers the opportunity not only for a company to expand its markets, but also to source unique goods and services, often at far lower prices, and in this way to permit a growing company to distance itself from its competition. Whether one seeks to import magnificent Turkish textiles or outsource computer programming to India (averaging one-quarter of the domestic cost), the benefits of international trade today is the continuation of a rich New England tradition that dates back to the late eighteenth century, when Salem’s extensive merchant ships combed the globe in search of treasures that then made it the wealthiest city in the New World. 

Yet if New England businesses are successfully to forge lasting relationships in the international community, they will need experienced guides to explain and walk them through local customs and cultures as much as to cover applicable laws and regulations; for the rest of the world is far different that ours, and the “imposition” of the American way of doing business can alienate and even anger foreign partners. For examples, Germans will find lack of strict punctuality or formality, such as by not using applicable titles (“Herr Doktor”) or, even worse, using first names at the initial meeting, to constitute a great insult and evidence of lack of respect. In other cultures, a meeting time is only a general approximation and may often be as much as an hour or two later, and warm, personal greetings, sometimes with an embrace, is the norm. In the States, if during a negotiation the other side responds to a point that you have requested by saying, “That would be difficult for me,” we would normally reply by expressing our understanding, but then explaining that we truly need that point and, perhaps, even offering some other point in return. But if you responded in this fashion to a potential partner in Japan, you would have insulted him. (Japanese culture is non-confronted, and hence such a response is their way of saying “no, I cannot do that.”) American contracts are extensive and highly detailed, reflecting the view that it is the ultimate conclusion of the terms of the new relationship. Japanese agreements are short and general, and are viewed as only the “opening” of the relationship. Some cultures expect an exchange of gifts at the first meeting; gifts may be an insult at others.

Mr Wise recognizes that just because your counterpart may be able to convey basic thoughts in English, does not mean you can truly “speak” with each other so as accurately to convey your ideas, feelings and visions. He stands ready to help you with that.

International Law

(978) 594-0678

“To a worm in horseradish, the whole world is horseradish.” -Yiddish proverb

Richard L Wise, Counsellor at Law, P.C.

Strategic Legal Advice and Implementation for Individuals and Businesses

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