Moreover, risks and dispute resolution options should be identified within the agreement. Important risks to consider in the drafting of a distribution agreement include territorial constraints, stability of country, influence of culture, religion, politics, conflict of laws, and enforcement procedures. Identifying risks means asking certain questions. Which laws govern, and to what extent are geographic restrictions applicable? Should you be bound by international law? Is the relationship between parties worth keeping? Ultimately, is it worth your risk?
Liberia, Nigeria, Benign, Togo, Ghana, Cote Divorce, Sierra Leone, Guiana, Guiana Bissau, the Gambia, and Senegal are 12 of the 15 countries in the Economic Community of West African States (SHOWCASE) bordering the western coast of Africa. Take into account African political realities and common commercial policy towards third parties. SHOWCASE countries are politically unstable, as a large proportion of this region is highly underdeveloped, with unfavorable economic conditions such as low income, high poverty, and unemployment, to mention just a few.
Proliferation and perpetuation of new political orders flourished simultaneously, with the resurgence of political coups, civil wars, rower struggle, and ethnic and communal clashes. The likelihood of heightened violence on the West African coast, employs the SHOWCASE as one of the more precarious regions of Africa (Edi, 2006). Political instability patterns in SHOWCASE region, more than any other, have been a recurring theme since the 1 sass, due to frequent military coups and interferences in politics. Political violence, civil wars, and Ethan-religious crises have ravaged the region.
Ethnic and religious crises appear to be common characteristics of SHOWCASE countries as well, with a history of civil wars in Liberia, Sierra Leone, Guiana Bissau, and Cote Delivered. Africans most populous and richest country, Nigeria, continues to contend with Ethan-religious crises and Islamic terrorist groups (I. E. Book Harm), signaling a highly politically unstable environment (ABA, Karri, & Aziza, 2014). Gambia and Ghana appear to be the least politically risky among SHOWCASE countries, but Gambia may be heading towards becoming a high risk country (ABA, Karri, & Aziza, 2014).
Given the high level of instability, pilferage is another real risk to be considered. It is ideal for the distributor to maintain control over the payment process, benison of payment documentation, taxation, and foreign exchange. Central banks have been implementing tighter monetary policies to curb inflation, yet exchange rate policies of the SHOWCASE member region still fluctuate considerably (Dsir Adam, Maybug Morphed, & Sahara, 2012). Foreign exchange rates have an effect on the amount of disputes between parties in distant countries.
Preferably, any negotiated discounts, rebates, and commissions should be calculated, and mutually agreed upon, in USED. The distribution agreement should outline which country’s laws will be applied in reference to applicable taxes and fees. Cultural factors influence attitudes toward dispute resolution. Planning dispute resolution in advance is a good way to minimize transaction risk. In terms of rectifying discrepancies, has either party specified mediation, arbitration, or litigation as a means of resolution?
Which legal rules are applicable to determine venue and applicable law? How will the resolution be enforced? Contract terms provide a basis for resolution. Providing for such processes in the dispute resolution section may show commitment to attempting to resolve any disputes. Additionally, uncertainty over jurisdiction can be avoided by including a forum election clause in the contract so all parties know where and how to resolve dispute in the event of a contract breach. All parties must be confident in the method and persons directly involved in the dispute resolution process.
Arbitration is often a preferable method of resolving disputes, especially where the foreign civil justice system is relatively unsophisticated in commercial matters, or where significant delays in dispute resolution in those forums may occur. Resolving a dispute through arbitration may also make means of enforcement more certain. If appropriate resolution of business spites requires expert opinion, or where privacy and confidentiality are desired, arbitration may be choice.
Many contracts contain arbitration clauses, since it is frequently used on the international level, and permits the possibility of arbitration in a third neutral country that is mutually convenient for both parties. Albeit an industry expert or distinguished lawyer, rules of the arbitrating party are flexible, straightforward, and impartial with less expense and delay. Alternative Dispute Resolution (ADAIR) dominates the field of international dispute resolution as a standard approach, but African nations re outmoded in their inability to commit to, and establish, regional dispute resolution mechanisms (McClure, 2014).
Therefore, dispute resolution proceedings should be handled in a more neutral location. In the sphere of trade and commerce, a vacuum exists within the African continent, having a substantial impact in terms of cohesion and cooperation. Take into account applicable conventions and protocols that may present a conflict of laws or inhibit enforcement. Have a trusted legal advisor. In many cases, the prospective Intermediary may be a good source of information regarding local regulatory, business, and cultural conditions.. Learn the other country’s laws and the role of foreign and international law within your own borders.
Outline risks and control activities in a manner conducive to the peaceful resolution of dispute. Before any agreement is reached, seek the advice of any attorney who specializes on the laws of that country. When dealing with foreign governments or government agencies, lines between sovereignty and international law can be unclear. Counsel should remember to consider issues of sovereign immunity and how both U. S. And foreign law treat those issues (Schaffer, August, Doge, & Earl, 2012). Both parties must decide where the disagreement will be resolved.
This is a significant part of the contract, as legal courts and system can be drastically different in terms of time, cost, and transparency. Both parties must select a language for the contract. Contracts should be drafted in both languages, though, since some legal terms might not translate literally. Operating business internationally means you will be trading in more than one currency, which carries with it foreign exchange risk. Holding funds or entering into contracts overseas exposes you to Currency exchange rates that ay adjust between signing and payment.