This case study examines a proposed partnership between CaDMex Pharma, a Tampa-based multinational pharmaceutical company, and Gentura, a biotechnology firm located in the fictional developing nation of Candore. The paper explores the ethical, legal, and contractual challenges that arise when doing business across borders with a country that has not signed major international trade conventions. Key issues addressed include the limitations of the UN Convention on Contracts for the International Sale of Goods (CISG), the role of international arbitration, the Foreign Sovereign Immunities Act, and the potential formation of a joint venture as a protective legal strategy. The paper ultimately recommends international arbitration and joint venture incorporation as the most viable solutions.
Globalism has resulted in a number of changes for the economic viability of the modern corporation. As the developed world evolves within its new market structure, the developing world adds to the pressures and changes necessary to do business in the contemporary environment. Doing business is not the same worldwide, and participants in the global village recognize that there are different cultural norms, behaviors, and expectations that stakeholders of all types hold when thinking about the modern corporation. Business ethics sets up standards for organizations to act in ways that may be considered right or wrong, or at the very least acceptable or unacceptable.
As trade barriers fall around the globe, differences in morality are gaining more attention regarding such issues as human rights, political behavior, and environmental conservation. The core purpose of a multinational business is to continue growing the organization, find more resources, develop more products, and convert new customers. Without fiscal advantages, organizations would not have the impetus to expand globally — greater profits, less regulatory expense, tax incentives, and a larger universe of workers, among other benefits. Multinational corporations must, however, keep in mind that customs, laws, and expectations may vary considerably by country, while overall global moral standards of behavior remain (Mayfield, 2003).
This case study revolves around CaDMex Pharma, a pharmaceutical company based in Tampa, Florida. It markets products in 127 countries globally and is heavily invested in the research and development of new drugs. Gentura is a biotechnology company based in Candore, a small developing nation experiencing rapid growth. Gentura recently developed a breakthrough anti-diabetes drug called ProPrez, but lacks the resources to produce and market it globally. Gentura is in discussions with CaDMex to explore forming a partnership that would leverage the strengths of both organizations.
This prospect is particularly promising because CaDMex has developed a technique that shortens the manufacturing time of certain drugs. CaDMex may license this technique to Gentura, provided that CaDMex retains global marketing rights. The central complication focuses on Candore, which is currently under a dictatorship with a volatile political and economic climate, an unpredictable internal legal system, and which, while in the process of becoming a WTO signatory, has not yet signed any of the major global trade conventions.
In the 21st-century global economy, conducting business across borders and cultures with divergent legal traditions is increasingly complex, making it ever more important to utilize legal tools such as international commercial arbitration prior to litigation. The rapid and robust economic development of the second and third worlds has encouraged new trade relationships, laws, barriers, restrictions, and treaties. Many global scholars observe that one of the core problems in global trade in the 21st century is that after two centuries of protectionism and nationalism, the developing world faces a steep learning curve that may result in legal barriers to continued globalization and free trade (Uncertainties bedevil plans, 2008).
Candore is a sovereign nation with its own set of laws and legal mechanisms for addressing conflict. An organization from another country — in this case, the United States — holds no real legal power within Candore. However, the United Nations Convention on Contracts for the International Sale of Goods (CISG) was created to facilitate international contracts and transactions by providing an international law of sales that can serve as the basis of contractual relationships (CISG, 2011). Because Candore is not a signatory to the CISG, CaDMex is left in a precarious position when it comes to enforcing copyright law. For example, there would be no real legal recourse if Gentura used the manufacturing technology on drugs other than ProPrez.
The check on Gentura would rely on the fact that it would be unable to market ProPrez in other countries — even under a different name — if the formulation were patented and the agreement were enforceable in other countries that are signatories to major trade agreements. Just as each sovereign nation has developed a set of rules and regulations arising out of its particular culture (legalism), once countries began to trade with one another more regularly, it became necessary to build a framework to aid in disputes and other contractual or legal matters. International law differs from national law in that it primarily concerns national or corporate behavior rather than the behavior of private citizens.
"International arbitration clauses resolve jurisdictional disputes"
"Joint venture incorporation offers enforceable contractual protection"
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