The Essential Legal Checklist for International Business Expansion

An International Law Checklist — The Top 8

Every so often, clients or potential clients inquire about the essential legal considerations for operating successfully in a foreign country. Every country has its own legal requirements that can trip up companies that seek to do business there. The below checklist is intended to be an initial guide, helping you avoid costly mistakes and ensuring legal compliance from the get-go.

1. Operating Legally

Many countries require that you establish a legal entity, (like a subsidiary, a branch office, or a joint venture) if your in-country business operations will extend beyond a few months. See e.g., Doing Business in China Without a WFOE: Will the Defendant Please Rise.

2. Contract Enforceability

It is oftentimes crucial to have written contracts in the local language. It’s also crucial to have your contract written in the style of the appropriate country in which it will be enforced. See e.g., Drafting China Contracts That Work. And remember, every country is different.

3. Protecting Your Intellectual Property

IP rights often do not extend beyond your home country, and it usually makes sense to register your trademarks and patents in every market you enter.

4. Legal Payments

Familiarize yourself with the Foreign Corrupt Practices Act (FCPA) in the United States and similar laws in other countries to ensure compliance. Misunderstandings here can lead to severe legal actions.

5. Legal Sales

Understand both export control laws from your country and import and product regulations in your target markets. This knowledge is essential to ensure that your products meet legal standards everywhere they are sold. What is perfectly legal in one country might be completely illegal in another. And just because a product you wish to sell is legal in a country, does not mean your product is legal. Countries sometimes have very specific requirements for specific products and specific types of businesses. Just because your product has passed FDA, EPA or other requirements in the United States, does not mean it can be sold in another country without passing that country’s own requirements.

6. Liability Mitigation

What happens if your product injures someone? Robust contracts and comprehensive insurance can help mitigate liability risks. Your existing contracts almost certainly will not work for the new country and there is also a very good chance that your existing insurance policy will not cover the new country.

7. Regulatory Issues

Antitrust, labor, tax, and business termination laws can vary significantly by country. For example, some countries have no laws on resale price maintenance, while others strictly enforce such laws.

8. Digital Compliance

Adhering to data protection and cross-border e-commerce laws is critical and complicated. We are aware of instances where someone has been arrested while vacationing in the United States for violating U.S. laws while operating on the internet from overseas.

Conclusion

This checklist is an overview of the key legal areas you need to consider when expanding your business internationally. It is intended to help with your initial planning and provoke careful consideration of the legal challenges you may face. For actual market entry or ongoing operations abroad, it is crucial you seek specific, in-depth guidance tailored to your industry, your business, and your target countries.