Implementation and Dispute Resolution

• Author: David A. Steiger
• Pages: 353-381

With the master service agreement, joint venture (JV) agreement, or other

contracts that dene the relationship of your client company to its foreign

counterpart complete, there is a natural tendency for the lawyers involved

to turn the process over to the businesspeople, and rightly so, for the most

part. It is the business experts who should be counted on to do what they do

best. Besides, for cost-conscious small to medium-sized enterprises (SMEs),

the idea of spending fees in addition to those incurred in planning and

completing the agreement may be a hard sell. Still, as Michael Mensik, of

Baker & McKenzie, cautions, “signing the agreement is only the beginning.”

Indeed, the special complications that can arise with cross-border

transactions make an excellent case for retaining legal counsel for the imple-

mentation phase. If the implementation process goes awry, you can be sure

that lawyers will become involved in the arbitration or other litigation that

will almost certainly result. Far better to spend a little at the implementa-

tion stage to avoid not only wasting the money and time invested in the

relationship thus far but also the disruption to operations and even poten-

tial liability that might ow from a bitter end to the business relationship.

This chapter offers suggestions to businesspeople and lawyers alike to

help anticipate problems during the set-up and execution of international

transactions generally, so that they can be defused before exploding into a

full crisis. For those ill-fated relationships that cannot be saved despite the

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Implementation and

Dispute Resolution

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hard work and best intentions of all involved, there are also a few thoughts

for navigating the dispute resolution process.

Converting Paper Oversight into Practical Oversight

As with all the other major milestones in putting together a cross-border

operation, implementation requires a focused team of individuals with

both a stake in the outcome and sufcient responsibility to get all necessary

agenda items through to completion. The team should have representatives

from all areas crucial to success, including nancial, human resources, and

operational experts.1

“When you’re implementing,” muses Howard Mills, of Deloitte, “some-

times you can put together a nice plan, but it still doesn’t end up working

with the joint venture partner for whatever reason.” On the tax end of

things, for example, perhaps there is a problem with withholding or with

qualifying for a treaty. Whatever the issue, Mills warns, you will be forced

to rethink and reshape it on the y to get to the best possible answer under

the circumstances. It may not be the best possible answer metaphysically,

but, says Mills, “it’s the best possible answer given the parameters that

exist at the time.”

Mensik agrees. At some point, your vendor or business partner will need

to take control of key functions—”this is when details will actually be

established and put in operation.” It is only once a vendor gets its prover-

bial “hands dirty” that you create a framework for further discussion, says

Mensik. “In the transition, you tell the vendor, ‘this is what I need you to

actually implement.’ If you reach outside this set of parameters, the result

will likely be a change order.”

Some relationships with vendors are endangered by the tendency of man-

agement on conclusion of the agreement to consider the process, service, or

other relationship to be “out of sight, out of mind.”2 There are a variety of

1. Dominic Conlon, Nearshore/Offshore Outsourcing, Part II: Implementation, AL G-

 (April 12, 2005), http:// www .hg .org /articles /article _1171 .html.

2. Kristin Robertson, How to Maintain Quality and Control with an Outsourcer, KR C-

 (May 2004), http:// www .krconsulting .com /how -to -maintain -quality -and -control

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