United States: Avoiding Legal Pitfalls And Cultural Considerations When Conducting International Business In Asia

Doing Business Abroad – 6 Tips From Our Experiences
Last Updated: September 23 2016
Article by Michael E. Slipsky and Saad Gul

The Foreign Corrupt Practices Act

Detailed technical definitions and explanations of what constitutes corrupt practices are available. A simple explanation is that furnishing a foreign government official with anything of value for favorable treatment is considered illegal. FCPA compliance is a highly specialized area requiring the assistance and advice of counsel. It is also fraught with potential difficulty in reconciling some countries' notions of "how business gets done" with the restrictions that FCPA imposes on American businesses.

The cliché of envelopes of cash changing hands in smoky backrooms is outdated. That kind of conduct will certainly trigger FCPA issues, but so will less egregious activities. For instance, providing lavish hospitality, hiring family members of foreign officials, or excessive entertainment can all result in FCPA violations.

In addition to potential criminal and civil liability, which can be considerable, FCPA violations can trigger related problems. For instance, in the M&A context, selling companies (and their owners) are often required to make representations and warranties regarding FCPA compliance. Similarly, FCPA violations can result in SEC enforcement action. Tread carefully.

Intellectual Property

Respect for intellectual property is not universal. There have been cases where outsourced manufacturers have used the intellectual property of their American customers to manufacture and distribute products in their own right. Others have set themselves up as competitors to their former partners after gaining access to key IP assets.

Tackling this problem requires both a legal and a practical approach. From a legal perspective, you should ensure that you have strong non-compete, non-disclosure and non-use provisions in your contracts. Even if you think that it's unlikely that you'll have the time or resources to enforce these kinds of contractual provisions, it is worth spending the time and money to protect your legal position. For example, if you subsequently try to sell your company, prospective buyers will want to see these kinds of contractual protections, and they may have the resources to vindicate those contractual rights.

From a practical perspective, you could start with due diligence on your partner—i.e., is the partner well-established and reputable in the international business community? You could also structure the proposed relationship so the key IP assets remain in the United States – Coca-Cola was famously excluded from India for years because it would not divulge its recipe to local bottlers.


Asia is in the unique position of being relatively technologically advanced but also undersecured from a privacy and security perspective. The Asia Pacific region is most vulnerable to malware threats, according to Microsoft's Malware Infection Index 2016. In addition to national security issues – defense contractors are targeted via hotel networks – industrial espionage is a significant problem.

The optimal approach is to use separate electronics for travel in the region. These should be bare-bones, with enough material to enable you to transact your business and no more. If you take your regular devices with you, make sure you have backups, use strong passwords, avoid public networks, update your protection software, and do not accept any software updates even if they appear to originate from safe sources such as Adobe.

While in a foreign country, you are subject to its laws. Laws and policies regarding online security and privacy may be different in other countries than in the United States. If you would like to become familiar with other laws, the State Department website contains safety information for every country in the world.

It is important to keep in mind that cybersecurity is not just an "identity theft" problem for you. If your device is hacked, you will have breach notification obligations under U.S. law to the extent that personally identifiable information of U.S. citizens was compromised. (And similarly for any other individuals from other countries who have breach notification laws.) Your company may also have various contractual indemnification obligations that would be triggered by a data breach. Likewise, a security breach could tie you up in knots if third-party plaintiffs allege that your cybersecurity practices were negligent or if your own shareholders allege that it constituted a breach of the fiduciary duty of care.

Know Your Partner

Be careful who you do business with. Most partners are regular businesspersons seeking to make a few dollars (or dinars, rupees, dirhams, yuan or yen). However, contrary to the Hollywood stereotype, unsavory characters do not always advertise themselves by sending limousines and Armani-wearing henchmen to your hotel late at night. Therefore, you cannot rely on appearances alone. You have to do your own diligence to ensure that your partner is a legitimate businessperson. You do not want to be connected to any issues involving money laundering, narcotics, espionage, or other problems that will put you on a law enforcement agency's radar. Even if you ultimately walk away with no issues, being listed as an "unindicted co-conspirator" or dealing with law enforcement investigations is stressful and will damage your business prospects.

The best vetting is generally by reputation. The economic affairs section of the local U.S. Embassy or Consulate should be able to guide you. Another excellent resource is the local U.S.-local country Chamber of Commerce. Chamber officials and prominent members can assist you in evaluating the suitability of your proposed partner.

Government Financing and Insurance Options; International Arbitration

The United States encourages American companies to do business abroad. Government agencies, such as the Export-Import Bank, exist to finance American exports and businesses. In addition, a number of international organizations such as the World Bank and MIGA are potential sources of finance. Additionally, these entities can offer insurance coverage for political risk, which is not available through most insurance companies.

The United States is also party to Bilateral Investment Treaties with a number of countries. A BIT is often a prerequisite to government financing. These treaties offer you a number of privileges. Perhaps the most significant is the right to resolve legal disputes via international arbitration, rather than having to potentially litigate in the foreign jurisdiction's court system. ICSID in Washington is one prominent arbitration venue, though London and Paris are also well established, and Dubai, Stockholm, Doha and Singapore have also become popular. In order to take advantage of international arbitration, you will need to have a clear arbitration clause in the contract with your foreign partner. Be sure to invoke it immediately if there is a legal dispute. That protects you from a later argument that you have waived your arbitration rights.

The alternative to arbitration is foreign litigation. Not only is this expensive and time-consuming – decades is common in South Asia – but once entangled, a foreign court could ask you to remain in-country until the matter is resolved, stranding you there indefinitely. Opt for arbitration.


Your existing insurance coverage is often limited to your activities in the United States and perhaps Canada. If you undertake business abroad, discuss your needs with your broker. Your D&O, CG&L, and umbrella policies must cover your activities in Asia. Riders extending coverage abroad are available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Michael E. Slipsky
Saad Gul
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions