Globalization does not only mobilize goods and people, but also values and laws. This brings up the question of the scope and the validity of a legal sphere.
As soon as somebody (x) makes business outside of the native legal sphere, the common sense tells us that local laws are valid. Exceptions are defined by the term extraterritoriality (http://en.wikipedia.org/wiki/Extraterritoriality).
However, international companies and retail chains export with their business model often their moral concepts and rules. It can happen that the employee cannot recognize the imported rules. In this case, this can result in unintentional misbehavior of the employees that will be sanctioned. The company is responsible for appropriate regulations. Therefore, the following questions should be answered.
- Which laws are valid where?
- Are laws valid for citizens outside their homeland?
- Is it possible that a foreign law can be above local law in a foreign legal sphere?
- Which law is valid for trans-national enterprises?
- Do outdated laws become an injustice?
- What makes right binding?
At first sight, these questions seem to be abstract and not very useful. As soon as corporations are active in different legal spheres, it is necessary that they answer these questions. Through governance, the company can create legal certainty.
Bottom line: Create legal clarity for yourself and your staff.
