8. LEGAL SYSTEM AND LITIGATION CONSIDERATIONS Understanding the U.S. legal system is crucial for foreign investors and international businesses operating in the country. The U.S. has a common law system, meaning that judicial decisions set precedents that influence future rulings. The legal framework is divided into federal and state jurisdictions, each with its own courts, rules, and procedures. This structure affects how businesses can be sued, where disputes are resolved, and the potential costs involved in litigation or alternative dispute resolution. Foreign investors and international businesses must carefully structure their U.S. operations to minimize legal risks and control dispute resolution costs. By leveraging contractual protections, alternative dispute resolution methods, and proper legal counsel, businesses can better navigate the complexities of the U.S. legal system, as further explained below. 8.1 Can Foreign Businesses Be Sued in the U.S.? Yes, foreign entities can be sued in the U.S. if they have sufficient business ties (minimum contacts) with a state or if they enter into contracts governed by U.S. law. Courts will analyze whether it is reasonable and fair to bring a foreign company into litigation under the Due Process Clause of the U.S. Constitution. A company with offices, employees, sales, or contracts in the U.S. may be subject to jurisdiction in multiple states, and also on the federal level. 8.2 U.S. Court System: Federal vs. State Jurisdiction The U.S. has a dual court system, meaning that cases can be heard in either federal or state courts, depending on the nature of the dispute. Understanding which court has jurisdiction is critical for businesses operating in the U.S., as different courts apply different procedural rules, timelines, and costs. Cases can be initiated in state or federal court depending on the subject matter of the claim, the amount in controversy, and the parties involved. (i) The federal court system has jurisdiction over cases involving federal law, constitutional issues, disputes between states, and lawsuits involving foreign entities where jurisdiction applies. The federal court system also has jurisdiction over parties from different states where the amount in controversy exceeds $75,000; this is often referred to as diversity jurisdiction. (ii) State courts handle most business disputes, contract claims, employment matters, and civil litigation unless diversity jurisdiction or a federal issue exists. Unlike some jurisdictions that have specialized commercial courts, most U.S. business disputes are handled in general state or federal courts, except in a few states like Delaware, which has a specialized Court of Chancery focused exclusively on business and corporate law.
37
Made with FlippingBook Ebook Creator