Where are judicial disputes resolved?
If your partner screws you over in a structure in Hong Kong, do you know where you will have to file the lawsuit? If your answer was "in Brazil", you've already started losing. Where your company's disputes are resolved is what defines whether you recover your money or just take the loss.
Choice of forum: where is the battlefield?
The biggest mistake in an Operating Agreement is ignoring the choice of forum. If your contract says disputes will be resolved in Hong Kong, that's where you'll have to send your lawyers. There's no point complaining to the judge in your city: he has no jurisdiction over a foreign LLC or LTD.
The battlefield is chosen before the war starts. Those who forget this clause end up fighting where the other side wants, with the other side's rules, and paying for the other side's lawyers. The forum is power.
Common Law vs. Civil Law
Brazil follows Civil Law, written and codified law. But most offshore jurisdictions follow Common Law, based on customs and precedents. In the USA, Hong Kong or the Caribbean, the judge decides based on what other judges decided in similar cases.
If you don't understand this difference, you're playing chess thinking it's checkers. In Common Law, contracts are read more literally, market practices matter, and litigation is adversarial. In Civil Law, the code speaks louder. Those who cross these systems without preparation are at a technical disadvantage before even hiring the first lawyer.
The cost of international litigation
Fighting abroad is expensive. Lawyers in elite jurisdictions charge in dollars, pounds, euros — and the procedural costs are heavy. Often, the cost of suing the partner is greater than the value of the fight.
That's why the structure needs to be shielded at the entry, so that the cost of attacking is prohibitive for the other party. A well-designed clause of forum, arbitration and indemnification of costs inhibits frivolous lawsuits. Those who want to drag your company into an expensive war need to know, from the beginning, that you will not be an easy target.
Arbitration: the smart way out
There is a faster, more discreet and economical alternative to conventional courts to resolve cross-border issues: arbitration. In fact, this is the favorite alternative of giants like IBM, Apple, Google, Uber and Meta.
Your Operating Agreement, your Terms of Service and even your contracts can define, in advance, that any dispute will be resolved by a private arbitrator, as long as accepted by all parties at the time of signing — or even by digital acceptance. Arbitration avoids public hearings, chooses specialists in the subject and produces internationally recognized decisions.
Startaway: your first line of defense
At Startaway, unless you explicitly opt otherwise, all your corporate documents and contracts generated by the platform can include a mediation and arbitration clause of our own. Why is this good?
You already use Startaway to manage the documentation, compliance, finances and communication of your business group internationally. Your information is, therefore, centralized, protected and subject to audit. You, your partners and your clients access transparency of information and transactions among themselves, with absolute secrecy from the market — exactly how the big ones do it.
In addition, who better than Startaway to analyze conflicts that cross national borders? When the battlefield is chosen intelligently, the fight doesn't even start. And if it starts, it ends quickly.
