Dear Elon Musk: “The law” is different in every jurisdiction

Unless you’ve just returned from weeks of trekking through the jungles of Borneo, you know that Tesla and SpaceX founder Elon Musk has made an offer to buy Twitter for around $43 billion. Chat classes are split on what this may mean for their preferred means of communication, and unsurprisingly, Musk himself weighed in.

Responding to media and Twitterati speculation about what his ownership of Twitter might mean, particularly in the context of free speech and the possible restoration of former President Donald Trump’s account, Musk (of course) tweeted, “By ‘freedom of expression’, I simply mean what corresponds to the law. I am against censorship which goes far beyond the law. If people want less freedom of speech, they will ask the government to pass laws to that effect. Therefore, going beyond the law is against the will of the people.

Twitter, of course, is a global platform, except in countries where it’s banned: China, Iran, Burma, North Korea, Russia, Turkmenistan, and Uzbekistan. This means that it is at least somewhat subject to the laws of each of the countries in which it operates.

As international lawyers, one of our favorite topics is the importance of understanding and following local laws and regulations when conducting international business – and even in the countries with local laws and regulations.

Yet many companies decide to expand internationally without sufficiently analyzing their potential and localized legal issues. Literally this morning, one of our attorneys had a call with a company that was planning to set up a software coding operation in Mexico with eight coders from other countries traveling to Mexico to do it. We had to tell them that their plan probably wouldn’t work because Mexican law generally doesn’t allow businesses from all foreigners. We get this stuff all the time.

Although the big issue for Twitter users in the United States is freedom of speech, some countries have very little. Indeed, of the above list of countries that have banned Twitter, Russia arguably offers the most freedom of expression…or did until two months ago.

For companies operating in multiple international jurisdictions, (one of the) big problem(s) is Taxation. We have often written in recent years on companies move their manufacturing out of Chinaand we have often written about the alternatives, for example MexicoVietnam, MalaysiaIndia, Polandet al.

The many considerations that international companies face include not only taxation, but also the availability and quality of product components; labor availability and skill; marine infrastructure; security (for employees and property); rule of law (for the protection and enforcement of intellectual property rights, among others); political risk (e.g. war and civil war, nationalization of industry, government actions on currency and taxation, compliance with human rightsnatural and man-made disasters, etc.) and more.

From a legal perspective, jurisdictional differences that need to be carefully considered can impact:

  • Entity creation
  • Employment contracts and conditions of employment (and dismissal)
  • Language of the contract and place where disputes should be resolved
  • Protection and enforcement of intellectual property rights
  • Data Privacy Compliance
  • Market access and tariffs
  • Real estate investment and property
  • Issuance of the work visa

In all of these areas of law, laws and regulations can be very different from jurisdiction to jurisdiction, even within countries (and especially in the United States). At the end of last year, we released a short guide to “international business success”and while following the steps outlined in this article is no guarantee of success, they will certainly help you avoid potential disaster.

Thelma J. Longworth