International Expansion

E-exports as seen by the lawyer


In the next edition of the information campaign on B2B e-export, we talk to Jakub Słodziński, Legal Counsel, Senior Associate at Peterka & Partners, about the legal aspects of such a decision.

International expansion is a frequent strategic move in any company's development process. In legal terms, what should we pay attention to while preparing to enter foreign markets?

When a Polish company seeks to open up to foreign markets, it always involves a complex process, including in the legal sense.

Firstly, it should be established whether the expanding company intends to operate in the B2B model, i.e. operate trade with other companies or run consumer trade exchanges (B2C). In particular, the B2C model may require some adjustment of company's policies as well as rules and regulations to the applicable legal system of the target country, accounting for differences in consumer rights, handling complaints, warranty and guarantee claims, information obligations, ways of conducting marketing activities along with product returns practices.

Moreover, the legal environment in a target country should be analysed, which involves the examination of online sales regulations, specific industry requirements, product quality and safety norms (including the seller liability), methods of product marking and labelling, packaging and waste disposal obligations, methods of payment and currency exchange rates or personal data processing standards. Taxation regulations also play an important part, particularly those for VAT;additionally,in the case of operations involving countries outside of the European Economic Area,the applicable customs procedures should be considered.

What are the legal risks entrepreneurs may be exposed to while expanding abroad and starting e-exports?

Although, in many fields, EU regulations have established a uniform legal framework for countries of the European Economic Area, there are still some discrepancies between national jurisdictions so local regulations should be examined at all times, preferably using some legal and tax advisory service from the relevant jurisdiction.

A failure to conduct a suitable legal environment analysis and, as a result, failing to implement the required solutions and practices in company operations may bring about negative consequences, including contractual liability or even tort liability towards clients. Additionally, there may also be administrative sanctions imposed by trade or sanitary supervision institutions, industry supervision bodies and regulators, consumer protection organisations, anti-monopoly authorities, etc.

Can international expansion conducted via technological platforms facilitate the legal procedures as compared to the more traditional forms of brick-and-mortar stores or dealerships?

Certainly expanding operations through international online sales offers some advantages over opening traditional stores abroad. In the traditional form of expansion it is necessary to establish some form of legal presence of the company in a given country, e.g. by forming a company under the foreign law or establishing a branch, subsidiary or dealership.

Establishing any of these entities will require renting premises, appointing representatives and meeting numerous registration and reporting obligations. If an international entity wants to hire employees, it will also face obligations resulting from the provisions of the local labour law, social security insurance, trade union activity, etc.

The business model based on international expansion via technological platforms, which allows to do business abroad without establishing a legal presence there, makes it possible to mitigate many of the legal and logistical risks involved in entering foreign markets.