In the first article of this series on crisis management, we addressed the fact that a crisis often brings legal challenges on several fronts, including in relation to customers, suppliers, and public authorities, as well as other key stakeholders.

In a globalized commercial environment, these challenges will not always be restricted to the national territory. It is increasingly common for companies in crisis situations to be forced to deal with legal issues in other jurisdictions.

When this occurs, it is essential to act quickly to ensure legal advice that defends the company's interests in the relevant jurisdiction, in addition to establishing an environment of collaboration and exchange of information between the legal teams involved. The objective is to neutralize possible information asymmetries or misalignment in these areas, especially when the legal challenge occurs in a jurisdiction other than the one where the facts related to the crisis occurred.

Below, we address the main contexts in which a crisis can trigger repercussions in one or more foreign jurisdictions and require good international crisis management.

Crisis with repercussions in several countries

The most direct situation in which a crisis may require the company to deal with repercussions in more than one jurisdiction occurs when the facts that gave rise to it reverberated in more than one country.

Situations in which it is easy to identify this scenario are, for example, environmental accidents that contaminate or affect regions in several countries or cyber incidents that affect the company's operation in two or more nations.

In these cases, both the victims of damages resulting from these facts and the government authorities of the locations involved will be able to initiate legal proceedings to hold the company accountable. As a result, the company may need to defend itself against the same fact in two or more locations. This will require agile and organized processing of information to ensure that simultaneously:

• the various procedures receive the evidentiary basis necessary for the defense of the company; and
• the legal teams involved can point out the different risks related to the specific legislation of each location.

Differences in the rules of each country can also result in the adoption of different positions. These variations may depend, for example, on the legal presumptions of the legal system in relation to risky activities or on the level of legal certainty offered by the legislation for compensation of damages through settlements.

These distinctions require legal teams to engage in dialogue to ensure the production of the necessary evidence in each jurisdiction, as well as to ensure that any adoption of different strategies is done in a justified and coherent manner.

A similar situation may arise from the practice of forum shopping – increasingly common in the globalized legal context. With this tactic, victims of crises strive to transfer their claims from the jurisdiction that would naturally be competent – usually the place where the facts occurred or the victim's domicile – to another jurisdiction that may be more favorable. To justify the change, the victims use, for example, the existence of subsidiaries of the company in the new location, even if the operations of the subsidiary are not related to the crisis in question.

In addition to the challenges already mentioned for cases involving victims in multiple jurisdictions, the practice of forum shopping can prove to be abusive, which increases the need for the company to anticipate and evaluate the jurisdictions in which it is easier to file and justify claims. This reinforces the importance of synergy between the legal teams of the various jurisdictions specifically and potentially involved.

Corporate disputes

Another recurring scenario in crises is corporate disputes, whether due to direct demands or claims for return. The company involved in the crisis itself may have fiduciary duties to initiate claims for recourse against its controlling shareholders or managers, which will not infrequently need to be carried out in another jurisdiction or through arbitration. This situation ends up exposing the dispute to different procedural rules and, possibly, also to differences related to substantive law.

There may also be disputes within the controlling block itself for a controlling shareholder to bear all or most of the financial consequences of the crisis, in addition to claims by minority shareholders for losses caused by the crisis.

The latter scenario has also become more frequent, given the growth of financial markets for global transactions. This may lead the authorities of a particular country to take action on possible falsity or inaccuracy of the information provided to investors.

Since the United Nations (UN) coined, in 2004, the term ESG (environmental, social and governance) to recommend to private entities the joint and responsible treatment of environmental, social and governance issues, several financial markets and international certifiers use ESG criteria to qualify and certify companies.

Crisis situations will often have some impact on ESG issues. For example, an operational accident may have an environmental and social impact, while a data leak will have governance implications.

This scenario may lead investors to initiate disputes against the company, based on the allegation that the organization's ESG rating does not correspond to reality – which would cause financial losses to investors or even lead them to make an unwanted investment (a thesis whose acceptance may vary according to jurisdiction).

Initiatives of third parties not directly involved

A third and final equally relevant axis involves initiatives by third parties not directly involved in the crisis or in the company, but which formulate claims related to both. An example is insurers and reinsurers that may have to pay claims directly or in return and that often initiate their own disputes against the company or third parties.

There are, however, many other scenarios. Among them, administrative procedures that foreign authorities can initiate to investigate repercussions of the crisis in that jurisdiction. This can even include public hearings or allegations of indirect and reflex damages – through the theory of bystanders, for example – whose acceptance will also depend on the jurisdiction involved.

The greatest challenge for a crisis that surpass the borders of the national territory (which, as mentioned, has been increasingly common in crisis situations) is the need to deal with several legal scenarios simultaneously. The company, for example, may have to defend itself against claims in two countries, while being investigated in a third one and with its shareholders engaged in arbitration disputes in a fourth location.

Precisely for this reason, it is necessary to have the legal support of experienced professionals (especially in the epicenter of the crisis). They must be prepared to manage the exchange of information and align strategies at the global level, but above all they must be able to draw up plans to address the crisis with a transnational approach. This will make it possible to sustain the company's position consistently in the various relevant jurisdictions.

The accumulated legal experience also allows such professionals to predict in which jurisdictions each claim is most likely to arise. This will result not only from the constant updating of the teams involved regarding the main global jurisdictions for certain types of litigation, but also from the finding, in previous crises, that certain types of disputes will be more prevalent in one location or another.

Having this background of legal advice ensures the company more agility in the analysis of scenarios and in the recommendation and implementation of strategies. In addition, it provides greater assertiveness in planning to face the crisis at an international level.