national research, mainly from the viewpoint of U.S. universities. Clearly, these are not the drivers of the research endeavor, but they can undermine the primary objectives if they are not effectively addressed.
Several issues affecting the reputational, financial, operational and legal risks of the endeavor and how best to structure the administrative and legal vehicle for the intellectual program should be decided at the outset of the collaboration. To begin with, it is critical to determine whether the parties’ objectives and expectations are realistic, understood, and aligned, or at least compatible. It is also important to have a clear sense of the activities that will be undertaken in the foreign locale, since this will drive tax and regulatory compliance requirements and liabilities that apply to the endeavor. In addition, the U.S. entity needs to understand the jurisdictions, laws, and processes of the overseas locale and whether they are predictable or whether local officials enjoy wide discretion. Finally, there is a need to ensure that negotiations are conducted with somebody who actually has the legal and political authority to close the transaction and who will be there for the duration of the relationship, or at least until the endeavor is well-established.
Ms. Keith explained some options for structuring the administrative and legal mechanisms to carry forward the research endeavor. Although the term “partner” may be used in casual parlance to indicate a close relationship, in most cases it is best to avoid creating a formal, legal partnership. A legal partnership carries with it 100 percent joint and several liability of each partner to the other for torts, debts, contracts and other liabilities of the endeavor. The foreign government might create a new, single-purpose corporation to contract with the U.S. university, particularly if it is investing a considerable amount of money. It is often easier politically and practically for a foreign government to fund a corporation organized locally and allow that entity to fund the U.S. university. Alternatively, the U.S. university and foreign university might be the co-creators and members of the new corporation if there is a joint commitment to a long-term relationship with adequate funding. This can be helpful since the corporation provides limited liability to the members. On the other hand, corporate formalities can add a level of bureaucracy that faculty find burdensome and unnatural. For example, the faculty working on the research endeavor of the new entity may have to attend board meetings, pay attention to using the correct title, stationery and business cards, and so forth. Typically, it is not worth creating a formal legal entity unless there is a large amount of money involved, a long-term commitment, and a high level of certainty that the relationship