blaw ch 24 - international law

national law

law that pertains to a particular nation

international law

the law that governs relations among nations

• no authority to enforce laws

• limited on persuasion or coercive actions

international law attempts to reconcile:

• each country needs to be the final authority over its own affairs with the desire of nations to benefit economically from trade and harmonious relations w/ each other

countries are limited to methods of persuasion(negotiations, being friendly, etc) to reach deals

• aka allies

• or coercive tactics(embargo, boycott, sanction, tariffs, threatening war, etc

very delicate balance- countries want to be their own independent entity and does not way tot be told what to do but also all want to get along and reap each others benefits

3 sources of international law

1. international customs

   • international customers have evolved among nations in their relations with one another

   • international custom= “evidence of a general practice accepted as law”

2. treaties and international agreements - an agreement or contract formed between 2 or more independent nations

3. international organizations - an organization composed mainly of nations and usually established by a treaty

   • adopt resolutions, declarations, and other types of standards that often require nations to behave in a particular manner

international court of justice

disputes with respect to international law resolutions and declarations are brought before the international court of justice

rthis court normally has authority to settle legal disputes only when nations voluntarily submit to its jurisdiction

• tricky bc they do not have to show up

united nations commission on international trade law

works to establish uniformity in international law related to trade and commerce

1980 convention on contracts for the international sale of goods (CISG)

similar to article 2 of the UCC to settle disputes between parties to sales contracts

governs only sales contracts between trading partners in nations that have ratified the CISG

UCC but an international scale → companies that are citizens of diff countries

common law and civil law systems

companies operating in foreign nations are subject not only to international agreements but also the laws of nations in which they operate

legal systems around the globe are divided into these 2 systems

common law system - the courts independently develop rules governing certain areas of law, such as torts and contracts

• apply to all areas not covered statutatory law

• we are a common law country

civil law systems - an ordered grouping of legal principles enacted into law by a legislature or other governing body. based on a code rather than case law

• courts interpret code and apply rules to individual cases, but courts by not depart from code and develop their own laws

international principles and doctrines

international legal principles and doctrines have evolved based on courtesy and respect to maintain harmonious relations among nations

1. principle of comity

2. act of state doctrine

3. doctrine of sovereign immunity

when applicable both the act of state doctrine and the doctrine of sovereign immunity tend to shield foreign nations from the jurisdiction of the U.S. courts

• as a result firms or individuals that own property overseas generally have little legal protection in the U.S. against gov actions in the countries where they operate

principle of comity

refers to legal reciprocity

deference by which one nation gives effect to laws and judicial decrees of another nation that are consistent with its laws

principle that says we are going to respect each others laws, we will apply each others laws as long as it is consistent with their own laws

the act of state doctrine

“mind your business” doctrine

provides that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory

frequently employed in cases involving expropriation or confiscation

• expropriation - seizure by a gov of privately owned business or personal property for a proper public purpose and with just compensation

  • gov purpose and they pay you for property

• confiscation - a govs taking of privately owned business or personal property without a proper public purpose or an award of just compensation

  • gov takes property j bc they like it, no proper purpose and don’t pay for it

the doctrine of sovereign immunity

doctrine that immunizes foreign nations from the jurisdiction of U.S. course when certain conditions are satisfied

in 1796 congress codified this rule in the foreign sovereign immunities act (FSIA) which exclusively governs the circumstances in which an action may be brought in the United States against a foreign nation, including attempts to attach a foreign nations property

FSIA major exceptions

a foreign state is not immune from the jurisdiction of the U.S. courts when

1. it has waived its immunity either explicitly or by implication

2. it has engaged in commercial activity within the U.S. or in commercial activity outside the United States that has a “direct effect in the United States”

3. it has committed a tort in the United States or has violated certain international laws

4. it has been designated a “state sponsor of terrorism” and is sued under the FSIA for “personal injury or death that was caused by an act of torture” or a related act of terrorism against a US citizen

foreign state

both a political subdivision of a foreign state and an instrumentality of a foreign state, including any department or agency of any branch of government

commercial activity

a regular course of commercial conduct or a transaction or an act that is carried out by a foreign state within the US

doing business internationally

US domestic firm can engage in international business transactions by

• exporting its goods and services to foreign markets

• manufacturing abroad

  • establish foreign production facilities

  • license tech to an existing foreign company

  • sell franchises to overseas entities

  • establish a subsidiary or joint venture abroad

exporting

direct exporting - occurs when a US company signs a sales contract with a foreign purchaser that provides for the shipment and payment for goods

indirect exporting - occurs when a US company develops a sufficient business in a foreign country and appoints foreign agent or a foreign distributor

• foreign agent - acts as the US firms agent and can sign contracts in the foreign location on behalf of the principal (US company)

• foreign distributor - the US company and the foreign distributor enter into distribution agreement setting out the terms and conditions for selling the company’s products

manufacturing abroad

typically US firms establish their own manufacturing plants abroad when they believe that by doing so they will reduce costs

several other ways in which american firm can manufacturing in another country including

1. licensing

2. franchising

3. establishing a wholly owned subsidiary or joint venture

licensing - manufacturing abroad

a US firm may license a foreign manufacturing company to use its intellectual property or trade secrets

allows foreign firm to use an established brand name for a fee

• firm that receives the license can take advantage of an established reputation for quality

• the firm that grants the license receives income from the foreign sales of its products and also establishes a global representation

franchising - manufacturing abroad

well-known form of licensing worldwide

franchisor license the franchisee to use the trademark, name, or copyright under certain conditions in the selling of goods or services

allows the franchisor to maintain greater control over the business operation that is possible with most other licensing agreements

franchisee pays a fee, usually based on a monthly percentage of gross or net sales

investing in subsidiaries - manufacturing abroad

when a wholly owned subsidiary is established, the parent company maintains complete ownership of all the facilitates in the foreign country as well as total authority and control over all phases of the operation

investing in joint venture - manufacturing abroad

in a joint venture the US company owns only part of the operation

rest is owned by local owners in the foreign country or by another foreign entity

regulation of specific business activities

international business relationships can affect the economies, foreign policies, domestic policies and other national interests of the countries involved

controlled by national laws and international agreements

investment protections

expropriation of property generally does not violate accepted principles of International law

confiscation of property in contrast normally violates international law

• bc of possibility of confiscation may deter potential investors, many countries garantee compensation to foreign investors if their property is taken

export controls

under the US constitution congress can’t impose any export taxes but congress can use other devises to restrict or encourage exports

1. export quotas

   • quota - a gov imposes trade restriction that limits the number, or sometimes the value, of goods that can be imported or exported during a particular time period

2. restrictions on tech exports

   • under the export administration act, the flow of technologically advanced products and technical data can be restricted

   • can be tech

3. incentives and subsidies

   • the US along with other nations uses incentives and subsidies to stimulate exports and thereby aid domestic businesses

   • agriculture, farming, etc

import controls

import controls - all nations can restrict imports

• bc it increases competition, foreign goods flooding the market when you have US goods in that marketplace, foreign goods lower prices → hurts US manufacturers

quotas and tariffs

• quotas - limits on the amounts of goods that can be imported

• tariff - a tax on imported goods (% of value or flat rate)

prohibitions - under the trading with the enemy act, no good may be imported from nations that have been designated enemies of US

other laws prohibit importation of: illegal drugs, agricultural products that pose dangers to domestic crops or animals, and goods that infringe on US patents

antidumping duties

• dumping = the selling of goods in a foreign country at a price below the price charged for the same goods in the domestic market of the exporting country (“less than fair value”)

• foreign firms that engage in dumping in the US hope to undersell US businesses and obtain a larger share in US market

• extra tariff - antidumping duty - may be assessed on underpriced imports to prevent this

• part of tariffs

minimizing the trade barriers

restrictions on imports are aka trade barriers

• regional trade agreements and associations work to minimize trade barriers between nations

the world trade organization(WTO)

• to minimize trade barriers among nations each member country is required to grant normal trade relations (NTR) status to other member countries

  • NTR status is granted thru an international treaty by which each member nation must treat other members as well as it treats country that receives best treatment

• most of the world leading trade nations are members

international dispute regulation

international contracts often include arbitration clauses

• the parties agree in advance to be bound by the decision of a specified neutral third party in the event of a dispute

IF a sales contract act does not include an arbitration clause, litigation may occur in court

• when the contract contains forum-selection and choice-of-law clauses the lawsuit will be heard by a court in the specified forum an decided according to that forum’s law

the new york convention

the United Nations Convention on the recognition and enforcement of foreign arbitral awards

assists in the enforcement of arbitration clauses by requiring courts in nations that have signed it to honor private agreements to arbitrate and recognize arbitration awards made in other contracting states

under the New York Convention a US court will compel the parties to arbitrate their dispute if all of the following are true

1. there is a written (or recorded) agreement to arbitrate the matter

2. the agreement provides for arbitration in a convention signatory nation

3. the agreement arises out of a commercial legal relationship

4. at least one party in the agreement is NOT a US citizen