Legal Environment in International Business: Laws, Systems, and Ethics

Rule of the individual

Rule of governing whereby one individual is the ultimate authority and has discretion to set and enforce laws.

Rule of law

Rule of governing whereby ALL individuals are accountable to well-defined and established laws that are fairly enforced.

Rule of Law Index

Based on a survey of over 2,500 judicial experts. Measures regulatory enforcement, civil justice, criminal justice, corruption, governmental restraint and fundamental rights.

Three Levels of Law

Constitutional, Criminal, Commercial.

Customary law

Laws derived from experience, practice, collective wisdom, and shared philosophy to set the boundaries and rights that define relationships between community members.

Theocratic law

A system of law that relies on religious doctrine and belief.

Common law

A legal system in which judges interpret law and set precedent for subsequent interpretation and usage.

Civil law

A system of law that provides a comprehensive code of written laws that judges translate into legal principles and regulatory statutes.

Mixed legal systems

A legal system that combines two or more of the following types of law; customary, theocratic, common, or civil law.

International law

Laws agreed on by nations; binding on nations and supersede national laws.

Public international law

Governs interactions of nation-states.

Private international law

Sets international legal jurisdiction and procedures for people and organizations.

Arbitration

Reaching a binding decision through a third-party arbitrator outside the courts.

World Bank Report

Outlines legal difficulties a firm may face starting or operating a business; ranks the regulatory environment in 189 countries each year.

Common Legal Issues for International Business

The three ways in which crime and corruption affect international business are: Increasing wealth through regulatory changes, Product liability, Property rights and intellectual property.

Illegal Versus Unethical Conduct

Ethics are the moral principles of right and wrong that guide personal and organizational decision making.