CHAPTER 3 INTERNATIONAL LAW DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.)

CHAPTER 3 CHAPTER 3 INTERNATIONAL LAWINTERNATIONAL LAW

CHAPTER 3 CHAPTER 3 INTERNATIONAL LAWINTERNATIONAL LAW

DAVIDSON, KNOWLES & FORSYTHEBusiness Law: Cases and Principles

in the Legal Environment (8th Ed.)

DAVIDSON, KNOWLES & FORSYTHEBusiness Law: Cases and Principles

in the Legal Environment (8th Ed.)

2© 2004 West Legal Studies in Business© 2004 West Legal Studies in BusinessA Division of Thomson LearningA Division of Thomson Learning

BUSINESS LAW: BUSINESS LAW: Cases & PrinciplesCases & PrinciplesDavidson Davidson • Knowles • Forsythe 8• Knowles • Forsythe 8 thth Ed. Ed.

BUSINESS IN A GLOBAL BUSINESS IN A GLOBAL VILLAGEVILLAGE

BUSINESS IN A GLOBAL BUSINESS IN A GLOBAL VILLAGEVILLAGE

World events create opportunities and risks for U.S. businesses.

“Internalization” is permeating society at every level.

Every businessperson must be familiar with the basic rules of international business.

World events create opportunities and risks for U.S. businesses.

“Internalization” is permeating society at every level.

Every businessperson must be familiar with the basic rules of international business.



GOING ‘GLOBAL’GOING ‘GLOBAL’

Communication and transportation improvements helps buyers and sellers in different markets to find one another more easily and makes it easier in doing business.

Technology has opened the global marketplace to businesses of all sizes.

Communication and transportation improvements helps buyers and sellers in different markets to find one another more easily and makes it easier in doing business.

Technology has opened the global marketplace to businesses of all sizes.



DOING BUSINESS DOING BUSINESS IN A GLOBAL MARKETIN A GLOBAL MARKET

– Franchising: special privileges granted by a corporation that allow the franchisee to conduct business under the corporate name of the franchisor.

– License: permission granted by a franchisor to the franchisee to do some act that, without such authorization, would be illegal, a trespass or a tort.

– Franchising: special privileges granted by a corporation that allow the franchisee to conduct business under the corporate name of the franchisor.

– License: permission granted by a franchisor to the franchisee to do some act that, without such authorization, would be illegal, a trespass or a tort.



CROSS-CULTURAL CROSS-CULTURAL NEGOTIATIONSNEGOTIATIONS

International businesspersons need to learn about their trading partners and their cultures.

Language can have an impact on cross-cultural negotiations and business dealings.

International businesspersons need to learn about their trading partners and their cultures.

Language can have an impact on cross-cultural negotiations and business dealings.



EXTRATERRITORIALEXTRATERRITORIAL APPLICATION OF U.S. LAW APPLICATION OF U.S. LAW

EXTRATERRITORIALEXTRATERRITORIAL APPLICATION OF U.S. LAW APPLICATION OF U.S. LAW Extraterritorial Applications of Sovereign Law.

– Do the laws of a nation end at its border?– Is domestic law applied internationally?

In some cases US. laws apply to business conduct in other countries.– Antitrust Law;– The Foreign Corrupt Practices Act (FCPA);– Employment.

Extraterritorial Applications of Sovereign Law.– Do the laws of a nation end at its border?– Is domestic law applied internationally?

In some cases US. laws apply to business conduct in other countries.– Antitrust Law;– The Foreign Corrupt Practices Act (FCPA);– Employment.



EXTRATERRITORIAL EXTRATERRITORIAL APPLICATION OF U.S. LAWAPPLICATION OF U.S. LAW

EXTRATERRITORIAL EXTRATERRITORIAL APPLICATION OF U.S. LAWAPPLICATION OF U.S. LAW

Antitrust Law:– Under the “direct and substantive effect” standard,

courts have applied antitrust statutes to business conducted outside the United States

The Foreign Corrupt Practices Act (FCPA):– Forbids US. firms from engaging in corrupt practices to

advance business interests Employment:

– Nondiscrimination laws apply to Americans working for US. firms abroad

Antitrust Law:– Under the “direct and substantive effect” standard,

courts have applied antitrust statutes to business conducted outside the United States

The Foreign Corrupt Practices Act (FCPA):– Forbids US. firms from engaging in corrupt practices to

advance business interests Employment:

– Nondiscrimination laws apply to Americans working for US. firms abroad



FREE TRADE ZONESFREE TRADE ZONESFREE TRADE ZONESFREE TRADE ZONES

Created to Facilitate and Expedite Commerce by Forming Economic Unions.

Two Most Recognized Are:– European Union (EU).– North American Free Trade Area.

Other Free Trade Zones: – In Latin America.– In Africa.

Created to Facilitate and Expedite Commerce by Forming Economic Unions.

Two Most Recognized Are:– European Union (EU).– North American Free Trade Area.

Other Free Trade Zones: – In Latin America.– In Africa.



THE EUROPEAN UNION THE EUROPEAN UNION (EU)(EU)


Organization of Western European Countries: created by the Treaty of Rome.

Purpose of EU is to:– Establish a common customs tariff for outside

nations importing goods into EU.– Eliminates tariffs among EU members.– Allow free movement of workers, goods, and

capital within EU.

Organization of Western European Countries: created by the Treaty of Rome.

Purpose of EU is to:– Establish a common customs tariff for outside

nations importing goods into EU.– Eliminates tariffs among EU members.– Allow free movement of workers, goods, and

capital within EU.





Governed by four main bodies:– The Council of Ministers: legislative branch of

EU, issues directives and regulations.– The European Commission: enforcement

branch of EU, imposes fines and sanctions.– The European Parliament: primarily an

advisory board.– The Court of Justice of the European

Communities: arbitrates disputes within EU.

Governed by four main bodies:– The Council of Ministers: legislative branch of

EU, issues directives and regulations.– The European Commission: enforcement

branch of EU, imposes fines and sanctions.– The European Parliament: primarily an

advisory board.– The Court of Justice of the European

Communities: arbitrates disputes within EU.




Objectives within the EU:– Goods;– People;– Services;– Capital.

Competition (Antitrust) Law in the EU:– Articles 85 and 86;– Negative Clearance;– Extraterritoriality.

Objectives within the EU:– Goods;– People;– Services;– Capital.

Competition (Antitrust) Law in the EU:– Articles 85 and 86;– Negative Clearance;– Extraterritoriality.



NAFTANAFTANAFTANAFTA

Agreement between Mexico, Canada, and the United States.

Seeks to eliminate tariffs of goods traded among member nations.

Promotes greater movement of workers and investment capital among member nations.

Agreement between Mexico, Canada, and the United States.

Seeks to eliminate tariffs of goods traded among member nations.

Promotes greater movement of workers and investment capital among member nations.



OTHER FREE TRADE OTHER FREE TRADE ZONESZONES

In Latin America:– Central American Common Market;– MERCOSUS Common Market;– Andean Common Market;– Caribbean Community.

In Africa:– Economic Community of West African States;– Economic and Customs Union of Central Africa;– East African Community.

In Latin America:– Central American Common Market;– MERCOSUS Common Market;– Andean Common Market;– Caribbean Community.

In Africa:– Economic Community of West African States;– Economic and Customs Union of Central Africa;– East African Community.



GATT GATT GATT GATT

Promotes free trade by defining unfair trading practices.

Provides panels to resolve trade disputes. Designed to reduce tariffs and quotas between

member nations. Created the World Trade Organization, an

international economic organization to provide leadership and coordinate international trade.

Promotes free trade by defining unfair trading practices.

Provides panels to resolve trade disputes. Designed to reduce tariffs and quotas between

member nations. Created the World Trade Organization, an

international economic organization to provide leadership and coordinate international trade.



WTO WTO WTO WTO

Intended to improve on the gains made by GATT.

Comprised of 134 member nations.Adopted rules relating to international trade

involving not only goods but also services and intellectual properties.

Disputes resolved by a panel of trade experts.

Intended to improve on the gains made by GATT.

Comprised of 134 member nations.Adopted rules relating to international trade

involving not only goods but also services and intellectual properties.

Disputes resolved by a panel of trade experts.



UNCITRALUNCITRAL

United Nations Commission on International Trade Law.

Provides harmonization of private international law to enhance trade.

Creating model laws on arbitration.

United Nations Commission on International Trade Law.

Provides harmonization of private international law to enhance trade.

Creating model laws on arbitration.



EXPORTS AND IMPORTSEXPORTS AND IMPORTSEXPORTS AND IMPORTSEXPORTS AND IMPORTSExport: all exports leaving the U.S. must be

licensed/regulated to:protect national interest in time of short supplyprotect national securityfurther U.S. foreign interest

Imports: all imports must pass through customs which usually involves the payment of tariff or duty.

Export: all exports leaving the U.S. must be licensed/regulated to:

protect national interest in time of short supplyprotect national securityfurther U.S. foreign interest

Imports: all imports must pass through customs which usually involves the payment of tariff or duty.



LETTERS OF CREDIT, LETTERS OF CREDIT, INFORMATION & TECHNOLOGYINFORMATION & TECHNOLOGY

LETTERS OF CREDIT, LETTERS OF CREDIT, INFORMATION & TECHNOLOGYINFORMATION & TECHNOLOGY

Letters of Credit:– Minimize financial risk of international trade.

Information and Technology:– World Intellectual Property Organization is the

“UN” of intellectual property law, but no universal international law protecting intellectual property at this time.

– There are international protection of copyrights, patents, and trademarks.

Letters of Credit:– Minimize financial risk of international trade.

Information and Technology:– World Intellectual Property Organization is the

“UN” of intellectual property law, but no universal international law protecting intellectual property at this time.

– There are international protection of copyrights, patents, and trademarks.



NATIONALIZATION AND NATIONALIZATION AND ACT OF STATE DOCTRINEACT OF STATE DOCTRINENATIONALIZATION AND NATIONALIZATION AND

ACT OF STATE DOCTRINEACT OF STATE DOCTRINENationalization:

– Occurs when a foreign country converts private business into a government owned enterprise.

– International law requires state to have proper public purpose and provide just compensation.

“Act of State” Doctrine:– The Act of State Doctrine prohibits courts from

judging the acts of a foreign government performed within its borders.

Nationalization:– Occurs when a foreign country converts private

business into a government owned enterprise.– International law requires state to have proper

public purpose and provide just compensation.“Act of State” Doctrine:

– The Act of State Doctrine prohibits courts from judging the acts of a foreign government performed within its borders.



SOVEREIGN IMMUNITYSOVEREIGN IMMUNITY

Sovereign Immunity:– Prohibits individuals or countries from

suing a foreign government based on political activities. However, it is permissible to sue foreign governments based on its commercial activities.

Sovereign Immunity:– Prohibits individuals or countries from

suing a foreign government based on political activities. However, it is permissible to sue foreign governments based on its commercial activities.



DISPUTE RESOLUTIONDISPUTE RESOLUTION

Options to resolve international business disputes:– International Court of Justice.– National Courts. – Arbitration.

Online Dispute Resolution uses the internet to resolve international business disputes.

Documents

CHAPTER 3 INTERNATIONAL LAW DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.)