International Business Law International Business Law Prof. M.E. StormeProf. M.E. Storme

2015-20162015-2016

SOURCESSOURCESinternational law v. international law v. international sourcesinternational sources

Distinction:Distinction:- Rules of international originRules of international origin- Rules of international public law (Rules of international public law (ius gentiumius gentium)) International public law distinguished from:International public law distinguished from:

- (national) public law (constitutional, - (national) public law (constitutional, administrative, criminal, tax, ...)administrative, criminal, tax, ...)- private law including « international private - private law including « international private law »law »

SOURCESSOURCESthe international legal order (ius the international legal order (ius

gentium)gentium)- Classic view: international legal order as Classic view: international legal order as

legal order between states and/or legal order between states and/or international organisations / dualisminternational organisations / dualism

- Nuance 1: private organisations as Nuance 1: private organisations as players; access of private parties to players; access of private parties to international organisations (incl. courts)international organisations (incl. courts)

- Nuance 2: direct effect of rules of Nuance 2: direct effect of rules of international law in the internal (national) international law in the internal (national) legal order (if accepted by national legal order (if accepted by national constitutional law)constitutional law)

SOURCESSOURCESsources of international public sources of international public

lawlaw

(Formal) sources of international public (Formal) sources of international public law (ius gentium):law (ius gentium):

- TreatiesTreaties- Customary law, general principles of lawCustomary law, general principles of law- Decisions of international organisationsDecisions of international organisations- Soft lawSoft law

SOURCESSOURCESTreaties (categories)Treaties (categories)

- parties: bilateral, multilateralparties: bilateral, multilateral- domain: commerce, war & peace, diplomatic relations, domain: commerce, war & peace, diplomatic relations,

foreigners ...foreigners ...- legal form: legal form: traité-convention traité-convention (mutual obligations) /(mutual obligations) / traité-loi traité-loi

(introducing legal rules).(introducing legal rules).Some important types:Some important types:* FNC (friendship navigation commerce); free trade zone or * FNC (friendship navigation commerce); free trade zone or

economic union, customs, ...economic union, customs, ...* founding international organisations* founding international organisations* investment treaties, state loans* investment treaties, state loans* judicial cooperation (e.g. extradition, evidence)* judicial cooperation (e.g. extradition, evidence)* « demarcation » e.g. double taxation avoidance treaties; * « demarcation » e.g. double taxation avoidance treaties;

jurisdiction and enforcement; conflict of law rulesjurisdiction and enforcement; conflict of law rules* unification of law* unification of law

SOURCESSOURCESTreaties: unification of lawTreaties: unification of law

Domain:Domain:- either limited to transnational relationships (international either limited to transnational relationships (international

sales, international transport, ...)sales, international transport, ...)- or also applicable to domestic ones (e.g. bills of exchange) or also applicable to domestic ones (e.g. bills of exchange) Sometimes different versions (creating confusion)Sometimes different versions (creating confusion) How to interpret:How to interpret:- General rules in the Vienna Convention in the Law of TreatiesGeneral rules in the Vienna Convention in the Law of Treaties- In many conventions a clause demanding autonomous In many conventions a clause demanding autonomous

interpretation (eg art. 7 CISG, see Ch. 4)interpretation (eg art. 7 CISG, see Ch. 4)- usually no institution with the authority to give a uniform usually no institution with the authority to give a uniform

interpretation interpretation - exceptions: Benelux Court, Court of Justice EU, OHADA exceptions: Benelux Court, Court of Justice EU, OHADA

Common Court (Abidjan), etc.Common Court (Abidjan), etc.- exchange of information (Lugano Treaty, CLOUT and CISG exchange of information (Lugano Treaty, CLOUT and CISG

Digest, …)Digest, …)

SOURCESSOURCESSome substantive concepts Some substantive concepts

Standards of treatment:Standards of treatment:- minimum standard or equitable treatmentminimum standard or equitable treatment- equivalent (« national ») treatment equivalent (« national ») treatment - MFN (most favoured nation) clause – with the MFN (most favoured nation) clause – with the

possible exception of « preferential treatment »possible exception of « preferential treatment » Sanctions:Sanctions:- determined by treaty provisionsdetermined by treaty provisions- customary law: prohibition of boycott (unless an customary law: prohibition of boycott (unless an

obligation to boycott is imposed) (in practice obligation to boycott is imposed) (in practice business parties may be caught bewteen conflicting business parties may be caught bewteen conflicting policies imposing boycot c.q. prohibiting to take part policies imposing boycot c.q. prohibiting to take part in it) in it)

SOURCESSOURCES Treaties: effects Treaties: effects

Effects in the international legal order: Effects in the international legal order: - international liability of states international liability of states - international jurisdiction (i.a. Permanent Court of international jurisdiction (i.a. Permanent Court of

Arbitration)Arbitration)- possibly sanctions possibly sanctions

SOURCESSOURCES Treaties: effects Treaties: effects

Effects in the domestic / national legal order, Effects in the domestic / national legal order, before the domestic courts (so-called « direct before the domestic courts (so-called « direct effect  »). Conditions determined by national effect  »). Conditions determined by national constitutional law, usually the following:constitutional law, usually the following:

- either implemented or directly applicable by - either implemented or directly applicable by virtue of another rule (adde: doctrine of (vertical) virtue of another rule (adde: doctrine of (vertical) « direct effect » of EU-Directives)« direct effect » of EU-Directives)

- content of the rule must be sufficiently precise - content of the rule must be sufficiently precise and unconditional to be applied without further and unconditional to be applied without further measures of implementation (self-executing) (NB. measures of implementation (self-executing) (NB. This is a question which also arises within a legal This is a question which also arises within a legal order, whether a rule is self-executing or not)order, whether a rule is self-executing or not)

- Examples in EU (member st. Legal order): many Examples in EU (member st. Legal order): many rules in EU-Treaties. Not: GATT rules in EU-Treaties. Not: GATT

SOURCESSOURCES International customary law International customary law

ConditionsConditions- objective element: (widespread) general practiceobjective element: (widespread) general practice- opinio iurisopinio iuris: accepted as law : accepted as law Often disputed ! Often disputed ! Sometimes extended to « general principles of law » as Sometimes extended to « general principles of law » as

a new kind of natural lawa new kind of natural law ImportanceImportance- limited in the field of international economic lawlimited in the field of international economic law- more important in other fields (rights & immunities of more important in other fields (rights & immunities of

states; war & peace; human rights (aspects of), …)states; war & peace; human rights (aspects of), …)

SOURCESSOURCESDecisions of Decisions of

internat.organis.internat.organis. Sometimes binding:Sometimes binding:- Decisions concerning the internal operation of an - Decisions concerning the internal operation of an

IOIO- Binding force provided by treaty (see - Binding force provided by treaty (see supra supra on the on the

conditions of direct effect) conditions of direct effect) - e.g. resolutions under Ch. VII UN Charter (Security - e.g. resolutions under Ch. VII UN Charter (Security

council). According to art. 103 UN Charter priority council). According to art. 103 UN Charter priority over any other rule (thus even ECHR).over any other rule (thus even ECHR).

- e.g. decisions of EU institutions within their - e.g. decisions of EU institutions within their competence (as to direct effect, instruments competence (as to direct effect, instruments differ – regulations, directives, decisions, ...) -differ – regulations, directives, decisions, ...) -

If not binding: = soft lawIf not binding: = soft law

SOURCES - « Soft law »SOURCES - « Soft law » Types:Types:- non-binding decisions of International Organisationsnon-binding decisions of International Organisations- non-binding treaties (gentleman’s agreements)non-binding treaties (gentleman’s agreements)- codes of conduct; recommendations; ‘principles’codes of conduct; recommendations; ‘principles’- Still softer: legislative guides, …Still softer: legislative guides, …- The ILC (international law commission – expert The ILC (international law commission – expert

group of the UN) has prepared many drafts group of the UN) has prepared many drafts (treaties, articles, principles) – some have been (treaties, articles, principles) – some have been enacted as treatiesenacted as treaties

(Possible) effects:(Possible) effects:not legally binding; political consequences; moral not legally binding; political consequences; moral effects; commercial pressure; effects; commercial pressure; de lege ferendade lege ferenda (model for future rules), chosen as rules by the (model for future rules), chosen as rules by the parties parties

SOURCESSOURCESThe national legal orderThe national legal order

National law includes international public law (and National law includes international public law (and other international sources) as far as « received » other international sources) as far as « received » (conditions for reception and possible « direct (conditions for reception and possible « direct effect » are determined by national constitutional effect » are determined by national constitutional law)law)

National public law and private law may have sources National public law and private law may have sources of international origin (eg human rights, uniform of international origin (eg human rights, uniform laws, ...)laws, ...)

Application of foreign national law in transnational Application of foreign national law in transnational relationships ? relationships ?

Distinction between public law and private law < next Distinction between public law and private law < next slidesslides

SOURCESSOURCES Effects of national / foreign public lawEffects of national / foreign public law

Public law includes: administrative law, tax law, criminal law, Public law includes: administrative law, tax law, criminal law, competition law and other economic public law (e.g. import & competition law and other economic public law (e.g. import & export regulation, valuta exchange regulation; supervision of export regulation, valuta exchange regulation; supervision of financial institutions and markets, expropriation, ...) financial institutions and markets, expropriation, ...)

Starting point: each country applies only its own public law Starting point: each country applies only its own public law according to its own criteria of applicabilityaccording to its own criteria of applicability

- application is usually territorial, sometimes extraterritorial (e.g. application is usually territorial, sometimes extraterritorial (e.g. taxes, competition,…). In how far accepted by international taxes, competition,…). In how far accepted by international law ?law ?

- demarcation by treaties (e.g. double tax avoiding treaties; demarcation by treaties (e.g. double tax avoiding treaties; criminal jurisdiction, etc.) criminal jurisdiction, etc.)

Exceptions (states applying foreign public law): cooperation Exceptions (states applying foreign public law): cooperation treaties in matters of public law, e.g. assistance in enforcing treaties in matters of public law, e.g. assistance in enforcing criminal sanctions, collecting taxes, extradition, …criminal sanctions, collecting taxes, extradition, …

SOURCESSOURCESThe (national) ’international private The (national) ’international private

law’law’

Private law = property, contract, tort, restitution, Private law = property, contract, tort, restitution, company law, trust, intellectual property, ….company law, trust, intellectual property, ….

Application of private law in transnational Application of private law in transnational relationships is determined by rules of « IPL ». relationships is determined by rules of « IPL ».

Basically 2 types of rules of IPL:Basically 2 types of rules of IPL:- conflict rules (national or uniform)conflict rules (national or uniform)- substantive rules of IPL (mostly uniform rules) substantive rules of IPL (mostly uniform rules)

(often applied only after the conflict rule)(often applied only after the conflict rule)See topic 3.See topic 3.

PLAYERSPLAYERSStates as rule-makers States as rule-makers

State as legislator / rulemaker (government)State as legislator / rulemaker (government)- direct (national sources of national law)direct (national sources of national law)- creating international sources: concluding creating international sources: concluding

treaties, etc. treaties, etc. - ratifying and implementing international sources ratifying and implementing international sources

(incl. uniform law)(incl. uniform law)- founding of, and taking part in international founding of, and taking part in international

organisationsorganisations State as party to conventions of international State as party to conventions of international

public law engaging itself in obligations (e.g. public law engaging itself in obligations (e.g. commodity agreements, bilateral or multilateral commodity agreements, bilateral or multilateral trade agreements, ...)trade agreements, ...)

States as trade partnersStates as trade partners Purpose: contracts to obtain or sell goods an Purpose: contracts to obtain or sell goods an

services for use by the government of by its citizens services for use by the government of by its citizens Methods: directly as contracting partner or through Methods: directly as contracting partner or through

state companies or mixed enterprises / joint venture state companies or mixed enterprises / joint venture (many gradations)(many gradations)

Regulation of the internationale trade (s. further, Regulation of the internationale trade (s. further, e.g. public procurement opened to foreign business)e.g. public procurement opened to foreign business)

State as contracting party: corruption risk; State as contracting party: corruption risk; international rules to fight corruption esp. on the international rules to fight corruption esp. on the active side. I.a. UNCAC (UN Convention against active side. I.a. UNCAC (UN Convention against corruption, in force 2005) (Japan & NE have signed corruption, in force 2005) (Japan & NE have signed but not ratified)but not ratified)

State as contracting party: determine the applicable State as contracting party: determine the applicable law(s)law(s)

States as trade partnersStates as trade partners UNCAC (UN Convention against corruption, in force 2005)UNCAC (UN Convention against corruption, in force 2005)

States as trade partners - States as trade partners - UNCACUNCAC

UNCAC (UN Convention against corruption, in force 2005)UNCAC (UN Convention against corruption, in force 2005) Ch. 2: preventive measures (i.a. anti-corruption bodies, Ch. 2: preventive measures (i.a. anti-corruption bodies,

recruitment principles, codes of conduct for public officials, recruitment principles, codes of conduct for public officials, appropriate system of public procurement, money-appropriate system of public procurement, money-laundering prevention, laundering prevention,

Ch. 3: criminalization (bribery of officials, diversion of Ch. 3: criminalization (bribery of officials, diversion of property by public official, trading in influence, abuse of property by public official, trading in influence, abuse of functions, bribery in private sector, laundering of proceeds functions, bribery in private sector, laundering of proceeds of crime, obstruction of justice, etc.of crime, obstruction of justice, etc.

Ch. 3: law enforcement: prosecution; freezing seizure and Ch. 3: law enforcement: prosecution; freezing seizure and confiscation, compensation for damage, protection of confiscation, compensation for damage, protection of witnesses etc., overcoming bank secrecy, ...)witnesses etc., overcoming bank secrecy, ...)

Ch. 4 international cooperation (extradition, legal Ch. 4 international cooperation (extradition, legal assistance, etc.)assistance, etc.)

Ch. 5 Asset recovery; .....Ch. 5 Asset recovery; .....

States as trade partnersStates as trade partners Anti-Corruption Policy:Anti-Corruption Policy: Application of the UNCAC: Application of the UNCAC: - i.a. the EU Transparency Directive and Accounting Directive i.a. the EU Transparency Directive and Accounting Directive

impose disclosure of payments to authoritiesimpose disclosure of payments to authorities- - in the US: Foreign Corrupt Practices Act (FCPA)- in the US: Foreign Corrupt Practices Act (FCPA)

Companies are expected to take their responsibility when doing Companies are expected to take their responsibility when doing business with partners that may engage in corrupt behaviour:business with partners that may engage in corrupt behaviour:

- There is a OECD Convention on Combating Bribery of Foreign Public - There is a OECD Convention on Combating Bribery of Foreign Public Officials in International BusinessOfficials in International Business

- The ICC (international chamber of commerce) has a code of “Rules - The ICC (international chamber of commerce) has a code of “Rules on Combating Corruption” and proposes a model anti-corruption on Combating Corruption” and proposes a model anti-corruption clause to be inserted in contractsclause to be inserted in contracts

States - immunitiesStates - immunities Immunity from jurisdiction for foreign states before national courts Immunity from jurisdiction for foreign states before national courts - Starting point: immunity, unless waived Starting point: immunity, unless waived - Many restrictions (national law, treaties). Many restrictions (national law, treaties). - In Europe: European Convention (CoE) on State Immunities Basel In Europe: European Convention (CoE) on State Immunities Basel

1972 (only 8 ratifications, incl. Belgium, NL, D, UK) In the UK 1972 (only 8 ratifications, incl. Belgium, NL, D, UK) In the UK internally: British State Immunities Act 1976/1978internally: British State Immunities Act 1976/1978

- In the US: FSIA (Foreign Sovereign Immunities Act 1976, am. 2008, In the US: FSIA (Foreign Sovereign Immunities Act 1976, am. 2008, now 28 US Code ch. 97) with exceptions in § 1605 ff, mainly: now 28 US Code ch. 97) with exceptions in § 1605 ff, mainly: commercial activity, tort committed in the US, expropriation in commercial activity, tort committed in the US, expropriation in violation of international law, terrorismviolation of international law, terrorism

- Compare Result: distinguish Compare Result: distinguish actaacta iure imperii / iure gestionis iure imperii / iure gestionis (already Belgian Cass. 11 June 1903); not every ’act of state’ is (already Belgian Cass. 11 June 1903); not every ’act of state’ is immune.immune.

- Jurisdictional immunity also covers foreign torts (ICJ 3 feb 2012 Jurisdictional immunity also covers foreign torts (ICJ 3 feb 2012 Germany v. Italy on acts committed by German soldiers in Italy in Germany v. Italy on acts committed by German soldiers in Italy in WW II: no jurisdiction of Italian courts)WW II: no jurisdiction of Italian courts)

- Attempt at harmonisation: UN Convention on Jurisdictional Attempt at harmonisation: UN Convention on Jurisdictional immunities of states and their property 2004 (not in force yet, but immunities of states and their property 2004 (not in force yet, but cited in ECtHR 29 juin 2011 cited in ECtHR 29 juin 2011 Sabeh El Leil Sabeh El Leil as customary law)as customary law)

- In general not contrary to art. 6 ECHR if there is no immunity before In general not contrary to art. 6 ECHR if there is no immunity before domestic courts (see ECtHR in McElhinney, in Fogarty, in Al-Adsani).domestic courts (see ECtHR in McElhinney, in Fogarty, in Al-Adsani).

States - immunitiesStates - immunities

Immunity from jurisdiction for foreign statesImmunity from jurisdiction for foreign states Waiver, i.e. acceptance of jurisdiction, mostly not before domestic Waiver, i.e. acceptance of jurisdiction, mostly not before domestic

courts of foreign state, butcourts of foreign state, but- international courts- international courts- arbitration , see Ch. 8 and 12.- arbitration , see Ch. 8 and 12.

States - immunitiesStates - immunities Immunity from enforcement for foreign statesImmunity from enforcement for foreign states- Starting point: immunityStarting point: immunity- Result: immunity for assets used by the public service (s. eg Result: immunity for assets used by the public service (s. eg

art. 55 New York Arbitration Convention)art. 55 New York Arbitration Convention)- Cass.B. set immunity of international organisations aside in 3 Cass.B. set immunity of international organisations aside in 3

cases because of lack of effective remedy (art. 13 ECHR). cases because of lack of effective remedy (art. 13 ECHR). Idem Cass.Fr.Idem Cass.Fr.

- In the Argentina debt cases, a US Court allowed post-judgment In the Argentina debt cases, a US Court allowed post-judgment discovery of Argentinian assets in the US held by third parties discovery of Argentinian assets in the US held by third parties (banks). Compare the ‘(banks). Compare the ‘alter egoalter ego’ doctrine assimilating certain ’ doctrine assimilating certain entities to the state itself (eg possibly a central bank). entities to the state itself (eg possibly a central bank). Argentina filed a complaint with the ICJ (international court of Argentina filed a complaint with the ICJ (international court of justice)justice)

- Belgian Court of Cass. (22 Nov. 2012) did not set aside Belgian Court of Cass. (22 Nov. 2012) did not set aside immunity of the Argentinian embassy accounts; idem French immunity of the Argentinian embassy accounts; idem French Court of Cass. 28 Sep 2011 (but reasoning changed in a more Court of Cass. 28 Sep 2011 (but reasoning changed in a more recent case Cass. 13 May 2015 recent case Cass. 13 May 2015 Commisimpex/CongoCommisimpex/Congo))

States - sovereigntyStates - sovereignty

Starting point of the international public law: Starting point of the international public law: - sovereignty also regarding the economic order;sovereignty also regarding the economic order;- equality of rights under international law, also in equality of rights under international law, also in

relation to (participation in) international traderelation to (participation in) international trade Many international treaties provide benefits for Many international treaties provide benefits for

« developing countries » (further benefits for « developing countries » (further benefits for LLDC’s, least developed countries)LLDC’s, least developed countries)

Disputed « right » to development and « duty » of Disputed « right » to development and « duty » of solidarity (soft law ?)solidarity (soft law ?)

International organisationsInternational organisations

Universal organisations (in principle open for all states)Universal organisations (in principle open for all states)- GATT, now WTO (1994), with a General Council and GATT, now WTO (1994), with a General Council and

separate Councils for GATT, GATS, TRIPSseparate Councils for GATT, GATS, TRIPS- UNO, with General Assembly, Security council, EcoSocUNO, with General Assembly, Security council, EcoSoc- Uncitral (international trade law): treaties and model laws Uncitral (international trade law): treaties and model laws - Unctad (trade & development): granting developing Unctad (trade & development): granting developing

countries access to the world economy countries access to the world economy - Unidroit: create uniform law (mostly private law)Unidroit: create uniform law (mostly private law)- Hague conference: unification of IPLHague conference: unification of IPL

Restricted organisations, i.a. OECD, OPEC etc.Restricted organisations, i.a. OECD, OPEC etc.

International organisationsInternational organisations

Free trade organisationsFree trade organisations Types: free trade zone / customs union / common Types: free trade zone / customs union / common

market / monetary union market / monetary union Examples:Examples:- EUEU- EFTA, EEAEFTA, EEA- NAFTA, CAFTA (Central America), MercosurNAFTA, CAFTA (Central America), Mercosur- ASEAN / SAARC (SAFTA)ASEAN / SAARC (SAFTA)- Possibly CETA (Canada - Europe)Possibly CETA (Canada - Europe)- COMESA (East & Southern Africa), …COMESA (East & Southern Africa), …

PLAYERS - NGO’sPLAYERS - NGO’s Private organisations: not subjects of international public law, but Private organisations: not subjects of international public law, but

governed by national law (although sometimes involved in the governed by national law (although sometimes involved in the activities of I.O.’s)activities of I.O.’s)

Some influential NGO’s :Some influential NGO’s :- ICC: for standard contracts and uniform rules; Court of arbitration ICC: for standard contracts and uniform rules; Court of arbitration

(organising arbitral tribunals) (organising arbitral tribunals) - International Accounting Standards Board (IASB), setting the IFRS International Accounting Standards Board (IASB), setting the IFRS

(International Financial Reporting Standards)(International Financial Reporting Standards)- - World economic forum DavosWorld economic forum Davos- Comité maritime international: maritime transport conventionsComité maritime international: maritime transport conventions- Institut de droit international: tries to « codify » international public Institut de droit international: tries to « codify » international public

law, …..law, …..- ICANN = California corporation (internet corporation for assigned ICANN = California corporation (internet corporation for assigned

names and numbers), with a Governmental advisory committee (111 names and numbers), with a Governmental advisory committee (111 countries)countries)

Multinational enterprises: sometimes conclude contracts « under Multinational enterprises: sometimes conclude contracts « under international law » (with states or IO’s) instead of under national law. international law » (with states or IO’s) instead of under national law.