Chapter 7: International Law in a Global Economy

Tariff

A tax on imported goods.

Correspondent Banks

A bank in which another bank has an account (and vice versa) for the purpose of facilitating fund transfers.

Choice-of-Law Clause

A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.

Choice-of-Language Clause

A clause in a contract designating the official language by which the contract will be interpreted in the event of a disagreement over the contract's terms.

Distribution Agreement

A contract between a seller and a distributor of the seller's products setting out the terms and conditions of the distributorship.

Sovereign Immunity

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

Confiscation

A government's taking of a privately owned business or personal property without proper public purpose or an award of just compensation.

Normal Trade Relations (NTR) Status

A legal trade status granted to member countries of the World Trade Organization.

Quota

A limit on the amount of goods that can be imported.

Forum-Selection Clause

A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.

Force Majeure Clause

A provision in a contract that certain unforeseen events - such as war, political upheavals, or acts of God - will excuse a party from liability for nonperformance of contractual obligations.

Letter of Credit

A written document in which the issuer (usually a bank) promises to honor drafts or other demands for payment by third persons in accordance with the terms of the instrument.

The Alien Tort Claims Act (ATCA)

Allows even foreign citizens to bring civil suits in US courts for injuries caused by violations of international law or treaty of the US.

Treaty

An agreement or contract between two or more nations that must be authorized and ratified by the supreme power of each nation. In the U.S., all must be approved by the Senate.

Antidumping Duty

An extra tariff assessed on imports to prevent the ability of dumping.

International Organization

An organization that is composed mainly of member nations and usually established by treaty (i.e. the U.N.).

The European Union (EU)

Arose out of the 1957 Treaty of Rom - creating the Common Market, a free trade zone. Today, this is a single integrated trading unit made up of twenty-eight nations.

Licensing Agreement

Calls for a payment of royalties on some basis - such as so many cents per unit produced or a certain percentage of profits from units sold in a particular geographic territory.

Foreign Sovereign Immunities Act (FSIA)

Congress codified this rule in 1976 to exclusively govern the circumstances in which an action may be brought in the US against a foreign nations.

The North American Free Trade Agreement (NAFTA)

Created a regional trading unit consisting of Canada, Mexico, and the US. The goal of this was to eliminate tariffs among these three countries on substantially all goods by reducing the tariffs incrementally over a period of time.

National Export Initiative (NEI)

Enacted to increase U.S. exporting through promotion and financing via subsidies.

The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)

Formed by Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the US. Its purpose is to reduce tariffs and improve market access among all of the signatory nations, including the US. Legislatures in all seven countries have approved this despite significant opposition in certain nations.

The Republic of Korea-United States Free Trade Agreement (KORUS FTA)

In 2011, the US ratified its first free trade agreement with this agreement. The treaty's provisions will eliminate 95% of each nation's tariffs on industrial and consumer exports within five years.

Foreign State

Includes both a political subdivision of a foreign state and an instrumentality of a foreign state.

Antidiscrimination Laws

Laws in the US which prohibit discrimination on the basis of race, color, national origin, religion, gender, age, and disability. Generally apply extraterritorially - examples include the Americans with Disabilities Act, or the Age Discrimination in Employment Act

Foreign Exchange Market

Make up a worldwide system for the buying and selling of foreign currencies. Simply, it's the price of a unit of one country's currency in terms of another country's currency.

US Antitrust Laws

May subject firms in foreign nations to their provisions, as well as protect foreign consumers and competitors from violations committed by US citizens.

Expropriation

Occurs when a government seizes a privately owned business of privately owned goods for a proper public purpose and awards just compensation.

Act of State 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.

Trade Barriers

Restrictions on imports.

Commercial Activity

Something that is carried out by a foreign state within the United States, but does not describe the particulars of what constitutes it.

Incentives and Subsidies

The US also uses these to stimulate other exports and thereby aid domestic businesses.

Comity

The principle in which one nation will defer to and give effect to the laws and judicial decrees of another country, as long as they are consistent with the law and public policy of the accommodating nation. This recognition is based primarily on respect.

Export

The sale of goods and services by domestic firms to buyers located in other countries.

Dumping

The sale of imported goods at "less than fair value." The sale of goods in a foreign country at a price below the price charged for the same goods in the domestic market.

Export Quotas

These can be set by Congress of various items, such as grain being sold abroad.

Hague Convention

This indicates that whenever a contract does not specify a choice of law, the governing law is that of the country in which the seller's place of business is located.

False

True of False: Under the New York Convention, a court will compel the parties to arbitrate their dispute if one 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, or (4) One party to the agreement is not a US citizen. In other words, both parties cannot be US citizens.

False

True or False: A foreign state is subject to the jurisdiction of the US courts when it has engaged in commercial activity within the United States or in a commercial activity outside the US that has "an indirect effect in the United States."

True

True or False: A foreign state is subject to the jurisdiction of the US courts when the foreign state has committed a tort in the US or has violated certain international laws.

Restrictions of Technology Exports

Under the Export Administration Act, the flow of technologically advanced productions and technical data can be restricted.

Customs, Treaties, Organizations

What are sources of International Law?

Choice-of-Language, Forum-Selection, and Choice-of-Law

What are the clauses commonly included in international business contracts?

When a foreign state has waived its immunity

What is the first situation when a foreign state is subject to the jurisdiction of the US courts?

Direct Exporting

When a US company signs a sales contract with a foreign purchaser that provides for the conditions of shipment and payment for the goods.

Indirect Exporting

When a US corporation sets up a specialized marketing organization in a foreign market by appointing a foreign agent or distributor.

Subsidiaries

When one of these are established, the parent company, which remains the US, retains complete ownership of all the facilities in the foreign country, as well as total authority and control over all phases of the operation.

Joint Venture

When the US company owns only part of the operation - the rest is owned either by local owners in the foreign country or by another foreign entity.

Act of State and Sovereign Immunity

Which doctrines tend to immunize foreign governments from the jurisdiction of U.S. courts?