Legal and Ethics Chapter 24

International Organizational

generally refers to an organization composed mainly of officials or member nations and usually established by treaty

An Arbitration Clause

if sales contract does not include ______, litigation may occur

National Law

law of a particular nations, such as Brazil, Germany, Japan, or the US.

National Export Initiative

made in effort to increase US exports with a goal of doubling US exports by 2015.

Expropriation

occurs when a government seizes a privately owned business or privately owned goods for a proper public purpose and awards just compensation

Age Discrimination in Employment Act

protects US employees working abroad for US employers

Section 1 of the Sherman Act

provides for the extraterritorial effect of the US anti-trust laws

Societe Anonyme

the form a subsidiary would take, similar to a US corporation

Confiscation

when a government seizes private property for an illegal purpose and without just compensation

The Doctrine of Sovereign Immunity

-exempts foreign nations from the jurisdiction of the US courts -in 1976, Congress codified this rule in the Foreign Sovereign Immunities Act (FSIA)

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 the latter's own territory -frequently employed in cases involving expropriation or confiscation

Principle of Comity

-refers to legal reciprocity -one national will defer and give effect to the executive, legislative, and judicial acts of another country, as long as the acts are consistent with the law and public policy of the accommodating nation

Foreign Manufacturing Facilities

An alternative to direct or indirect exporting.

Nations that use civil law

Argentina, Brazil, Chile, China, France, Germany, Italy, Mexico, South Korea (more on page 455)

"evidence of a general practice accepted as a law"

Article 38(1) of the Statute of the International Court of Justice refers to international custom as

Nations that use common law

Australia, Canada, United States, United Kingdom, Jamaica (more on page 455)

Alleged violation had a substantial effect on US commerce

Before US courts will exercise jurisdiction and apply anti-trust law, it must show that

-courts independently develop the rules governing certain areas of law (torts and contracts) -apply to all areas not covered by statutory law -stare decisis obligates judges to follow presidential decisions in their jurisdictions, courts may modify or even overturn precedents when deemed necessary

Common Law Systems

Types of law systems

Common, Civil and Islamic Law Systems

Export Quotas

Congress sets export quotas on various items, such as grain being sold abroad

World Trade Organization

Established to minimize trade barriers among nations

CISG

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

Export Quotas, Restrictions on Technology Exports, Incentives & Subsidies

How Congress can restrict or encourage exports

expropriation, not a confiscation

In a case alleging that a foreign government has wrongfully taken the plaintiff's property, the defendent government has the burden of providing that the taking was an

Because the law (FSIA) is jurisdictional in nature, a plaintiff generally has the burden of hsowing that a defendant is

NOT entitled to sovereign immunity

Strict prohibitions, quotas, and tariffs.

Restrictions of imports include

Trade Barriers

Restrictions on imports

Tariffs

Taxes on imports, usually a % of the value of the import. Can also raise the price of imports

respect, courtesy, applied in the interests of maintaining harmonious relations among nations

The Principle of comity, act of the state doctrine, and the doctrine of sovereign immunity are all based on

Incentives and Subsidiaries

The US (& other nations) also use this to stimulate exports and thereby aid domestic businesses.

international customs, treaties and international agreements, and international organizations and conferences

The three sources of international law

Joint Venture

US company owns only part of the operation, the rest is owned by either local owners in the foreign country or by another foreign entity. All firms involved share responsibility

Restrictions on Technology Exports

Under the export administrations act of 1979, the flow of technologically advanced products and technical data can be restricted

That there is no higher authority to which that nation must submit

What does it mean if a nation is a sovereign entity?

bilateral agreement

agreement formed by two nations to govern their commercial exchanges or other relations with one another.

Substantial Effect

an conspiracy that has ____ on US commerce is within reach of the Sherman Act

Civil Law Systems (codified law systems)

an ordered grouping of legal principles enacted into a law by a legislature or other governing body

Title VII of the Civil Rights Act of 1964

applies to extraterritoriality to all US employees working for US employers

is international law public or private?

can be both

Section 1603, does not describe what constitutes a

commercial activity

Islamic legal systems

common in Islamic countries, where the law is often influenced by sharia (religious law of Islam)

Sharia

comprehensive code of principles that governs both the public and the private lives of persons of Islamic faith. Directs many aspects of day-to-day life. In some countries aspects of ___ have been codified and are enforced by national judicial systems.

Distribution agreement

contract setting out the terms and conditions of the distributorship (price, currency of payment, guarantee of supply available, and method of payment)

Two forms of exporting

direct and indirect

Coercive actions include

economic sanctions, severance of diplomatic relations, boycotts, and (as a last resort) war against violating nation.

actively question witnesses

Judges in civil systems (unlike common law systems) often

Compensation

Many countries guarantee compensation to foreign investors if their property is taken, guarantee can be in the form of national constitutional/statutory laws/provisions of inter. treaties

blurred

The line between expropriation and confiscation is sometimes

Statutory code

What is the primary source of law in a civil law system?

Agency Relationship

When a US firm wishes to limit its involvement in an international market, it develops a _____ with the foreign firm. The foreign firm then acts as the US firm's agent and can enter contracts in the foreign location on behalf of the US company

Federal Laws

____ in the US prohibit discrimination against race, age, gender, origin, religion, and disability

The Republic of Korea-US Free Trade Agreement

-Eliminate 95% of each nations tariffs on industrial and consumer exports withing five years. -Largest free trade agreement that US has ventured into since NAFTA -Supposed to increase US exports by more than $10M

A foreign state is not immune from the jurisdiction of the US courts in the following situations:

-when foreign state has waived its immunity either explicitly or by implication -when foreign state has engaged in commercial activity within the US or in commercial activity outside the US that has a "direct effect in the US" -when foreign state has committed a tort in the US or has violated certain international laws

Direct Exporting

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

"No tax or duty shall be laid on Articles exported from any state" therefore Congress cannot impose any export taxes.

Article I, Section 9 of the US Constitution states

"by and with the Advice and Consent o the Senate, to make treaties, provided two-thirds of the Senators present concur"

Article II, Section 2, of the US Constitution, the president has the power to:

international law

Can be defined as a body of law--formed as a result of international customs, treaties, and organizations-- that govern relations among or between nations

No

Does international law require nations to honor the actions of other nations?

Normal Trade Relations

Each member of WTO is obligated to treat other members at least as well as it treats the country that receives its most favorable treatment with regard to imports or exports.

Indirect Exporting

If sufficient business develops in a foreign country, a US company may establish a specialized marketing organization there by appointing a foreign agent or foreign distributor

adopt resolutions and create uniform rules

International Organizations can do what to help enforce laws:

Sherman Act

Law applies even if the violation occurs outside of the US, and foreign gov as well as businesses can be sued for violations

Quotas

Limits on the amounts of goods that can be imported

That government authorities can enforce national law

Major difference between international law and national law?

Roman civil law or "code law"

Most European nations, as well as Latin America, Asia, and Africa, base their legal systems on

1980 Convention on Contracts for the International Sale of Goods (CISG)

Most significant creations of The United Nations Commission on International Trade Law is

Trading with the Enemy Act of 1917

No goods may be imported from nations that have been designated enemies of the US

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

Purpose is to reduce trade tariffs and improve market access among all of the signatory nations, including the US. (US, Costa Rica, Dominican, Salvador, Guatemala, Honduras, Nicaragua)

New York Convention

Requires courts in nations that have signed it to honor private agreements to arbitrate and recognize arbitration awards made in other contracting states.

Dumping

Sale of imported goods at "less than fair value"

-There is a written/recorded agreement to arbitrate the matter -agreement provides for arbitration in a convention signatory nation -agreement arises out of a commercial legal relationship -one party to the agreement is not a US citizen, in other words both parties cannot be US citizens

The following has to be true for a court under the New York Convention to arbitrate their dispute if

To eliminate tariffs among these three nations on substantially all foods bu reducing the tariffs incrementally over a period of time, elimination of barriers that prevented cross-border movement of services, and eleminates citizenship requirements for the licensing of professionals (drs, attorneys)

The goal of NAFTA

Arbitration Clause

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

Wholly Owned Subsidiary

When established the parent company remains in the US. Parent maintains complete ownership of the facilities in the foreign country, as well as total authority and control over all phases of the operation

forum-selection & choice of law clauses

When the contract contains __________ & ___________ the lawsuit will be heard by a court in the specified forum and decided according to that forum's law

Section 1605 of the FSIA

______________ sets forth the major exceptions to the jurisdictional immunity of a foreign state

Alien Torts Claim Act

allows even foreign citizens to bring civil suits in the US courts for injuries caused by violations of the law of nations or a treaty of the US

Licensing

allows the foreign firm to use an established brand name for a fee. Example Coca Cola

Treaty

an agreement of contract between two or more nations that must be authorized and ratified by the supreme power of each nation

Under Section 1603 of the FSIA, a foreign state includes

both a political subdivision of a foreign state and a foreign state and an instrumentality (dept/agency of any branch of gov) of a foreign state

FSIA

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 nation's property.

multilateral agreement

formed by several nations

Under Section 1603 of the FSIA, commercial activity is defined as

regular course of commercial conduct, transaction, or act that is carried out by a foreign state within the United States.

Franchising

the owner of a trademark/trade name/copyright licenses another to use the mark/name/copyright under certain conditions or limitations in the selling of the good/service. Ex: Holiday Inn and Hertz