MGT 301 CH 19 International Law in a Global Economy
Expropriation
A government's seizure of a privately owned business or personal property for a proper public purpose and with just compensation.
Joint Venture
A joint venture provides another method that a U.S. firm can use to expand into international markets. In a joint venture, the U.S. company owns only part of the operation. The rest is owned either by local owners in the foreign country or by another foreign entity. All of the firms involved in a joint venture share responsibilities, as well as profits and liabilities.
Normal Trade Relations (NTR) Status
A legal trade status granted to member countries of the World Trade Organization. This means that each member must treat other members at least as well as it treats the country that receives its most favorable treatment with regard to imports or exports.
EXAMPLE 19.1 In 2014, Russia sent troops into the neighboring nation of Ukraine and supported an election that allowed Crimea (part of Ukraine) to secede from Ukraine.
Because Russia's actions violated Ukraine's independent sovereignty, the United States and the European Union imposed economic sanctions on Russia. Nevertheless, Russia continued to support military action in Ukraine as of 2016.
Import Controls
Import restrictions include strict prohibitions, quotas, and tariffs. Other laws prohibit the importation of illegal drugs and agricultural products that pose dangers to domestic crops or animals. The import of goods that infringe U.S. patents is also prohibited. The International Trade Commission investigates allegations that imported goods infringe U.S. patents. The commission imposes penalties if necessary. Illegal drugs. Books that urge insurrection against the U.S. government. Agricultural products that pose dangers to domestic crops or animals. Goods coming from enemies of the United States.
The U.S. government has historically had a broad power to search travelers and their property when they enter this country.
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Direct Exporting
a U.S. company signs a sales contract with a foreign purchaser that provides for the conditions of shipment and payment for the goods.
If an international contract does not include an arbitration clause
a contract dispute may result in litigation. If no forum and choice of law have been specified, however, proceedings will be more complex and legally uncertain.
account party
buyer
EXAMPLE 19.7 Some years ago, Mexico imposed tariffs of 10 to 20 percent on ninety products exported from the United States
in retaliation for the Obama administration's cancellation of a cross-border trucking program. The program had been instituted to comply with a provision in the North American Free Trade Agreement (to be discussed shortly). U.S. trucking companies opposed the program, however, and consumer protection groups claimed that the Mexican trucks posed safety issues. Because the Mexican tariffs were imposed annually on $2.4 billion of U.S. goods, in 2011 President Barack Obama negotiated a deal that allowed Mexican truckers to enter the United States. In exchange, Mexico agreed to suspend half of the tariffs immediately and the remainder when the first Mexican hauler complied with the new U.S. requirements.
Sources of International Law
international customs, treaties and international agreements, and international organizations.
EXAMPLE 19.6 The Export Trading Company Act encouraged U.S. banks to
invest in export trading companies, which are formed when exporting firms join together to export a line of goods. The Export-Import Bank of the United States has provided financial assistance, primarily in the form of credit guaranties given to commercial banks that, in turn, lend funds to U.S. exporting companies.
multilateral agreement
is formed by several nations. For example, regional trade associations such as the Andean Common Market (ANCOM), the Association of Southeast Asian Nations (ASEAN), and the European Union (EU) are the result of multilateral trade agreements.
beneficiary
seller
International Law
"A body of law - formed as a result of international customs, treaties and organizations - that governs relations among or between nations." International law may be created when individual nations agree to comply with certain standards (such as by signing a treaty). It may also be created when industries or nations establish international standards for private transactions that cross national borders
sovereign immunity
A doctrine that immunizes foreign nations from the jurisdiction of U.S. courts when certain conditions are satisfied. FSIA
bill of lading
A document issued to an exporter by a common carrier transporting merchandise. It serves as a receipt, a contract, and a document of title.
International Customs
Article 38(1) of the Statute of the International Court of Justice refers to an international custom as "evidence of a general practice accepted as law."
The General Assembly of the United Nations, for instance, has adopted numerous nonbinding resolutions and declarations that embody principles of international law.
Disputes involving these resolutions and declarations may be brought before the International Court of Justice. That court, however, normally has authority to settle legal disputes only when nations voluntarily submit to its jurisdiction.
Investment Protections
Few remedies are available for confiscation of property by a foreign government, however. Claims are often resolved by lump-sum settlements after negotiations between the United States and the taking nation. Because the possibility of confiscation may deter potential investors, many countries guarantee that foreign investors will be compensated if their property is taken. A guaranty can take the form of statutory laws or provisions in international treaties. As further protection for foreign investments, some countries provide insurance for their citizens' investments abroad.
EXAMPLE 19.4 Flaherty, Inc., a U.S. company, owns a mine in Brazil. The government of Brazil seizes the mine for public use and claims that the profits that Flaherty realized from the mine in preceding years constitute just compensation.
Flaherty disagrees, but the act of state doctrine may prevent the company's recovery in a U.S. court. n Note that in a case alleging that a foreign government has wrongfully taken the plaintiff's property, the defendant government has the burden of proving that the taking was an expropriation, not a confiscation.
Sherman Act
Passed in 1890. Made it illegal for companies to create monopolies. Section 1 of the Sherman Act—the most important U.S. antitrust law—provides for the extraterritorial effect of the U.S. antitrust laws. Any conspiracy that has a substantial effect on U.S. commerce is within the reach of the Sherman Act. The law applies even if the violation occurs outside the United States, and foreign governments as well as businesses can be sued for violations.
International organizations may also create uniform rules.
The United Nations Commission on International Trade Law has made considerable progress in establishing uniformity in international law as it relates to trade, for example. One of the commission's most significant creations to date is the 1980 Convention on Contracts for the International Sale of Goods (CISG).
When a Foreign Government Takes Private Property
The line between these two (expropriation / confiscation) forms of taking is sometimes blurred because of differing interpretations of what is illegal and what constitutes just compensation.
CASE EXAMPLE 19.8 Intermax Trading Corporation, a New York firm, contracted to act as the North American sales agent for Garware Polyester, Ltd., based in Mumbai, India.
The parties executed a series of contracts with provisions stating that the courts of Mumbai, India, would have exclusive jurisdiction over any disputes relating to the agreements. When Intermax fell behind in its payments to Garware, Garware filed a lawsuit in a U.S. court to collect the balance due. Garware claimed that the forum-selection clause did not apply to sales of goods in a warehouse, but the court sided with Intermax. Because the forum- selection clause was valid and enforceable, Garware had to bring its complaints against Inter- max in a court in Mumbai, India. Note that the forum does not necessarily have to be within the geographic boundaries of the home nation of either party.
dumping
The sale of goods in a foreign country at a price below the price charged for the same goods in the domestic market.
foreign state
Under Section 1603 of the FSIA, a foreign state includes both a political subdivision of a foreign state and an instrumentality of a foreign state.
The Principle of Comity
Under the principle of comity, 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. For instance, a U.S. court ordinarily will recognize and enforce a default judgment from an Australian court because the legal procedures in Australia are compatible with those in the United States.
indirect exporting
When a firm sells its domestically produced goods in a foreign country through an intermediary. Agency Relationship Distributorships
PLC
a public limited company; a company whose shares can be traded on the stock market a publicly traded company in England and Ireland. A PLC is the equivalent to a publicly traded corporation in the United States.
Choice-of-Law Convention
allows unlimited autonomy in the choice of law. Under that convention, when 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.
bilateral agreement
an agreement formed by two nations to govern their commercial exchanges or other relations with one another.
Coercive actions may include
economic sanctions, severance of diplomatic relations, boycotts, and, as a last resort, war against the violating nation.
Columbian Trade Agreement
includes a provision requiring an exchange of tax information
Panama Agreement
incorporates labor rights assurances
A letter of credit is
independent of the underlying contract between the buyer and seller Eliminating the need for banks (issuers) to inquire into whether actual contractual conditions have been satisfied greatly reduces the costs of letters of credit. Moreover, the use of a letter of credit protects both buyers and sellers.
National Law
law that pertains to a particular nation In some ways, national laws that involve restrictions applied at a nation's borders effectively become international law.
Trading with the Enemy Act of 1917
prohibited individual trade with an enemy nation and banned the use of the postal service for disseminating any literature deemed treasonous by the postmaster general
Countries restrict exports for several reasons, including to
protect national security, to further foreign policy objectives, and to conserve resources (or raise their prices).
The major difference between international law and national law is
that a nation's government authorities can enforce its national law.
Two U.S. government agencies are instrumental in imposing anti-dumping duties:
the International Trade Commission (ITC) and the International Trade Administration (ITA).
Simple letter of credit transaction
the issuer (a bank) agrees to issue a letter of credit and to ascertain whether the beneficiary (seller) performs certain acts. In return, the account party (buyer) promises to reimburse the issuer for the amount paid to the beneficiary. The transaction may also involve an advising bank that transmits information and a paying bank that expedites payment under the letter of credit. Under the letter of credit, the issuer is bound to pay the beneficiary (seller) when the beneficiary has complied with the terms and conditions of the letter of credit. The beneficiary looks to the issuer, not to the account party (buyer), when it presents the documents required by the letter of credit.
By definition, a nation is a sovereign entity—meaning that
there is no higher authority to which that nation must submit. If a nation violates an international law and persuasive tactics fail, other countries or international organizations have no recourse except to take coercive actions.
Linde v. Arab Bank, PLC
BACKGROUND AND FACTS Victims of terrorist attacks that were committed in Israel between 1995 and 2004—during a period commonly referred to as the Second Intifada—filed a suit in a federal district court against Arab Bank, seeking damages under the Anti-Terrorism Act (ATA) and the Alien Tort Claims Act. According to the plaintiffs, Arab Bank provided financial services and support to the terrorists. Over several years, and despite multiple discovery orders, the bank failed to produce certain documents relevant to the case. As a result, the court issued an order imposing sanctions. Arab Bank appealed, arguing that the order was an abuse of discretion. DECISION AND REMEDY The U.S. Court of Appeals for the Second Circuit affirmed the lower court's decision and order. There is no abuse of discretion in concluding that the interest of other nations in enforcing bank secrecy laws are outweighed by the need to impede terrorism "as embodied in the tort remedies provided by U.S. civil law and the stated commitments of the foreign nations."
U.S. Antitrust Laws
Subject firms in foreign nations to their provisions Protect foreign consumers and competitors from violations committed by U.S. citizens
That power includes the right to inspect papers and other physical documents in the possession of anyone entering the United States, including U.S. citizens.
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International Trade Administration (ITA)
The ITA, which is part of the Department of Commerce, decides whether imports were sold at less than fair value. The ITA's determination establishes the amount of anti-dumping duties, which equal the difference between the price charged in the United States and the price charged in the exporting country.
International Trade Commission (ITC)
The ITC assesses the effects of dumping on domestic businesses and then makes recommendations to the president concerning temporary import restrictions.
Export
The sale of goods and services by domestic firms to buyers located in other countries. Alternatively, a U.S. firm can establish foreign production facilities so as to be closer to the foreign market or markets in which its products are sold.
issuer
bank
Under the New York Convention, a court will compel the parties to arbitrate their dispute if all of the following are true:
1. There is a written (or electronically 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. 4. One party to the agreement is not a U.S. citizen. In other words, both parties cannot be U.S. citizens.
Subsidiaries
A U.S. firm can also expand into a foreign market by establishing a wholly owned subsidiary firm in a foreign country. When a wholly owned subsidiary is established, the parent company, which remains in the United States, retains complete ownership of all the facilities in the foreign country, as well as complete authority and control over all phases of the operation.
Licensing
A U.S. firm may license a foreign manufacturing company to use its copy- righted, patented, or trademarked intellectual property or trade secrets. A licensing agreement with a foreign-based firm is much the same as any other licensing agreement. Its terms require 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.
correspondent bank
A bank that acts on behalf of another bank 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. At common law, parties may choose the law that will govern an international agreement provided that the law chosen is the law of a jurisdiction that has a substantial relationship to the parties and to the international business transaction. European civil law systems follow similar rules. Under Section 1-105 of the Uniform Commercial Code, parties may choose the law that will govern the contract as long as the choice is "reasonable." Article 6 of the United Nations Convention on Contracts for the International Sale of Goods, however, imposes no limitation on the parties' choice.
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 future disagreement over the contract's terms. Note also that some nations have mandatory language requirements. In France, for instance, certain legal documents, such as the prospectuses used in securities offerings, must be written in French. In addition, contracts with departmental or local authorities, instruction manuals, and warranties for goods and services must be written in French.
distribution agreement
A contract between a seller and a distributor of the seller's products setting out the terms and conditions of the distributorship.
Act of State Doctrine
A doctrine providing 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.
forum-selection clause
A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract. There are no universally accepted rules as to which court has jurisdiction over the subject matter or the parties involved in a particular dispute.
Force Majeure Clause
A provision in a contract stipulating that certain unforeseen events—such as war, political upheavals, or acts of God—will excuse a party from liability for nonperformance of contractual obligations. Force majeure is a French term meaning "impossible or irresistible force"—sometimes loosely identified as "an act of God." Natural disasters, for instance, are considered "acts of God."
Quota
A set limit on the amount of goods that can be imported. At one time, the United States had legal quotas on the number of automobiles that could be imported from Japan. Today, Japan "voluntarily" restricts the number of automobiles exported to the United States. (But Japanese automakers build most cars sold in the United States in U.S. factories.)
Tariffs
A tax on imported goods A tariff usually is a percentage of the value of the import, but it can be a flat rate per unit (for example, per barrel of oil). Tariffs raise the prices of goods. The effect is to cause some consumers to purchase more domestically manufactured goods and fewer imported goods.
Foreign Exchange Market
A worldwide system in which foreign currencies are bought and sold. Like other prices, the exchange rate is set by the forces of supply and demand. Frequently, a U.S. company can rely on its domestic bank to take care of all international transfers of funds. Commercial banks often transfer funds internationally through their correspondent banks in other countries.
Letters of Credit
A written document in which the issuer (usually a bank) promises to honor drafts or other demands for payment by third persons.
Daimler AG v. Bauman
Although MBUSA distributes cars to and maintains offices in California, MBUSA distributes cars to every state. The affiliations of MBUSA and Daimler with California are not so continuous and systematic as to render the companies at home in California. A court may assert general jurisdiction over a corporation when the corporation's affiliations with the forum state are so continuous and systematic as to render the corporation essentially at home in the state. BACKGROUND AND FACTS Barbara Bauman and twenty-one other residents of Argentina filed a suit in a federal district court in California against Daimler AG, a German company. They alleged that Mercedes-Benz (MB) Argentina, a subsidiary of Daimler, had collaborated with state security forces to kidnap, detain, torture, and kill certain MB Argentina workers. These workers included the plaintiffs and some of their relatives. Their claims were asserted under the Alien Tort Claims Act. DECISION AND REMEDY The United States Supreme Court reversed the decision of the lower court. A federal district court in California could not exercise jurisdiction over Daimler in this case, given the absence of any California connection to the atrocities, per- petrators, or victims described in the complaint.
Manufacturing Abroad
An alternative to direct or indirect exporting is the establishment of foreign manufacturing facilities. The advantages of manufacturing abroad may include lower costs, fewer government regulations, and lower taxes and trade barriers. Typically, U.S. firms establish manufacturing plants abroad if they believe that doing so will reduce their costs—particularly for labor, shipping, and raw materials—and enable them to compete more effectively in foreign markets.
International Organization
An organization composed mainly of member nations and usually established by treaty --- for example, the United Nations. More broadly, the term also includes nongovernmental organizations (NGO's) such as the Red Cross adopt resolutions, declarations, and other types of standards that often require nations to behave in a particular manner. Adopt Standards Create Uniform Rules
Fraudulent Misrepresentation
Any misrepresentation, either by misstatement or by omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment. A representation, or prediction, of a future fact does not qualify. The misrepresentation must be consciously false and intended to mislead an innocent party, who must justifiably rely on it. When an innocent party is fraudulently induced to enter into a contract, the party can rescind the contract and be restored to her or his original position or can enforce the contract and seek damages for injuries resulting from the fraud.
Carlyle Investment Management, LLC v. Moonmouth Co. SA
BACKGROUND AND FACTS Moonmouth Co. SA (incorporated in the British Virgin Islands) bought stock in Carlyle Capital Corp., Ltd. (CCC), an investment fund (incorporated in Guernsey, a dependency of the United Kingdom), under a subscription agreement. Carlyle Investment Management, LLC, which owned CCC, signed the agreement on CCC's behalf. Plaza Management Overseas SA signed it on Moonmouth's behalf. Plaza was Moonmouth's director, and both were owned by Louis Reijtenbagh. The agreement pro- vided that "the courts of the State of Delaware shall have exclusive jurisdiction over any action . . . with respect to this Subscription Agreement." Later, the global financial crisis depleted CCC's cash reserves, and CCC entered liquidation (the process of liquidating its assets). Plaza then threatened to hold CCC liable for all damages that Moonmouth had sustained in connection with its investment. Carlyle and its owners filed a suit in a Delaware state court against Plaza and its owner to enforce the forum-selection clause. Plaza sought to move the case to a federal district court. That court remanded the case to the state court. Plaza appealed. DECISION AND REMEDY The U.S. Court of Appeals for the Third Circuit affirmed the lower court's remand of the case to state court. Plaza was not a signatory to the subscription agreement but was held bound by the forum-selection clause because the clause was valid. Plaza was "closely related to the agreement," and the claim arose from Plaza's status related to it.
Braddock v. Braddock
CASE BACKGROUND David Braddock wanted to form a company, Broad Oak Energy, Inc. (BOE), to tap oil and gas reserves in Louisiana and Texas. He asked his cousin John, an investment banker in New York, to find an investor to provide BOE with $75 to $150 million and also asked John to come to work for BOE. David assured John that he would be BOE's chief financial officer (CFO) and land manager. He also told John that he would receive half as much stock in the company as would be issued to David, who would serve as the company's chief executive officer. John quit his job, agreed to accept a significantly reduced fee to find an investor for BOE, and moved his family to Texas. As a result of John's efforts, Warburg Pincus, LLC, agreed to provide $150 million in start-up capital. Two weeks later, David told John that Warburg Pincus insisted that John not be made CFO or land manager. Instead, David offered him a substantially reduced position, that of landman. Surprised, John nev- ertheless cooperated. He signed "engagement agreements" to accept the lesser position as an "employee at will," subject to discharge for any reason at any time. Stress soon began to take a toll on his health, and he was granted a conditional medical leave of absence. The next month, BOE terminated his employment.
Contract Clauses
Language and legal differences among nations can create problems for parties to international contracts when disputes arise. To avoid these problems, parties should include provisions that designate the language of the contract, the jurisdiction where any disputes will be resolved, and the substantive law that will be applied in settling any disputes. Parties to an international con- tract should also indicate in their contract what acts or events will excuse the parties from performance under the contract and whether disputes under the contract will be arbitrated or litigated.
trade barriers
Restrictions on imports The elimination of trade barriers is sometimes seen as essential to the world's economic well-being. The World Trade Organization, as well as various regional trade agreements and associations, work to reduce trade barriers among nations.
commercial activity
Section 1603 broadly defines a commercial activity as a regular course of commercial conduct, transaction, or act that is carried out by a foreign state within the United States. Section 1603, however, does not describe the particulars of what constitutes a commercial activity. Thus, the courts are left to decide whether a particular activity is governmental or commercial in nature.
CASE EXAMPLE 19.2 Karen Goldberg's husband was killed in a terrorist bombing in Israel.
She filed a lawsuit in a federal court in New York against UBS AG, a Switzerland-based global financial services company with many offices in the United States. Goldberg claimed that UBS was liable under the U.S. Anti-Terrorism Act for aiding and abetting the murder of her husband because it provided financial services to the terrorist organizations responsible. UBS argued that the case should be transferred to a court in Israel, which would offer a remedy "substantially the same" as the one available in the United States. The court refused, however. Transferring the case would require an Israeli court to take evidence and judge the emotional damage suffered by Goldberg, "raising distinct concerns of comity and enforceability."
CASE EXAMPLE 19.3 Spectrum Stores, Inc., a gasoline retailer in the United States, filed a lawsuit in a U.S. court against Citgo Petroleum Corporation, which is owned by the government of Venezuela.
Spectrum alleged that Citgo had conspired with other oil companies in Venezuela and Saudi Arabia to limit production of crude oil and thereby fix the prices of petroleum products sold in the United States. Because Citgo is owned by a foreign government, the U.S. court dismissed the case under the act of state doctrine. A government controls the natural resources, such as oil reserves, within its territory. A U.S. court will not rule on the validity of a foreign government's acts within its own territory.
Contracts for the International Sale of Goods (CISG)
The CISG is similar to Article 2 of the Uniform Commercial Code. It is designed to settle disputes between parties to sales contracts if the parties have not agreed otherwise in their contracts. The CISG governs only sales contracts between trading partners in nations that have ratified the CISG, however.
European Union (EU)
The European Union (EU) arose out the 1957 Treaty of Rome, which created the Common Market, a free trade zone comprising the nations of Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. Today, the EU is a single integrated trading unit made up of twenty-eight European nations. The EU has gone a long way toward creating a new body of law to govern all of the member nations—although some of its efforts to create uniform laws have been confounded by nationalism. The EU's council and commission issue regulations, or directives, that define EU law in various areas, such as environmental law, product liability, anti-competitive practices, and corporations. The directives normally are binding on all member countries.
(FSIA) Foreign Sovereign Immunities Act
The 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. Because the law is jurisdictional in nature, a plaintiff has the burden of showing that a defendant is not entitled to sovereign immunity. Section 1605 of the FSIA sets forth the major exceptions to the jurisdictional immunity of a foreign state. A foreign state is not immune from the jurisdiction of U.S. courts in the following situations: 1. When the foreign state has waived its immunity either explicitly or by implication. 2. When the foreign state has engaged in commercial activity within the United States or in commercial activity outside the United States that has "a direct effect in the United States." 3. When the foreign state has committed a tort in the United States or has violated certain international laws.
Export Controls
The U.S. Constitution provides in Article I, Section 9, that "No Tax or Duty shall be laid on Articles exported from any State." Thus, Congress cannot impose export taxes. Congress can, however, use a variety of other methods to restrict or encourage exports, including the following: 1. Export quotas. Congress sets export quotas on various items, such as grain being sold abroad. 2. Restrictions on technology exports. Under the Export Administration Act, the flow of technologically advanced products and technical data can be restricted. 3. Incentives and subsidies. Incentives and subsidies are used to stimulate some exports and thereby aid domestic businesses.
Anti-dumping duties
The United States has specific laws directed at what it sees as unfair international trade practices. Dumping, for instance, is the sale of imported goods at "less than fair value." "Fair value" is usually based on the price of those goods in the exporting country. Foreign firms that engage in dumping in the United States hope to undersell U.S. businesses to obtain a larger share of the U.S. market. To prevent this, an extra tariff—known as an anti- dumping duty—may be assessed on the imports. The duty may be retroactive to cover past dumping.
Licensing Benefits
The firm that receives the license can take advantage of an established reputation for quality. The firm that grants the license receives income from the foreign sales of its products and also establishes a global reputation.
U.S. vs. Saboonchi
The government then filed criminal charges against Saboonchi in federal court for violating U.S. export restrictions on trade with Iran. The indictment alleged that he had sold specialized equipment to a company in the United Arab Emirates that was linked to a company in Iran. His digital devices had contained contact information about the companies involved, along with other evidence. Saboonchi argued that the evidence had been illegally seized and that the information obtained from his electronic devices should be excluded from trial. The court recognized a difference between routine border searches and forensic border searches, which involve experts using specialized software. Forensic searches, according to the court, require reasonable suspicion. Nevertheless, the court concluded that the government had reasonable suspicion that Saboonchi was involved in violations of export restrictions.
comity
The principle by which one nation defers to and gives effect to the laws and judicial decrees of another nation. This recognition is based primarily on respect.
Abidor v. Napolitano
When Pascal Abidor, a Ph.D. student who has dual U.S. and French citizenship, traveled by train from Canada to New York, U.S. Customs and Border Control agents pulled him aside and required him to log on to his computer. They then examined much of its contents. Abidor was released after a few hours, but the Department of Homeland Security kept his laptop for eleven days. Abidor challenged the search. His complaint alleged that the suspicion-less search of U.S. citizens' electronic devices at inter- national borders violates their constitutional right to privacy. The lawsuit was dismissed in 2013 when a federal court concluded that Abidor lacked standing to challenge the government's border search policies.
Agency Relationship
When a U.S. firm prefers to limit its involvement in an international market a foreign firm then acts as the U.S. firm's agent and can enter into contracts in the foreign location on behalf of the principal (the U.S. company).
Distributorship
When a foreign country represents a substantial market, a U.S. firm may wish to appoint a distributor located in that country. The U.S. firm and the distributor enter into a distribution agreement. This is a contract setting out the terms and conditions of the distributorship, such as price, currency of payment, guarantee of supply availability, and method of payment.
New York Convention
Widely accepted treaty on the court enforcement of arbitral awards The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (often referred to as the New York Convention) assists in the enforcement of arbitration clauses, as do provisions in specific treaties among nations. The New York Convention has been implemented in nearly one hundred countries, including the United States.
confiscation
a government's taking of a privately owned business or personal property without a proper public purpose or an award of just compensation
World Trade Organization (WTO)
a trade organization that replaced the old General Agreement on Tariffs and Trade (GATT) was established in 1995. To minimize trade barriers among nations, each member country is required to grant normal trade relations (NTR) status to other member countries.
Alien Tort Claims Act of 1789
allows even foreign citizens to bring civil suits in U.S. courts for injuries caused by violations of international law or a treaty of the United States. Since 1980, plaintiffs have increasingly used the ATCA to bring actions against private companies operating in other countries. Such actions have been brought against companies doing business in Colombia, Ecuador, Egypt, Guatemala, India, Indonesia, Nigeria, and Saudi Arabia, among others. Some of the cases have involved alleged environmental destruction. In addition, mineral companies in Southeast Asia have been sued for collaborating with oppressive government regimes.
Treaty
an agreement or contract between two or more nations that must be authorized and ratified by the supreme power of each nation. Under Article II, Section 2, of the U.S. Constitution, the president has the power "by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur."
EXAMPLE 19.10 An investigation by the U.S. government revealed that a Tokyo-based auto parts supplier, Furukawa Electric Company,
and its executives had conspired with competitors in an international price-fixing agreement (an agreement to set prices) that lasted more than ten years. As a result of the conspiracy, automobile manufacturers had paid noncompetitive and higher prices for parts in cars sold to U.S. consumers. Because the conspiracy had a substantial effect on U.S. commerce, the United States had jurisdiction to prosecute the case. In 2011, Furukawa agreed to plead guilty and pay a $200 million fine. The Furukawa executives from Japan also agreed to serve up to eighteen months in a U.S. prison and to cooperate fully with the ongoing investigation.
advising bank
bank that tells beneficiary that letter of credit has been issued
international law is the result of
centuries-old attempts to reconcile the need of each country to be the final authority over its own affairs with the desire of nations to benefit economically from trade and harmonious relations with one another. Sovereign nations can, and do, voluntarily agree to be governed in certain respects by international law for the purpose of facilitating international trade and commerce, as well as civilized discourse. As a result, a body of international law has evolved.
North American Free Trade Agreement (NAFTA)
created a regional trading unit consisting of Canada, Mexico, and the United States. The goal of NAFTA is to eliminate tariffs among these three countries on substantially all goods by reducing the tariffs incrementally over a period of time. NAFTA gives the three countries a competitive advantage by retaining tariffs on goods imported from countries outside the NAFTA trading unit. Additionally, NAFTA provides for the elimination of barriers that traditionally have prevented the cross-border movement of services, such as financial and transportation services. NAFTA also attempts to eliminate citizenship requirements for the licensing of accountants, attorneys, physicians, and other professionals.
Antidiscrimination Laws
federal laws in the United States prohibit discrimination on the basis of race, color, national origin, religion, gender, age, and disability. These laws, as they affect employment relationships, generally apply extraterritorially Thus, U.S. employees working abroad for U.S. employers are protected under the Age Discrimination in Employment Act. Similarly, the Americans with Disabilities Act, which requires employers to accommodate the needs of workers with disabilities, applies to U.S. nationals working abroad for U.S. firms. In addition, the major law regulating employment discrimination—Title VII of the Civil Rights Act—applies extraterritorially to all U.S. employees working for U.S. employers abroad. U.S. employers must abide by U.S. discrimination laws unless to do so would violate the laws of the country where their workplaces are located. This "foreign laws exception" prevents employers from being subjected to conflicting laws.
foreign exchange rate
the price of a unit of one country's currency in terms of another country's currency. For instance, if today's exchange rate is eighty Japanese yen for one dollar, that means that anybody with eighty yen can obtain one dollar, and vice versa.
Currencies are convertible when
they can be freely exchanged one for the other at some specified market rate in a foreign exchange market.
The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)
was formed by Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. Its purpose is to reduce tariffs and improve market access among all of the signatory nations. Legislatures in all seven countries have approved the CAFTA-DR, despite significant opposition in certain nations.
Republic of Korea-United States Free Trade Agreement (KORUS FTA)
will eliminate 95 percent of each nation's tariffs on industrial and consumer exports. KORUS is the largest free trade agreement the United States has entered into since NAFTA and may boost U.S. exports by more than $10 billion a year. It benefits U.S. automakers, farmers, ranchers, and manufacturers by enabling them to compete in new markets.
