International Business Law Quiz 1

Protective jurisdiction

-Based on country's need to protect its national security, government functions, and vital economic interests. -Anything that affects vital economic interests of national security can be heard in US courts.

Islamic Legal System

-Based on religion -Source: Quran

What was the Tarbert Trading Ltd. v. Cometals Inc. Case? (export)

-Cometals a New York company wants to buy red Kenyan beans from Tarbert, a United Kingdom company, to resell in Colombia -The Colombian govt. issues a Certificate of Origin to show that the beans were of a product of the EU. -Tarbert says the Certificate of Origin is EU, but both sides know the beans were Kenyan grown. -They go ahead with the exportation but Cometals refuses the beans for damaged beans and Tarbert sues. -Since the beans came from Kenya and did not go through a "Substantial Transformation", the transaction was considered "void"

Nationality

-Complying with the laws of your nation of origin no matter where the national is in the world. Is an obligation of citizenship. Umbrella principle. -Umbrella Principle: Laws follow you everywhere you go

Transnational Business Crimes

-Crimes incident to or in the course of legitimate businesses -White collar crimes -Economic crimes

What was the case of The Paquette Habana?

-During Spanish-American was, the US Navy seizes two commercial fishing ships sailing from Havana. They were owned by a Spanish citizen living in Cuba and sailed under Spanish flags. The owners were unare of the hostilities and US blockade of Cuba. -The ships were sold by the Navy as "prizes of war" Original owner sues for damages. Court upheld the seizure and the owner appealed Decision: Reverse decision. Supreme courts says under an established rule of international law peaceful fishing vessels are exempt from capture as prizes of war

Transnational Organized Crimes -> transcend national borders Illegal drugs and firearms trade

-Illegal drugs and firearms trade -Japanese Yakuza -Colombian Drug Cartels -Chinese TriadProtective jurisdiction

Territoriality

-Jurisdiction over all persons, nationals and non-citizens, places and property within the territory, airspace, and territorial waters, and vessels flying that nation's flag. Subjective and objective (if committed outside but having a substantial effect inside, e.g., attempting to smuggle illegal drugs into the US) -Subjective: all people? -Objective: crime is committed outside of US territory but has substantial effects in the US (Ex: smuggling drugs into the USA)

Pebble Beach Company v. Caddy case?

-Pebble Beach sues Caddy under the Lanham Act for trademark infringement and the California Business and Professions Code for intentional infringement and dilution.Caddy moves to dismiss for lack of personal jurisdiction -The US Court of Appeals for the 9th Circuit agreed with the district court's determination that it lacked personal jurisdiction The 9th Circuit concluded that the district court properly exercised its discretion by denying PB's motion to conduct additional jurisdictional discover -Caddy did not purposefully avail himself of US law nor expressly aim his conduct at California or the US. Therefore, he is not subject to the personal jurisdiction of the district court. A passive website & domain name alone do not satisfy the effects test, and there was no other action expressly aimed at California or the US that would justify personal jurisdiction. Pebble Beach's complaint was properly dismissed.

What was the Ventress v. Japan Airlines case? (treaties)

-Plaintiffs alleged that JAL had required a seriously ill pilot to fly, in violation of aviation laws. Claimed they experienced harassment from JAL after expressing their concerns. They sued seeking recovery for violation of Californias whistle blower protect statute and wrongful termination. The court dismissed claims die to the treaty of friendship, commerce and navigation between Japan and US. Plaintiffs appeal. Decision: Judgement reversed for plaintiffs. FCN treaty is in effect but it does not give them immunity form state and federal employment laws.

Civil Law System

-Predominant legal system of the world -> goes back to Ancient Rome -No jurors -Written Corsevectus papers?? -Source: Civil codes -Judges: very active role -Judge interrogates -Inquisitorial system -> collaborative -Lawyers: secondary role -Evidence: all evidence is admissible -Notaries: a leg of the government

Common Law System

-Rooted from practice, customs, and trials -Source: precedents (past case outcomes) -Judges: passive role -Judge is arbitrator -Adversarial systems -> parties are fighting -Lawyers: advisor for client, using precedents. Primary role -Evidence: rules of exclusion Very technical on procedure -Notaries: bond from state governor. Not lawyers!!

What was the Sosa v. Alvarez-Machain case?

-Sosa kidnaps Alvarez from his Mexico home after Mexico would not extradite him. Alvarez was tried and acquitted in US Court. After the acquittal, Alvarez sues Sosa for damages under the Alien Tort Statute. -Alvarez wins judgments, Sosa appeals Decision: judegement reversed for Sosa. Alvarez arrest did not violate any norm of customary international law that would permit an action for damages under the Alien Tort

Criminal Jurisdiction and the Extraterritorial Reach of Domestic Law

-Territoriality -Nationality -Protective Principle -Passive Personality -Universality

What was the Transatlantic Financing Corp. v. United States case?

-The United States contracted with Transatlantic Financing, operating cargo ship, to transport wheat from Texas to Iran. -Due to blockade of the Suez Canal, Transatlantic could not travel the usual route and sued for added expenses -The decision was affirmed for the US since the closure of the canal did not make the contract commercially impracticable to perform

What was the Gaskin v. Stumm Handel case?

-US citizen entered an employment contract With German Firm Stumm Handel. -The contract was completely in German and without knowing any German signed the contract -Gaskin contended that his failure to understand German rendered the forum section clause invalid -Court dismissed Gaskins actions, stating that his failure to know German was no ground to invalidate any provisions of the contract

What is the US Alien Tort Statue?

-limit in international customary law -gives federal courts jurisdiction over civil actions for damages brought by non-us citizens for injuries occurring overseas -Used now for human rights cases brought against multinational companies

How can exports can be sold?

1) by independent foreign sales representatives (agent) 2) by foreign distributors that receive goods and resell to customers

Factors driving uniformity in International Business Law

1. Accelerating forces of free trade 2. Need for nations to cooperate 3. Intergovernmental organizations 4. International tribunals 5. Roles of private industry organizations and trade associations

What are some of the challenges of doing business in developing countries?

1. Adverse government policies 2. Rules often lack transparency

Difference between Developed and Developing Countries?

1. Banking anf Finance 2. Law enforcement 3. Energy 4. Health 5. Poverty 6. Political instability 7. Protectionist policies

List some of the largest newly industrialized countries?

1. Brazil 2. China 3. Saudi Arabia 4. Thailand 5. Mexico

What are the important documents required in exporting goods?

1. Certificate of origin (one of the most important documents) 2. IP registration 3. Export licenses 4. A certificate of inspection 5. Bill of lading (title and receipt of goods) -MOST IMPORTANT DOCUMENT IN INTL. MARITIME TRADING

List some of the Common risks of doing business internationally?

1. Distance and Logistics 2. Language and Culture Barriers 3. Cross Border Trade Controls 4. Currency Risk 5. Political Risk

What are the five forms of investments?

1. Foreign branch 2. Foreign subsidiary 3. Affiliate 4. Joint venture 5. Local participation

What are some of the controls on investment in developing countries?

1. High tariffs 2. Taxes 3. Import licensing requirements 4. Financial regulation 5. Controls on technology transfer, trade and investment barriers that protect local industries from competition

What are some sources of international law?

1. International treaties 2. International customs 3. General principles of law recognized by civilized nations

Factors influencing differences in International Business Law:

1. National courts' interpretations 2. Differences in national legal systems 3. Varying levels of economic development 4. National attitudes toward economics

What forms can joint venture take?

1. Partnership 2. Corporation

What are the two classifications of international law?

1. Public 2. Private

List some of the least developed countries?

1. Sub saharan Africa 2. Haiti 3. Bangladesh 4. Cambodia 5. Afghanistan

Three forms of international business

1. Trade 2.Licensing of intellectual property 3. Foreign Direct Investments

Crimes Related to International Business

1. Transnational organized crime 2. Transnational business crime 3. UN Convention Against Corruption

What are the distinguishing characteristics of International Law?

1. consists of rules that countries agree to follow rather than being dictated by a legislative body 2. No global authority for enforcement

List some of the professional assistances used in doing business internationally?

1. international attorney 2. freight forwarder/ customs broker 3. The international banker

What are examples of issues in public international law?

1. resolving boundary disputes 2. dealing with how nations treat foreign citizens

What is foreign branch investment?

A business presence by the investor in the host country. The branch is part of the home country entity, with operations in the host country

Disadvantage of joint venture?

A company may have to share its technology, expertise, and profits with another company, or give up control over local operations.

What is an export control?

A restriction on export of goods, services, or technology to a country or group of countries imposed for reasons of national security or foreign policy.

What is a reservation?

An exception to a treaty

What are treaties of Friendship, Commerce, and Navigation?

Bilateral agreements that provide protection to foreign nationals doing business in host countries

What are sanctions?

Broader and more comprehensive restrictions on trade and financial transactions with countries who violate major principles of international law

What is International Franchising?

Business arrangement that uses an agreement to license, control, and protect the use of the franchisor's patents, trademarks, copyrights, or business know-how in return for royalties, fees, or commissions

What are International Licensing agreements?

Contracts by which the holder of intellectual property will grant certain rights in that property in return for consideration

What does countries in transition mean?

Countries that are transitioning from centrally planned economies to free markets ex. Soviet Union and China

Passive Personality

Crimes committed against citizens by non-citizens and outside of the nation's territory. The only connection is the victim. Very controversial

What was the Dayan vs. McDonald's Corp Case?

Dayan opens McDonalds franchise in Paris. Dayan breaks QSC standard required in the license with McDonalds. McDonalds sues to terminate the franchise agreement because it was violated. Dayan was permitted to continue his operation of the restaurant but without the McDonalds trademarks or name.

What is private international law?

Deals with the rights and responsibilities of private individuals or corporations operating in an international environment

What is often a businesses first step in interactional business?

Exporting

Of the three forms of international business which provides the firm with the greatest opportunity for market penetration, the most involvement, and perhaps the greatest risk of doing business abroad?

FDI

What was the Scherk v. Alberto case? (arbitration)

Fact: Alberto-Culver signed a contract that included an arbitration clause that provided that "any controversy or claim shall arise out of this agreement or the breach thereof would be referred to arbitration before the International Chamber of Commerce in Paris, France, and that the laws of Illinois shall govern" to which Scherk moved to dismiss or to stay the action pending arbitration. Issue: Does Alberto undo the arbitration clause because of violation of securities and exchange? Rule: Arbitration Clause Analysis: The agreement of the parties in this case to arbitrate any dispute arising out of their international commercial transaction is to be respected and enforced by the federal courts in accord with the explicit provisions of Arbitration Act. Conclusion: Original judgement reversed and remanded.

Asahi Metal Industry, Co. v. Superior Court of California, Solano County case?

Fact: Asahi Metal Industry is a Japanese company dealing with a cross complaint from Cheng Shin, a Taiwanese company who filed seeking indemnification from Asahi for the defective tires. The Superior Court of California held that the California state court possessed personal jurisdiction over Asahi due to the accident involving the defective tires occurring in California. Issue: Does the Superior Court of California have personal jurisdiction over Asahi and Cheng Shin, a Japanese and Taiwanese company? Rule: Personal Jurisdiction Analysis: The Superior Court of California does not have personal jurisdiction because the placement of a product into the stream of commerce is not an act of the defendant purposefully directed toward the forum State. Also, the transaction on which the indemnification claim is based took place in Taiwan; Cheng Shin has not demonstrated that it is more convenient for it to litigate its indemnification claim against Asahi in California rather than in Taiwan or Japan. Conclusion: The U.S. Supreme Court found that the California Supreme Court had no jurisdiction and reversed decision.

What are international trading companies?

Firms that specialize in all aspects of import/export transactions

What are multinational corporations?

Firms with significant foreign investments, assets, or operations move technology, factories, and capitals with most favorable economic conditions

What is ratification?

Formal agreement of a signatory nation to be bound by the treaty

What is property or marine risk? (Distance and Logistics)

Goods can be damaged by salt water or air, ship wrecks, plane crash.. etc. during cargo

What is payments or credit Risk? (Distance and Logistics)

In an import or export transaction, it is the risk that buyer will fail or refuse to pay

What is customary international law?

Includes those commonly accepted rules of conduct that, through a consistent and long standing practice, nations have followed out of a sense of binding obligation

What are export management companies?

Independent firms that assume export related duties for manufacturers, producers, or other exporters

What is a foreign subsidiary?

Is a "foreign" company organized under the laws of a foreign host country, but owned and controlled by the parent corporation in the home country.

What is a joint venture?

Is a cooperative business arrangement between two or more companies for profit.

What was the Bernina Distributors v. Bernina Sewing Machine Co. case?

Judgement was affirmed for the distributor. The importer had assume the exchange rate risk. The contract did not include currency fluctuations as one of the cost incenses that could be passed on the distributor -Cost increases and currency fluctuations alone do not render a contract too impractible to perform

Why is franchising a good vehicle for entering the foreign market?

Local franchisee provides capital investment, entrepreneurial commitment, and on site management to deal with local issues.

What do export trading companies do?

Market products of several manufacturers in countries. Handle a large volume of transactions.

What is Local participation?

Means that a share of the business is owned by nations of the host country

What are foreign direct investments?

Ownership and active control of ongoing business concerns including investment in manufacturing, mining, farming and other production facilities in a foreign (host) country

What is exchange rate risk?

Results from the fluctuations in the relative value of two currencies when one is exchanged for the other

What are affiliates?

Several subsidiaries owned by one parent company

What was the case of DIP SpA v. Commune di Bassano del Grappa?

Summary: In Italy, you must obtain a license from local authorities before opening a retail store, however if it is believed that the market is already being served, the request may be denied. The local mayor, with advice from a local committee of 10-15 representatives and merchants, is able to grant such licenses. After 3 applicants were denied licenses, they filed an action claiming that Italian retail licensing discriminated against foreign companies and importer goods, led to higher consumer prices, and was invalid under laws of the European Union and the Treaty of Rome. Decision: The plaintiffs argued that the licensing act excluded new entrants, especially non-Italians, from the market, and potentially hindered intra-community trade. The court rejected this argument, saying that it does not result in a decrease of the overall goods on the market, and it does not provide more difficulty for the sale of imports in comparison to domestic goods. The mayor is to make a decision based on the commercial development plan of his region, not the origin of the retailer. These licensing acts are in place to limit the number of shops in order to balance supply and demand, and eliminate dominant traders. Any effect the laws have on hindering free trade would be too indirect and uncertain to file action against.

What is the home country?

The country under whose laws the investing corporation was created or is headquartered.

What occurred in the Russian Entertainment Wholesale Inc. v. Close-up International Inc. case? (IP)

The multilingual DVDs were considered completely separate products from the Russian only DVDs, regardless of the fact that Russian could be selected as the language. A licensee of a limited exclusive license may seek relief from infringement only for the exclusive rights received from the copyright holder.

What is supplier risk? (Distance and logistics)

The possibility of being victims of fraud or receiving defective goods. International firms learn how to mage this

What is Transfer of Technology?

The sharing of scientific information, technology, and manufacturing know-how

What is nationalization?

The transfer of private sector firms to government ownership and control

What is infringement?

The violation of IP rights of another. Often referred to as piracy or counterfeiting

What was the In re Union Carbide Corporation Gas Plant Disaster at Bhopal case?

This was the case of forum non conveniens - it is better to litigate the case where it happened In this case the court dismissed the actions held against the UCC since the greater interest in the outcome of the case was in India.

Universailty

To prosecute the most heinous and universally condemned crimes regardless of where the crimes occurred or the nationality of the perpetrators or victims.

What is Mediation?

Voluntary, nonbinding, conciliation process

What is the most important international IP organization?

World Intellectual Property Organization

Have barriers softened overtime in developing countries?

Yes.

M/S Bremen v. Zapata Off-Shore Co. case? Finnish Fur Sales Co., Ltd. v. Juliette Shulof Furs, Inc.

Zapata, company based in Houston, entered into a contract w/ Untereweser, a German company to tow Zapata's drilling rig from Lousiana to Italy. Clause in contract stated, " Any dispute arising must be heard before the London Court of Justice". There was a storm during transport, which damaged the rig. Zapata instructed Bremen (the tug boat) to tow to Tampa, FL, the nearest port. Zapata then filed a suit in federal district court in Tampa FL on basis of admiralty jurisdiction, seeking $3.5Million in damages in personam against Unterweser & Bremen. Bremen moved to dismiss for lack of personal jurisdiction on the basis of the forum selection clause. They sought a stay of action pending resolution in the London Court. Decision: Vacated and remanded for proceedings consistent w/ the opinion.

What is a treaty?

a binding agreement between two or more nations. Can be bilateral or multilateral

What is a convention?

a legally binding multilateral treaty of matters of common concern ex. prisoners of war, lost baggage reimbursement

What is protocol?

an agreement that modifies or adds to a treaty or convention

What is arbitration?

binding award that can be enforced by courts of law in different countries

Franchisee agreements?

certain franchises in certain countries (India) must meet local cultural norms, which may differ from US norms, but unless it is included in the agreement, the franchisee can't break the agreement for any circumstance

What is the host country?

country where a company that is based in another country has business activities

In personam jurisdiction

courts power over a certain individual or corporation. -Minimum contacts

What is confiscation?

expropriation without payments of any compensation

Arbitration is

faster and less expensive than court system

What do International organizations and IP do?

foster cooperation and resolve dissolve disputes

What is public international law?

governs the conduct of nations with other nations or in their relationship with the individuals. Norms regarded as binding on all members of the international community.

What are signatories?

nations that express their willingness to join a treaty

What is a self executing treaty?

one that automatically creates rights that are enforceable in the courts of that country

What is a non self executing treaty?

one without direct effect. Requires some additional legislative act before it becomes enforceable in national courts

In direct exporting the exporter assumes_________________.

responsibility for most export functions

Tereritorial jurisdiction

the power of criminal courts to hear cases involving crimes committed white their territory

What is expropriation?

the taking by a government of privately owned assets with some compensation