International Business Law

Factors driving uniformity of International 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

primary sources of international law

(1) international treaties and conventions (2) international custom, as evidence of a general practice accepted as law, and (3) the general principles of law recognized by civilized nations

factors influencing differences in international law

(1) national courts' interpretations (2) differences in national legal systems (3) varying levels of economic development (4) national attitudes toward economics

Application of Torts under Restatement (Second) Factors

(1) place where the injury occurred (2) place where conduct causing an injury occurred (3) domicile, residence, nationality, place of incorporation, and place of business of the parties (4) place where the relationship between the parties is centered

foreign subsidiary

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

customary international law

a body of commonly accepted rules of conduct

fundamental breach

a breach of contract committed by one of the parties that "results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind and the same circumstances would not have foreseen such a result

franchising

a business arrangement that uses an agreement to license, control, and protect the use of the franchisors patents, trademarks, etc. Example: the most common form of franchising is known as business operations franchise and is usually used in retailing

foreign branch

a business presence by the investor in a place other than the host country Example: a business that has a branch in another place

force majeure

a clause in a contract that excuses a party from failing to perform on the occurrence of one or more specified events

joint venture

a cooperative business arrangement between two or more companies for profit, either as a partnership or corporation

litigation

a court law is the final alternative for resolving a dispute; used more in the US, has trial by jury, lawyers, etc.

sovereign immunity

a doctrine that states that the courts of one country cannot hear cases brought against the government of another country and that courts cannot involve themselves in the internal affairs of a foreign country

special drawing rights

a form of international money, created by the International Monetary Fund, and defined as a weighted average of various convertible currencies; represent an amount equal to a mix of currency values to help with easy conversion

pro forma invoice

a formal document addressed to a specific buyer to sell the products described according to certain terms and conditions

letter rogatory

a formal request of service

peril of the sea

a fortuitous action of the sea or weather of sufficient force to overcome the strength of a seaworthy ship or the diligence and skill of a trustworthy crew

treaty

a legally binding agreement between two or more nations that is recognized and given effect under international law

convention

a legally binding multilateral treaty on matters of common concern, usually negotiated on a regional or global basis and open to adoption by many nations Example: the Geneva Convention (prisoners of war)

fortuitous losses

a loss occurred by chance or accident and could not have reasonably been predicted

Napoleonic Code

a model for new legal systems of Latin America on their independence; has distinct roots in Roman law

arbitration

a more formalized process resulting in a binding award that the courts of law in many countries will enforce; parties must agree and cannot withdraw Example: in an international court, it can "level the playing field" in business disputes; arbitration clauses might be located in contracts for the sale of goods, commodities, and raw materials

territorial jurisdiction

a nation's jurisdiction over all persons, places, and property within the territory, airspace, or territorial waters of a country and to crimes committed on vessels flying the nation's flag; must occur when a crime is committed in a territory; least controversial form of jurisdiction

particular average

a partial loss to the insured cargo

UN Global Compact

a partnership of international companies, public interest groups, and UN agencies who pledge to support a set of voluntary principles on human rights

commercial impracticability

a party to a contract that is prevented from performing may attempt to be excused under the doctrine

act of state doctrine

a principle of domestic law (not international law) that prohibits the courts of one country from inquiring into the validity of the legislative or executive acts of another country Example: Underhill v. Hernandez case (US); many cases involve the confiscation of American-owned property by foreign governments without the payment of compensation

universal jurisdiction

a principle that allows any country to prosecute perpetrators of the most heinous and universally condemned crimes regardless of where the crimes occurred or the nationality of the perpetrators Example: Nazi War Crimes,

CERES Principles

a private, mostly American network of environmental groups, socially conscious investors, and companies committed to following the principles of environmental and social accountability

forum selection clause

a provision in a contract that fixes in advance the jurisdiction in which any disputes will be arbitrated or litigated

quota

a quantitative restriction on imports that limit the quantity of an item that may enter a country annually

specific performance

a remedy used when a court requires a party to the contract to perform, or carry out its part of the bargain

export controls

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

mailbox rule

a rule that assumes the correct mode of transmission is used and that it is addressed

World Intellectual Property Organization (WIPO)

a specialized agency in the UN that fosters government cooperation in developing IP policies and coordinates registrations in some IP areas; arbitrates to resolve IP disputes between parties Example: solves a dispute over patent, trademarks, etc. between corporations

multilateral treaty

a treaty between three or more countries

bilateral treaty

a treaty between two countries

self-executing treaties

a treaty that automatically creates rights that are enforceable in the courts of that country, without any further legislation

non-self-executing treaties

a treaty without a direct effect and requires some additional legislative act before it becomes enforceable in national courts

direct exporting

a type of exporting in which the exporter, often a manufacturer, assumes responsibility for most of the export functions Example: when companies hire a full-time export manager who makes export marketing decisions, including product development, pricing, packaging, and labeling and deal directly with foreign buyers, trade shows, etc.

indirect exporting

a type of exporting that occurs when companies do not have the experience, personnel, or capital to tackle a foreign market alone and so instead use intermediaries

mediation

a voluntary, non-binding, conciliation process when parties agree to have an impartial mediator help them reach a solution peacefully; all parties reserve the right to resort to binding arbitration/litigation Example:

house air waybill

a waybill issued by a freight forwarder to the shipper

master air waybill

a waybill issued directly to a shipper by an air carrier

integrated contract

a written document or documents that evidence the final and complete agreement of the parties

non-vessel operating common carrier (NVOCC)

act as a freight consolidator for small shipments, permitting them to take advantage of lower freight rates

torts

actions that should be governed by the law of the place where the injury or damaged occurred Example: personal injuries, product liability, wrongful death, etc.

freight forwarder

agents for shippers contracting with air/land/sea carriers for the transportation of goods to a place of destination Example: advice on shipping alternatives and cost information

non-tariff barrier

all barriers to the import of foreign goods or services other than tariffs Example: laws or administrative regulations that have the same effects

in personam jurisdiction

also known as "jurisdiction over the person"; refers to the court's power over a certain individual or corporation; must have had some contact with the place or forum

abrogation

an act of a legislature that renders a treaty null and void

freight forwarders

an agent for an exporter or importer in arranging transportation or insurance for goods, preparing import or export documents, and moving goods through customs

protocol

an agreement that modifies or adds to a treaty or convention, or that deals with matters less significant than those dealt within treaties

valid contract

an agreement under common law that contains all of the essential elements and meets all the requirements of a binding contract

export plan

an assessment of a firms readiness for export markets and its willingness to commit financial resources, human resources, and production output to foreign customers (p. 6)

reservation

an exception to a treaty set out by a signatory country at the time of ratification

tariff

an import duty or tax imposed on goods entering the customs territory of a nation; most are determined by trade negotiations between nations Example: import taxes

United Nations Commission on International Trade Law

an organization responsible for unifying trade law

FCN treaties

bilateral agreements that provide a broad range of protection to foreign nationals doing business in a host country

Treaty of Friendship, Commerce, and Navigation

bilateral agreements that provide protection to foreign nationals doing business in a host country Example: Ventress v. Japanese Airlines

law of sales

body of law which governs contracts for the present or future sale of goods Example: the Convention of the International Sale of Goods

sanctions

broader and more comprehensive restrictions on trade and financial transactions with countries, who sponsor international terrorism, engage in proliferation of WMDs, threaten international peace, or violate major principles of international law Example: ones listed by the UN on North Korea

export training companies

can apply and receive certificates from the US Department of Justice that can waive the application of US antitrust laws to their export activities Example: it is illegal for two competing firms that manufacture similar products to agree to fix prices in the US market

Justinian Code

classified legal rules and organized them into a logical system that created a "body" of law, in a form that could be learned, understood, and applied

choice of law clauses

contract provisions that stipulate the country or jurisdiction whose law will apply in interpreting the contract or enforcing its terms

licensing agreements

contracts which the holder of intellectual property will grant certain rights in that property to another party under certain conditions and for a certain time; can either be exclusive or non exclusive, and frequently limit distribution to a certain geographical area or a certain period of time Example: Russian Entertainment Wholesale, Inc. v. Close-Up International, Inc.

least developed countries (LDCs)

countries defined as the United Nations on the basis of several socioeconomic criteria who lack the current infrastructure, etc. to be able to rapidly develop Examples: sub-Saharan Africa or Central Asia

emerging market economy

countries or regions with the potential for rapid economic growth Example: China, India, Brazil, Russia, Mexico

contracting parties

countries that have ratified a treaty

countries in transition

countries transitioning from centrally planned economies (usually based on communist doctrine) to free markets Example: the former Soviet Union

US Uniform Commercial Code

covers many areas of commercial law, including bank deposits, negotiable instruments, and sales of goods

perils cause

covers the basic risks of an ocean voyage and generally covers extra-ordinary and unusual perils that are not expected during a voyage Examples: bad weather sufficient to overcome a seaworthy vessel, shipwreck, etc.

public international law

deals with rules affecting the conduct of nations in their relationships with each other and with individuals as citizens or residents Example: rules for resolving border disputes

private international law

deals with the rights and responsibilities of individuals, corporations, or other private parties in their cross border or international activities, as well as procedural rules for how courts Example: private international law could include family law and rules for international adoptions

punitive damages

designed to punish a defendant for particularly offensive behavior (such as international torts/fraud/bad faith) and deter future misconduct; allowed in some countries but banned in others Example: the French Civil Code limits damages in civil actions to placing the injured party in the position it would have occupied had the defendant's conduct not occured

newly industrialized countries

developing countries that have made rapid progress toward becoming industrialized or technology-based economies Example: Indonesia, Malaysia, etc.

confiscation

expropriation without payment or any compensation

multinational or transnational corporation

firms that have significant foreign direct investment assets or that derive a significant portion of their revenues from more than one country; not a single entity

The US Alien Tort Statute

gives federal courts jurisdiction over civil actions for damages brought by non-US citizens for injuries occurring overseas and limits international customary law Example: Sosa v. Alvarez Case

cargo

goods carried on ships

World Trade Organization (WTO)

helps member countries assure a more uniform application and enforcement of their national IP laws Example: when there are IP disputes between governments and the forum must resolve them

forwarder's receipt

house bills of lading when forwarders receive cargo for shipment

battle of the forms

if the seller sends a confirmation in response to a buyer's purchase order and the seller's form contains differing or additional terms, no matter how minor, than no contract exists

payment or credit risk

in an import/export transaction, the risk that the buyer will fail or refuse to pay

maritime contract

include ocean bills of lading, marine insurance contracts, contracts for towing, etc.

export management companies

independent firms that assume a range of export-related responsibilities for manufacturers or other exporters; they do everything from render advice/training on how to export or assume full responsibility Example: a company who does foreign market research, establishing foreign channels, and handing shipping arrangements for a firm

foreign distributers

independent firms, usually located in the country or region to which a firm is exporting, that purchase and take delivery of goods for resale to their customers; they assume the risk of bear responsibility, etc. for all things they're working on

foreign sales representatives

independent sales agents who solicit orders on behalf of their principals and receive compensation on a commission basis; they know foreign markets, establish customer loyalty, carry a range of complimentary products Example: an agent that represents several manufacturers of US sporting goods in Japan

invitations to deal

invitations to the public to make an offer

protective jurisdiction

jurisdiction over noncitizens for acts committed abroad on the basis of a country's need to protect its national security, economic interests, and government functions; Example: used to prosecute terrorism, espionage, counterfeiting, making false statements to to customs/immigration officers, and falsifying US government documents

passive personality

jurisdiction that gives a country the right to hear cases stemming from crimes committed against their own citizens from non-citizens outside of their own territories; controversial because only the connection to the prosecuting nation may be the nationality of the victim Example: US v Roberts

Sharia Law

law derived from the Koran is the main religious book of the Islamic religion that expresses fundamental Islamic values

civil law

laws affecting private rights and remedies, such as contract law, family, or inheritance law, or tort law; refers to modern legal systems that are derived from ancient Roman law

arbitration clauses

many contracts contain clauses requiring that disputes be submitted for arbitration because doing so removes much of the uncertainty in the event of a breach in contract or other dispute Example: Scherk v. Alberto-Culver, when the US considered an arbitration clause in an international contract calling for arbitration in Paris

objective impossibility

means it must be impossible for anyone to perform, not just this particular party, and the parties did not expressly assume such risk

liquidated damages

monetary awards set forth and agreed to by the parties within the express terms of a breached agreement

compensatory damages

money paid in the event of a breach of contract by either buyer or seller, and the non-breaching party has exercised their right to avoidance of the contract

signatories

nations that express their willingness to join a treaty

price reduction

occurs when a buyer who would like to retain defective/nonconforming goods may adjust the amount paid by withholding a part of the purchase price in order to offset the reduced value of the nonconforming goods

anticipatory breach

occurs when one party clearly sees the other party to the contract either will not perform a substantial part of its obligation or will commit a fundamental breach

alternative dispute resolution (ADR)

offers a faster, cheaper, and more efficient alternative to resolve international commercial disputes than litigation; involves voluntarily submitting to the process Example: mediation

open cargo policy

offers the convenience and protection of covering all shipments by the shipper of certain types of goods to certain destinations and over specified routes

certificate of origin

one of the most important legal documents used in import/export Example:

maritime tort

only applied if the tort occurred and an injury was sustained on navigable waters

seamen

persons employed on vessels regardless of jobs

freight

price charged to transport cargo

maritime courts

private courts developed in the port cities to deal with problems specific to water

clean bill

proof that the goods were shipped in good condition and not damaged

maritime law

refers to the body of law within the admiralty jurisdiction of a court that governs private rights and obligations arising out of the operation of vessels on navigable waters or maritime occurrence

subject matter jurisdiction

refers to the court's authority to hear a certain type of legal matter, such as tort cases or breach of contract Example: in the US, federal courts have subject matter jurisdiction over cases involving federal statutes and federal government agencies, constitutional cases, and cases arising between citizens of different states or between US citizens and those in foreign countries

in rem jurisdiction

refers to the court's power over property within its geographical borders

forum non conveniens

refers to the discretionary power of a court to refuse to hear a case, even through jurisdiction and venue are otherwise proper, because a court in another jurisdiction or location would be more convenient and justice would be better served; whenever a case is properly heard in the courts of more than one jurisdiction, it should be heard in the jurisdiction that is more convenient and has a closer connection to the case

territorial jurisdiction

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

trade in services

refers to the providing of services to a customer or the operation of service companies in a foreign country Examples: transportation, package delivery, banking, etc.

conflict of laws

refers to the rules by which courts determine which jurisdiction's laws apply to a case and how to reconcile differences between laws

infringement

refers to the violation of the IP rights of another, and often occurs in the unauthorized use, distribution, or appropriation of those rights Example: piracy or counterfeiting

mirror image rule

requires that an offeree respond to an offer with an acceptance that is definite and unconditional and that matches the terms of the offer exactly and unequivocally

currency controls

restrictions on foreign currency transactions used by some developing countries that do not have larges reserves of foreign currency

exchange rate risk

results from fluctuations in the relative value of two currencies when one is exchanged for the other and it a risk that can change the value of money and objects

trade usages

rules derived from widespread customs of an industry, the practices of merchants in past dealings, and the usages of trade terminology/language

foreign affiliate

several subsidiaries owned by own parent

dry bulk ships

ship used for carrying coal, ore, and other minerals, grains, etc.

tanker

ship used for carrying oils, chemicals, and other liquids

consequential damages

special or indirect damages arising as a "reasonably foreseeable" consequence of the breach

parol evidence rule

states that a court may not consider in evidence any written or oral statements made by the parties prior to/at the time of concluding a fully integrated written contract if the statements contradict, vary, or add to the written contract; not incorporated into CISG

code of conduct

the US guidelines for sentencing corporate offenders allow for reduced fines and sentences if a defendant can show that it has a compliance program to reduce the likelihood of criminal conduct

law merchant

the accepted customs and practices of ancient and medieval merchants, traders, bankers, mariners, and ship owners

international business law

the body of law and regulations, derived from national and international sources, that governs cross-border business transactions, the activities of doing business in foreign countries or subject to the jurisdiction of foreign courts, and the resolution international business disputes Example: international trade and transportation (exports and imports), the international aspect of licensing, FDI, etc.

sales law (law of sales)

the body of law that governs contracts for the present or future sale of goods

international law

the body of rules applicable to the conduct of nations in their relationships with other nations, and with individuals and other private parties, rules for settling disputes between nations, as well as rules for intergovernmental organizations

mutual assent

the contract laws of all countries require that parties reach a mutual agreement and understanding about the essential terms of a contract

home country

the country under whose laws the investing corporation was created or is headquartered Example: the US is home to multinational corporations such as Ford, Exxon, and Coca-Cola

ratification

the formal agreement of a signatory nation to be bound by the treaty, usually by its own legislative approval

venue

the geographical location of a court of competent jurisdiction where a case can be heard

intellectual property (IP)

the legal rights which result form intellectual activity in the industrial, scientific, literary, and artistic fields Examples: patents, trademarks, copyrights, etc.

errors in navigation

the managing of the ship; the carrier is not liable for damage due to this

political question doctrine

the modern version of the doctrine requires courts to consider six different factors before dismissing a lawsuit on political question grounds: (1) constitutional commitment of the question to the executive/legislative branch (2) a lack of judicially manageable and discoverable standards for resolving the question (3) the impossibility of resolving the question without making a policy determination (4) the determination of the question will result in the expression of lack of judicial respect for the executive or legislative branches (5) the need for adherence to a previously-made political decision (6) the potential for embarrassment of the US government by differing pronouncements of policy by multiple branches of government

extraterritorial jurisdiction

the notion that a nation can project its laws beyond its territorial borders

foreign direct investment (FDI)

the ownership and operation or effective control of the productive assets of an ongoing business by an individual or corporate investor who is a resident or national of another country

jurisdiction

the power of a court to hear and decide a case

unification of law

the process of making national laws more uniform

common law system

the reasoned decisions of judges become the law of the case, a legal precedent that binds judges in deciding similar cases in the future

salvage

the rescue or recovery of a ship or cargo that is lost or damaged in navigable waters

diplomatic jurisdiction

the right of one nation to take diplomatic or judicial action to protect the rights of a person to whom it has granted nationality from a violation of international law by another nation Example: Mavrommatis Palestine Concessions

property or marine risk

the risk of goods being damaged by salt water, break downs, etc. while in transit

supplier risk

the risk that something will happen to the importers and purchasing managers for international firms during a transaction Example: being victims of fraud or receiving defective goods

political risk

the risk to a firm's business interests resulting form political instability or civil unrest, political change, war, or terrorism in a country in which the firm is doing business

arbitration rules

the rules of arbitral tribunals that address issues such as the qualification and appointment of arbitrators, the conduct of proceedings, procedures for finding the facts and applying the law, and the making of awards

Full Faith and Credit Clause

the section of the US constitution that allows judgements to be taken against a party by a court of competent jurisdiction in one state and will be enforced by all other states; does not apply in foreign countries

order confirmation

the seller's formal confirmation of the buyer's order, either accepting the order, rejecting it, or modifying its terms

local participation

the share of the business is owned by nationals of the host country; a disadvantage is that the company might have to share its technology, expertise, and profits with another company

transfer of technology

the sharing of scientific information, technology, and manufacturing know-how between firms, universities, and other institutions Example: the building of business alliances between groups who share patent information

sovereignty

the supreme and absolute power that governs an independent state or nation

expropriation

the taking by a government of privately owned assets Example: when a government takes real estate, factories, farms, etc.

nationalization

the transfer of private-sector firms to government ownership and control, usually with payment to shareholders and pursuant to a larger plan to restructure a national economy

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

the widely accepted body of international sales law which is now implemented in over 70 countries; applies only to the commercial sale of goods and in international business

comity

the willingness of one court or department of government to respect the rules or decisions of another or to grant it some privilege or favor; international comity is a doctrine (not law) Example: under comity, a court that otherwise might be entitled to hear a case may allow it to be transferred to a court in a foreign country with a greater interest in the case

longshoremen

those employed to load and unload ships

jettison

throwing cargo or property overboard to save the ship

compulsory jurisdiction

types of cases where jurisdiction is voluntary

host countries

when a corporation has businesses in a different country than the one where their operations take place Example: when companies such as Ford, Exxon, etc. have offices/areas in other countries

"forum shopping"

when a counsel attempts to "shop around" for a better legal deal by looking for more favorable laws, or more sympathetic juries

diversity of citizenship

when a court applies the laws of the state in which they sit (unless a federal statute or treaty controls) Example: a breach of contract or tort actions between residents of different states, generally apply the laws of the state in which they sit

nationality jurisdiction

when individuals and corporate citizens owe duties to comply with the laws of their countries of nationality no matter where they are in the world Example: a country may tax the income of its citizens earned anywhere in the world, subject to certain rules set out in international treaties on income taxation

suspend performance

when you suspect a performance due to a party not performing a "substantial part" of its obligations

currency risks

whenever a transaction is made in a country with a different currency and can be divided into exchange rate risk and currency risk

break-bulk

where goods are stowed in individual containers or on pallets in the ships hold