Legal and Ethics Chapter 24
International Organizational
generally refers to an organization composed mainly of officials or member nations and usually established by treaty
An Arbitration Clause
if sales contract does not include ______, litigation may occur
National Law
law of a particular nations, such as Brazil, Germany, Japan, or the US.
National Export Initiative
made in effort to increase US exports with a goal of doubling US exports by 2015.
Expropriation
occurs when a government seizes a privately owned business or privately owned goods for a proper public purpose and awards just compensation
Age Discrimination in Employment Act
protects US employees working abroad for US employers
Section 1 of the Sherman Act
provides for the extraterritorial effect of the US anti-trust laws
Societe Anonyme
the form a subsidiary would take, similar to a US corporation
Confiscation
when a government seizes private property for an illegal purpose and without just compensation
The Doctrine of Sovereign Immunity
-exempts foreign nations from the jurisdiction of the US courts -in 1976, Congress codified this rule in the Foreign Sovereign Immunities Act (FSIA)
Act of State Doctrine
-provides that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within the latter's own territory -frequently employed in cases involving expropriation or confiscation
Principle of Comity
-refers to legal reciprocity -one national will defer and give effect to the executive, legislative, and judicial acts of another country, as long as the acts are consistent with the law and public policy of the accommodating nation
Foreign Manufacturing Facilities
An alternative to direct or indirect exporting.
Nations that use civil law
Argentina, Brazil, Chile, China, France, Germany, Italy, Mexico, South Korea (more on page 455)
"evidence of a general practice accepted as a law"
Article 38(1) of the Statute of the International Court of Justice refers to international custom as
Nations that use common law
Australia, Canada, United States, United Kingdom, Jamaica (more on page 455)
Alleged violation had a substantial effect on US commerce
Before US courts will exercise jurisdiction and apply anti-trust law, it must show that
-courts independently develop the rules governing certain areas of law (torts and contracts) -apply to all areas not covered by statutory law -stare decisis obligates judges to follow presidential decisions in their jurisdictions, courts may modify or even overturn precedents when deemed necessary
Common Law Systems
Types of law systems
Common, Civil and Islamic Law Systems
Export Quotas
Congress sets export quotas on various items, such as grain being sold abroad
World Trade Organization
Established to minimize trade barriers among nations
CISG
Governs only sales contracts between trading partners in nations that have ratified the CISG.
Export Quotas, Restrictions on Technology Exports, Incentives & Subsidies
How Congress can restrict or encourage exports
expropriation, not a confiscation
In a case alleging that a foreign government has wrongfully taken the plaintiff's property, the defendent government has the burden of providing that the taking was an
Because the law (FSIA) is jurisdictional in nature, a plaintiff generally has the burden of hsowing that a defendant is
NOT entitled to sovereign immunity
Strict prohibitions, quotas, and tariffs.
Restrictions of imports include
Trade Barriers
Restrictions on imports
Tariffs
Taxes on imports, usually a % of the value of the import. Can also raise the price of imports
respect, courtesy, applied in the interests of maintaining harmonious relations among nations
The Principle of comity, act of the state doctrine, and the doctrine of sovereign immunity are all based on
Incentives and Subsidiaries
The US (& other nations) also use this to stimulate exports and thereby aid domestic businesses.
international customs, treaties and international agreements, and international organizations and conferences
The three sources of international law
Joint Venture
US company owns only part of the operation, the rest is owned by either local owners in the foreign country or by another foreign entity. All firms involved share responsibility
Restrictions on Technology Exports
Under the export administrations act of 1979, the flow of technologically advanced products and technical data can be restricted
That there is no higher authority to which that nation must submit
What does it mean if a nation is a sovereign entity?
bilateral agreement
agreement formed by two nations to govern their commercial exchanges or other relations with one another.
Substantial Effect
an conspiracy that has ____ on US commerce is within reach of the Sherman Act
Civil Law Systems (codified law systems)
an ordered grouping of legal principles enacted into a law by a legislature or other governing body
Title VII of the Civil Rights Act of 1964
applies to extraterritoriality to all US employees working for US employers
is international law public or private?
can be both
Section 1603, does not describe what constitutes a
commercial activity
Islamic legal systems
common in Islamic countries, where the law is often influenced by sharia (religious law of Islam)
Sharia
comprehensive code of principles that governs both the public and the private lives of persons of Islamic faith. Directs many aspects of day-to-day life. In some countries aspects of ___ have been codified and are enforced by national judicial systems.
Distribution agreement
contract setting out the terms and conditions of the distributorship (price, currency of payment, guarantee of supply available, and method of payment)
Two forms of exporting
direct and indirect
Coercive actions include
economic sanctions, severance of diplomatic relations, boycotts, and (as a last resort) war against violating nation.
actively question witnesses
Judges in civil systems (unlike common law systems) often
Compensation
Many countries guarantee compensation to foreign investors if their property is taken, guarantee can be in the form of national constitutional/statutory laws/provisions of inter. treaties
blurred
The line between expropriation and confiscation is sometimes
Statutory code
What is the primary source of law in a civil law system?
Agency Relationship
When a US firm wishes to limit its involvement in an international market, it develops a _____ with the foreign firm. The foreign firm then acts as the US firm's agent and can enter contracts in the foreign location on behalf of the US company
Federal Laws
____ in the US prohibit discrimination against race, age, gender, origin, religion, and disability
The Republic of Korea-US Free Trade Agreement
-Eliminate 95% of each nations tariffs on industrial and consumer exports withing five years. -Largest free trade agreement that US has ventured into since NAFTA -Supposed to increase US exports by more than $10M
A foreign state is not immune from the jurisdiction of the US courts in the following situations:
-when foreign state has waived its immunity either explicitly or by implication -when foreign state has engaged in commercial activity within the US or in commercial activity outside the US that has a "direct effect in the US" -when foreign state has committed a tort in the US or has violated certain international laws
Direct Exporting
A US company signs a sales contract with a foreign purchaser that provides for the conditions of shipment and payment for the goods
"No tax or duty shall be laid on Articles exported from any state" therefore Congress cannot impose any export taxes.
Article I, Section 9 of the US Constitution states
"by and with the Advice and Consent o the Senate, to make treaties, provided two-thirds of the Senators present concur"
Article II, Section 2, of the US Constitution, the president has the power to:
international law
Can be defined as a body of law--formed as a result of international customs, treaties, and organizations-- that govern relations among or between nations
No
Does international law require nations to honor the actions of other nations?
Normal Trade Relations
Each member of WTO is obligated to treat other members at least as well as it treats the country that receives its most favorable treatment with regard to imports or exports.
Indirect Exporting
If sufficient business develops in a foreign country, a US company may establish a specialized marketing organization there by appointing a foreign agent or foreign distributor
adopt resolutions and create uniform rules
International Organizations can do what to help enforce laws:
Sherman Act
Law applies even if the violation occurs outside of the US, and foreign gov as well as businesses can be sued for violations
Quotas
Limits on the amounts of goods that can be imported
That government authorities can enforce national law
Major difference between international law and national law?
Roman civil law or "code law"
Most European nations, as well as Latin America, Asia, and Africa, base their legal systems on
1980 Convention on Contracts for the International Sale of Goods (CISG)
Most significant creations of The United Nations Commission on International Trade Law is
Trading with the Enemy Act of 1917
No goods may be imported from nations that have been designated enemies of the US
Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)
Purpose is to reduce trade tariffs and improve market access among all of the signatory nations, including the US. (US, Costa Rica, Dominican, Salvador, Guatemala, Honduras, Nicaragua)
New York Convention
Requires courts in nations that have signed it to honor private agreements to arbitrate and recognize arbitration awards made in other contracting states.
Dumping
Sale of imported goods at "less than fair value"
-There is a written/recorded agreement to arbitrate the matter -agreement provides for arbitration in a convention signatory nation -agreement arises out of a commercial legal relationship -one party to the agreement is not a US citizen, in other words both parties cannot be US citizens
The following has to be true for a court under the New York Convention to arbitrate their dispute if
To eliminate tariffs among these three nations on substantially all foods bu reducing the tariffs incrementally over a period of time, elimination of barriers that prevented cross-border movement of services, and eleminates citizenship requirements for the licensing of professionals (drs, attorneys)
The goal of NAFTA
Arbitration Clause
The parties agree in advance to be bound by the decision of a specified third party in the event of a dispute
Wholly Owned Subsidiary
When established the parent company remains in the US. Parent maintains complete ownership of the facilities in the foreign country, as well as total authority and control over all phases of the operation
forum-selection & choice of law clauses
When the contract contains __________ & ___________ the lawsuit will be heard by a court in the specified forum and decided according to that forum's law
Section 1605 of the FSIA
______________ sets forth the major exceptions to the jurisdictional immunity of a foreign state
Alien Torts Claim Act
allows even foreign citizens to bring civil suits in the US courts for injuries caused by violations of the law of nations or a treaty of the US
Licensing
allows the foreign firm to use an established brand name for a fee. Example Coca Cola
Treaty
an agreement of contract between two or more nations that must be authorized and ratified by the supreme power of each nation
Under Section 1603 of the FSIA, a foreign state includes
both a political subdivision of a foreign state and a foreign state and an instrumentality (dept/agency of any branch of gov) of a foreign state
FSIA
exclusively governs the circumstances in which an action may be brought in the United States against a foreign nation, including attempts to attach a foreign nation's property.
multilateral agreement
formed by several nations
Under Section 1603 of the FSIA, commercial activity is defined as
regular course of commercial conduct, transaction, or act that is carried out by a foreign state within the United States.
Franchising
the owner of a trademark/trade name/copyright licenses another to use the mark/name/copyright under certain conditions or limitations in the selling of the good/service. Ex: Holiday Inn and Hertz
