International Business Law
Prof. M.E. Storme
2015-2016
SOURCES
international law v.
international sources
Distinction:
- Rules of international origin
- Rules of international public law (ius gentium)
 International public law distinguished from:
- (national) public law (constitutional,
administrative, criminal, tax, ...)
- private law including « international private
law »
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SOURCES
the international legal order (ius gentium)
Classic view: international legal order as legal
order between states and/or international
organisations / dualism
- Nuance 1: private organisations as players;
access of private parties to international
organisations (incl. courts)
- Nuance 2: direct effect of rules of international
law in the internal (national) legal order (if
accepted by national constitutional law)
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SOURCES
sources of international public law
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(Formal) sources of international public law (ius
gentium):
Treaties
Customary law, general principles of law
Decisions of international organisations
Soft law
SOURCES
Treaties (categories)
parties: bilateral, multilateral
- domain: commerce, war & peace, diplomatic relations, foreigners ...
- legal form: traité-convention (mutual obligations) / traité-loi
(introducing legal rules).
Some important types:
* FNC (friendship navigation commerce); free trade zone or economic
union, customs, ...
* founding international organisations
* investment treaties, state loans
* judicial cooperation (e.g. extradition, evidence)
* « demarcation » e.g. double taxation avoidance treaties; jurisdiction
and enforcement; conflict of law rules
* unification of law
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SOURCES
Treaties: unification of law
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Domain:
either limited to transnational relationships (international sales,
international transport, ...)
or also applicable to domestic ones (e.g. bills of exchange)
Sometimes different versions (creating confusion)
How to interpret:
General rules in the Vienna Convention in the Law of Treaties
In many conventions a clause demanding autonomous
interpretation (eg art. 7 CISG, see Ch. 4)
usually no institution with the authority to give a uniform
interpretation
exceptions: Benelux Court, Court of Justice EU, OHADA Common
Court (Abidjan), etc.
exchange of information (Lugano Treaty, CLOUT and CISG Digest,
…)
SOURCES
Some substantive concepts
Standards of treatment:
- minimum standard or equitable treatment
- equivalent (« national ») treatment
- MFN (most favoured nation) clause – with the possible
exception of « preferential treatment »
 Sanctions:
- determined by treaty provisions
- customary law: prohibition of boycott (unless an
obligation to boycott is imposed) (in practice business
parties may be caught bewteen conflicting policies
imposing boycot c.q. prohibiting to take part in it)
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SOURCES
Treaties: effects
Effects in the international legal order:
- international liability of states
- international jurisdiction (i.a. Permanent Court of
Arbitration)
- possibly sanctions
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SOURCES
Treaties: effects
Effects in the domestic / national legal order, before the
domestic courts (so-called « direct effect »). Conditions
determined by national constitutional law, usually the
following:
- either implemented or directly applicable by virtue of
another rule (adde: doctrine of (vertical) « direct effect »
of EU-Directives)
- content of the rule must be sufficiently precise and
unconditional to be applied without further measures of
implementation (self-executing) (NB. This is a question
which also arises within a legal order, whether a rule is
self-executing or not)
- Examples in EU (member st. Legal order): many rules in
EU-Treaties. Not: GATT
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SOURCES
International customary law
Conditions
- objective element: (widespread) general practice
- opinio iuris: accepted as law
Often disputed !
Sometimes extended to « general principles of law » as a
new kind of natural law
 Importance
- limited in the field of international economic law
- more important in other fields (rights & immunities of
states; war & peace; human rights (aspects of), …)
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SOURCES
Decisions of internat.organis.
Sometimes binding:
- Decisions concerning the internal operation of an IO
- Binding force provided by treaty (see supra on the
conditions of direct effect)
- e.g. resolutions under Ch. VII UN Charter (Security
council). According to art. 103 UN Charter priority over
any other rule (thus even ECHR).
- e.g. decisions of EU institutions within their competence
(as to direct effect, instruments differ – regulations,
directives, decisions, ...)  If not binding: = soft law
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SOURCES - « Soft law »
Types:
- non-binding decisions of International Organisations
- non-binding treaties (gentleman’s agreements)
- codes of conduct; recommendations; ‘principles’
- Still softer: legislative guides, …
- The ILC (international law commission – expert group of
the UN) has prepared many drafts (treaties, articles,
principles) – some have been enacted as treaties
 (Possible) effects:
not legally binding; political consequences; moral
effects; commercial pressure; de lege ferenda (model for
future rules), chosen as rules by the parties
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SOURCES
The national legal order
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National law includes international public law (and other
international sources) as far as « received » (conditions
for reception and possible « direct effect » are
determined by national constitutional law)
National public law and private law may have sources of
international origin (eg human rights, uniform laws, ...)
Application of foreign national law in transnational
relationships ?
Distinction between public law and private law < next
slides
SOURCES
Effects of national / foreign public law
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Public law includes: administrative law, tax law, criminal law,
competition law and other economic public law (e.g. import &
export regulation, valuta exchange regulation; supervision of
financial institutions and markets, expropriation, ...)
Starting point: each country applies only its own public law
according to its own criteria of applicability
application is usually territorial, sometimes extraterritorial (e.g.
taxes, competition,…). In how far accepted by international law ?
demarcation by treaties (e.g. double tax avoiding treaties; criminal
jurisdiction, etc.)
Exceptions (states applying foreign public law): cooperation treaties
in matters of public law, e.g. assistance in enforcing criminal
sanctions, collecting taxes, extradition, …
SOURCES
The (national) ’international private law’
Private law = property, contract, tort, restitution,
company law, trust, intellectual property, ….
 Application of private law in transnational relationships is
determined by rules of « IPL ».
Basically 2 types of rules of IPL:
- conflict rules (national or uniform)
- substantive rules of IPL (mostly uniform rules) (often
applied only after the conflict rule)
See topic 3.
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PLAYERS
States as rule-makers
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State as legislator / rulemaker (government)
direct (national sources of national law)
creating international sources: concluding treaties, etc.
ratifying and implementing international sources (incl.
uniform law)
founding of, and taking part in international
organisations
State as party to conventions of international public law
engaging itself in obligations (e.g. commodity
agreements, bilateral or multilateral trade agreements,
...)
States as trade partners
Purpose: contracts to obtain or sell goods an services for
use by the government of by its citizens
 Methods: directly as contracting partner or through state
companies or mixed enterprises / joint venture (many
gradations)
 Regulation of the internationale trade (s. further, e.g.
public procurement opened to foreign business)
 State as contracting party: corruption risk; international
rules to fight corruption esp. on the active side. I.a.
UNCAC (UN Convention against corruption, in force
2005) (Japan & NE have signed but not ratified)
 State as contracting party: determine the applicable
law(s)
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States as trade partners
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UNCAC (UN Convention against corruption, in force 2005)
States as trade partners UNCAC
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UNCAC (UN Convention against corruption, in force 2005)
Ch. 2: preventive measures (i.a. anti-corruption bodies, recruitment
principles, codes of conduct for public officials, appropriate system
of public procurement, money-laundering prevention,
Ch. 3: criminalization (bribery of officials, diversion of property by
public official, trading in influence, abuse of functions, bribery in
private sector, laundering of proceeds of crime, obstruction of
justice, etc.
Ch. 3: law enforcement: prosecution; freezing seizure and
confiscation, compensation for damage, protection of witnesses
etc., overcoming bank secrecy, ...)
Ch. 4 international cooperation (extradition, legal assistance, etc.)
Ch. 5 Asset recovery; .....
States as trade partners
Anti-Corruption Policy:
 Application of the UNCAC:
i.a. the EU Transparency Directive and Accounting Directive impose
disclosure of payments to authorities
- in the US: Foreign Corrupt Practices Act (FCPA)
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Companies are expected to take their responsibility when doing business
with partners that may engage in corrupt behaviour:
- There is a OECD Convention on Combating Bribery of Foreign Public Officials
in International Business
- The ICC (international chamber of commerce) has a code of “Rules on
Combating Corruption” and proposes a model anti-corruption clause to be
inserted in contracts
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States - immunities
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Immunity from jurisdiction for foreign states before national courts
Starting point: immunity, unless waived
Many restrictions (national law, treaties).
In Europe: European Convention (CoE) on State Immunities Basel 1972
(only 8 ratifications, incl. Belgium, NL, D, UK) In the UK internally: British
State Immunities Act 1976/1978
In the US: FSIA (Foreign Sovereign Immunities Act 1976, am. 2008, now 28
US Code ch. 97)
Attempt at harmonisation: UN Convention on Jurisdictional immunities of
states and their property 2004 (not in force yet, 16 ratifications, but 30
required). But cited by the ECtHR (23 March 2010, Kudak/Lithuania (labour
case) and 29 June 2011 Sabeh El Leil) as customary law and recognised as
customary law in eg Belgian case law)
In general not contrary to art. 6 ECHR if there is no immunity before
domestic courts (see ECtHR in McElhinney 21 Nov 2011, in Fogarty, in AlAdsani, in Jones/UK 2 June 2014) (courts of canon law within the Romancatholic church also considered as domestic courts)
States - immunities
Immunity from jurisdiction for foreign states
 Rule and exceptions
In the USA - FSIA: with exceptions in § 1605 ff, mainly: claims based upon
commercial activity in the US, tort committed in the US, expropriation in
violation of international law, terrorism
Overall Result: distinguish acta iure imperii / acta iure gestionis (already
Belgian Cass. 11 June 1903); not every ’act of state’ is immune.
Jurisdictional immunity also covers foreign torts (ICJ 3 feb 2012 Germany v.
Italy on acts committed by German soldiers in Italy in WW II: no
jurisdiction of Italian courts) , unless the tort is unrelated to the political
order (Cass. 11 June 1903).
Immunity covers also the « Holy See » (as a sovereign)
 -Separate immlunity for diplomatic missions (Vienna Diplomacy Convention
art. 22 and 25 + general principle ne impediatur legatio)
 Waiver, i.e. acceptance of jurisdiction, mostly not before domestic courts of
foreign state, but
- international courts
- arbitration , see Ch. 8 and 12.
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States - immunities
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Immunity from enforcement for foreign states
Starting point: immunity
Result: immunity for assets used by the public service (s. eg art. 55
New York Arbitration Convention)
Cass.B. set immunity of international organisations aside in 3 cases
because of lack of effective remedy (art. 13 ECHR). Idem Cass.Fr.
In the Argentina debt cases, a US Court allowed post-judgment
discovery of Argentinian assets in the US held by third parties
(banks). Compare the ‘alter ego’ doctrine assimilating certain
entities to the state itself (eg possibly a central bank). Argentina
filed a complaint with the ICJ (international court of justice)
Belgian Court of Cass. (22 Nov. 2012) did not set aside immunity of
the Argentinian embassy accounts; idem French Court of Cass. 28
Sep 2011 (but reasoning changed in a more recent case Cass. 13
May 2015 Commisimpex/Congo)
States - sovereignty
Starting point of the international public law:
- sovereignty also regarding the economic order;
- equality of rights under international law, also in relation
to (participation in) international trade
 Many international treaties provide benefits for
« developing countries » (further benefits for LLDC’s,
least developed countries)
 Disputed « right » to development and « duty » of
solidarity (soft law ?)
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International organisations
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Universal organisations (in principle open for all states)
GATT, now WTO (1994), with a General Council and separate
Councils for GATT, GATS, TRIPS
UNO, with General Assembly, Security council, EcoSoc
Uncitral (international trade law): treaties and model laws
Unctad (trade & development): granting developing countries
access to the world economy
Unidroit: create uniform law (mostly private law)
Hague conference: unification of IPL
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Restricted organisations, i.a. OECD, OPEC etc.
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International organisations
Free trade organisations
 Types: free trade zone / customs union / common
market / monetary union
 Examples:
- EU
- EFTA, EEA
- NAFTA, CAFTA (Central America), Mercosur
- ASEAN / SAARC (SAFTA)
- Possibly CETA (Canada - Europe)
- COMESA (East & Southern Africa), …
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PLAYERS - NGO’s
Private organisations: not subjects of international public law, but governed
by national law (although sometimes involved in the activities of I.O.’s)
 Some influential NGO’s :
ICC: for standard contracts and uniform rules; Court of arbitration
(organising arbitral tribunals)
International Accounting Standards Board (IASB), setting the IFRS
(International Financial Reporting Standards)
- World economic forum Davos
Comité maritime international: maritime transport conventions
Institut de droit international: tries to « codify » international public law,
…..
ICANN = California corporation (internet corporation for assigned names
and numbers), with a Governmental advisory committee (111 countries)
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Multinational enterprises: sometimes conclude contracts « under
international law » (with states or IO’s) instead of under national law.