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INTERNATIONAL LAW
Jeffrey Saunders, Lawrence Technological University, Southfield, MI
Amanda _______________, Lawrence Technological University, Southfield, MI
Ulanda Caldwell, Lawrence Technological University, Southfield, MI
Matt________________, Lawrence Technological University, Southfield, MI
Sources of International Law
Brief History of International Law
Prior to the Middle Ages a King or powerful
landowner ruled over his domain as he saw fit.
His word was law for the workers
(serfs/subjects). During the Middle Ages the
Church was given the power to settle disputes.
This custom continued until the 16th and 17th
centuries when the power of the Church waned.
As territories expanded into what are now
known as countries/states, it became apparent
that there was a need to have a set of principles which would govern disputes between
powerful landowners/kings without resorting to extensive and expensive wars. The creation of
international law as we now know it began with the existence of a modern state system and
after the Treaty of Westphalia (1648). During the 19th century, it was recognized that a
sovereign could choose to limit its authority to act by consenting to an agreement according to
the principal of pacta sunt servanda.
Definition of International Law
The simplest definition of International law is “the term used to describe the set of rules and
regulations by which international system operate”. International laws must also reflect the
processes and principals regulating the international community. Since international law
increasingly governs much more than merely relations between sovereign states, it may be better
defined as law decided and enforced at the international, as opposed to national level. The legal
rules by which the international systems operates is known as international law. The judiciary
body which handles international concerns is the International Court of Justice (World Court or
IJC) The sovereign states are the primary subjects of international law. Other powers of
international law include:
 Define the condition of peace, war, and neutrality.
 Establish rules for the conduct of war
 Recognition of states
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Dissolution of states
Recognition of governments
Rules of diplomacy and diplomatic etiquette
Sources of International Law
Traditionally, the sources of international law are regarded as being listed in Article 38 of the
Statute of the International Court of Justice. These are:
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International Conventions whether general or particular establishing rules
expressly recognized by 'the contesting states'
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International custom as evidence of a general practice accepted as law
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The general principles of law recognized by civilized nations
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Judicial decisions and the teachings of the most highly qualified publicists of
the various nations (as subsidiary means for the determination of rules of law).
Since WWII treaties have become the primary source of international laws. In subsequent years
it has been argued that the United Nations and the Security Council and the General Assembly
are additional sources of international law. Another source notes however, that
---it must be remembered that wherever a rule of international law may originate,
it only becomes binding by the force of custom and through general acquiescence.
This consensual view of international law is reflected in the 1920 Statute of the permanent Court
of International Justice. Later, Article 38(1) of the 1946 Statute of the International Court of
Justice further reflects this view (International Norms, 2004). Article 38(1) is also recognized as
a definitive statement of the sources of
international law. According to this Article the
Court must apply at least two basic premises
a. International conventions
“expressly recognized by the
contesting states”
b. “International customs as
evidences of a general practice
accepted as law”
Later a sub paragraph added the requirement
that
c. The general principles applied by
the court were those that had been
“the general principals of the law
recognized by the civilized nations”
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An additional subparagraph acknowledges that
d. The Court is entitled to refer to “judicial decisions” and the most highly qualified
juristic writings as subsidiary means for the determination of rules of law”
(Sources of international law, 2012).
Subdivisions of International Law
There are several subsets of international law. Included are:
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Customary International Law wherein states follow certain practices and
constraints consistently out of a sense of obligation
Conventional International Law wherein the law is derived from international
agreements and may be formulated in any manner the parties agree upon
Public International Law which concerns itself only with questions of rights
between several nations
Private International Law deals with controversies between private persons
arising out of situations having significance to more than one nation
International organizations are also seen as subject to governed by international law. Other areas
also regulated by international law include, international human rights law, international
humanitarian laws and international trade laws (NAFTA).
Doing Business Internationally
Many businesses today have taken advantage of conducting and /or manufacturing business off
shore. There are a number of ways in which businesses can take part in these types of
transactions. The most common form of international business is the exporting of goods and
services. Secondly business can establish a way of manufacturing those goods and services in
foreign countries, to in turn sell in them in the United States and across the world.
Exporting
The export of goods and services can be conducted in two forms,
direct and indirect. Direct exporting provides a U.S firm the
opportunity to sign a sales contract with a foreign purchaser that
describes the conditions in which shipment and payment will take
place. Indirect exporting occurs when a U.S firm establishes a
specialized marketing organization. . An addition to how exporting
takes place is the involvement of the U.S firm during operations. Some
U.S. firms may choose to have limited involvement in the international
market. This creates an agency relationship.
Exporting has had a significant impact on jobs in the United States and the continued growth of
capital for many businesses. The article “Made In the USA : An export boom, discusses the
impact exporting has made in the past five years. President Barack Obama stated during his
election campaign that in order to overcome the recession we must increase the quantity of
exporting goods and services.
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Manufacturing Abroad
The theory behind manufacturing plants abroad is, it will reduce cost for labor, shipping and raw
materials. U.S. firms participate in these acts of business to increase their competitive stand point
against other firms. The article “A tale of Apple, the iPhone, and overseas Manufacturing”
discusses how former CEO Steve Jobs chose to have Apple products manufactured China to
increase profitability, reduce the cost of labor and to produce the product in mass quantities.
Manufacturing in foreign countries is conducted through either of the following procedures:
Licensing
As with any other licensing agreement, a form of payment must be established as a part of the
contract. Foreign bases licensing payments may consist of a price per unit or percentage of the
profits per units sold. Licensing of intellectual property rights is an important benefactor to all
parties during a transaction. The firm granting the license receives profits from the sale of its
goods and establishes a global reputation, while the firm receiving the license has the
opportunity to exemplify a higher quality product.
Franchising
A franchise agreement provides an owner of a trademark the opportunity to “share” or use its
trademark or trade name with a potential business owner(franchisee) under certain conditions
and contract terms. Subway is an international trademark known for its franchising opportunities
and popularity. Franchise owners pay a fee to utilize the trade name, which can be based on
gross or net sales.
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Wholly owned subsidiary or Joint Venture
Once a wholly owned subsidiary is established a U.S. firm retains complete ownership of all the
facilities, manufacturing plants or warehouses, and all conditions of operations while housed in
the foreign country. Firms that establish a joint venture will only have part ownership and control
of the operations taking place in a foreign country. The remaining portion of ownership is
maintained by local owners in the foreign country or other foreign counterparts. All owners
whether foreign or home based share liabilities, responsibilities and profits.
Regulations of Specific Business Activities
There are laws created between nations to restrict and or to facilitate international business. This
implementation is necessary to protect the countries, economies, foreign policies, domestic politics as
well as additional interests that will help increase the livelihood of trading within the global market.
The nations can introduce five very important controls within international agreements. The agreements
can include investment protections, export controls, import controls and trade agreements that
minimize trade barriers.
1. Investment protection pertains to the property that a firm may have purchased in a foreign
nation. There may be potential risks of that foreign government may expropriate the
investment property. The owner is compensated for the loss property and this does not
violate observed principles of international law, however, if the owner is not compensated
then there is a violation. The remedies are usually resolved with lump-sum settlements
between the United States and the nation that initiated the challenge. The nations have
decided that it is necessary to address the potential risks by creating a guaranty within a
national constitution or statutory laws and provisions within the international treaties.
2. Export controls are embodied within Article 1, Section 9, Clause 5 of the United States
Constitution which state that Congress cannot impose any export taxes, therefore “No Tax
or Duty shall be laid on Articles exported from any State.” They can, however, be creative
in diversifying their efforts to either encourage or restrict exports. The technology industry
is growing rapidly and the U.S. implemented the Export Administration Act of 1979, is used
to restrict the flow of technological data and products. The Act has since been amended in
August 31, 2001 and replaced with the International Emergency Economic Powers Act
which is a streamlined and strengthened export control system that effectively
promotes both U.S. national security and U.S. economic interests. The nations have
commonly implemented export quotas, incentives subsidies that can encourage additional
exporting to help enhance more global business. President Obama presented a speech on
March 10, 2010 stating the importance of pushing exports to prevent a depression in the
21st Century.
3. Import controls are customized with prohibitions,
quotas and tariff restrictions worldwide. In the
United States, the Trading with the Enemy Act of
1917 ensures that we do not import goods from
designated enemy nations. Additional laws protect
the U.S. from importation of books that may
influence insurrection against the nation, harmful
agricultural products that may be a danger to our
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animals and crops. The U.S. does not allow goods that may infringe the nation’s patents.
The government has created an agency, the Federal Trade Commission, to investigate
any infringement allegations and they are allowed to impose penalties on the violating
foreign nation(s) if applicable. The United States has set quotas which will limit the
amount of imported goods as well as tariffs, the tax on the imported goods. The tariff is
the percentage of the value of the import. This tax has been used for political
retaliation by some nations in the past. The United States has also created customized
laws to focus on the unfair international trade practices of various countries.
Dumping is the sale of imported goods at less than fair value which is decided by the
price of those goods in the exporting country. Some countries hope to undersell the
businesses to possibly monopolize the U.S. market with that product. The United
States will impose an extra tariff call the antidumping duty to eliminate the
potential threat.
The two agencies that will investigate any allegations are the
International Trade Commission (ITC) which assess the effects of dumping on domestic
businesses and then seek the advice of President Obama to establish temporary import
restrictions and the International Trade Administration (ITA), who decides if the goods
are sold at less than fair value, then the amount of the antidumping duties are
established and the costs may be retroactive to cover past dumping.
4. Trade agreements that minimize trade barriers contribute to the goal of eliminating the
trade barriers which are restrictions on imports all together may enhance the world’s
economic well-being.
The World Trade Organization (WTO) was created in 1995, embodies world leading
trading nations members to ensure that there is favorable export and import processes
among them, this communication has also created regional trade agreements and
associations that has helped simplify the their efforts.
The European Union (EU) was created during the 1957 Treaty of Rome and their
sufficient checks and balances within their governing authorities, the Council of
Ministries which includes a representative from each nation that coordinates economic
policies and they are regulated by a commission who are in turn monitored by an
elected assembly.
Canada, Mexico and the United States has created a regional trade agreement, the
North America Free Trade Agreement (NAFTA) with the goal of eliminating the tariffs
among themselves and creating a competitive advantage for them as they retain tariffs
on the countries that are not included in their agreement.
On August 5, 2004 the United States, Costa Rica, the Dominican Republic, El Salvador,
Guatemala, Honduras and Nicaragua created The Central America-Dominican RepublicUnited States Free Trade Agreement (CAFTA-DR) the goal of this agreement is to reduce
trade tariffs and improve the market between these nations.
5. U.S. Antitrust Laws are created to subject firms in foreign nations to recognize their own
provisions and they also protect the foreign consumers and competitors from violations
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committed by U.S. citizens. The U.S. has implemented the The Sherman Act of 1980 to
ensure that their global trading is favorable at all times.