International Law in a Global
Economy
Chapter 24
Introduction
• International Law: formed as a result
of international customs, treaties, and
organizations - that governs relations
among or between nations.
• National Law: law of a particular
nation.
International Law
• International law is the result of
attempts to reconcile the need of each
country to be the final authority over
its own affairs and the desire to benefit
from relations with one another.
International Law
• Sources of International Law.
– International Customs.
– Treaties and International
Agreements.
– International Organizations.
International Law
• Common Law and Civil Law Systems.
– Common Law Systems: courts
independently develop rules by stare
decisis for certain areas of law, not
covered by statutory law.
International Law
• Common Law and Civil Law Systems.
– Civil Law Systems: Most of Europe,
Asia, Africa, Latin America based on
Roman civil law or “code law.”
International Law
• Common Law and Civil Law Systems.
– Islamic Legal Systems: sharia legal
code is based on religious principles
that govern a Muslim’s way of life.
International Law
• International Principles and Doctrines.
– The Principle of Comity.
– The Act of State Doctrine.
– The Doctrine of Sovereign
Immunity.
International Law
• Principle of Comity.
– One nation will defer and give effect to
the laws and judicial decrees of another
country.
International Law
• Act of State Doctrine.
– Judicial branch of one country will not
examine the validity of public acts by
foreign government within its own
territory.
– Often invoked to protect expropriation,
and confiscation.
International Law
• Doctrine of Sovereign Immunity.
– Exempts foreign nations from jurisdiction
in U.S. courts.
– A foreign state is not immune from U.S.
jurisdiction when:
• (1) The foreign state has waived its
immunity.
International Law
• Doctrine of Sovereign Immunity.
– A foreign state is not immune from U.S.
jurisdiction when:
• (2) The foreign state has engaged in
“commercial activity” within or
outside the U.S. that has a “direct effect
in the United States.”
International Law
• Doctrine of Sovereign Immunity.
– A foreign state is not immune from U.S.
jurisdiction when:
• (3) The foreign state has committed a
tort in U.S. or violated certain
international laws.
Doing Business Internationally
• Types of International Business Operations.
– Direct Exporting.
– Indirect Exporting.
• Agency Relationship with Foreign
Firm.
Doing Business Internationally
• Types of International Business Operations.
– Distributorships.
– National Export Initiative.
• Export Promotion (US Commerce
Dept)
• Increased Export Financing.
Doing Business Internationally
• Types of International Business Operations.
– Manufacturing Abroad.
• Licensing.
• Franchising.
• Investing in a Wholly-Owned
Subsidiary or Joint Venture.
Regulation of Specific
Business Activities
• Nations Impose Laws and Controls to
restrict or facilitate international
business.
– Investment Protections:
expropriation is a major concern.
– Export Controls.
Regulation of Specific
Business Activities
– Import Controls.
• Prohibited Goods (e.g., Trading
with the Enemy Act of 1917).
• Quotas and Tariffs. Quotas limit
the amount of goods that can be
imported. Tariffs are taxes upon
imports.
Regulation of Specific
Business Activities
– Import Controls.
• Political Factors (Retaliation).
• Antidumping Duties: less than fair
value.
Regulation of Specific
Business Activities
• Minimizing Trade Barriers.
– European Union.
– NAFTA.
– CAFTA-DR.
– KORUS-FTA.
International
Dispute Resolution
• International trade agreements usually
include arbitration provisions.
• New York Convention.
– (1) Written or recorded agreement.
– (2) Agreement provides for arbitration.
– (3) One party is not a U.S. citizen.
International
Dispute Resolution
• Effect of Choice-of-Law and Choice-ofForum Clauses.
– If there is no arbitration clause,
litigation may take place within the
jurisdiction agreed-to by the parties in
the contract.
U.S. Laws in
a Global Context
• Do U.S. laws apply to other nations’
businesses?
• U.S. Antitrust Laws.
– Apply if foreign conspiracy has
substantial effect on U.S. commerce.
• International Tort Claims.
–
U.S. Laws in a
Global Context
• Antidiscrimination Laws.
– Civil Rights Act of 1991 applies Title
VII extraterritorially to all U.S.
employees working for U.S.
employers abroad (apparently does
not apply to domestic nationals
working for U.S. firms).
International Law in a Global
Economy
Chapter 24