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RISK, POLITICAL SYSTEMS AND INTERNATIONAL LEGAL ENVIRONMENTS DR. KIP BECKER.

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Presentation on theme: "RISK, POLITICAL SYSTEMS AND INTERNATIONAL LEGAL ENVIRONMENTS DR. KIP BECKER."— Presentation transcript:

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3 RISK, POLITICAL SYSTEMS AND INTERNATIONAL LEGAL ENVIRONMENTS DR. KIP BECKER

4 BUSINES RISKS ENVIRONMENTAL SOCIAL WARS ANTI GLOBAL BUSINESS POLITICAL LABOR BRAND LOSS INDUSTRIAL

5 Risks: unclear legal systems, regulations, economic policies, regulations, economic policies, corporate-governance standards and corruption in 48 countries. corporate-governance standards and corruption in 48 countries. Kurtzman group:milken inst./Economist9/1804p106 OPACITY INDEX 2004=100% OPACITY

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7 APPROACHES TO ASSESSING BUSINESS RISK

8 RELATIONSHIP OF RISK TO BUSINESS TYPE

9 WHAT IS Unwritten law LAWS Must All laws be written?

10 A country's written legislation is vulnerable to public opinion, cultural standards and religious influences. Together these form the nation's unwritten or codes. While violation of these laws and codes may not produce the same legal repercussions of defying legislation Business may find offended extremely unforgiving NOW, WHAT BUSINESS ACTIVITIES COULD LAW EFFECT?

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15 United States has historically had the greatest number of patent requests 1987, the U.S. share Int. Pat. dropped to 25.16% passed by the Japanese (25.88%) By 1990 the U.S. was again the int. leader (America 30.1%, Japan 24.2%, Germany 16.5%) Patent, Trademark, and Copyright Protection INDUSRIAL PROPERTY INTELLECTURAL/ARTISTIC PROPERTY

16 WHO DOES PATIENT PROTECTION PROTECT IS IT GOOD OR BAD? IS IT GOOD OR BAD?

17 TRADEMARK PROTECTION MAY NOT BE JUST FOR LARGE POST INDUSTRIALS HELP PROTECT JUAN VALDEZ AND HIS FINE DONKEY

18 Marsin Prunier v. Prunier's Restaurant & Cafe, Inc (159 Misc. 551, 288 N.Y.S. 529)

19 Most recognize a moral right, or droit moral, originator written material, artistic works musical scores. Right is derived from French law is recognized by most countries. BURNE CONVENTION 1886, revised in 1971, to protect such works. Membership ranges from Communist states, Developing Nations and Post Industrial nations. Individuals need not be residents of a member nation to be protected. Of particular importance works need not be visually perceptible, thus opening the door to high technology firms for software to fall within its purview. The United States is not a member of the Berne Convention but the purpose of many of the 1976 revisions of the U.S. Copyright Act were to move more in line with the Berne Convention's international standards. Droit Moral and Berne Convention

20 Charles M. Schwab presented the mistress of Czar Alexander with a small gift of friendship. A $200,000 diamond and pearl necklace Evidently well received- Schwab's Bethlehem Steel was shortly awarded the contract to supply the rails for the Trans- Siberian railroad OTHER LEGAL ISSUES BRIBES

21 Companies often defend these payments as necessary It is essential to do so to compete if other nations do not restrict these practices. In some nations it is necessary to expedite normal processing of documents. It can assist in protecting a company during political changes or periods of unrest It can assist in mellowing the tone of new laws or even assist in changing old ones. BRIBES – ARE THEY BAD THINGS?

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23 ARE THERE AGRUMENTS AGAINST SUCH PRACTICES ?

24 FCPA,U.S. hoped other countries similar laws. Most did not- many countries openly condone such practices. Italy 1980 payments to foreign officials to secure business for Italian companies perfectly legal. France No law to penalize foreign bribery. Cannot deal in those countries without payoffs". Germany's Federal Office for Foreign Trade Information advises budget extra 20% to win difficult deals paying off corrupt officials. Considered a cost of business government -tax deductions. The Japanese and Koreans- bribes as normal business expenses. 12% stated they had made some form of undeclared payoff payment in the form of entertainment, rebates and commissions, undeclared political donations, payoffs to unions and funds to prevent disruptions at shareholder meetings. In 1992 Japanese companies approximately $446.1 million in undeclared payments, up an estimated 25% over the previous year.

25 The Sullivan Principles, a code of conduct 1977 for corporations Played a major role in dismantling the apartheid system in South Africa. Director Emeritus of General Motors Corporation,

26 What About A Country Forcing Its Laws on A Citizen of Another Nation? What types of laws? Protection domestic companies -in particular for small-scale industries. Protection for domestic infant business. Legislation which restricts the number of foreigners that can be employed. Taxation specific to foreign firms. Foreign-exchange restrictions.

27 Extraterritorial Extension And The Tobago Syndrome In 1808, Tobago, non-resident was served a summons nailing to courthouse door. Tobagoan law all that was required. The problem- summons was served to one living in England. Since never received, a judgment was obtained by default. bind the right of the whole world?" When appealed to English court, Lord Edinburgh, Chief Justice of the King's Bench threw the case out. Case remains important as central issue was whether the island of Tobago had the right to, in Chief Justice's words, "bind the right of the whole world?" While the answer was no, it provides insight into how disputes involving people, or firms, from different nations were to be reviewed or whose law prevailed.

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29 SOME LEGAL ISSUES TO PONDER WHERE TO HEAR DISPUTES? MOST WANT HEARD AT HOME Where the case is heard is extremely important, as the difference among national laws could result in significantly different outcomes. belief that having the case heard domestically gives the upper hand. Union Mortgage vs. Mrs. Bartow WHAT LEGAL SYSTEM? LANGUAGE? BUT SOMEIMES- TO AVOID LOCAL LAWS DIRTYWATER

30 THE END GO SOCKS!

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