© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 7: International LawChapter 7: International Law in a Global Economyin a Global Economy © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Introduction Introduction  International Law. Body of 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. 2

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  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. 3

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  Sources of International Law. International Customs: evidence of a general principle accepted as law by the Statute of the International Court of Justice) Treaties and International Agreements. International Organizations: mainly composed of representatives from member nations, usually established by treaty. 4

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  International Principles and Doctrines. The most important principles and doctrines applied in the interest of maintaining harmonious relations among nations: Principle of Comity.  Act of State Doctrine.  Doctrine of Sovereign Immunity.  5

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  International Principles and Doctrines. Principle of Comity. One nation will defer and give effect to the laws and judicial decrees of another country, as long as those laws and judicial decrees are consistent with the law and public policy of the accommodating nation. 6

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  International Principles and Doctrines. Act of State Doctrine. Judicial branch will not examine the validity of public acts by foreign government within its own territory. Often invoked to protect expropriation, and confiscation. CASE 7.1 S PECTRUM S TORES, I NC. V C ITGO P ETROLEUM C ORP. (2011). CASE 7.1 S PECTRUM S TORES, I NC. V C ITGO P ETROLEUM C ORP. (2011). Why didn’t the court declare the foreign country’s acts illegal? 7

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  International Principles and Doctrines. Doctrine of Sovereign Immunity. Exempts (or immunizes) foreign nations from jurisdiction in U.S. courts. However a foreign state is not immune from U.S. jurisdiction when: – Foreign state has waived its immunity.  8

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  International Principles and Doctrines. Doctrine of Sovereign Immunity. Exempts (or immunizes) foreign nations from jurisdiction in U.S. courts. However a foreign state is not immune from U.S. jurisdiction when: – Foreign state has committed a tort in U.S. or violated certain international laws. 9

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. International Law— Sources and Principles  International Principles and Doctrines. Doctrine of Sovereign Immunity. Exempts (or immunizes) foreign nations from jurisdiction in U.S. courts. However a foreign state is not immune from U.S. jurisdiction when: – Foreign state has engaged in commercial activity within or outside the U.S. that has a “direct effect in the United States.” 10

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Types of International Business Operations. Exporting. Distributorships. The National Export Initiative (2010). – Export Promotion. – Increased Export Financing. Doing Business Internationally 11

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Types of International Business Operations. Manufacturing Abroad. Licensing. Franchising. Investing in a Wholly-Owned Subsidiary or Joint Venture. Doing Business Internationally 12

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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 13

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Nations Impose Laws (cont’d). Import Controls. Quotas and Tariffs. Quotas limit the amount of goods that can be imported. Tariffs are taxes upon imports. CASE 7.2 U NITED S TATES V. I NN F OODS, I NC. (2009). CASE 7.2 U NITED S TATES V. I NN F OODS, I NC. (2009). Why are two sets of books illegal? Regulation of Specific Business Activities 14

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Nations Impose Laws (cont’d). Import Controls. Antidumping Duties: less than fair value.  Minimizing Trade Barriers. European Union. NAFTA. CAFTA-DR.  Bribing Foreign Officials. Regulation of Specific Business Activities 15

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Contract Clauses. Choice of Language. Parties should designate the ‘official’ language of the contract, in case of misunderstanding. Choice of Forum: forum-selection clause. Choice of Law: UCC Commercial Contracts in an International Setting 16

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Contract Clauses. Force Majeure Clause: sometimes referred to as an ‘act of god.’  Civil Dispute Resolution. International contracts typically have mandatory arbitration clauses. But, the issue is always enforcement of the award. Commercial Contracts in an International Setting 17

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Monetary Systems Foreign exchange market  Civil Dispute Resolution. International contracts typically have mandatory arbitration clauses. But, the issue is always enforcement of the award. Payment Methods for International Transactions 18

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Letters of Credit. Foreign exchange market Payment Methods for International Transactions 19

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Ex. 7-1 Letter–of-Credit Transaction 20

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Do U.S. laws apply to other nations’ businesses?  U.S. Antitrust Laws. Apply if foreign conspiracy has substantial effect on U.S. commerce.  U.S. Laws in a Global Context 21

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  International Tort Claims: often involve human rights allegations. CASE 7.3 K HULUMANI V. B ARCLAY N ATIONAL B ANK, L TD. (2007). CASE 7.3 K HULUMANI V. B ARCLAY N ATIONAL B ANK, L TD. (2007). How did the bank collaborate with the apartheid regime?  U.S. Laws in a Global Context 22

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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). U.S. Laws in a Global Context 23