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Introduction to MIB Law

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Brontie Zoutewelle

on 12 February 2015

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Transcript of Introduction to MIB Law

Welcome to class
Here we will be learning
about international business law

Brontie Ansell
LLB LLM Solicitor

What you will learn
The basics of law, the legal system and international rules, regulations and agreements
To enable you to be a better manager when operating on a global scale
What is this course about?
International Business Law
These are the topics
The legal environment of international business, the regulation of the international marketplace, including:-
- Introduction to law
- EU Law
- International sales contracts
- Intellectual Property Law
- Dispute settlement
A good way to learn law is to use case notes - See Moodle for more info on this
Your outline is available on Moodle
You can also learn how to answer legal problems by using IRAC
This refers to the ownership and control of assets and products of businesses by an investor from another country.
What are the benefits?
What are the risks?
Foreign Direct Investment
Goods and services will be regulated by the countries they pass through.

What are Tariffs?

What are non tariff barriers?

Quotas, quantitative restrictions and complete bans

Non Tariff barriers are the hardest to predict and the hardest to understand. In terms of impact and control over the good. They cannot be easily factored into a business plan.
Barriers to Trade
Direct exporting is where a manufacturer assumes all responsibility for the functions of foreign trade.

Indirect exporting is where a business cannot directly export
themselves because they do not have the capital or the backing to take the risk on credit transactions, or the expertise to ship goods to a foreign market.

Importing and Global Sourcing:
This is where a firm will source anything from raw materials, to goods or services from anywhere in the world.

Debate whether there is such a thing as international law

For both states and individuals, what are the possible sanctions or enforcement mechanisms for breaches of international law?

Should multi-national corporations be held responsible under International Law for their actions where they violate international law, environmental law or fundamental human rights? Are codes of conduct enough to ensure corporations do not abuse the power they have? Do you think codes of conduct can help make business more socially responsible?
Give examples of codes of conduct that might help to regulate corporations.

Read the case of First Flight Ass v Pro Golf on p14. Explain this case to the class
Read the case of Dayan v McDonalds Corp on p17. Explain this case to the class
Read the case of M.Alsam Khaki v Syed Mohammad Hashim on p71. Explain this case to the class
Questions for discussion:
Sometimes it is referred to as the World Court.

It hears claims brought by states against other states. Individuals cannot bring a claim, although see above the note on diplomatic protection.

The court has control over cases that concern the UN charter or treaties, conventions of questions of international law.
However this is a voluntary jurisdiction and nations must submit to the courts control over the case.
The seat of the Court is at the Peace Palace in The Hague (Netherlands)

The Court’s role is to settle, in accordance with international law, legal disputes submitted to it by States and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies.
The International
Court of Justice
In the UK treaties must be incorporated into domestic legislation by an Act of Parliament. Meaning all treaties are “non-self executing” treaties.
This then becomes domestic law capable of being referred to in a national dispute.
Once ratified and incorporated, treaty provisions are directly applicable.
This means they require no further action by the state to enforce the treaty.
Special position of UK
These are the international equivalent of legislation

Treaties are legally binding agreements between two or more states

Conventions are legally binding agreements between states sponsored by international organisations such as the UN.

Both are binding because the states feel a shared sense of commitment and because they fear that if they do not respect the promises it has made the other state will also break its promises.
Treaties and conventions
In commercial transactions:

treaty provisions might set out when municipal courts have jurisdiction.
Parties may apply a “choice of Law” clause to their contract and elect to use international rules rather than their own states.
International law can sometimes be specified by the national legislature as overriding the national law, meaning courts must apply any provision of international law over a domestic provision where there is conflict.
See for example the law of the EU and particularly the case of Factortame (1990) in the English House of Lords.
Applications of International law
Soft law consists of non-binding rules or statements of practice which are intended to influence behaviour or to be a resource for those seeking the best rule for a particular situation.

It can take a number of forms: Codes of Practice, Restatements such as the Principles of European Contract Law and the UNIDROIT Principles of International Commercial Contracts, communications and non-binding declarations of international bodies.
Soft law
International law is seen as soft law or consensual law. We agree to it as states and citizens because it suits us. It is within individual states sovereign power to commit to uphold certain conventions or contracts with other states, they do this by consent rather than by the force of some larger legal system.

Therefore it is arguable whether the term law can be applied to our discussions at all.
Can it be termed law at all?
Table to show the
different areas
Questions for discussion:
Managing the risks of international business -

Identify as many areas of concern when doing international business?

Pick one of these areas and describe the detail of the risk.

Can you think of any ways of reducing the risk or managing it?
Questions for discussion:
Multinationals are firms with a parent company in one country and foreign affiliates in host countries.

Start up a new foreign subsidiary:
A “wholly owned foreign subsidiary” is a foreign corporation which is organised under the laws of a host country by it is owned and controlled by a parent corp. in the home state.

Form a joint venture with an existing foreign company:
This means there is a cooperative business arrangement between two or more enterprises for profit. This may be a partnership or a corporation. Most often one party will bring capital and the other will bring land, and expertise and staff.

Buy stock/shares for the whole or part of an existing foreign company
These are mergers or buyouts. These are subject to regulation but they require little expertise compared with a start up and there is minimum disruption to existing business.
How does FDI occur?
Intellectual property are intangible rights to use a copyright, patent or trademark.

Each country has its own legal provisions for the granting of these rights.

They can often be sold, mortgaged or licensed for large sums of money.

Copyrights are rights to artistic, literary or music works

Trademarks are the right to use a name or symbol to identify a company or its product

Patents are granted to new inventions to allow the inventor sole use of that product for a certain period of time

Licensing agreements are contracts where the right holder grants rights in the property to a foreign business to allow them to use the IP under certain conditions and for a certain time.
IP – Rights and licensing
There are three major forms of international business:

Trade (importing and exporting)

Licensing agreements for the transfer and protection of patents, copyrights, trademarks and other IP)

Active foreign investment (mergers acquisitions and joint ventures)
International business
Judgements, as in all aspects of international law, are difficult to enforce.

It is mainly on the basis of pressure and public opinion against the defaulting state. As mentioned before, a country can assume that if it defaults on an obligation or a judgement, then at some point in the future a state may default against it in return.

Therefore it is often going to be in a state’s best interest to comply and allow the judgement to be enforced.
Enforcing judgements?
International organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and the achieving of world peace.

The UN was founded in 1945 after World War II to replace the League of Nations, to stop wars between countries, and to provide a platform for dialogue. It contains multiple subsidiary organizations to carry out its missions.

There are currently 192 members of the UN. The UN has a number of different bodies, such as the Security Council, International Court of Justice, the Economic and Social Council.
Intro to International Organisations
The United Nations
The principle source of treaty law is the Vienna Convention on Treaties 1969. Article 2(1)(a) defines a treaty as:
An international agreement between states in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.

Treaties may be bi-lateral (one to one) or multi-lateral (many states). Treaty making power is not confined just to states. International organisations can also make agreements as long as they have this power by their relevant rules. Eg. The United Nations, the European Union, the WTO.

Treaties are only binding on those that sign up to them. (Vienna Treaty Art. 34)
Vienna Convention
By express consent

When states work together under state practice this is the conduct and practice of states in their dealings with each other

Statements of general consent or evidence can be found in the decisions of the international court of justice

In resolutions passed by the General Assembly of the United Nations

In law making multi-lateral treaties and

In the conclusions of international conferences of heads of state.
The making of international law
No international government
No international army (UN forces aside) or police force or prisons

International law could be defined as the body of rules applied to the conduct of nations in their dealings with other nations, the conduct of a state in its dealings with a person or company who belongs to another state, or it could be defined as the rules for international organisations and committees.
Features of international law
International law deals with three kinds of international relationships:

Those between states
Those between states and persons (or companies)
Those between persons and other persons (or company to company)

The legal relationship between states is public international law, the legal relationship between people of different states is private international law.
Introduction to International law

There are several reasons why soft law instruments may represent an attractive alternative to law making by treaty. First it may be easier to reach agreement when the form is non-binding...it may be easier for states to adhere to non-binding instruments because they can avoid the domestic treaty ratification process...soft law instruments may be easier to amend or replace than treaties.
Boyle, A (1999) 48ICLQ 901:

A rule or set of rules, enforceable by the courts, regulating the government of the State, the relationships between the organs of government and the subject of the State, and the relationship or conduct of subjects towards each other.

Defined by the Collins English Dictionary
Law is…….
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