International and World Trade Law © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman International Law Law that governs affairs between nations. Law that regulates transactions between individuals and businesses of different countries. No single source of international law. No world court responsible for interpreting all international law. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

The United States and Foreign Affairs The Constitution gives most of the power over foreign affairs to the federal government. Foreign Commerce Clause Treaty Clause © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Foreign Commerce Clause Article I, Section 8, Clause 3 vests Congress with the power “to regulate commerce with foreign nations.” Any state or local law that unduly burdens foreign commerce is unconstitutional under the Commerce Clause. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Treaty Clause Article II, Section 2, clause 2 states that the president “shall have power, by and with the advice and consent of the Senate, to make treaties, provided two-thirds of the senators present concur.” The president is the agent of the United States in dealing with foreign countries. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Treaty Clause (continued) Under the Treaty Clause, only the federal government may enter into treaties with foreign nations. Under the Supremacy Clause of the Constitution: Treaties become part of the “law of the land” Conflicting state or local law is void © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Sources of International Law Those things that international tribunals rely on in deciding international disputes. Treaties and conventions Custom General principles of law Judicial decisions and teachings © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Treaties and Conventions The first source of international law. They are the equivalents of legislation at the international level. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Treaty An agreement or contract between two or more nations. Formally signed by an authorized representative. Ratified by the supreme power of each nation. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Convention Treaty that is sponsored by an international organization. Treaties and conventions address: Human rights Foreign aid Navigation Commerce Settlement of disputes © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Custom The second source of international law. Custom describes a practice followed by two or more nations when dealing with each other. It may be found in: Official government statements. Diplomatic correspondence. Policy statements. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Custom (continued) Two elements must be established to show that a practice has become a custom: Consistent and recurring action by two or more nations over a considerable period of time. Recognition that the custom is binding because of legal obligation. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

General Principles of Law The third source of international law. Consist of principles of law recognized by civilized nations. These are principles of law that are common to the national law of the parties to the dispute. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

General Principles of Law (continued) The general principles of law may be derived from: Constitutions Statutes Regulations Common Law Other Sources of National Law © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Judicial Decisions and Teachings The fourth source of international law. Consist of judicial decisions and teachings of the most qualified legal scholars of the various nations involved in the dispute. International courts are not bound by the doctrine of stare decisis. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman United Nations International organization created by multinational treaty in 1945. Goals of the United Nations (U.N.): Maintain peace and security in the world. Promote economic and social cooperation. Protect human rights. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Governance of the United Nations The United Nations is governed by: The General Assembly Composed of all member nations. The legislative body of the U.N. Adopts resolutions which have limited force. Resolutions are usually enforced through persuasion and sanctions. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Governance of the United Nations (continued) The Security Council Composed of 15 member nations. Five are permanent members Ten are chosen for two-year terms Primarily responsible for maintaining international peace and security. Has authority to use armed forces. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Governance of the United Nations (continued) The Secretariat Administers the day-to-day operations of the United Nations. Headed by the Secretary-General, who is elected by the General Assembly. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

International Court of Justice The judicial branch of the United Nations. Also called the World Court. Located in The Hague, the Netherlands. Only nations may have cases decided by this court. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman UN Agencies The UN is composed of various autonomous agencies. UNESCO UNICEF IMF World Bank IFAD © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

International Monetary Fund IMF was established to promote the world economy. Sound monetary, fiscal, and macroeconomic policies worldwide Provides assistance to needy countries © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman World Bank Financed by contribution from developed countries. Provides money to developing countries to fund projects for humanitarian purposes and relieve poverty. Bank routinely grants debt relief for these loans. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman The European Union Comprised of many countries of Western Europe. Created to promote: Peace and security. Economic, social, and cultural development. Open borders for trade. Provide free flow of capital, labor, goods, and services. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

North American Free Trade Agreement Free-trade zone formed by the United States, Canada, and Mexico. Eliminates or reduces most of the duties, tariffs, quotas, and other trade barriers between the members. Forms supernational trading region. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Free Trade Area of the Americas (FTAA) Possible extension to NAFTA Would include all of the countries of North, Central and South America, extending from Alaska in the North to Argentina in the South. Reservations and critics still exist. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Latin, Central, and South American Economic Communities Central American Common Market MERCOSUR Common Market Caribbean Community Andean Common Market © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Asian Economic Communities Association of South East Asian Nations (ASEAN) Japan and China not members © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

African Economic Communities Economic Community of West African States Economic and Customs Union of Central Africa East African Community Organization of African Unity © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Middle Eastern Economic Communities Organization of Petroleum Exporting Countries (OPEC) 11 Oil-producing and exporting countries from Africa, Asia, the Middle East and South America. Sets quotas on the output of oil production by member nations. Gulf Corporation Council © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

World Trade Organization (WTO) International organization of more than 130 member nations. Created to promote and enforce trade agreements among member nations. One of the primary functions of the WTO is to hear and decide trade disputes between member nations. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

WTO Dispute Resolution WTO hears and decides trade disputes between member nations. Three-judge panel issues panel report. Report referred to dispute settlement body of WTO. WTO creates an appellate body composed of seven professional justices. If violation found, offending nation ordered to stop and to pay damages. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

National Courts Decide International Disputes The majority of commercial litigation involving international business transactions are heard by national courts. Most disputes are between private parties. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Judicial Procedure Choice of forum clause – designates the judicial or arbitral forum that hear and decide the case. Choice of law clause – designates the law to be applied by the court or arbitrator in deciding the case. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Act of State Doctrine Judges of one country cannot question the validity of an act committed by another country within that other country’s borders. Based on the principle that a country has absolute authority over what transpires within its own territory. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

Doctrine of Sovereign Immunity Act of a government in a foreign country is not subject to suit in the foreign country. Some countries provide absolute immunity. Some countries provide limited immunity. The U.S. provides limited immunity © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

International Arbitration A non-judicial method of dispute resolution. A neutral third party decides the case. The parties agree to be bound by the arbitrator’s decision. Faster, less expensive, less formal, and more private than litigation. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

International Arbitration (continued) Arbitration Clause A clause contained in many international contracts. Stipulates that any dispute between the parties concerning the performance of the contract will be submitted to an arbitrator or arbitration panel for resolution. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman

© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Law Around the World Jewish Law and the Torah More in search of truth than it is an adversarial process. Islamic Law and the Ko’ran (Quran) Used primarily in the areas of marriage, divorce and inheritance. Limited use in criminal law. Ignored in commercial Law. Hindu Law and Dharmasastra Does not rest on civil codes nor court decisions, but on the works of private scholars that were passed along for centuries by oral tradition and eventually smitris (or law books). Concerned with family matters and the law of succession. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman