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

2. © 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

3. 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

4. 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

5. © 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

6. 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

7. 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

8. 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

9. © 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

10. © 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
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11. © 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

12. © 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

13. 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

14. 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

15. 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

16. © 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

17. 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

18. 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

19. 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

20. 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.
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21. © 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
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22. International Monetary Fund
IMF was established to promote the world economy.
Sound monetary, fiscal, and macroeconomic policies worldwide
Provides assistance to needy countries
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23. © 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.
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24. © 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

25. 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

26. 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.
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27. Latin, Central, and South American Economic Communities
Central American Common Market
MERCOSUR Common Market
Caribbean Community
Andean Common Market
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28. Asian Economic Communities
Association of South East Asian Nations (ASEAN)
Japan and China not members
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29. African Economic Communities
Economic Community of West African States
Economic and Customs Union of Central Africa
East African Community
Organization of African Unity
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30. 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

31. 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

32. 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.
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33. 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.
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34. © 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.
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35. © 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

36. 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

37. 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

38. 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.
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39. © 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