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The International Legal Environment

Cateora and Graham Chapter 7

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Agenda Bases for Legal Systems Jurisdiction in International Legal

Disputes Dispute Resolution Protecting Intellectual Property Rights Commercial Law within Countries US Laws Applicability Abroad Law Regarding the Internet

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Bases of Legal Systems There are four primary basis of

legal systems across the world: Common Law Civil or Code Law Islamic Law Marxist-Socialists Law

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Common Law Common law is based on tradition, past

practices, and legal precedents set by interpretations of statutes, legal legislation, and past rulings. Found in US, England, Canada, etc.

Common law has a premise that the rules are incomplete and tries to establish rules on currently existing laws that relate to approximately the same issues.

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Code Law Code law is considered an all

inclusive system of written laws which can be broken up into commercial, civil, and criminal. Tends to be in Germany, Japan, and

France. Code law leaves room for a broad

set of interpretations of the rules.

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Major Differences in Common Versus Code Law In common law, ownership is usually

established by use, where as in code law, ownership is established under registration.

Under common law, only forces of nature are reasons for not complying with the fulfillment of a contract, whereas in code law, unforeseeable events are enough.

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Islamic Law Islamic law is based on the interpretation

of the Koran. It encompasses both religious and secular

aspects as to how a human may act. Understanding Islamic law means

understanding both the intent of the writers of the Koran, as well as, the interpretation by the locals that are using the law.

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Marxist-Socialist Laws Since the fall of the Soviet Union,

many of the laws that existed in those respective countries have had to change with the time.

Many of the laws are still being written which can imply an unstable legal system?

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Legal Questions What is the basis of Law in the

country that you want to do business?

How will that law affect your ability to market in that country?

How stable are the laws in the foreign country?

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Jurisdiction in International Legal Disputes Since there is no official set of

international laws, legal jurisdiction can be difficult to determine in an international business deal.

The international marketer must take care in developing contracts so legal jurisdiction is unambiguous.

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Jurisdictional Determination Jurisdiction is usually determined

by one of the following: Jurisdictional clauses in the contract Where the contract was enter into Where the provisions of the contract

are performed

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Jurisdictional Questions Has the contracts written specify

where the jurisdiction is for any legal disputes?

Where would be the most likely jurisdiction of a dispute if it was not written in the contract?

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Dispute Resolution Resolve the Dispute Informally Conciliation Arbitration Litigation

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Resolving the Dispute Informally When a problem arises between

you and another party over a commercial transaction, your first option is to informally resolve it.

This may be the cheapest form of dealing with a dispute.

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Conciliation This is when the disputing parties

bring in a third party to mediate the issue without entering into a binding agreement.

Conciliation sessions tend to be private and confidential and what is said in them cannot be used later in other legal recourses.

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Conciliation Cont. Conciliation is usually one of the

cheapest ways of handling a dispute.

Some countries, such as China, would prefer to use conciliation over other forms of dealing with disagreements or issues.

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Arbitration Arbitration is a more formal version of

conciliation and tends to be the next step if conciliation does not work.

In arbitration both parties agree on binding themselves to the decision of a disinterested arbitrator(s) which referee the discussion and make judgment based on the merits of the case.

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Arbitration Cont. There are many formal arbitrators in the

global market. The Inter-American Commercial Arbitration

Commission The London Court of Arbitration The International Chamber of Commerce

It is usually advantageous to write a clause in the contract that says you will try arbitration before litigation.

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Litigation Litigation is when you take an

issue to a public court. It tends to be very expensive and

time consuming. Litigation should be the last thing

you try to get resolution of an issue.

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Deterrents to Litigation Creating a poor image that

damages your public relations Unfair treatment in foreign court Greater difficulty of collecting a

judgment High cost and time required Loss of confidentiality

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Protecting Intellectual Property Rights Intellectual property rights are the

tangibles and intangibles that this business owns that come from research and development of a product or name.

A marketer must be vigilant as to how to protect their property rights.

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Inadequate Protection The marketer should not assume that

because they have the intellectual property rights in one country they have the rights in all countries.

Inadequate protection can cause you to have to buy back the rights to your intellectual property in other countries.

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Prior Use Versus Registration In some countries, i.e., common

law countries, intellectual property rights are given to the person who first used it.

In many code-law countries, property rights are developed when the product is registered with the government.

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Property Rights Question What steps can you take to secure

the intellectual property rights for the product that you are marketing in a foreign country?

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Commercial Laws Within Countries The different legal systems and

interpretations in the legal systems may be widely different across countries. This implies that the marketer must

understand the marketing laws, green legislation, and antitrust laws within each country.

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US Laws Applicability Abroad Even though some marketing

practices may be legal in foreign countries, you may still be bound by the laws of your country.

The marketer must know the laws of the US that bound their marketing practices.

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US Laws Applicability Abroad US laws dictate that marketers:

Cannot be involved in bribery Cannot sell products the US deems

related to national security Cannot become a monopoly oversees

that causes less price competition for the US

Cannot participate in foreign boycotts

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US Laws Applicability Abroad Question What US laws are going to have an

effect on the marketing of your products?

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Cyberlaw Since the internet is so new and it crosses

international boundaries easily, many of the laws related to it are not finished in many countries.

It is important that the marketer understand the particular laws that do apply.

The two biggest issues are: Taxes Jurisdiction of disputes and validity of contracts