IBT Outline

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IBTs Occur because of: Local Scarcity or Unavailability of Product

simultaneous buying and selling: the simultaneous buying and selling of the same negotiable financial instruments or commodities in different markets in order to make an immediate profit without riskTo take advantage of Arbitrage: a hedged investment meant to capture slight differences in price; when there is a difference in the price of something on two different markets, to buy at lower price and sells at higher price Many companies take advantage of the price auction internally, through production and manufacture of a good in different countries Profit for the companies involved Legal Framework for International Business Involve many different fields of law Often trigger both international and national legal systems Private International Law (PIL) use of domestic choice of law rules by domestic courts to resolve issues of conflicts of law in an international context The choice of law can be international, but domestic is usually the starting point. Domestic rules that govern how judges select which law to use US PIL Choice of Law Analysis A court will engage in a private international law analysis when it hasnt been discussed the parties and have to decide which jurisdiction to apply. Beginning Premises: State law governs in contracts re: Constitution 10th amendment Courts wont apply state law when it doesnt apply, if federal law preempts Choice of law multifactor Analysis, Restatement, Conflicts of Law (2), 188, 403 (1971) 188 Restatement, Conflict of Law If the restatement says there are more than one criteria, judges will have to engage in a balancing and weighing of the factors Factors courts weigh when there is a choice between state law and foreign law Needs of interstate and intl systems Relevant policies of the forum The public policy interests of the other country and the relative interest of those states in the determination of the particular issue Protection of justified expectations Basic policies underlying the particular field of law Certainty, predictability, and uniformity of result Ease in the determination and application of the law to be applied. Different set of factors when it is Federal law vs. foreign law, foreign relations law, (sec) 403 Need to find these PIL Choice of Law Analysis Abroad Civil Law Countries are very similar to the Restatement Some countries who are signatories use Hague Conference on Private International Law in 1893: establish uniformity in rules across countries US is not a party to the conventions

The lex mercatoria (law merchant) was a body of law used by merchants to resolve disputes across borders New Lex Mercatoria embodies a modern set of international rules Result of new Lex Mercatoria is that private international law is reducing in importance for three specific reasons: Promulgation of international treaties and uniform codes Courts allow parties to choose governing law Availability of arbitration is overtaking litigation, arbitrating bodies dont necessarily adhere to particular bodies of law Public International Law System of laws governing the relations of countries, NGOs, to a limited extent, the private conduct of individuals Primary source are treaties Customary international law standard practices or rules that take on a sense of legal obligation through use and tradition. Mostly applies to traditional diplomatic / political stuff, like granting of asylum

Regional Supranational Law, like public international law members are required to follow like in a multilat treaty, EU law Regional agreements, ie EU, ASEAN agreements, MERCOSUL, OAS Harmonization of Law Need for harmonization in the form of uniform laws and codes The purpose of Uniform codes and other harmonizing measures is to give concepts a uniform meaning Sources: Hague Conference Conventions bilat treaties EU legislation

Urging instruments: model laws codification of custom and usage promulgated by an intl NGO international trade terms model contracts restatements Major International Institutions Important to IBTs: UNCITRAL (UN Commission on Intl Trade Law) is a govtal institution in that states are parties are nonbinding until the nation ratifies in own domestic law reports to UN how to unify commercial law Created the Contracts for the Intl Sale of Goods (CISG) UNIDROIT

international institute for the unification of Private law studies the needs and methods for modernizing and harmonizing private law and commercial law

Intl Chamber of Commerce (ICC) promulgates rules for private parties to adopt by contract non-governmental may be binding until private parties/countries adopt created incoterms uniform customs and practice for documentary credits (UCP) INCOTERMS (international commercial terms) Major Sources of International Business Law Sources: public international law o in form of INCOTERMS, UCP regional agreements international commercial custom and usage domestic law When Domestic Law is used as a source (rule): when there is an absence of a superceding international treaty silence of the parties (not stipulated in the contract or agreement) By Party Agreement (when it is stipulated in the contract or agreement) When mandatory law preempts party choice o laws dealing with public rights that may apply in an international context such as anti-trust, securities (CISG) When the parties choose to opt-out CISG or when the contract places the issue out of its scope o Art 6, provision 4(a) allows opt-out provision

For Domestic Disputes: Determining whether state law or federal law governs domestic contract disputes in the US When the parties are engaged in international sale of goods Sources of Law in IBTs Different aspects of the same transaction may be subject to different sources of law Sources of law that may be implicated in an international Sale of Goods (Problem 1-6) Private International Law o When no superseding international law applies, and o The parties did not elect a substantive contract law to govern the relationship Public International Law dealing with private law issues o Comes into play when if there is a superseding treaty; and o if the parties have not expressly opted out; and o if the parties nations are signatories Domestic Law dealing with private law issues o If the contract is silent; and no superseding treaty o The question remains which law will apply federal, state or Which countrys law will apply o Domestic law is used when other laws dont speak to that particular issue (gap filler) o Probably will be on the final

Domestic law that deals with public law issues o Domestic law applies because mandatory public law controls a particular issue (e.g. import/export compliance)

Relationship of International Law to Domestic Law By the constitution and USC rulings, international law is our domestic law. US Constitution, art VI, cl 2 o Federal law is supreme law of the land The Paquete Habana decision, 175 U.S. 677, 700 (1900) o international law is a part of our law, both federal and state o customary international law is equal to law of treaties and other intl agreements and part of law of the US Ware v. Hylton 1796 when conflict between intl law and state law, intl law prevails Whitney v. Robertson, 1888 when conflict between intl law and federal law, the law enacted later prevails executive agreements and congressional executive agreements have same effect as treaties o supremacy clause applies to congressional-executive Agreement and executive agreements o Cheung v US 2000 explicit statement by executive that treaty will not require implementing legislation o When it is solely based upon the Presidents foreign relations power, it is controversial whether it is binding law. CISG is a self-executing treaty that has direct effect in state courts because it is federal law. Self-executing vs. non-self-executing distinction Those treaties that are self-executing are laws of the land o If the treaty is s-e, then the courts are obligated to apply as it is federal law. Those that are not require implementing legislation from Congress Rule: Where a treaty or an international agreement is non-self-executing, the prior inconsistent statute will not be superseded until the treaty or international agreement is implemented. Rule: The prior inconsistent statute will be superseded on the date the implementing legislation goes into effect or some prescribed implementing act occurs Foster v. Neilson, 1829 o Distinction made between self-executing and non self executing treaties o Self-executing treaty has a direct effect within the US as soon as the treaty is entered into force w/o need for implementing domestic legislation. Factors to determine when a treaty is self-executing o intent of the states that are party to the treaty to det if they are self-executing o Court examines provisions of the treaty and whether it was intended that courts were to implement and not congress o If the treaty expressly states that it will require implementing legislation from Congress (in some cases, courts will decide this as well) o Non requires implementing legislation from Congress WTO agreements are non-self executing Courts are not obligated to apply non-self executing treaties

Example of non-self-executing: Agreement on Subsidies and Countervailing Measures, art. 14, Calculation of the Amount of a Subsidy in Terms of the Benefit to the Recipient [A]ny method used by the investigating authority to calculate the benefit to the recipient

[in a subsidy investigation] shall be provided for in the national legislation or implementing regulations of the Member concerned and its application to each particular case shall be transparent and adequately explained. Example of self-executing CISG Article 99 When a State ratifies, accepts, approves or accedes to this Convention after the deposit of