General Principles of Business

Law issues relating to

International Business Law

Prof. L.C. Singhi,IAS (Retd)

M.A;LL.M;MAIPS(USA);Ph.D(Law)

Law: Basic Principles

Law may be defined as an enforceable
body of rules that govern the conduct of
individuals in a society, not only in terms of
their relationship with each other but also
with the society as a whole.
The law and the legal system of the nation
are inseparable from its history, its culture
and its customs.

 The law provides certain rights,

protection and freedoms to each
individual and specifies the
boundaries that may not be crossed
in such relationships.
It also prescribes the penalty for the
violation of the boundaries.

Basic Features of Law

It is a means to preserve the social order, and to
specify the penalties for violation of such order.
It is a means to provide a basic, broad model of
conduct. It would declare certain types of
conducts that are considered illegal.
It establishes the nature of property and other
rights in a society and it would thereby reduce
uncertainty in expectations.

 this reduction in uncertainty in expectation

creates conditions that would go for the
design and implementation of economic,
political and social exchange in any
society.
It acts as a Compromiser, by mediating
the views of different segments of society
into one common set of enforceable rules.

Types of Law in Different Parts of

the World
(1) Common Law: a system of law built on
traditions and on the notion of Stare
decisis (let the decision stand) the notion
of precedence.
(2) Civil law: a system of codified law, where
courts tend to follow statutes in letter and
spirit.
(3) Religious law

Characteristics of Civil law system

The right to a civil jury does not exist
Courtroom arguments are less adversarial
Contingency fees for lawyers are unethical
Court imposed limits on award for damages
Punitive or noneconomic damages not allowed
Parties go to court without knowing as to what would be
presented by the other side
Class-action suits are not allowed.

Broad classifications of law

Criminal and civil law: criminal law is a
wrong done to the society
Violation of criminal law entails penalty.
Substantive and procedural law
Public and private law

International Law: Is It law ?

Lack of institutions : not possible to locate supreme
parliamentary body
Command theory of Austin
Effectiveness- it appears that there is no authority to
implement it.
almost all nations observe almost all principles
of international law and
almost all of their obligations and almost all of the time (Louise Henkin in 1979)

continued
pure theory of law defines lawas ought
propositions and that the validity of a law should
be judged by reference to a prior law.
Accordingly, international law is not a law.
Hart defined international law as primitive form
of legal order as there is no gradual
development in the absence of supreme
Parliament and Court of Justice. There should
be a rule of recognition.

Contd.
states generally act only when their self interest
so warrants and not otherwise. When it comes to
their self interest, they care very little about the
law. For example, US conduct.
international law places excessive reliance on
states to the detriment of individuals.
International law is both a social fact and a
social necessity.

 No purpose will be served on first defining

law and then to ask whether international
law is law or not.
International law tends to place the
emphasis on mutual respect and
cooperation. It acts as a vehicle and would
promote international cooperation
between the states.

Types of International Law

Public International Law (known as Law of Nations, or
Common-Law of Mankind orTransnational law)
Private International Law (also known as the conflict of
laws in the US)
In US Public International Law also referred as
International Law
(Public International Law was first used by the English
philosopher Jeremy Bentham and The Private
International Law used by Joseph Story.

enforceability of international law

International law lacks sanctions and does not
have proper means of enforcement. However,
the international law has considerable number of
methods of dispute resolution.
International law is respected because its
compliance is based on acceptance.
Some rules of international law become
enforceable by becoming a part of the national
legal system.

 A serious breach of international law will cause

the state to suffer in its dealings with other
states.
The UN Security Council may take enforcement
actions in certain circumstances.
In case of breach some individual states may
also take action against the defaulting state.
Since 1920 there is a International Court of
Justice.
Even under International Law a State can use
minimum force in self-defence.

Sources of international law for

business
International conventions, with the general
or particular establishing rules.
International customs-accepted as law
The general principles of law recognised
by nations
Judicial decisions and the writings of the
eminent scholars of various nations as
subsidiary means for determining rules of
law.

Broad principles of international law

for business
The concept of sovereignty and sovereign
immunity
international jurisdiction
The doctrine of comity
The Act of State Doctrine
The treatment and rights of aliens
Appropriate forum for hearing and settling
disputes.

Sovereignty and sovereign

immunity
Sovereign countries cannot be subjected to
the decisions of the Indian courts for their
acts.
Even though such acts are illegal under the
domestic law or under international law
Transactions of commercial nature entered
by sovereign nations may be subjected to
local and domestic law.

International jurisdiction
Nationality Principle: every country has
jurisdiction over its citizens no matter where they
are located.
Territoriality principle: every nation has the right
of jurisdiction within its legal territory- the act
must be committed within the state but effect
may be outside the state, but not vice versa.
Protective principle: every nation has jurisdiction
over behaviour that affects its national security
or its governments operations- even if the
conduct took place outside the country or
conducted by an alien.

The doctrine of Comity

The doctrine of comity is also known as
the custom of International etiquette or
mutual respect for the laws, institutions
and governments of the other country.

Doctrine of Act of state

All acts of governments of other states in
their own territory are considered as valid
by courts in India, even if such acts are
illegal or inappropriate.
Example- nationalisation of assets of other
countries limiting transfer of assets by
MNCs

Treatment and rights of aliens

There is no equal treatment between
citizens and aliens.
Can refuse to admit foreign nationals,
Regulate the conduct of business by them
Restrict the rights of Travel or choice
regarding place of stay
Special laws can be enacted for aliens
and right of appeal may be denied.

Dispute Settlement Forums

Principle of forum non convenience was
applied by US courts in the case of Union
Carbide and the matter was referred to
the Indian courts. The matter related to
Bhopal gas tragedy.
This principle can be applied when suits
are brought by foreigners before Indian
courts also.

Theories of International Law

Natural theory of law

Theory of positive law
Pure theory of law
Sociological theory of law
Theory of critical analysis

International Law & National Law

Article 51 of the Constitution of India states
that the state shall endeavour to:
(a) promote international peace and security
(b) maintain just and honble relations
between nations
Foster respect for international law and
treaty obligations
(d) encourage settlement of international
disputes by arbitration

International Law & National Law

international treaties do not automatically
become part of national law,
they have to be incorporated into the legal
system by appropriate law.
The national legislation to be respected,
even if contrary to international law; and
Power to implement the treaties is with the
union government.

Issues relating to International

Business Law

International Antitrust Considerations

Multinational bankruptcy
Cross-border liability
Trade disputes and the international trade
laws
Protection of intellectual property
National security/foreign policy
considerations

Emerging non-trade issues

Environmental issues
Biodiversity issues
Human rights issues
Issues relating to women rights
Issues relating to livelihood
Issues relating to non-proliferation
Issues relating to terrorism and insurgency

Course-content of Legal Aspects of

International Business (LA)
General Principles of International
Business Law- issues relating to
International Business Laws.
Impact of General Agreement on Trade &
Tariffs (GATT), WTO and Bilateral and
Regional Trade Agreements on Legal
Regime.
Laws Relating to Anti-Dumping and
Countervailing Duties.

Course content- LA
Intellectual Property Rights and TRIPS
Agreement-role of WIPO
.Laws relating to Trade in Services-General
Agreement on Trade in Services (GATS)
International law relating to Investments
(TRIMS)-Foreign Direct Investment (FDI).
International Law Relating to Standards
-Agreement on Technical Barriers to Trade and
other non-trade issues.

Course content- LA
Global Monetary System, the IMF and
World Bank: Laws Relating to Foreign
Exchange Market.
Dispute Settlement Mechanism in
International Business-Practice &
Procedure.
International Commercial Contracts and
Arbitration.

Thanks