Ch 12 Flashcards
Congress enacted the foreign corrupt practices act (FCPA) 1977
Law intended to stop bribery of foreign officials
Prevent US citizens and companies from making payments
To foreign officials whose duties are not essentially
ministerial or clerical for purpose of obtaining business
Risks involved In international trade
1 validity of contract law 2 property rights 3 protection of intellectual property 4 language barriers 5 political instability 6 export and import limitations
Amended FCPA limits criminal liability for…
Violations of accounting standards for those who knowingly
Circumvent accounting controls or falsify financial records
FCPA: Payment of bribe
Results in jail time
Creeping expropriation
Series of acts, (taxes, regulation or other changes in law)
That have expropriatory effect reducing or eliminating
Foreign investments
Expropriation (used in context of international law)
Seizure of foreign owned property by government
Nationalization
Government assumes ownership of property
Export controls
Controls placed on US strategic products and technology
Abroad
International trade risk
Landmark case Paquette Habana (1900),
US Supremecourt held international law is par of our law
International law must be ascertained and administered by
Courts of justice of appropriate jurisdiction
Public international law
Examines relationships between nations
and uses rules That are binding on all countries in the
international community
Private international law
Examines relationships created by commercial transactions
Utilizes international agreements, as well as laws of nations
To resolve business disputes
International Court of Justice (ICJ)
Traditional place for ascertaining what is public international
Law
Judicial branch of UN, consists of 15 judges representing
All the world’s major legal systems
Decisions made by ICJ, the World Court don’t create…
Binding rules of law or precedent in future cases
United Nations
Almost every country is a member
Goal is to prevent war
International monetary fund (IMF)
Encourages international trade by maintaining stable
Foreign exchange rates
Works closely with commercial banks to promote orderly
Exchange policies with members
World bank
Promotes economic development in poor countries by
Making loans to finance development projects/programs
General Agreement on Tariffs and Trade (GATT)
After WW2, originally signed by 23 countries
Reduced tariffs and promoted free trade
World Trade Organization (WTO)
Umbrella organization that regulates world trade
3 core principles Of GATT
1 nondiscrimination
2 national treatment
3 elimination of trade barriers
GATT: non discrimination
Treating all member countries equally with respect to
Trade
GATT: National Treatment
Countries not favoring their domestic products over
imported products
WTO: Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
Strengthens protection of intellectual property rights internationally
European Union’s mission, 5 things
1 provide peace, prosperity, stability
2 overcome divisions on the continent
3 ensure people’s safety
4 promote balanced economic and social development
5 meet challenges of globalization and preserve diversity
Of people’s of Europe
Convention on the International Sale of Goods (CISG)
Outlines standard international practices for sale of goods
Looks at contract law for international commercial sale of
Goods
More lenient than US
North American Free Trade Agreement (NAFTA) 1993
Eliminated tariffs and trade barriers between United States,
Mexico and Canada
Has settlement mechanism to resolve trade disputed
Protects labor rights in Mexico
Central American Dominican Republic Free Trade Agreement (CAFTA-DR) 2005
Opened up trade barriers between the United States,
Dominican Republic and Central American Countries
Irrevocable letter of credit
Used to ensure payment on foreign sales
The buyer obtains a commitment from the bank to advance
A specified amount upon receipt of goods from carrier
Bill of lading (foreign sales)
From carrier states the goods have been shipped
License or franchise contract
Typical method for controlling transfers of information
Allows international business to enter foreign market
Without any direct foreign investment
Why is a Foreign subsidiary created in a foreign country?
Most countries permit foreign firm to conduct business
Only if a national (individual or firm) of host country is
Designated as its legal representative
This results in high fees, foreign subsidiary created
In host country to avoid high fees
Creation of foreign subsidiary (SA or AG) subjects domestic parent to risks
Subjects parent company to foreign law and foreign courts
Joint ventures
Allow host countries to participate and get a large share of The profits (often the local partner gets a majority stake)
Decrease risk of foreign domination of local industry
Alien Tort Claims Act (ATCA) 1789
Grants jurisdiction to US federal district courts over any
Civil action by alien for tort only
Committed in violation of law of nations or treaty of US
Doctrine of Sovereign immunity
Foreign sovereign is immune from suit in United States
Based on status as a state
Congress enacted Foreign Sovereign Immunity Act (FSIA) 1976
Codifies restrictive theory
Rejects immunity for commercial acts in US or having direct
Effects in this country
Sovereignty
Supreme, absolute and uncontrollable power by which
Any state is governed
Advantages to international arbitration 2
1 avoid publicity
2 easier for parties to understand than litigating in foreign
Court
The world intellectual property organization: arbitration and mediation center
Hears cases involving domain name disputes and
cybersquatting
