International Law

Question 1

Stages of Becoming a multinational corp. and two ways this has been hindered

Answer 1

Foreign trade -> foreign presence -> foreign investment -> multinational

1. e-commerce allows people to buy easily internationally
2. cheap labour abroad

Question 2

Export Contracts

Answer 2

• Regular rules of contract law still apply – but now more complicated
• Additional parties to the contract become necessary, including:
  
  • Insurers
  • Shippers
  • Financiers
  • Export Houses – created to simplify these problems by providing specialized services

Question 3

Proper Law of the Contract

Answer 3

• Proper Law of the Contract: The law of the country or jurisdiction by which the provisions of a contract are to be interpreted and its effect determined
• The law that will apply to the contract

Determining the Proper Law of the Contract:

• Allowing the contract to govern; or
• Private International Law (a.k.a. The Conflict of Laws)
  
  • Principles of law that apply to resolve questions concerned with private relationships that are affected by the laws of two or more countries

Question 4

Where the contract does not state the Proper Law of the Contract, courts will look to:

Answer 4

Where the contract does not state the Proper Law of the Contract, courts will look to:

• the judge has to figure out what they thought they meant when they started the contract
• Surrounding circumstances and the intentions of the parties
• The system of law that is most closely connected to the contract – or different systems for different parts of the contract

Question 5

Incoterms

Answer 5

• Need for standardized terminology – developed through industry practice
• International Chamber of Commerce has standardized “incoterms”
• Government intercession:
  
  • SFC’s
  • Uniform codes

Question 6

Import/Export Documentation

Answer 6

1. Bill of Lading
   
   • Document signed by a carrier acknowledging that specified goods have been delivered to it for shipment
2. Certificate of Insurance
   
   • Insuring goods against loss or damage
3. Invoice
   
   • Name and address of buyer and seller
   • Date of order
   • Full description of goods sold
   • Details of packaging
   • Price of the contract
   • NB must conform to requirements of importing country
4. Contract of sale

Question 7

Shipment and Insurance

Answer 7

• Who bears the risk is determined and reflected in the price of the transaction
• Standard terms to describe the shipping and insurance arrangements:
  
  • EXW (ex works): The buyer picks up the goods from the seller’s factory gate.
  • FOB (free on board): seller delivers goods onto buyers carrier
  • CIF (Cost, insurance, freight): Seller must arrange the carrier shipment, and the buyer picks up the goods at the port of destination
  • DDP (Delivery, duty paid) - most expensive for company: The seller delivers the goods to the buyer’s location and pays all duty along the way

Question 8

Payment

Answer 8

• Issues of currency to be paid
  
  • Requirement of a stable currency
  • Should be set out in the contract
  • Some countries restrict conversion of currency
• Financing
  
  • Letters of Credit: a buyer obtains this from its bank and uses it to pay seller
  • Collection Arrangements: seller employs services of its bank to collect its credits

Question 9

Countertrade

Answer 9

• not a money trade, but instead of goods

Question 10

Import and Export of Services

Answer 10

• Need to abide by importing countries’ rules
• Still require a Proper Law of the Contract
• Still need to determine method and currency for payment
• ex. you can visit another country for a concert but need to abide by its laws

Question 11

Government Regulation of Foreign Trade

Answer 11

• balance of trade between imports and exports
• Controls set on exports and duties set on imports
• Promotion of exports through subsidies (we want more exports so government encourages this through giving subsidies to those who produce to export)

Question 12

International Trade Agreements

Answer 12

• Need for balance between trading nations
• Subsidies in one country equate to high duties in the receiving country and vice versa
• Agreements/treaties & organizations created between countries to assist in the promotion of trade:
  
  • NAFTA
  • GATT
  • WTO

Question 13

Foreign Investment Types(Passive and Active)

Answer 13

• Passive investment
  
  • Buying shares in foreign companies or foreign government bonds
• Active investment (Foreign Direct Investment)
  
  • Purchasing foreign property
  • Setting up an office in a foreign country
  • Joint ventures

Question 14

Expropriation

Answer 14

a private owner is forced by stature to transfer its land to a government body that needs it

Question 15

International Business Disputes **

Answer 15

• Issues of Jurisdiction arise – even where the Proper Law of the Contract has been set out in the contract
• A court must consent to the action being brought in its jurisdiction
• Courts dislike “forum shopping”: allowing a plaintiff to pick the location only because it is likely to view the claim favourably
• judge can decide if the case is in the right jurisdiction, even if it’s in the contract - there has to be a connection between the K and the place (ex. ontario)

Each court sets out its own grounds for when it will exercise its jurisdiction – but there must be some real and substantial connection to the jurisdiction; other factors considered:

• Tort committed in the jurisdiction
• Contract to be performed in the jurisdiction
• Damage from tort or breach of K sustained in jurisdiction
• Dispute concerns property located in the jurisdiction
• K stipulates jurisdiction is the Proper Law of the Contact or that dispute would be heard in that jurisdiction
• Court agrees there is no better or more appropriate jurisdiction to hear the dispute

Question 16

Determining Jurisdiction

Answer 16

1. First, the court decides whether the location where the lawsuit was started has jurisdiction at all (jurisdiction simpliciter).
2. Second, if jurisdiction exists, the court may be asked by the defendant not to hear the matter and to defer the lawsuit to a more appropriate foreign court (forum non conveniens)

Question 17

Doctrine of forum non conviens

Answer 17

allows court to decline a case if it doesn’t apply to the right jurisdiction, or if they think they’re ruling will not be recognized by the other country

Question 18

Other factors for determining jurisdiction

Answer 18

the location of parties and witnesses;
the cost of transferring to another jurisdiction or proceeding;
the avoidance of multiple proceedings—that is, whether a foreign jurisdiction has already assumed jurisdiction;
the avoidance of conflicting decisions;
the ability to enforce any resulting judgment;
the fair and efficient functioning of the Canadian legal system; and the relative strength of the connections of the two parties to each location

Question 19

Enforcement of Foreign Judgements

Answer 19

• No obligation for one jurisdiction to recognize the judgment of another jurisdiction
• Questions arise –
  
  • Was the judgment made in the appropriate forum?
  • Was the judgment legitimately obtained?
  • Does the judgment offend against either natural justice or public policy?
• Need to apply to the court in the jurisdiction where assets reside and request recognition – or recommence action, if permitted (duplication of costs)

Question 20

Commercial Arbritation

Answer 20

An alternative to court action:

• International, neutral third parties set up to arbitrate disputes
• Often forms a term of the contract – binding arbitration
• Advantage – court will recognize an arbitrator’s judgment as it was previously agreed to by the parties that they would be bound by the decision
• usually done with an arbritation clause in the agreement contract at time of signing

Question 21

Governments

Answer 21

• Governments generally cannot be forced to submit to arbitration
• Apply through WTO or treaties such as NAFTA to redress breaches of treaty agreements or other binding international laws
• Realistically, these mechanisms only denounce the governments actions, but cannot force compliance

Question 22

International Human Rights

Answer 22

• Ethical and legal responsibilities that multinational corporations face in dealing with corrupt governments in trampling on the rights of its citizenry
• Multinationals abiding by the laws of the country in which they operate, but which would be illegal in the originating country