Midterm 2 Flashcards
What do the clauses that mitigate risk do?
Seek to ensure the protection of:
Property rights
Right of entry into new markets
Availability of natural resources for consumption
The effect of these clauses is not only to avoid the law of a host nation, but also to develop a legal system and a system of precedent outside traditional sovereign courts
Choice of law clauses
Most common. Allow a party to avoid local law and remove issues from local control and forums by predetermining where controversies will be resolved and under whose law the controversy will proceed
Arbitration clauses
Determine who has the authority to decide controversies and usually include a reference to the specific rules that will guide arbitration.
Arbiters have powers similar to sovereign courts
Power to compel discovery
Dispose of property and property rights
Order monetary damages
Stabilization clause
Freezes the law at the time the contract is entered into
prevents law made from having any effect on the ultimate disposition of a controversy
Globalization - One way private parties traditionally mitigate risk?
Enter contracts where specific provisions are tailored to the mutual amount of risk each party is willing to bear
Rise of private power
Based on the increasing role of private parties worldwide
Legal harmonization is on the rise and while many see great promise, there is also a growing reluctance to embrace these efforts. Why?
Two aspects of globalization may explain this phenomenon:
- The rise of private power outside of traditional sovereign mechanisms is filling the institutional gap created by the lack of state authority and capability to regulate the trans-national effects of globalization
- Concomitant with the rise of private power is the expansion of western, market-based liberalism and its spread globally through multilateral institutions
Private power and globalization- what is happening?
Problems go beyond sovereignty but governments do not
Private power is exerting itself giving rise to new global private legal mechanisms
Choice of law clauses impact
Impose a heavy burden on firms located outside centers of commerce such as New York Delaware and London. Travel costs make pursuing a dispute cost prohibitive
Arbitration clause impact
Little transparency to the proceedings. Outcomes difficult to predetermine and/or asses
Local governments in developing word….
Experience a loss in control and influence over trade practices within their borders
Developing world has a procedural disadvantage
Suffers from a lack of expertise needed to enter into agreements with a full appreciation of the costs and consequences
Forum shopping or boomerang politics
Choosing the most propitious site to move an issue forward
MNCs what is new
Number
Resources
Global reach and influence of modern mncs
How are trade organizations able to enforce their rules
Regulating trade
Imposing fines
Challenge domestic law
IGOs- what is new
Number, resources, global reach and influence of modern IGOs
IGOs- mandate congestion
Gap between the demand and supply for governance at the international level, between expectations and capacity
Benefits of globalization
Building the infrastructure of
Open economies
Open societies
Open technologies
These 3 amplify intensify and reinforce each other so that the whole equals more than the sum of these parts
Globalization is worsening…
Income and wealth inequality
6 challenges of globalization
Economic challenges
Challenges to democracy
Uneven and asymmetrical
Driven by the private sector, organized in de-centralized networks
Difficult for states to control or manage
Why are international environmental problems difficult to solve?
Common pool resources without common authority
International law is based on sovereignty, yet environmental problems go beyond sovereign jurisdictions
Asymmetrical distribution of costs benefits information and power
Problems of information and prediction
Even when there is agreement about the fact that a problem exists, there are heated disputes about how to solve it
Economic benefits of globalization
Power of competitive advantage increases standard of living worldwide
Free market capitalism and the prosperity produced by it
More economic power in the hands of the private sector rather than states
A rising tide floats all boats
Increased post Cold War security
Collapsed states
Un interventions
Opportunities to use force
Internal conflict
