Pp (set 1)[1]


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  • Usus: does not mean lengthy nor followed by all the states. On the other hand it means that it must be acceptable to a reasonable large number of major states for a period long enough to be recognized by the courts as establishing constant and uniform condubt.
  • Several consequence of treating municipal law as a fact are significant such as the requirement that states parties must prove what the law is, that municipal laws will not be interpreted by an international tribunal , and that an international tribunal will not declare it is void or valid
  • Characteristics common to IGOs: a) They are created by two or more states. b) They are meant to pursue interests common to their creators. c) They function autonomously as independent international persons. 3) Creation: Created much in the fashion of a corporation. a) Charter or constituent instrument, sets out its aims and objectives, internal structure, resources, and express powers. 1] Example: United Nations Charter.
  • Today , there are some 400 igos .Unlike states, an igo is created much in the fashion of a corporation. Its aims and objectives, international structure , resources, and express powers are set out in a” constituent instrument” which is drafted and adopted by the organizations’s member states. The charter may set out the purpose and principles, defines its membership, names its structural elements or “organs”, describes the makeup and powers of those organs, set out the rights and duties of its members, endows the organization with international personality, and describes the procedures for the charter’s ratification and amendment.
  • Legal capacity: Includes the capacity to carry on diplomatic relations with a state or to sue or be sued in an international or municipal court. a) Acquired by recognition. 1] From its own state members: Automatically. 2] From non-member states: Recognition must be specifically certified.
  • 1) Nonprofit NGOs serve as coordinating agencies for private national groups in international affairs. 2) For-profit NGOs (transnational corporations (TNCs) or multinational enterprises (MNEs)) are businesses operating branches or subsidiaries or joint ventures in two or more countries (see Chapter 4).
  • sharp business practices : Dishonest business dealings meant to obtain a benefit for a firm regardless of the means used. 1) Examples: Misrepresentation and bribery. b. Governing law: Municipal (local) law. c. Extraterritorial application of sharp practices law. 1) The country that has been most willing to apply its sharp practices laws extraterritorially: The US. 2) US legislation: Foreign Corrupt Practices Act (FCPA) of 1977. a) Antibribery provisions. 1] Apply to: a] US companies or companies registered with the US Securities and Exchange Commission. b] Their officers, directors, agents, or employees. (1) Caveat : They may only be charged with a violation of the FCPA after the company has first been charged and convicted of the same violation. 2] Forbid bribes to: a] Foreign government officials. b] Foreign political party officials. c] Candidates for foreign political office. Case 4-8. United States v. Blondek, Tull, Castle, and Lowry.
  • a. Local regulation: A host state may regulate a foreign firm that is doing business within the state b. Extraterritorial regulation: A host state may some-times seek to regulate the foreign firm. 1) This may be done if: a) The foreign company has consented to the jurisdiction of the host state. b) The foreign firm is part of a common enterprise with a local firm (making both of them liable for activities of the local firm). c) The independent corporate status of a subsidiary can be ignored so that liability can be imposed on its parent. 2.Consent a. Companies may give express and implied consent to the jurisdiction of a state. 1) Express consent is given: a) By incorporating in the state. b) By maintaining the firm ’ s head office in the state. c) By obtaining a certificate to do business in the state. 2) Implied consent can be found from a foreign firm doing business within the state. a) Consent will be implied from: 1] The carrying on of a business. 2] The solicitation of business. 3] Any “ persistent ” conduct related to the making of a profit. Common Enterprise Liability Individuals or companies (including related subsidiary companies of a multinational firm) will be held jointly liable for each other ’ s conduct when they function as part of a common enterprise. Showing the existence of a common enterprise: Look at the intent of the parties. 1) Express intent: A formal agreement creating a partnership or joint venture. 2) Implied intent: a) A sharing of profits or losses. b) Sharing in the management. c) Joint ownership of the affiliates.
  • 1) Four circumstances where this is done: The controlled company, the alter ego company, undercapitalization, and personal assumption of liability. b. The Controlled Company: The corporate status of a controlled company will be ignored if both: 1) Its financing and management are so closely connected to its parent that it does not have any independent decision-making authority; and 2) It is induced to enter into a transaction beneficial to the parent but detrimental to it and to third parties. c. The Alter Ego Company: The company veil will be pierced if the company is not treated by its shareholders as a separate juridical entity (i.e., it is treated as the alter ego of the shareholders). 1) Examples: a) b) The use of company assets by shareholders for their own personal benefit. c) The failure to hold and record minutes of board of directors ’ meetings. d. Undercapitalization: A company ’ s veil will be set aside if, at the time it was formed, it was provided with insufficient capital to meet its prospective debts or potential liabilities. e. Personal Assumption of Liability: Shareholders who have personally guaranteed the obligations of a company can, of course, be made to answer for those obligations.
  • 1. Traditional view : Individuals traditionally have no rights — only duties — under international law. a. Law of State Responsibility (see Chapter 2) allows a state to seek compensation for one of its injured nationals. Case 1-9. DeSanchez v. Banco Central de Nicaragua 2 . A contemporary — and still evolving — view : Individuals do have the ability to exercise the rights of an international person. a. Individuals have basic human rights. b. Individuals may sue states in some international tribunals (see Chapter 3).
  • Introduction The classification of legal systems is essentially an academic tool, but it can also be useful to law reformers and anyone seeking to use comparative legal argument. For example, a law reform commission seeking to alter the law on negotiable instruments might ask “What do other common law systems do about this?” Before the question can be answered one needs to know what jurisdictions fall into this “family” of common law systems. Alternatively someone might suggest that the Germans have a very developed law of negotiable instruments perhaps it could be used. In order to anticipate what problems or issues might need to be taken into account in considering the viability of this legal transplant it might be helpful to ask “what legal family does German law belong to? Is it the same as ours or different? If different will these differences present difficulties in adopting German models or approaches?” Similarly if one is trying to harmonise the laws of several different jurisdictions – as happens with the European Union for example – apparent difficulties and variances in approach to particular legal problems may be understood better if it is appreciated that these jurisdictions belong to different legal families. For example, when the Berlin wall came down and countries formerly under socialist rule were liberated to develop their own legal systems there were a number of challenges in countries such as what was then Czecholsovakia – now the Czech and Slovak Republics - with the formation of company law. Eventually the lawyers and legal consultants had to go back to the law as it had been prior to the socialist era, and then update it. If the Pacific Region formed a common trade zone or “market” then again there may be a need to harmonise certain rules, particularly of commercial and company law. Classification provides a tool for coping with diversity of legal systems by finding a number of types or categories by which the legal systems of the world can be organised. As there are 42 legal systems in the world (De Cruz p.3) this is clearly useful if one wishes to look at a particular, unfamiliar legal system. In order to classify legal systems it is necessary to look beyond mere differences in rules. Difference between legal systems is not determined simply by difference in rules from one country to another. For example the age of consent to marriage may be 16 in one common law country and 18 in another. This does not necessarily mean that these two national systems stem from a different “parent”. What needs to be looked at is the structure within which the rules and concepts are organised, the function of law in society, the sources of law and the categorization of different branches or fields of law. While rules may change, these aspects of the “legal system” are less likely to do so, and so there is a continuity evident despite the rules. In distinguishing legal systems one is concerned to look at the overall picture and at the elements that are constant – not for instance subject to sudden change by a new case decision or a new statute – that is substance, technique and form. A test suggested by David & Brierley is to ask if a lawyer from one system would be able to understand and operate within the other system. If the answer is yes, then the two systems may well be from the same legal family. However one would also have to check that the two systems shared the same outlook on the role and function of law. For classifying legal systems then, the unchanging elements need to be considered rather than the changeable ones. One has to ask “What are the fundamental elements of this system?” Thus one might look at the conceptual structure of the law, the sources of law, the place of law within society, or the purpose of law. Different conclusions may be arrived at depending on which of these criteria is chosen, and in order to test whether in fact one legal system belongs to the same parent legal system it may be necessary to use a number of criteria. For example, there may be two national systems which regard codes of law as the major source of law. However one legal system might regard the function of law as being to uphold the power of the state, while the other might regard the use of codes as a way of reducing the power of the state. Here the philosophical or political approach is different. Similarly the different sources of law may be viewed differently. In Civil Law systems, for example, case law or la jurisprudence does not have the same significance as in common law systems. Both however have case law. Religious law and questions of morality/spirituality may have a greater influence in Islamic or Jewish legal systems than in Socialist, while customary law has a greater role in Africa legal systems or those of the Pacific region than in Common Law systems – although again some traces of customary law are found in common and civil law systems. Ultimately though classification is a tool, and as such a number of classification models may be used. Indeed one finds published comparativists classifying legal systems differently, for example David & Brierley classify the legal systems of the world into Common law, Romano-Germanic and Socialist law. Zwiegert and Kotz however, separate the Romano legal family from the Germanic legal family, and De Cruz suggests that there is no longer a socialist legal family but consideration should be give to the Chinese Communist system as a major legal system. The Romano-Germanic Family Under David & Brierley’s classification this includes all those systems in which the law has developed from the Roman civil law both as received in the west and as adapted by the Germanic people. This is a family of law where the law has developed essentially from private law, with public law coming much later. In these systems the role of the universities is important The Romano-Germanic family spread to Latin America, parts of Africa, the Near East, Japan and Indonesia, partly by colonization and partly because of its portability, especially the technique of codification. Characteristics of this system include: a common origin from continental Europe particularly the renaissance of the study of Roman law in the twelfth and thirteenth centuries as fostered in the universities. David & Brierley refer to a “community of culture” which has brought countries with very different political structures together. Common Law Family In this family the law is primarily judge-made and casuistic with legislation coming after the development of law in the courts. It is primarily developed in the context of actual disputes and is directed at providing a solution to problems before the court, not broader, more abstract principles. The development of the common law is also linked to the exercise of royal power and centralized authority. It is therefore much more concerned with public law issues than private issues. Today there is considerable overlap between these two major systems. In common law the rights of the individual have grown stronger, while the upsurge in administrative law in civil law systems has created a large body of public law. In the common law there are as many statutes passed as in Romano-Germanic systems. The power of the Crown has waned in common law systems. In the common law universities and legal theory have come to play a more important role, while the decisions of the courts in Romano-Germanic systems have grown in practical importance. There are moreover some countries which have hybrid or mixed legal systems, such as Scotland, Quebec, Israel, South Africa and the Philippines which combine elements of the common law and civil law system. The Religious Legal Family This embraces the legal systems of Muslim, Hindu and Jewish laws. Although the religious beliefs are very different the law is seen as providing a model of ideal behaviour. It is moral rather than practical or abstract. The sources of law may be religious books rather than legislation or judicial decisions. Indeed decisions may not lie in the hands of judges but religious leaders. Eastern Legal systems David & Brierley suggest that these are really systems of non-law where value is placed on harmony and peace and the responsibility of each individual to get on without dispute with his or her neighbour. Focus is place on conciliation and mediation, the dissolution of conflict rather than resolution. In communist China, for example, there is very little place for law especially as regards the individual. Customary Law Even where western systems of law have been introduced such as in Africa and the Pacific, the role of communal and customary law has remained important and with independence in these regions has in some respects strengthened. It has also changed, in some instances becoming codified or reduced to written form, and becoming part of the reported decisions of formal courts. Exercises Classify the following systems: Italy, Japan, Egypt, South Africa, India, Argentina, Scotland. What are the difficulties faced in trying to classify legal systems today? What are the advantages and disadvantages of a legal system based on codes, a legal system based on judicial decisions, a legal system based on commentary, a legal system based on custom?
  • In order to classify legal systems it is necessary to look beyond mere differences in rules. Difference between legal systems is not determined simply by difference in rules from one country to another. For example the age of consent to marriage may be 16 in one common law country and 18 in another. This does not necessarily mean that these two national systems stem from a different “parent”. What needs to be looked at is the structure within which the rules and concepts are organised, the function of law in society, the sources of law and the categorization of different branches or fields of law. While rules may change, these aspects of the “legal system” are less likely to do so, and so there is a continuity evident despite the rules. For classifying legal systems then, the unchanging elements need to be considered rather than the changeable ones. One has to ask “What are the fundamental elements of this system?” Thus one might look at the conceptual structure of the law, the sources of law, the place of law within society, or the purpose of law.
  • The organizational form a business takes is a matter of municipal law. 1) States authorize or forbid different business forms based on: a) Political ideology. b) Economic and social needs. 2) The company laws of every country in the world are unique in many ways. 3) A prudent business investor planning to organize a firm abroad will investigate in detail the company laws of the particular country involved. b. For comparative and general planning purposes, it is useful to know the legal derivation of national company laws in categorizing business forms. 1) Most national company laws are derived from: a) The civil law, especially French and German law. b) The common law, especially English law.
  • a. Company: An association of persons or of capital organized for the purpose of carrying on a commercial, industrial, or similar enterprise. b. Partnership: A company of two or more persons who co-own and manage a business and who are each liable to the full extent of their personal assets for its debts. 1) Limited partnership: A company of two or more persons, at least one of whom has unlimited personal liability for the debts of the business and at least one other who is an investor having limited liability. 2) Silent partnership: A secret relationship between two or more persons, one of whom carries on a business in his name alone without revealing the participation of the other who has limited personal liability. 3) Partnership limited by shares: A company of one or more general partners who have unlimited personal liability for the debts of the company and limited participation by investors in the form of shares. The company is taxed as a corporation. c. Corporation: A company of capital whose owners have limited personal liability. 1) Stock corporation: A corporation that can raise money in the public marketplace through the sale of freely transferable shares. Its financial statements have to be disclosed to the public. 2) Limited liability company: A corporation owned by members that does not issue negotiable share certificates and is subject to minimal public disclosure laws.
  • a. Company: An association of persons organized for the purpose of carrying on a commercial, industrial, or similar enterprise. b. Partnership: An association of two or more persons who co-own and manage a business for profit and who are each liable to the full extent of their personal assets for its debts. 1) Limited partnership: A partnership consisting of one or more general partners who manage the business and who are each liable to the full extent of their personal assets for its debts, and one or more limited partners whose liability is limited to the funds they invest. Case 4-1. Puerto Rico v. Russell & Co. et al 2) Secret partnership: A partnership in which the participation of one or more persons as partners is not disclosed to the public by any of the partners. All of the partners have unlimited personal liability. c. Joint stock company: An unincorporated association of persons whose ownership interests are represented by transferable shares. 1) The shareholders have unlimited personal liability. d. Business trust: A business arrangement in which the owners of a property, known as beneficiaries, transfer legal title to that property to a trustee who then manages it for them. 1) The beneficiaries hold transferable trust certificates entitling them to the income generated by the property and a residual equitable share at the time the trust is terminated. 2) The trustee has unlimited personal liability while the beneficiaries have limited personal liability. e. Corporation: A separate juridical entity owned by shareholders who may have limited, unlimited, or no liability. 1) Public corporation: A corporation that can raise money in the public marketplace through the sale of freely transferable shares. Its financial statements have to be disclosed to the public. 2) Private corporation: A corporation that may not ask the public to subscribe to its shares, bonds, or other securities and which is subject to less stringent public disclosure laws than a public corporation. 3) Limited liability company: An unincorporated business association. a) Treated as a partnership for tax purposes. b) Provides limited liability for its owners. d. Limited liability for equity investors. 1) Unlimited liability corporation: A corporation whose members are liable in the event that it is wound up and its assets are insufficient to cover its debts. 2) No liability corporation: A corporation whose shareholders are not obligated to pay any call for contributions made by the firm or to pay any of the firm ’ s debts, but who will not receive any dividends if a call is due and unpaid.
  • Pp (set 1)[1]

    1. 1. International business law  International law  Need for international law  Conflict of laws  International private law  International public law  International economic law
    2. 2. International Business Law
    4. 4. Conflict of laws  Effectiveness of law in other sovereign nations  Laws differ in different nations  Conflict of laws arises between states  Need for rules in the international plane
    5. 5. A. WHAT IS INTERNATIONAL LAW?  Defined: The body of rules and norms that regulates activities carried on outside the legal boundaries of nations.  Three international relationships are governed by international law:  Those between nations and nations.  Those between nations and persons.  Those between persons and persons.
    6. 6. A. WHAT IS INTERNATIONAL LAW?  Is International Law Really Law?  It is because nations regard it as something they are obligated to respect.  Distinguish: Comity  Comity is courtesy.  It is the practice between nations of treating each other with goodwill and polite.  Comity is NOT law because countries do not regard it as something they are obligated to respect.
    7. 7. B. THE MAKING OF INTERNATIONAL LAW  There is no formal international law-making machinery  The basic mechanism for creating international law is: The consent of the international community. (example: Diplomatic privilege,  1961 Vienna Convention on Diplomatic Relations)
    8. 8.  General consent--State practice:  Multilateral treaties  statement: diplomatic exchanges, formal instructions, judiciary decisions  Inaction  Particular consent  Declarations of government , domestic legislations…  Arbitration tribunals
    9. 9. C. SOURCES OF INTERNATIONAL LAW  Sources listed in Article 38(1) of the Statute of the International Court of Justice:  International conventions.  International custom.  General principles of law.  Judicial decisions.  Teachings of publicist.
    10. 10. C. SOURCES OF INTERNATIONAL LAW  1 Treaties and Conventions - The most important sources of international law.  Treaties: agreements between one or more nations.  Conventions: agreements sponsored by international community
    11. 11. C. SOURCES OF INTERNATIONAL LAW  Reasons for binding effect of treaties  Shared sense of commitment.  Because one country fears that if it does not respect its promises, other countries will not respect their promises. - Rules governing treaties:  Traditionally customary.  Now codified in the Vienna Convention on the Law of Treaties (in force since 1980 ).  Case 1-1. Legal Status of Eastern Greenland  The effect of an authorized oral commitment made by a gov’t official … is deemed to be binding .
    12. 12. Binding effect of the pact  State may choose to bind itself through signature, but also by ratification or accession 國家可以選擇通過簽署條約以約束自己,更可採取「認可」或「加入」 Ratification is act where state declares itself bound by treaty 「認可」是指國家宣布自己受限於某條約 Instrument of ratification deposited with designated state or I.O
    13. 13. C. SOURCES OF INTERNATIONAL LAW  Custom Rules that have been around for a long time or which are generally accepted.
    14. 14. two elements — one behavioral and one psychological:  1) Usus (Latin for: usage):  Is the consistent and recurring action (or lack of action if the custom is one of noninvolvement) by states.  2) Opinio juris sive necessitatis (Latin for: Of the opinion that the rule is proper and required): The custom must be regarded by states observing it as one that they must obligatorily follow.
    15. 15. Exceptions to the application of custom 1) Persistent objector: A state that persistently objects to a practice during its formative stages will never become a party to it.  2) A state allowed by the international community to deviate from a customary practice.  Case 1-2. The Asylum Case
    16. 16. C. SOURCES OF INTERNATIONAL LAW  2 Customary rule  Pacta sunt servanda  is a basic principle of international law and civil law. It is Latin and it means "pacts must be respected" by all sides. With reference to international agreements, "every treaty in force is binding upon the parties to it and must be performed by them in good faith" (Vienna Convention on the Law of Treaties, 1969, art. 26, and the Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations, 1986, art. 26). All serious state and international organizations observe this fundamental and basic principle of international law. If a state does breach the agreements she had inked or promises she had given, no state will trust her in future
    17. 17. C. SOURCES OF INTERNATIONAL LAW  Domestic laws ( foreign related)  General Principles - those legal principles common to nation states.  Interpretation of treaties, customs, and general practice  Judicial decisions  Teachings (publicists )
    18. 18. D. THE SCOPE OF INTERNATIONAL LAW  The Practice in International Tribunals  Municipal law is regarded as subordinate (subservient) to international law.  States have a general obligation to bring their municipal law into compliance with international norms.  Procedurally, municipal law is treated as “mere fact.”—the onus of proof
    19. 19. D. THE SCOPE OF INTERNATIONAL LAW  The Practice in Municipal Courts:  International law is regarded as (correlative).  Court determines if a particular international law has been received into the municipal jurisprudence.  If it has, the Court applies it as if it were a local law and not a mere fact.
    20. 20. D. THE SCOPE OF INTERNATIONAL LAW  Determining if International Law has been Received Into the Local Jurisprudence  Customary international law:  Doctrine of Incorporation:  a custom is automatically part of a nation's laws as long as it is not inconsistent with those laws. (Majority rule)  Doctrine of Transformation: a custom is not part of a nation's laws until expressly adopted by legislative or (legislative) act, or by local usage. (Minority rule)
    21. 21. As for treaties:  Reception rules depend upon two factors:  (i) The nature of the treaty; and (ii) The constitutional structure of the ratifying state.  1] The nature of treaties — they may be:  Self-executing treaty: One that contains a provision that says the treaty will apply in the parties’ municipal courts without their having to adopt any domestic enabling legislation.  Non-self-executing treaty: One that has no such provision.  2] The structure of states  — constitutions may assign to one or more state organs (or branches) the responsibility for entering into treaties.
    22. 22. Making and effectiveness of the pact  Bilateral treaties produced by foreign ministries or embassies.  Multilateral treaties made through conferences Signing of treaty does not indicate acceptance of treaty by signatory Merely indicates authentication of text. Usually two-thirds of conference must authenticate text
    23. 23. E. INTERNATIONAL PERSONS  States  Intergovernmental organizations (IGOs)  Nongovernmental organizations (NGOs)  Business organizations  Sole proprietorship  Partnership  Company--MNC  Individuals
    24. 24. E. INTERNATIONAL PERSONS  States  Defined: Political entities that have all of the following characteristics –  A territory.  A population.  A government capable of entering into international (community).  A government capable of controlling its territory and people.
    25. 25. E. INTERNATIONAL PERSONS  Kinds of states:  Independent: free from political control of other states.  Dependent: have formally surrendered some of the their political and governmental functions to another state.  Inchoate: lack some _conditions_ required to be a state.
    26. 26. E. INTERNATIONAL PERSONS  International Organizations  Permanent organizations set up by two or more states to carry on activities of common interest.  Inter-government organization  Non-government organization  Characteristics:  Permanent.  Set up by two or more states.  Pursue matters of common interest to the creators.  Function ___ as independent international persons.
    27. 27. E. INTERNATIONAL PERSONS  Examples:  European Union  United Nations  Creation: essentially in the same fashion as a corporation.— charter
    28. 28. E. INTERNATIONAL PERSONS  Legal capacity of IGOs:  the right to carry on diplomatic relations with states and to sue or to be sued in international tribunals.  Sources of legal personality:  Constituent treaty  Case law  Acquired by recognition.  Automatically from its own state members .Becoming a state implies recognition of the igo .  Exceptional: in U.K. a special certification should be given by the gov’t to recognize the legal capacity of the igo .  When specifically granted by non-member states.
    29. 29. E. INTERNATIONAL PERSONS  Nongovernmental Organizations (includes Non-profit NGOs and for- profit NGOs) Set up by individuals or groups  Governed by the law of the country where the NGO is incorporated  Ex.: Amnesty International, Greenpeace  States are usually not parties of NGOs Non-profit NGOs:  serve as independent agencies for private national groups in international affairs  For-profit NGOs: businesses operating internationally  Other names:  Multinational Enterprises (MNEs)  Transnational Corporations (TNCs)
    30. 30. INTERNATIONAL REGULATION OF MULTINATIONAL ENTERPRISES  Several International Organizations Have Promulgated Rules of Ethical Behavior for Multinational Enterprises, including:  Organization for Economic Cooperation and Development (OECD).  International Labor Organization (ILO).  International Chamber of Commerce (ICC).  These are only Suggested Rules  Binding international codes do not exist as yet.
    31. 31. HOME STATE REGULATION OF MULTINATIONAL ENTERPRISES  The most important forms of home state regulation are:  1) Regulation of competition.  2) Regulation of injuries caused by defective products.  3) Prohibition of sharp business practices.  4) Regulation of securities.  5) Regulation of labor and employment.  6) The establishment of accounting standards.  7) Taxation.
    32. 32. Some of these rules are applied extraterritorially by home state  most notably:  1) Regulation of competition.  2) Regulation of injuries caused by defective products.  3) Prohibition of sharp business practices.  The country that has been most willing to apply its laws extraterritorially has been the United States.  1) The European Union, to a lesser extent, has also begun to apply its internal regulations extraterritorially.
    33. 33. The Host nation’s Regulation  Local regulation: A host state may regulate a foreign firm that is doing business within the state  Extraterritorial regulation: A host state may some-times seek to regulate the foreign firm.  Consent to the Jurisdiction of the Host State.  Common Enterprise Liability  Piercing the Company Veil
    34. 34. Piercing the Company Veil  Ignoring the corporate structure of a company (i.e., “piercing the company veil”) and exposing the shareholders to personal liability.  E.g. The commingling of corporate and personal assets.
    35. 35. F. RIGHTS OF INDIVIDUALS UNDER INTERNATIONAL LAW  Traditional view: no rights, only duties.  Evolving view:  Individuals have basic human rights  Individuals may sue state in some international tribunals  Icsid-- oecd
    36. 36. G. COMPARISON OF MUNICIPAL LEGAL SYSTEMS  The Romano-Germanic Civil Law System  The Anglo-American Common Law System  The Islamic Law System  Review of Chinese law
    37. 37.  Comparative Law: The study and analysis of the different municipal law systems.  a. Legal “families”:  1) Romano-Germanic Civil Law.  2) Anglo-American Common Law.  3) Islamic Law.  b. These are divided into subfamilies.  c. There are also hybrids.  d. There are also some practices that are unique to a particular country.
    38. 38. Civil law system  Derived from Roman law. It is a complete code of written laws whose primary source of law is legislation. It is inquisitorial in form and forms the basis of the legal systems of most western European countries. Japan and the former colonies of France, Spain and Portugal in Latin America, the near East, Indonesia, Thailand, Vietnam and parts of Africa
    39. 39.  Countries with Civil Law systems distinguish between the civil law and public law.  1] Public law evolved separately from the movement for codification of civil or private law.  a] Civil law (for civilian lawyers) is only the law contained in the codes and its auxiliary statutes (that is, the law of persons, family law, property law, succession law, the law of obligations, commercial law, labor law, and criminal law).  b] Public law is constitutional and administrative law.
    40. 40. Common law system  Derived from case law (or precedent) and statute. It is accusatorial in form with an emphasis on remedies. It forms the basis of English law and can be found in the U.S. , as well as Commonwealth nations including Canada, Singapore, Malaysia, New Zealand, India, Pakistan
    41. 41. Introduction to THE BUSINESS FORM  a matter of municipal law.  The company laws of every country in the world are unique in many ways.  A prudent business investor planning to organize a firm abroad will investigate in detail the company laws of the particular country involved.  b. Most national company laws are derived from:  a) The civil law, especially French and German law.  b) The common law, especially English law.
    42. 42. Business Forms in Civil Law States  Company:  Partnership:  Limited partnership:  Silent partnership:  Partnership limited by shares  Corporation: A company of capital whose owners have limited personal liability. Stock corporation Limited liability company
    43. 43. Business Forms in Common Law States  Company:  Partnership:  Joint stock company:  Business trust:.  Corporation:  1) Public corporation: 2) Private corporation:  3) Limited liability company:
    44. 44.  Limited liability for equity investors.  1) Unlimited liability corporation  2) No liability corporation
    45. 45. The Importance of the Separate Legal Identity of Companies  a. Juridical entities (such as companies) have legal identities separate from that of their owners.  b. Significance:  1) The liability of the owners is limited to their investment in the company.  2) The owners are neither managers nor agents nor representatives of the company.  3) The rights and benefits accruing to the company belong to the company and not its owners.  a) The property rights of a company can only be claimed by that company.
    46. 46. Chapter 2Chapter 2 SalesSales
    47. 47. introduction  International trade  sale, transportation,insurance
    48. 48. The sources of international trade law  International conventions  The UN convention on the limitation of the Int’l sale of goods  The UNIDROIT convention on Agency  The UNCITRAL ,Model law on Procurement of goods, construction and services 1994  International customary rules  ICC –International commercial term (INCOTERMS)  Domestic laws  Relevant international conventions takes priority if the relevant country ratified and incorporated the convention into the domestic law.
    49. 49.  Application of law for international trade contract  Autonomy of will  The most significant connection  conventions
    50. 50.  145. The parties to a contract involving foreign interests may choose the law applicable to settlement of their contractua1 disputes, except as otherwise stipulated by Law.  If the parties to a contract involving foreign elements have not made a choice, the law of the country to which the contract is most closely connected shall be applied.
    51. 51. A. CISG  United Nations Convention on Contracts for the International Sale of Goods  In effect since January 1, 1988  Current state parties: 64, including Canada Mexico China Russia France United States Germany Web site: http://www.uncitral.org/
    52. 52. B. COVERAGE OF CISG  International contracts: buyer and seller must have their places of business in different states.  Both states must be contracting parties to the convention, or  The rules of private international law must lead to the application of the law of a contracting state.  Exception: A contracting state may declare that it will apply the CISG only when the buyer and seller are both from contracting states.
    53. 53. B. COVERAGE OF CISG  Opting in and out  The parties to a contract may exclude or modify the CISG’s application by a choice of law clause.  Whether parties can exclude a domestic law and adopt the CISG in its place depends on the rules of the state where the case is heard.
    54. 54. B. COVERAGE OF CISG  Merchants: CISG applies only to commercial sales transactions between merchants  CISG Art.1: buyers and sellers must both have “places of business.”  CISG Art. 2(a): the Convention does not apply to sales of goods bought for personal, family, or household use.
    55. 55. B. COVERAGE OF CISG  Subject Matter of CISG:  The formation of contracts.  The remedies available to buyers and sellers.
    56. 56. B. COVERAGE OF CISG  Subject Matter Not Covered:  The validity of contracts.  The competency of the parties.  The rights of third parties.  Liability for death or personal injury.  Sales to consumers.  Sales of services
    57. 57. B. COVERAGE OF CISG  Sales commonly subject to special regulation:  Auction sales,  Sales on execution or otherwise by authority of law,  Sales of stocks, shares, investment securities, negotiable instruments, or money  Sales of ships, vessels, hovercraft, or aircraft, and  Sales of electricity.
    58. 58. C. CISG COMPARED  General sources of CISG rules: French Civil Code, the French Commercial Code, and similar civil law codes.
    59. 59. C. CISG COMPARED  Distinctive CISG provisions:  Contract formation(offer /acceptance)  Firm offers  Time of acceptance  Acceptance with additional terms  Definiteness  Formalities  Obligations of the buyer/seller  Remedies
    60. 60. Offer/acceptance  Withdraw an offer  Revocation of an offer  Rejection an offer  Counter offer  Modified acceptance  Rules for calculating the time of acceptance  Effect of late acceptance  Conclusion of contract
    61. 61. FIRM OFFERS  Firm Offer is Irrevocable if:  the offeror indicates, whether by stating a fixed time or otherwise, that it is irrevocable, or  the offeree acts in reliance on the reasonable belief that it is irrevocable.  Firm Offer Does Not Have to be:  in writing (as required by the UCC), or  supported by consideration or cause.
    62. 62. TIME OF ACCEPTANCE  Acceptance is Effective and a contract formed only when the indication of assent reaches the offeror.  Caveat: An offeror may not revoke an offer once it has been dispatched.  Basis: French Civil Code's receipt rule.  Compare: UCC provides that an acceptance is effective upon dispatch.
    63. 63. ADDITIONAL TERMS  Additions, limitations, or other modifications constitute a “counteroffer.”  Caveat: This is so only if—  the additional or different terms materially alter the terms of the offer, or  the offeror fails to promptly object to changes that are not material.
    64. 64. ADDITIONAL TERMS  Material alterations are changes to the following:  Price  Payment  quality and quantity of the goods  place and time of delivery  extent of one party’s liability to the other  settlement of disputes  Basis: French mirror image rule and UCC § 2-207.
    65. 65. FILANTO, SPA v. CHILEWICH INTERNATIONAL CORP. United States District Court, Southern District of New York, 1992.  Chilewich had a contract to deliver footwear to Russia. This contract contained an arbitration provision that called for all disputes to be arbitrated in Moscow. Chilewich then engaged Filanto (an Italian corporation) to supply it with footwear that Chilewich had contracted to deliver to Russia. Chilewich’s correspondence to Filanto said that the arbitration provision in the Russian contract was to be part of their contract as well. Filanto supposedly sent Chilewich a counteroffer rejecting the arbitration provision. Chilewich meanwhile proceeded to obtain a letter of credit benefiting Filanto and proceeded as if there was a contract. Filanto, however, signed a contract on August 7 that contained this provision, although it said in its cover letter that it was not bound by the provision. When a dispute arose and Filanto sued in a US court, Chilewich invoked the arbitration provision and asked the court to dismiss Filanto’s suit.
    66. 66.  ISSUE: (1) Was the August 7 reply a counteroffer? (2) If it was, was there a contract anyway based on unobjected- to performance?
    67. 67.  LAW: A reply that purports to be an acceptance but contains material additions, limitations, or modifications are a rejection of the offer and a counteroffer. (1) The objections to the arbitration provision in the August 7 cover letter were a material modification amounting to a rejection of the offer.  If the offeree knows that the offeror has begun performance and fails to notify the offeror within a reasonable time that it objects to the terms of the contract, it will be deemed to have assented to those terms. (2) Because Chilewich went ahead with the contract (getting the letter of credit) and Filanto did not timely object, Filanto accepted the terms of the Chilewich’s proposed contract.  ORDER: Case dismissed; the matter must be arbitrated in Moscow.
    68. 68. DEFINITENESS  A contract must be sufficiently definite so that a court can enforce it.  A contract is sufficiently definite if it:  describes the goods, and  expressly or impliedly fixes or makes provision for determining the quantity.
    69. 69. DEFINITENESS  Price should be stated or a means provided for determining it.  Price not stated: courts imply will the price generally charged at the time of the contract for like goods sold under comparable circumstances in the trade concerned
    70. 70. FORMALITIES  No Formalities: The CISG does not require a contract to be in any particular form (article 11,12,96)  A contract may be proven by oral testimony regardless of the price involved.  Basis: French Commercial Code.
    71. 71. GENERAL STANDARDS FOR PERFORMANCE  Fundamental Breach:  When one party substantially fails to deliver what the other reasonably anticipated receiving. (art. 25)  Avoidance: (art. 26)  The right to be excused from having to perform any obligation required by the contract.  3. Requests for Specific Performance( art. 46)  a. An injured party make ask a court “to require performance” if the other party fails to carry out its obligations.  b. A court is not obliged to order specific performance unless the court can do so under its own domestic rules. 
    72. 72. Avoidance  Requirements:  The other party must have committed a fundamental breach.  The injured party must notify the other party.  The injured party must be able to return any goods he has already received.  2) Effect of avoidance:  Only the obligation to perform is set aside.  Avoidance does not affect any provision in the contract concerning:  The settlement of disputes (such as arbitration, choice of law, or choice of forum clauses), or  Any other provisions governing the rights and duties of the parties “consequent upon the avoidance of the contract.”
    73. 73. Obligations  For the seller:  Delivery of goods  Transfer of Bills  warranty  For the buyer  Payment  Take delivery
    74. 74. REMEDIES  Buyer’s Right of Avoidance  Requirements for avoiding a contract:  The seller commits a fundamental breach, or  The seller commits a lesser breach and the buyer gives the seller a Nachfrist notice that the seller rejects or does not comply with during the period it specifies.  Basis: German Civil Code.
    75. 75. REMEDIES  Nachfrist Notice: the fixing of an additional period of time of reasonable length for performance by the seller of his obligations.  The period must be definite and the obligation to perform within that period must be clear.  During the Nachfrist period the seller is entitled to correct (i.e., “cure”) the non-conformity at his own expense.  A cure may not be made if the breach is fundamental and the buyer chooses to avoid the contract.
    76. 76. REMEDIES  Time for Avoidance: Once the Nachfrist period has run, or once the fundamental breach becomes clear, the buyer has a reasonable time in which to avoid the contract.
    77. 77. REMEDIES  Seller’s Right of Avoidance  Analogous to that of the buyer’s avoidance remedy
    78. 78. REMEDIES  Buyer’s Right to a Reduction in Price  Applicable when:  the seller delivers non-conforming goods  the buyer accepts them, and  the seller is not responsible for the non- conformity
    79. 79. REMEDIES  Formula for determining the price reduction: The price is to be reduced by that ratio of:  The value at the time of delivery of the goods actually delivered, to  The value that conforming goods would have had at the time of delivery.
    80. 80. REMEDIES Example  Idaho potatoes sold at $3.50/bushel for delivery in Djakarta  Damaged in transit by act of nature  Undamaged potatoes are worth $4.00/bushel if purchased in Djakarta  Damages potatoes are worth $2.80/bushel  The price reduction ratio is: $2.80 = 7 $4.00  10  Applying this ratio, the reduced price the buyer pays is: $3.50 x 7/10  =  $2.45
    81. 81. Anticipate breach of contract  Article 71:  suspend the performance of a contract on the ground of an anticipatory breach.  Deficiencies in ability or creditworthiness  The act in performing or preparing the contract show that …can not perform at least of the substantial part of the contract
    82. 82. Passing of Risk  Vital issue:Who is liable for losses incurred before the completion of the contract.  Passing of risk and the duty to pay  When:  To be transported by carrier  Sold in transit  Through delivery  In unascertained goods
    83. 83. Impediment beyond control  Force majeure  A party is not liable for damages resulting from his failure to perform if he can show that:  His failure was due to an impediment beyond his control.  The impediment was not something he could have reasonably taken into account at the time of contracting, and  He remains unable to overcome the impediment or its consequences. Typical situations: Natural disasters, war, embargoes, strikes, breakdowns, and the bankruptcy of a supplier.
    84. 84.  Dirty hands  One party may not rely on a failure of the other party to perform to the extent that such failure was caused by the first party’s act or omission.  Case 10-8  Italy 14 January 1993 District Court Monza (Nuova Fucinati v. Fondmetall International) [translation available] [Cite as: http://cisgw3.law.pace.edu/cases/930114i3.html]
    85. 85. Other conventions  The United Nations Convention on the Limitation period in the international sale of Goods  Convention on international agency
    86. 86. INTERNATIONALECNOMIC LAW chapter 3chapter 3 Trade TermsTrade Terms
    87. 87.  Use of Trade Terms: sales contracts involving transportation customarily contain abbreviated terms to describe:  When buyer takes delivery.  Who arranges for transportation.  Additionally:  place of payment.  the price.  the time when the risk of loss shifts from the seller to the buyer.  the costs of freight and insurance. A. TRADE TERMS
    88. 88. A. TRADE TERMS  Trade Terms Used Inconsistently  Domestic laws define trade terms for domestic sales. Some states define trade terms for international sales.  Contracting parties may themselves define trade terms. By incorporating definitions from:  foreign legislation.  private rules. The most widely used private trade terms are the “Incoterms” published by the International Chamber of Commerce. Web address: www.iccwbo.org
    89. 89. A. TRADE TERMS  “Free” Terms  Several of the common trade terms begin with the word "free" (e.g., free on board, free alongside, free carrier).  “Free” means: the seller has an obligation to deliver the goods to a named place for transfer to a carrier.
    90. 90. B. F.O.B.  Free On Board (port of shipment) contract: requires a seller to deliver goods on board a vessel that is to be designated by the buyer in a manner customary at the particular port.  “On board” means that the goods:  have been appropriated to the contracts.  have crossed rail.
    91. 91. B. F.O.B.  Use limited to seaborne commerce in most of the world.  The Incoterms uses it only in connection with the carriage of goods by sea.  In common law countries it is also applies to inland carriage aboard any “vessel, car or other vehicle.”
    92. 92.  Free Alongside or Free Alongside Ship Contracts: requires the seller to deliver goods to a named port alongside a vessel to be designated by the buyer and in a manner customary to the particular port.  “Alongside” means that the goods be within reach of a ship's lifting tackle. C F.A.S
    93. 93. D. C.I.F.  Cost, Insurance and Freight (port of destination): requires the seller to arrange for the carriage of goods by sea to a port of destination and to turn over to the buyer the documents necessary to obtain the goods from the carrier or to assert a claim against an insurer if the goods are lost or damaged.
    94. 94. D. C.I.F.  Three document represent the CIF contract:  the invoice.  the insurance policy.  the bill of lading.  Seller’s duties: deliver the documents to buyer  Buyer’s duties: pay the seller on delivery of the documents
    95. 95. E. C.F.R.  Cost and Freight (port of destination): same as the CIF contract, except that the seller does not have to procure marine insurance against the risk of loss or damage to the goods during transit.
    96. 96. F. D.E.S.  Delivered Ex-Ship (arrival contract): requires seller to deliver goods to buyer at an agreed port of destination.  Seller remains responsible for the goods until they are delivered.  Seller is not obliged to obtain insurance for the buyer's benefit.
    97. 97. G. F.C.A.  Free Carrier or Free Carrier Alongside: requires the seller to deliver goods to a particular carrier at a named terminal, depot, airport or other place where the carrier operates.  Risks of loss and liability for cost of transportation shift to buyer upon seller making delivery.  
    98. 98. H. E.X.W.  Ex-Works: seller delivers the goods at his own place of business.  All risks and transportation. costs are the responsibility of the buyer
    99. 99. Chapter 4Chapter 4 Transportation
    100. 100. Contract for carriage by sea,air and land  A . Introduction  Modes of international transportation  By sea ( bill of lading/charter party)  By air  By land  Multimodal transport of goods  Application of law relating to the contract for carriage by sea.
    101. 101. Legal frame work for carriage by sea  It is presently regulated by both international conventions and domestic laws.  Conventions:  The Hague Rules 1924  The Hague-Visby Rules 1968  Hamburg rules 1978  The UN Conventions on International Multimodal Transport of Goods 1980  The UN Conventions on the Liability of operators of Transport terminals in international trade,1991
    102. 102. B. BILL OF LADING  Bill of Lading Defined: an instrument issued by an ocean carrier and given to a shipper with whom the carrier has entered into a contract for the carriage of goods at the time the goods are delivered to the carrier.
    103. 103. BILL OF LADING  Purposes( 法律性质) :  Receipt for the goods.  Evidence of a contract of carriage.  Document of title.
    104. 104. RECEIPT FOR GOODS  Functions of a bill of lading:  Describes the goods.  States their quantity.  States their condition.
    105. 105. . RECEIPT FOR GOODS  Kinds of Bills of Lading  “On Board” Bill of Lading: certifies that the goods have been properly loaded.  Bill is prima facie evidence that goods were received by the carrier as described on the bill  Carrier can introduce rebutting evidence if the bill has not been negotiated to a third party.  Carrier is barred from introducing rebutting evidence if the bill has been negotiated.
    106. 106.  “Claused” Bill of Lading: One that notes a discrepancy on its face and is non-negotiable.  Discrepancy must refer to a problem noted at the time the goods are loaded. Notations as to problems that occur later do not effect the negotiability of the bill.
    107. 107. CONTRACT FOR CARRIAGE  Bill of Lading is evidence of a contract of carriage between the shipper and the carrier.  Carrier can introduce rebutting evidence if the bill has not been negotiated to a third party.
    108. 108. DOCUMENT OF TITLE  Rightful possessor of a bill of lading has title and is entitled to possess, use, and dispose of the goods that the bill represents.  Two main kinds of bills of lading:  Straight bills of lading  Order bills of lading ( OPEN BILL OF LADING )
    109. 109.  Straight bills of lading: a non- negotiable bill issued to a named consignee.  Transferee acquires same rights as than those of his transferor. DOCUMENT OF TITLE
    110. 110. DOCUMENT OF TITLE  Order bills of lading: negotiable bill issued to a named consignee.  Transfer is by negotiation: by endorsement and delivery.  Third party holder has title and the right to take possession of the goods described in the bill.  Must receive the bill in good faith through due negotiation.  Must surrender the bill to the carrier in order to take delivery of the goods.
    111. 111. CARRIER’S DUTIES  Exercise Due Diligence in:  Making the ship seaworthy.  Properly manning, equipping and supplying the ship.  Making the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.  Properly and carefully loading, handling, stowing, carrying, keeping, caring for, and discharging the goods carried.  Duties are strictly enforced.
    112. 112. CARRIER’S IMMUNITIES  Carrier is exempt from liability for damages arising from “perils” such as:  Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship;  Fire, unless caused by the actual fault or privity of the carrier;  Perils, dangers and accidents of the sea or other navigable water;
    113. 113. CARRIER’S IMMUNITIES  Carrier’s Immunities are Strictly Construed: carrier is responsible despite any listed exemption if it fails to exercise due diligence in carrying out its fundamental duties.
    114. 114. CARRIER’S LIABILITY LIMITS  Carrier Must Issue Bill of Lading  Limits set by the Hague Rules of 1924:  ₤100 per package, or  ₤ 100 per unit when shipped in “customary freight units.”
    115. 115. P. CARRIER’S LIABILITY LIMITS  Limits set by the Hague-Visby Rules are the higher of:  10,000 gold francs per package or unit,  30 gold francs per kilo of the gross weight of the goods lost or damaged, whichever is the higher.
    116. 116. P. CARRIER’S LIABILITY LIMITS  Limits do not apply if:  Parties agree to higher amounts.  Carrier acted either:  With intent to cause damage, or  Recklessly and with knowledge that damage would probably result.  
    117. 117. Q. THIRD PARTY RIGHTS  Liability Limits do not Apply to Third Parties: Hague Rules and Hague-Visby Rules liability limits apply to the carrier only.  Third parties who help in the transport of the goods, but who are not parties to the carriage of goods contract contained in the bill of lading, have no contractual right to claim the liability limits established by the Rules.
    118. 118. Q. THIRD PARTY RIGHTS  Himalaya Clauses: Clauses added to bills of lading extending the Hague Rules or the Hague-Visby Rules liability limits to third parties.  Unenforceable in most other countries.  Rationale: privity of contract.
    119. 119. The Hague Rules Common Carriage/The Bill of Lading  APPLICATON  The Carrier’s Duties Under a Bill of Lading  The Carrier’s Immunities (P 73)  Liability Limits  Time Limitations  Third-Party Rights (Himalaya Clause)
    120. 120. Contracts for the carriage of goods by air  Introduction  Warsaw System  Warsaw convention The Hague protocol 1955 Guadalajara convention 1961  Objectives of Warsaw system
    121. 121. Carriage of goods under the Warsaw Convention  Air Consignment of Note(CAN)  Definition  Issue of ACN  Functions
    122. 122. Liability of the carrier  Liability and the period of laibility  Excluded liability  Limited liability  Liability of successive carriers
    123. 123. Rights and obligations of the consignor  Obliged to  Information  documents  Entitled to  Take goods back  Stop the carriage of goods on any landing  Direct goods to the person other than the consignee
    124. 124.  Limitation period  Incase of loss of or damage to goods,complaint must be made within 7days after receiving the goods  Later delivery 14 Ds  Forum of action  The carriers ordinary residence;  The carriers principal place of business  The place the carrier’s rep. Actually made the contract  The place of destination
    125. 125. Chapter 5Chapter 5 INSURANCEINSURANCE
    126. 126. Marine insurance  Introduction  Cargo insurance contract  Contract of indemnity  Classification of contracts  Valued and unvalued policies  Voyage and time policies  Floating policies
    127. 127. Risk ,loss and cost  Risk  Peril of the sea  Risks incedental to the adventure  Additional risks  Loss  Toal loss  Constructive loss  Partial loss  General average  Partial average  Cost
    128. 128. Chapter 6Chapter 6 PAYMENT
    129. 129. Lecture 7Lecture 7 The World Trade Organization
    130. 130.  World Trade Organization  Agreement Establishing WTO came into effect January 1, 1995.  WTO supercedes the ad hoc organization that had administered the General Agreement on Tariffs and Trade of 1947. A. WTO
    131. 131. A. WTO Agreement Establishing WTO provides legal framework to administer various trade pacts. Final Act Embodying the Result of the Uruguay Round of Multilateral Trade Negations, the Marrakesh Agreement establishing the World Trade Organization and 1 Annexes annex 1 A Annex 1B Annex 1c, Annex 2,Annex 3, Annex 4  Annex 1A,1B,1C  General Agreement on Tariffs and Trade of 1994 and other agreements on trade in goods.  General Agreement on Trade in Services.  Agreement on Trade-Related Aspects in Intellectual Property Rights.
    132. 132.  Annex 2  Agreement Understanding on Rules and Procedures Governing the Settlement of Disputes.  Annex 3  Trade Policy Review Mechanism  Annexes 4  Plurilateral Trade Agreement  Annex 4a Agreement on trade in civil aircraft  Annex 4b Agreement on Government Procuremnet
    133. 133.  They are two ways to become wto member.  Origianal member GATT 1947  Contracting party:“state or special customary territories possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this agreement and Multilateral trade agreements may accede to this agreement on terms to be agreed between it and the WTO Consessus for admission of new members. A prospective member needs to negotiate with all existing members, who have expressed special intent in its application for admission.
    134. 134.  Organs of the WTO  Ministerial Conference: the WTO’s supervisory and policy making organ.  General Council:  Also functions as the WTO’s:  Dispute Settlement Body.  Trade Policy Review Body.  Council for Trade in Goods.  Council for Trade in Services.  Council for Trade-Related Aspects of Intellectual Property Rights.  Secretariat headed by Director-General. A. WTO
    135. 135. Ministerial conference General council secretariat DSB COMMITTEE S councils BOARD
    136. 136. B. THE GATT 1994  Purpose of the GATT Rules: to progressively liberalize world trade.  This is done by giving WTO member states:  Equal access to markets  Reciprocity in trade concessions.  Transparent and stable trading conditions.
    137. 137. B. The Principles Underlying the GATT Rules  Nondiscrimination  Most-Favoured-Nation Treatment  National treatment  Tariff concession  Market Access  Elimination of Quantitative restrictions  Anti-dumping and countervailing  Transparency
    138. 138. C. NONDISCRIMINATION  Basic principle of GATT: International trade should be conducted without discrimination.  Rules giving expression to principle of nondiscrimination:  Most Favored Nation Rule.  National Treatment Rule.
    139. 139. C. NONDISCRIMINATION  Most Favored Nation Rule: WTO member state must apply its tariff rules equally to all other members.  General exceptions to the MFN Rule:  Contracting states may take actions to counter dumping and subsidization.  Contracting states may join together to create customs unions and free trade areas.  Contracting states may restrict imports to protect public health, safety, welfare and national security.
    140. 140. C. NONDISCRIMINATION  Special exceptions for developing member states.  Generalized System of Preferences allows developed countries to grant preferential treatment to developing countries, and to do so on a nonreciprocal basis.  South-South Preferences allows developing countries exchange tariff preferences among themselves without extending the same preferences to developed countries.
    141. 141. C. NONDISCRIMINATION  National Treatment Rule: A WTO member state must treat imports equally with its own domestic products once the imports are inside its borders.  National treatment means that a WTO state must accord to the nationals of another WTO state treatment equivalent to that which the state accords to its own nationals.  Interpretation: Products must be treated equally vis- à-vis their content; they may not be discriminated against because of the way in which they were made.
    142. 142. C. NONDISCRIMINATION  Exceptions to the National Treatment Rule:  A member state can maintain the preferences it had in place at the time it became a WTO member state.  A member state’s government agencies can discriminate when they procure goods.  A member states can discriminate in paying of subsidies to domestic producers.  A member states can discriminate in favor of domestically produced movies.
    143. 143. D. TARIFF concession  Protection Through Tariffs: a WTO member state may only protect its domestic industries with tariffs.  Implementation:  Quotas and other quantitative restrictions are forbidden if they block the price mechanism function (Art. XI).  Tariffs may only be collected at the time or point of importation (Art. II).  This ensures that internal taxes will not be disguised tariffs.
    144. 144. E. TRANSPARENCY  WTO member state governments must disclose to the public, and to other governments, the rules, regulations and practices they follow in their domestic trade systems.
    145. 145. F. EXCEPTIONS TO GATT  The Escape Clause (or GATT safety valve): Allows a WTO member state to temporarily avoid GATT 1994 obligations when a surge in the number of imports coming from other member states threatens a domestic industry.  An injured member may impose emergency, restrictive trade measures.
    146. 146. F. EXCEPTIONS TO GATT  Prerequisites – before adopting restrictive measures a WTO member state must:  Determine threat to a domestic industry.  Notify the WTO of its affected exporting member state to arrange planned action.  Consult with the for compensation.  Effect of failure to consult: injured exporting state may withhold substantially equivalent concessions in order to restore the previous balance of trade between the two countries.
    147. 147. F. EXCEPTIONS TO GATT  Safeguards Agreement sets out the procedures for engaging in consultations and for withholding concessions.
    148. 148. F. EXCEPTIONS TO GATT  Permanent Exceptions: GATT 1994 allows WTO member states to permanently implement certain public policies that are in conflict with its general goal of liberalizing trade. These are known as:  General Exceptions  Security Exceptions
    149. 149. G. EXCEPTIONS TO GATT  General Exceptions: GATT Art. XX allows a WTO member state to take measures contrary to its GATT obligations that:  Are necessary to protect public morals.  Are necessary to protect human, animal, or plant life, or health.  Relate to the importation or exportation of gold or silver.  Are necessary to secure compliance with laws or regulations which are not inconsistent with the General Agreement.
    150. 150.  Restrict imports of prison labor products.  Protect national treasures of artistic, historic, or archaeological value.  Relate to the conservation of exhaustible natural resources.  Are undertaken in accordance with an intergovernmental commodity agreement.  Involve restrictions on exports of domestic materials needed by a domestic processing industry during a period when the domestic price is held below world prices as part of a governmental stabilization plan.  Are essential to acquiring products in short supply.
    151. 151. F. EXCEPTIONS TO GATT Prerequisite to implementing a general exception: A WTO member state may not adopt an exception as a way to arbitrarily or unjustifiably discriminate or as a disguised restriction on international trade. (GATT Art. XX)
    152. 152. G. EXCEPTIONS TO GATT  Security Exceptions: GATT Art. XXI allows WTO member states to avoid any obligation that is:  contrary to an essential security interest, or  in conflict with duties imposed by the United Nations Charter for the maintenance of international peace and security.
    153. 153. G. WTO MULTILATERAL TRADE AGREEMENTS  WTO Multilateral Trade Agreements supplementing the GATT 1994, include:  Antidumping Code  Agreement on Subsidies and Countervailing Measures
    154. 154. H. ANTIDUMPING CODE  Agreement on Implementation of Article VI of GATT 1994 (the Antidumping Code) provides the procedures a WTO member state may take to counter dumping.  Dumping is the introduction into the commerce of another country a product at less than its normal value.  Dumping is not forbidden.  Anti-dumping law and it’s features  Investigation and procedure
    155. 155. H. ANTIDUMPING CODE  States may take antidumping measures to counter dumping – but only if they determine:  Goods are dumped.(price)  Tests for determining normal value of goods  A domestic industry within the importing country is materially injured or threatened with material injury.  The dumped goods are the cause of the injury or threatened injury.
    156. 156. I. SCM AGREEMENT  Agreement on Subsidies and Counter-vailing Measures (the SCM Agreement) specifies the actions a WTO member state may take to counterbalance an improper subsidy.  Subsidy defined: a financial contribu-tion made by a government or other public body that confers a benefit on an enterprise, group of enterprises, or an industry.
    157. 157. I. SCM AGREEMENT  Only specific subsidies are subject to the disciplines of the SCM Agreement.  Specific subsidies are subsidies that target:  A specific enterprise or industry.  A group of enterprises or industries.  Enterprises in a particular region.
    158. 158. I. SCM AGREEMENT  Categories of Specific Subsidies:  Prohibited subsidies (red subsidies) are subsidies that either:  Depend upon export performance, or  Are contingent upon the use of domestic instead of imported goods.
    159. 159. I. SCM AGREEMENT Actionable subsidies (yellow subsidies) are subsidies that are trade distorting because, in the way they are used, they:  Injure a domestic industry of another member state.  Nullify or impair benefits due another member state under GATT 1994.  Cause or threaten to cause serious prejudice to the interests of another member state.
    160. 160. I. SCM AGREEMENT  Nonactionable subsidies (green subsidies) are subsidies that either:  Are not nonspecific.  Are infrastructural subsidies that involve government funding to:  Assist (but not fully cover) the cost of business research activities.  Aid disadvantaged regions.  Help existing facilities adapt to new environmental requirements.
    161. 161. I. SCM AGREEMENT  Actions an injured state may take:  Do nothing.  Request consultations with the subsidizing state.  Ask the WTO to authorize it to impose countervailing duties.  Independently impose countervailing duties.  Must follow the same procedures used for imposing antidumping duties.
    162. 162. 第十四讲 WTO Dispute Settlement  WTO’s most individual contribution to the stability of the global economy.  makes the trading system more secure and predictable.  clearly structured, with flexible timetables set for completing a case. All final rulings or decisions are made by the WTO’s full membership. No single country can block these.
    163. 163.  What is this agreement called? Understanding on Rules and Procedures Governing the Settlement of Disputes  How are disputes settled?   Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise).  Bodies involved in the system DSB/Secretariat/the panel/appellate body/Director - General
    164. 164. The Dispute Settlement Body has the sole authority to  1) establish “panels” of experts to consider the case, and  2) to accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the  3) power to authorize retaliation when a country does not comply with a ruling.
    165. 165. First stage: consultation  countries in dispute have to talk to each other to see if they can settle their differences by them-selves  they can also ask the WTO director- general to mediate  up to 60 days
    166. 166. Alternative stage  Good office  Conciliation  mediation
    167. 167. Second stage: the panel  the complaining country can ask for a panel to be appointed by the Dispute Settlement Body .  The panel’s final report should normally be given to the parties to the dispute within six months.  up to 45 days for a panel to be appointed, plus 6 months for the panel to conclude
    168. 168. How the panel works?  Before the first hearing: each side in the dispute presents its case in writing to the panel.  First hearing: the case for the complaining country and defense  Rebuttals: the countries involved submit written rebuttals and present oral arguments at the panel’s second meeting.
    169. 169.  Experts: if one side raises scientific or other technical matters, the panel may consult experts or appoint an expert review group to prepare an advisory report.  First draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment.
    170. 170.  Interim report: The panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review.  Review: The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides.
    171. 171.  Final report : A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members.  The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report.
    172. 172. Appeals    Either side can appeal a panel’s ruling.  Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body.  Members of the Appellate Body have four- year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government.
    173. 173.  Appeals have to be based on points of law such as legal interpretation — they cannot reexamine existing evidence or examine new evidence.  The appeal can uphold, modify or reverse the panel’s legal findings and conclusions. (in 60 days )  The Dispute Settlement Body has to accept or reject the appeals report within 30 days — and rejection is only possible by consensus.
    174. 174. How long to settle a dispute?  Consultations, mediation, etc 60 days  Panel set up and appointment 45 days  Final panel report to parties 6 months  Final report to WTO members 3 weeks  DSB adopts report(if no appeal) 60 days  Appeals report 60-90 days  DSB adopts appeals report 30 days
    175. 175. The case has been decided: what next?    If the country that is the target of the complaint loses, it must follow the recommendations of the panel report or the appeals report.  If it fails to act within “reasonable period of time”, it has to enter into negotiations with the complaining country (or countries) in order to determine mutually-acceptable compensation.
    176. 176.  If after 20 days, no satisfactory compensation is agreed, the complaining side may ask the Dispute Settlement Body for permission to impose limited trade sanctions (“suspend concessions or obligations”) against the other side.  In principle, the sanctions should be imposed in the same sector as the dispute. If this is not practical or if it would not be effective, the sanctions can be imposed in a different sector.(cross sector retaliation)
    177. 177. GATT: The tuna-dolphin dispute  In eastern tropical areas of the Pacific Ocean, schools of yellowfin tuna often swim beneath schools of dolphins. When tuna is harvested with purse seine nets, dolphins are trapped in the nets. They often die unless they are released.  The US Marine Mammal Protection Act sets dolphin protection standards for the domestic American fishing fleet and for countries whose fishing boats catch yellowfin tuna in that part of the Pacific Ocean.
    178. 178.  If a country exporting tuna to the United States cannot prove to US authorities that it meets the dolphin protection standards set out in US law, the US government must embargo all imports of the fish from that country.  The embargo also applies to “intermediary” countries handling the tuna en route from Mexico to the United States. Often the tuna is processed and canned in an one of these countries.
    179. 179. Mexico asked for a panel in February 1991. A number of “intermediary” countries also expressed an interest. The panel reported to GATT members in September 1991. It concluded:  1) that the US could not embargo imports of tuna products from Mexico simply because Mexican regulations on the way tuna was produced did not satisfy US regulations. This has become known as a “product” versus “process” issue.
    180. 180.  2) that GATT rules did not allow one country to take trade action for the purpose of attempting to enforce its own domestic laws in another country — even to protect animal health or exhaustible natural resources. The term used here is “extra- territoriality”.  The report was never adopted. Mexico and the United States held their own bilateral consultations aimed at reaching agreement outside GATT.
    181. 181. WTO: Gasoline Case, 1995 On 23 January 1995, Venezuela complained to the Dispute Settlement Body that the United States was applying rules that discriminated against gasoline imports, and formally requested consultations with the United States.
    182. 182.  Just over a year later (on 29 January 1996) the dispute panel completed its final report.  The United States appealed. The Appellate Body completed its report, and the Dispute Settlement Body adopted the report on 20 May 1996  The United States and Venezuela then took six and a half months to agree on what the United States should do.
    183. 183.  The case arose because the United States applied stricter rules on the chemical characteristics of imported gasoline than it did for domestically- refined gasoline. Venezuela said this was unfair because US gasoline did not have to meet the same standards — it violated the “national treatment” principle and could not be justified under exceptions to normal WTO rules for health and environmental conservation measures.
    184. 184.  The dispute panel agreed with Venezuela. The appeal report upheld the panel’s conclusions.  The United States agreed with Venezuela that it would amend its regulations within 15 months and on 26 August 1997 it reported to the Dispute Settlement Body that a new regulation had been signed on 19 August. 
    185. 185. comments Powerful Integrated Multilateral respectable
    186. 186. International Business Law Lecture 10Lecture 10 Dispute SettlementDispute Settlement
    187. 187. THE SETTLEMENT OF DISPUTES  Disputes may be settled 1. By diplomacy, ADR 2. By litigation 3. By arbitration 1. Definition of arbitration 2. Arbitration agreement 3. Rules of arbitration
    188. 188. 1. SETTLEMENT OF DISPUTES THROUGH DIPLOMACY  Diplomacy: The process of reconciling the parties to a disagreement by negotiation, mediation, or inquiry., formally between states .  Informally it is also used to resolve the disputes involving institutions and /or persons., which is commonly referred as “alternative dispute resolution” --ADR
    189. 189. 1. SETTLEMENT OF DISPUTES THROUGH DIPLOMACY  Negotiation: The process of reaching an agreement by discussion.  Mediation: The use of a third party who transmits and interprets the proposals of the principal parties, and sometimes, advances independence proposal.  Inquiry: The determination of a disputed fact or facts by an independent third party.
    190. 190. 2. THE SETTLEMENT OF DISPUTES BY LITIGATION  A. Litigation  States or IGOs v. states or IGOs – cases are heard in:  International courts (such as Inter- national Court of Justice)  International arbitration tribunals (icsid)  Municipal courts (rarely)
    191. 191.  Private persons v. private persons, states, or inter-governmental organizations – cases are heard in:  International arbitration tribunals (such as International Center for the Settlement of Investment Disputes tribunals)  Municipal courts LITIGATION—international courts and tribunals
    192. 192. International Court of Justice --ICJ  Created in 1945 as one of the organs of the UN. All the member states of the UN are automatically parties to the ICJ’s statute,  Kinds of judgments that can be handed down by the ICJ.  1) cases between states (based on the Court’s “conten- tious” jurisdiction).  2) Those requested by organs or Specialized Agencies of the United Nations (based on the Court’s “advisory” jurisdiction).  3) Caveat: ICJ has no authority to hear cases involving individuals or entities other than those just mentioned.
    193. 193. W T O  The World Trade Organization (WTO) implements and enforces international agreements regulating international trade.  Regulatory agreements include:  General Agreements on Tariffs and Trade  General Agreement on Trade in Services  Agreement on Trade-Related Aspects of Intellectual Property Rights
    194. 194. Procedures For Dispute settlement  Consultation: Member states are encouraged to resolve disputes with each other by consultation.  Dispute Settlement Panels will be established. Dispute Settlement Panel. Panel reports are adopted automatically within 60 days after being circulated,  Third Party Participation If both parties agree, they may seek the assistance of third parties in conducting negotiations about their dispute.  Appellate Body. An appeal board made up of seven persons who serve terms of four years. Decisions of the Appellate Body will be adopted automatically unless the DSB decides by consensus not to do so
    195. 195. ICSID  International Center for the Settlement of Investment Disputes (ICSID)  Established in 1965 by the World Bank sponsored Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention)
    196. 196. ICSID  Purpose of Washington Convention: To encourage private investment in underdeveloped countries by providing a reliable mechanism for impartially resolving disputes between an investor and the country of investment.
    197. 197. ICSID Constituting an Arbitration Tribunal  Requirements: 1. Host state and home state of the investor must both be parties to the Washington Convention. 2. The host state must have notified ICSID of the class or classes of disputes that it considers arbitrable. The dispute must be a legal dispute arising out of on an investment 3. The investor and the host state must both consent to ICSID jurisdiction.
    198. 198. ICSID  Effect of consenting to ICSID arbitration:  Litigants agree to exclude all other remedies.  The case cannot be tried in a municipal or another international tribunal.  The investor may not ask its home state for diplomatic protection.  Caveat: The host state can require that all local remedies be applied before the dispute can be taken to ICSID.  Unilateral withdrawal is ineffective
    199. 199. ICSID  ICSID Awards  ICSID awards are binding and contracting states agree to comply with them.  Any review of the award by the courts of the state party to a particular dispute is considered to be in noncompliance with the award.
    200. 200. ICSID  Review: The tribunal itself can review an award either to interpret it or to revise it.  Appeal: Appeal is allowed to an ad hoc committee which has the power to annul an award.
    201. 201. B. DISPUTE SETTLEMENT IN MUNICIPAL COURTS  Introduction  Jurisdiction: the competence of a municipal (or national) court to exercise the power to try a case.  Immunity: The ability of a party (usually a state) to escape the jurisdiction of a court - such as:  Sovereign Immunity  Act of State
    202. 202. G. DISPUTE SETTLEMENT IN MUNICIPAL COURTS  Jurisdiction in Civil Cases  Jurisdiction over Persons  In personam jurisdiction exists when a natural or juridical person is physically present within the forum state.
    203. 203. G. DISPUTE SETTLEMENT IN MUNICIPAL COURTS  Consent to Jurisdiction  Expressly by:  Appearing in court after a suit has commenced.  Appointing an agent within a state to receive service of process on him.  Agreeing to the personal jurisdiction of a particular court in a forum selection clause contained in a contract.
    204. 204. G. DISPUTE SETTLEMENT IN MUNICIPAL COURTS  Impliedly by having “minimum contacts” with the forum state.  Minimum contact depends on:  Whether the defendant engaged in acts that relate to the forum state  Whether the suit is based on those acts, and  Whether the defendant has indicated by its conduct that it intended to rely on the benefits (such as doing business) of the forum state
    205. 205. G. DISPUTE SETTLEMENT IN MUNICIPAL COURTS  Jurisdiction over Property  In rem jurisdiction: The power of a municipal court to determine the ownership rights of persons as to property located within the territory of the forum state.
    206. 206. I. CHOOSING THE GOVERNING LAW  Municipal courts apply the laws of other states when that is the fair thing to do.  Rationale: To have a court in another country apply different laws would discourage international exchanges of all kinds.
    207. 207. I. CHOOSING THE GOVERNING LAW  Rules for Choosing the Governing Law  Courts use choice of law or conflict of law rules to determine if they should apply their own laws or the laws of another state in settling disputes.
    208. 208. I. CHOOSING THE GOVERNING LAW  Procedure:  Step One: If the parties to a dispute have agreed to the application of the laws of a particular country, the court will apply those laws.  The agreement of the Parties may appear in:  A choice of law clause.  Statements made to the court.
    209. 209. I. CHOOSING THE GOVERNING LAW  Step Two: If the parties have not agreed as to which laws should apply (either expressly or impliedly), then the court (depending on the state it is located in) will determine for itself which laws it should apply by:  Following statutory dictates,  Using the most significant relationship test.  Using the governmental interest test.
    210. 210. I. CHOOSING THE GOVERNING LAW  Statutory Choice of Law Provisions  Commonly found in civil law countries in:  Statutory codes (usually).  International treaties (occasionally).  Common basis of these provisions:  Vesting of Rights Doctrine: A court is to apply the law of the state where the rights of the parties to a suit vested (i.e., where they legally became effective).
    211. 211. I. CHOOSING THE GOVERNING LAW  Rules for determining vesting.  The general case: The law of the place where the act occurred shall govern the dispute.  The particular case: Depends on the type of dispute.  For example: for a dispute involving the interpretation of a contract:  The law of the place where the contract was made governs questions of validity.  The law of the place where the contract was to be performed governs questions of
    212. 212. I. CHOOSING THE GOVERNING LAW  Most Significant Relationship Test  A court is to apply the law of the state which has the most contacts with the parties and their transaction.  General factors that a court will consider in all cases are (in essence):  Which law best promotes the needs of the _____________ system?  Which state's law will be furthered the most by applying it to the case at hand?  Which law will best promote the underlying policies of the legal subject-matter area involved?  Specific factors that a court considers depends on
    213. 213. I. CHOOSING THE GOVERNING LAW  Governmental Interest Test  If asked to make a choice of law, a court using this test will look to see which state has a legitimate interest in determining the outcome of the dispute.  If only the forum state has an interest: the court will apply the forum state's law.  If the forum state and another state/states have an interest: the latter should be applied, as the court obviously understands those interests better.
    214. 214. I. CHOOSING THE GOVERNING LAW  If only one state other than the forum has an interest: the court will apply that state's law.  If two states other than the forum state have interests: the court may –  Dismiss the case if the state in which the court is located can use the doctrine of forum non conveniens (discussed later).  Apply whichever law it feels is the sounder.  Apply the law that is most like that of the _____ _______.
    215. 215. J. REFUSAL TO EXERCISE JURISDICTION  Forum Non Conveniens  Doctrine: a court may refuse to exercise its power to hear a case when it believes that it would be fairer and more convenient for the case to be decided elsewhere.  Factors that courts consider:  Private interests of the parties (e.g., the ease and cost of access to documents and witnesses).  Public interest factors (e.g., the interests of the forum state, the burden on the courts, and the notion of judicial comity).
    216. 216. L. RECOGNITION and ENFORCEMENT OF FOREIGN JUDGMENTS  Recognition of Foreign Court's Judgment  Hearing will be held by a court asked to convert a foreign judgment into a local judgment.  Common consideration: Did the foreign court have JURISDICTION before handing down its judgment?  Other considerations depend on the country.
    217. 217. L. RECOGNITION and Enforcement OF FOREIGN JUDGMENTS  Recognition of Foreign Arbitral Awards  Treated like domestic judgments in courts in states that are parties to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  Otherwise, must be converted into a foreign judgment in the state where the arbitration takes place, and then that judgment is treated like any other foreign court judgment.
    218. 218. NEW YORK CONVENTION(p607- 617)  Foreign arbitral judgment  Recognition and enforcement of judgment  Procedure  Refusal of recognition and enforcement  Public policy