INTERNATIONAL BUSINESS LAWLegal Environment of International Trade

INTERNATIONAL LAW – 3 KINDS OF RELATIONSHIPS:

The relationships between states and states (i.e. nations)- Public International law

The relationships between states and persons (Quasi-public)

The relationships between persons and persons – Private International Law

THE BODY OF INTERNATIONAL LAW IS IMMENSE:

• International Customs• International Agreements• International Treaties and Accords• Charters (Such as the United Nations)• Protocols• Tribunals• Memoranda• Legal Precedents of the International Court of Justice (ICJ)

INTERNATIONAL LAW INCLUDES:

• Common Law (Sometimes called “case law”

• Civil Law (Statutes Created by Governing Bodies)• Includes substantive law, procedural law

and remedies

THREE MAIN LEGAL PRINCIPLES IN INTERNATIONAL LAW

• Act of State Doctrine: Respects that a nation is sovereign in its own territory and its official domestic actions may not be questioned by the judicial bodies of another country. It dissuades from deciding cases that would interfere with a country’s foreign policy

• Doctrine of Sovereign Immunity: Deals with actions brought in the court of one nation against another foreign nation and prevents the sovereign state from being tried in court without its consent. In the U.S. this is governed by the Foreign Sovereign Immunities Act (FSIA) of 1976

• Principle of Comity: In the instance where two nations share common policy and ideas, one of them submits to the laws and judicial decrees of the other.

Example 1: Comity – Ignacio Sequihua v. Texaco, Inc.

Plaintiffs were residents of Ecuador – they filed suit against Texaco in Texas State Court . They asserted a variety of causes of action arising out of the alleged contamination of the air, ground and water in Ecuador.

The asked for an injunction (court order) requiring Defendant s (Texaco and others) to return the land to its former condition and for a “trust fund” to be administered by the Court.

The case was “removed” to federal Court – which the Court found procedurally proper in the circumstances

Defendants made a motion to dismiss . The Court used the principle of “comity” to rule for Defendants. Comity states that a court should decline to exercise jurisdiction in certain

circumstances in deference to the laws and interests of another country.

WHY COMITY? WHAT DOES THIS MEAN? The challenged activity and the “harm” complained of in this

case by the citizens of Ecuador occurred entirely in Ecuador

The Plaintiffs are all residents of that country

Defendants are not residents of Texas

Enforcement of any order of THIS court in Ecuador is questionable at best

The challenged conduct is regulated by the country of Ecuador which has expressed objection to the exercise of jurisdiction by this court and this must be respected under Comity

BASIS OF JURISDICTION

The basis of jurisdiction in the foregoing case is territorial

Another basis for jurisdiction is nationality – If U.S. companies do certain acts in foreign states (i.e. countries), they may still be accountable in U.S. courts under the principle of nationality

If foreign companies act in ways that directly affect a state (country) other than their own, they may be held accountable by the other state (country) and this is known as the principle of objective territoriality

THE MAKKING OF INTERNATIONAL LAW

Within nations law is made by legislatures, courts and other agencies of government

At the international level no formal law making machinery exists

International law comes into effect only when states (countries) consent to it

CONSENT IS FOUND IN STATE PRACTICE: The conduct and practices of states (countries) in their

dealings with each other;

Statements or evidence of general consent can be found in: Decisions of the International Court of Justice (or its predecssor the

Permanent Court of International Justice

Resolutions passed by the General Assembly of the United Nations

Multilateral Treaties

Conclusion of International Conferences and

Bilateral Treaties (between two nations) – in some instances

CONSENT OF A PARTICULAR STATE (NATION) Consent of a particular state (country) can be

found in: The declarations of its government In its domestic legislation In its court decisions In treaties to which it is a party

SOURCES OF INTERNATIONAL LAW Article 38(1) of the Statute of the International Court of Justice lists

the sources that the Court is permitted to use and most legal writers in this area agree that this list is reasonably complete: International Conventions whether general or particular establishing rules

expressly recognized by the contesting states (i.e., countries)

International custom, as evidence of a general practice accepted as law

The general principles of law as recognized by civilized nations

Judicial decisions, and the teachings of the most highly qualified publicists of the various nations as a subsidiary means of determining the rules of law

[THIS LIST IS IN ORDER OF PREFERENCE – TOP TO BOTTOM]

TREATIES AND CONVENTIONS In International Law TREATIES and CONVENTIONS are the

equivalent of legislation Treaties are legally binding agreements between two or more states

(countries)

Conventions are legally binding agreements between states sponsored by organizations such as the United Nations

BOTH ARE BINDING UPON STATES BECAUSE OF A SHARED SENSE OF COMMITMENT AND

BECAUSE ONE STATE FEARS THAT IF IT DOES NOT RESPECT ITS PROMISES, OTHER STATES WILL NOT RESPECT THEIR PROMISES

VIENNA CONVENTION ON THE LAW OF TREATIES

This came into force in 1980 It only applies to treaties after a party ratifies the agreement

Its wide-spread acceptance by states and its codification of customary rules have made it the usual standard for interpretation.

Article 2(1)(a) of the Vienna Convention states “’Treaty’ means an international agreement concluded between states in written form and governed by international law, whether embodied in a single instrument or two or more related instruments and whatever its particular designation”

This definition excludes certain agreements, such as oral promises, unilateral promises, agreements relating to international organizations, agreements governed by municipal law and agreements not intended to create a legal relationship

CUSTOM SOME RULES HAVE BEEN AROUND SO LONG OR ARE SO GENERALLY

ACCEPTED THAT THEY ARE DESCRIBED AS CUSTOMARY LAW

INTERNATIONAL CUSTOMARY LAW IS NOT FIXED

DEVELOPMENT OF INTERNATIONAL CUSTOMARY LAW IS IN A STATE OF CONSTANT FLUX

EXAMPLE: RULES THAT GOVERN THE “ART OF WAR” ARE REVISED AT THE END OF PRACTICALLY EVERY MAJOR CONFLICT TO REFLECT THE CIRCUMSTANCES OF A CHANGED WORLD.

Example: The present rule that requires a soldier to fight only with combatants is rather outdated in today’s world of terrorism and guerilla warfare and will likely change in the near future.

CUSTOM (Cont’d) To show customary practice has become customary law, to elements must

be established – one behavioral and the other psychological:

USUS: Requires consistent and recurring action (or lack thereof) by states. Evidence can be found in the statement of governments, including diplomatic correspondence, policy statements, press releases

OPINIO JURIS SIVE NECESSITATIS: The psychological element must show that states observing the custom must regard it as binding

GENERAL PRINCIPLES OF LAW When courts are required to decide international disputes, they

frequently rely on general principles of law that are common to the legal systems of the world. In the world today there are over 200 states (countries) yet there are really only TWO MAJOR LEGAL SYSTEMS:

THE ANGLO-AMERICAN COMMON LAW SYSTEM

THE ROMANO-GERMANIC LEGAL SYSTEM

These two systems are remarkably similar in their basic procedures and substantive rules. It is this similarity that provides courts with the general principles they use in deciding many problems that arise in the international community.

JUS COGENS The idea of international jus cogens as a body of higher law for the

international community has achieved some currency in the late twentieth century.

It was first embodied in the 1969 Vienna Convention on the Law of Treaties.

The doctrine of international jus cogens was developed under the strong influence of natural law concepts. In contrast to positivists, who predicate international law on freedom of contract, naturalists (or cosmopolitans) believe that states (countries) cannot be absolutely free in their contractual relations but must respect certain fundamental principles deeply rooted in the international community.

Legal Norms that override a state’s sovereignty because they are so basic

SOME TERMINOLOGY• Custom – A usage or practice common to many or to a particular place or

class OR habitual with an individual

• International Agreements – Agreements concluded between states in written form and governed by international laws, whether embodied in a single instrument or two or more related instruments; while considered binding, international agreements may lapse on expiration, through war or denunciation or when a fundamental change in circumstance occurs. Multilateral Agreements are usually open to all nations; Plurilateral Agreements involve a restricted number of nations; Bilateral Agreements are private agreements between two nations.

• Municipal Law – “Local” law – as opposed to broader international

MORE TERMINOLOGY• Treaties – Formal agreements between two or more sovereign nations. In

the United States, the President negotiates treaties with foreign nations and these agreements must be ratified by the United States Senate (Article II, Section 2.2 – two-thirds of the senators must concur)

• Protocols – The etiquette of diplomacy and affairs of state: these are rule which guide how an activity should be performed; they are not usually written down; they establish generally accepted conduct in diplomacy

• Tribunals – Any person or institution with authority to adjudicate• Memorandum – A document which describes a bilateral or multilateral

agreement. A document that expresses a convergence of will between nations which indicates a common intended action in a situation with no legal commitment implied

INTERNATIONAL LAW IN ACTUAL PRACTICE International Tribunals generally regard municipal (i.e., local law) as

subservient to international law. [e.g., in relation to states who are contracting parties to a treaty, the provisions of their municipal [sic local] law cannot prevail over those of the treaty]

International Tribunals also would regard states as having the obligation to bring their municipal law into compliance with international norms.

However, given the nature of sovereignty and nationalism, it must be admitted that municipal courts may chafe at the notion that there is a law that is higher than the sovereign state’s own law In The U.S. there are disagreements about whether our Supreme Court justices should

take international law or standards into account in deciding cases involving only U.S. citizens

THE PRACTICE IN MUNICIPAL [LOCAL] COURTS

In municipal [i.e., local] courts International Law is treated as correlative. Once a court determines International Law is applicable in a particular case, the law will be treated as law and not as fact.

The main question becomes: Whether the international law has been received into the local jurisprudence. How the court will answer this question depends on whether the law is based on customary practice OR is contained in a treaty.

In most countries customary international law is received in accordance with the Doctrine of Incorporation – customary international law is treated as adopted to the extent it is not inconsistent with prior municipal legislation or judicial decisions of final authority.

A minority of courts follow the doctrine of transformation – customary international law is NOT applicable until clearly adopted by legislative action, judicial decision or established local usage.

SELF-EXECUTING vs.NON-SELF-EXECUTING TREATIES

A self-executing treaty is one that contains a provision that the treaty will apply to the parties without their having to adopt any domestic enabling legislation

A non self-executing treaty has no such provision

In the U.S., for example, the Constitution gives the President authority to negotiate treaties but they must be ratified by the Senate. This is cumbersome and has lead the U.S. to develop two kinds of treaties:

constitutional treaties and executive agreements. As external matters, these both have the same effect (commitments which impose binding international obligations on the United States but as to internal matters a different rule

SEI FUJII vs. STATE Mr. Sei Fujii, a Japanese alien, purchased real estate in

California after World War II

Because he was ineligible for citizenship under U.S. naturalization laws, a trial court held his ownership of the land violated California’s alien land law and that the land purchased by him escheated to the State of California

Mr. Fujii appealed; an intermediate appellate court held that this law violated the United Nations Charter’s human rights provisions and reversed the decision of the trial court. The State of California appealed to the Supreme Court of California

FUJII DECISION The United Nations Charter is a Treaty and our federal Constitution provides that

treaties made under the authority of the United States are part of the supreme law of the land and that judges in each state must follow them

A treaty does not automatically supersede local law which are inconsistent with it unless the treaty provisions are self-executing.

In determining whether a treaty is self-executing courts look to the intent of the signatory parties as manifested by the language of the instrument and if this is not clear then recourse may be had to the circumstances surrounding its execution.

In order for a treaty provision to be operative without the aid of implementing legislation and to have the force and effect of a statute, it must appear that the framers of the treaty intended to prescribe a rule that, standing alone, would be enforceable in the courts.

This treaty is NOT self-executing

INTERNATIONAL PERSONS States – Political entities that have a territory, a population, a government

capable of entering into international relations and a government capable of controlling its peoples.

Included :

Independent States which are free from the control of other states and free to enter into agreements with other international persons

Dependent States – these are states which have formally surrendered some aspects of their political and governmental functions to another state

Inchoate States – States which lack some attribute required to be treated as a fully independent state; most commonly they lack territory or population

WHICH COUNTRY’S LAW APPLIES?• In the U.S., for example, where there is a SALE OF GOODS, the Uniform

Commercial Code (UCC) is usually the law that applies (with some variations between the states); however

• When the sale is INTERNATIONAL, it’s necessary to determine whether it’s the LAW OF THE EXPORTING COUNTRY or the LAW OF THE IMPORTING COUNTRY that applies.

• The Parties often resolve that question as part of their agreement by using a Choice of Law Clause.

• Sometimes a treaty between two countries may be in force spelling out how the citizens of the countries will be treated when certain types of transactions are in play.

• Conflicts of Law must often be resolved by determining the significance of contacts with regard to one or both states involved in a controversy.

RECOGNITION Recognition comes about by a unilateral declaration and it can be explicit

or implicit – for a state to exist in the international community, it must be recognized by other states

Once recognition is given, it implies that the recognized state or government is entitled to the rights and privileges granted by international law

Recognition of government is different from recognition of a state – a state is recognized when an identifiable government, people and territory first come into existence. If the government later changes, it may not be recognized even though recognition of the state continues

THEORIES FOR WHEN A GOVERNMENT SHOULD BE RECOGNIZED

Declaratory Doctrine: The legal existence of a government happens automatically, by operation of law whenever a government is capable of controlling a territory and its people

Constitutive Doctrine: A government does not truly come into existence until such time as it is recognized by other states and participates in the international arena

MATIMAK TRADING CO. v. KHALILY, et. al.

This Case is summarized on page 13 of your Text. I have also posted the complete case in “Instructor Files” on the Course Home Page

INTERNATIONAL PERSONS

States (Countries) and their subdivisions

International Organizations Businesses Individuals

CLASSIFICATION OF STATES (COUNTRIES)

Independent States are free from the political control of other states (countries) and free to enter into agreements with other international persons

Dependent States have formally surrendered some aspect of their political and governmental functions to another state

Inchoate States lack some attribute required to be treated as a fully independent state; most commonly they lack territory or population

RECOGNITION For a state to exist in the international community, it must be recognized

by other states

Recognition comes about by a unilateral declaration and it can be either explicit or implicit (tacit)

Once given it implies that the recognized state or government is entitled to the rights and privileges granted by international law

Recognition of a government is different from recognition of a state

INDIVIDUALS AND INDIVIDUAL RIGHTS UNDER INTERNATIONAL LAW