Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29The International Legal Environment: Playing By the RulesChapter 7McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.Chapter Learning Objectives1. The four heritages of today’s legal systems1. The four heritages of today’s legal systems2. The important factors in jurisdiction of legal disputes2. The important factors in jurisdiction of legal disputes3. Issues associated with jurisdiction of legal disputes and the various methods of dispute resolution 3. Issues associated with jurisdiction of legal disputes and the various methods of dispute resolution 4. The unique problems of protecting intellectual property rights internationally. Ways to protect against piracy and counterfeiting 4. The unique problems of protecting intellectual property rights internationally. Ways to protect against piracy and counterfeitingChapter Learning Objectives5. The legal differences between countries and how the differences can affect international marketing plans 5. The legal differences between countries and how the differences can affect international marketing plans 6. The different ways U.S. laws can be applied to U.S. companies operating outside the U.S.6. The different ways U.S. laws can be applied to U.S. companies operating outside the U.S.7. The many issues of evolving cyberlaw 7. The many issues of evolving cyberlawIntroduction1. No single, uniform international commercial law governing foreign business transactions exists1. No single, uniform international commercial law governing foreign business transactions exists2. International marketers must comply with the laws of each country within which it operate2. International marketers must comply with the laws of each country within which it operate3. The legal systems of different countries are so disparate and complex 3. The legal systems of different countries are so disparate and complex 4. Best to get expert legal advice when doing business in another country 4. Best to get expert legal advice when doing business in another country(1) Common law, derived from English law and found in England, the United States, Canada, and other countries once under English influence(2) Civil or code law, derived from Roman law and found in Germany, Japan, France, and in non-Islamic and non- Marxist countries(3) Islamic law, derived from the interpretation of the Koran and found in Pakistan, Iran, Saudi Arabia, and other Islamic states(4) A commercial legal system in the Marxist-socialist economies of Russia and the republics of the former Soviet Union, Eastern Europe, China, whose legal system is based on the economic, political, and social policies of the stateBases for Legal SystemsThe bases for the majority of the legal systems of the world include:The bases for the majority of the legal systems of the world include:Common and Code LawUnder code law, the legal system is generallydivided into three separate codes: (1) Commercial code(2) Civil code, and (3) Criminal codeUnder code law, the legal system is generallydivided into three separate codes: (1) Commercial code(2) Civil code, and (3) Criminal code•The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings•Common law seeks “interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts” •Code law is based on an all-inclusive system of written rules (codes) of lawIslamic Law•The Koran forms the basis for the Shari’ah (Islamic law)•It encompasses religious duties and obligations and patterns of social and economic behavior for all individuals•It includes issues such as property rights, economic decision making, and types of economic freedom •The overriding objective of the Islamic system is social justice•Islamic law prohibits the payment of interest •Islamic doctrine advocates risk sharing, individuals’ rights and duties, property rights, and the sanctity of contract •Emphasis placed on the ethical, moral, social, and religious dimensions to enhance equality and fairness for the good of society •Prohibits investment in activities that violate the Shari’ah, e.g., business dealing with alcohol, gambling, and casinosMarxist-Socialist Tenets•With the collapse of communism, the former eastern bloc countries have developed a commercial legal system to engage in international commerce •The Czech Republic and Poland revised and reinstituted pre–World War II commercial legal codesMarxist-Socialist Tenets•USSR and China have had to build from scratch an entire commercial legal system with respect to private ownership, contracts, due process, and other legal mechanisms•China and Russia differ as Russia is moving toward a democratic system, whereas China is attempting to activate a private sector within a multi-component or mixed economy, but their legal systems are still nascentJurisdiction in International Legal Disputes•Determining whose legal system has jurisdiction when a commercial dispute arises is another problem of international marketing.•The World Court at The Hague and the International Court of Justice resolve international disputes between sovereign nations of the world rather than between private citizens.Legal disputes can arise in three situations: (1) between governments, (2) between a company and a government,(3) and between two companiesLegal disputes can arise in three situations: (1) between governments, (2) between a company and a government,(3) and between two companiesJurisdiction in International Legal Disputes•The World Court can adjudicate disputes between governments, but disputes in situations 2 and 3 must be handled in the courts of the country of one of the parties involved or through arbitration.•When international commercial disputes must be settled under the laws of one of the countries concerned, the paramount question in a dispute is: Which law governs? Jurisdiction is generally determined in one of three ways: (1) on the basis of jurisdictional clauses included in contracts (2) on the basis of where a contract was entered into, or (3) on the basis of