Chapter 13 Business in the Global Legal Environment November 24th 2014 13 1 The Nature of International Law Learning Objectives Compare and contrast the structure of international law with that of domestic law Understand the difference between international law between states and law as it applies to businesses operating internationally Basic of International Law Sovereign State Political entity that governs the affairs of its own territory without being subjected to an outside authority o People who live in a sovereign state are subjected to domestic laws Domestic Law Applicable in the nation in which it is created All laws are not conceived as a vertical structure International Law Law between sovereign states o Best of thought of in a horizontal structure o Rights or Duties for which they are no corresponding legal and enforceable remedies short of unilateral action Illustration of the Horizontal Nature of International Law between Nation States The Vertical Nature of U S Domestic Law Basics of International Law Challenge to laws created in horizontal power structures is the enforcement of violations Many horizontal laws contain provisions that require the parties to submit to a treaty created dispute resolution panel or other neutral tribunal o International Court of Justice ICJ International tribunal located at The Hague Netherlands o Actions only between nation states Laws are applicable only to parties who voluntarily choose to participate in them o Defendant nation must consent to jurisdiction before court can hear the case Nature of Law Businesses are not involved in signing treaties or in creating law that applies between sovereign states Sovereign states themselves have the only power to conduct foreign affairs o In the United States the power rests with the president though Congress also has important roles Businesses are required to abide by their own applicable domestic laws and the laws of the foreign country in which they operate Nature of Law Choice of Forum Parties can agree as to location where any suits are brought Choice of law clause Contractual provision that specifies which law and jurisdiction will apply to disputes arising under the contract Convention on the Recognition and Enforcement of Foreign Arbitral Awards Treaty that provides for the enforcement of arbitral awards among member states o Member states must have enacted laws providing for such enforcement membership alone does not create such compulsion The Horizontal and Vertical Nature of Contract Relationships in the Global Legal Environment
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