International Business Law Sources of the international business law Mgr. Tomáš Gongol, Ph.D. International Business Law PEM/NPPMO „International business activities“ commercial transaction –the object of which is located in a foreign jurisdiction –and where the parties are often, although not necessarily, located in different jurisdictions • State A (Hungary) State B (Czech rep.) Legal regulation specialities of IBL (International Business Law) • Globally there is no uniform legal form ( just partial unification) • • • • There is need to adjust dissimilarities which international business has by special rules of national law • • • Some rules are included in international agreements or EU legislation Dissmililarities – specialities? Who participate in unification of IBL… •International institute for the unification of private law (UNIDROIT) - an independent intergovernmental organisation with seat in Rome - aim – unification of private law – especially business law §E.g. International business law principle § •United nations commision on international trade law (UNCITRAL) - aim– elimination of barriers to trade International public law (States, International Organizations) EU law 1. Institutions of EU (acquis communitaire) 2. States 3. States EU member state law (Portugal, Czech rep.) Public law Private law International business law is the mixture of national law and public international law and EU law Sources of IBL Fundamental: oInternational agreements oSecondary law of EU institutions oNational (domestic) law §Legislation– continental law system §+ precedent– Anglo-American law system Supporting: Created in practise in international business oLex mercatoria (Merchant law) §International usages and customs common to mechants §Form and sample agreements §Trading conditions §Delivery conditions §Principle of international agreements http://knihovnakasnice.files.webk.cz/images/book.jpg Lex mercatoria ?? Překládá se? International contracts •Multilateral oEstablishing international institutions §United Nations, Bretten wood system oRegulating business aspects §Elimination of trade barriers – customs and other foreign exhange measures , for example GATT oCreating territorial units with specific regime of international business §Free trade area, customs union, common market , Internal single market oUnifying procedural and substantive law rules §International contract of sale area, international transport area, immaterial assets area, arbitration area •Bilateral oContracts on mutual support and protection of investments oContracts on prevention of double taxation European Community regulations Conflict and a procedural rule oRome I – regulation on the applicable law for contractual obligations oRome II – regulation on the applicable law for non-contractual obligations oBrussels I – regulation on affiliation, recognition and enforcement of judgments with regards to commercial as well as individual issues Other legal regulation about international business, e.g.: oRegulation establishing the Community Custome Code oVarious directives on import of goods to member countries http://t3.gstatic.com/images?q=tbn:ANd9GcRF0zP-vF-6w4fjMkN38ZPhJ0WFr65O2PWWxe67-KbB794QaWDyFA Supporting legal measures created in practise •Remove differences between rules of law •Not generally applicable rules •Can be applied only if one side of an agreement make them part of a contract i.e. Their application depends on will of participants Types: §Lex mercatoria §International business conventions §Form and model contracts §Trade terms §Commercial terms INCOTERMS §International cotracts principles UNIDROIT §Principles of european contract law Fundamental question: what is the source of law for specific contract? 1.Contracting parties can choose what will be the source for their contract oFreedom of parties is not limited anyhow, they can vote §Rule of law A or rule of law B §Rule of law of another country §non-state international trade rule of law ( e.g. UNIDROIT ) „This contract is governed by the domestic law of __________ (country)“ 2.If parties do not choose the source of their contract then direct rule is applied (if exists) oe.g. Vienna convention on international trade contracts o 3. If parties do not choose the source of their contract and direct rule does not exist then conflict rule will be applied oin EU: Regulation Rome I – on the law applicable in contractual relations volnost stran není při volbě práva omezena, mohou volit - nejsem si jista, ze jsem tuto vetu pochopila spravne.. Tento graf byl puvodne vlozen jak obrazek, ale ja jsem ho radeji vytvorila novy, pro pripad, ze by bylo nutne nektere udaje v rameccich opravit…. Example 2: Contract for Work 1.Choice of law –> legal system of country A, B or C, UNIDROIT rules etc. 2.Regulation Rome I: connecting factor is settlement of maker –> legal system of country B Ordering party (legal entity from country A) Maker (natural person from country B) Maker (natural person from country B) 3. Decision of the judge: fair decisions -> e.g. Legal system of country A International treaties with direct effect • result of law unification • no needs to choose it in contract • only some fields of interest, i.e. –sale of goods –international transport Example 1: Contract of sale Direct rule existence : Vienna convention (1980) Seller (legal entity from country A) Buyer (natural person from country B) Aplication of Vienna convention conditions: Condition 1: Seller and buyer are legal entities from different countries Condition 2: Countries A and B are contrating countries of Vienna convention Condition 3: The subject of purchase is merchandise (good) => NO NEED TO DETERMINE or CHOOSE APPLICABLE LAW, Vienna convention will be applicated Example There was an public tender for the construction of plant for the production of telephone cables. Ordering party (client) approved joint proposal of the Polish and Belgian companies. Then a contract was signed. According to the contract, Polish company is obliged to supply the building material and machinery. Belgian company has to provide own technological equipment, install it and also train the staff of the client. Questions: 1.What law would be the most suitable in that case providing that contracting parts did not choose applicable law and potentional conflict should be addressed to a court in the Czech republic? 2.By what legal rules should domestic court proceed? How to resolve dispute • There are a few modalities on how to resolve disputes between businessmen: –civil procedure before state courts –arbitration, including international arbitration –alternative dispute resolution as conciliation, mediation, etc. • Parties involved either try to find a way of resolving disputes before the problem arised or they let this situation unnoticed. National courts • Question: National court of which country will decide? –EU: Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters • • National Courts are called up to process and decide litigations and other cases involved in their competence according to civil procedures. International arbitration •Judicial systems do not allow disputing parties to choose their own judges. •In contrast, arbitration offers the parties the unique opportunity to designate persons of their choice as independent arbitrators. •Arbitration is a simplified version of a trial and arbitration hearings usually lasting only a few hours, and the opinions are not on public record. •Arbitration award is widely enforceable •There is a need of including arbitration clause in contract –i.e.: "All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules." Alternative Dispute Resolution - ADR increases the parties' opportunities to resolve disputes prior to or during the use of formal court procedures and litigation (which can be very costly and time-consuming). - It includes the use of a neutral individual such as a mediator who can assist disputing parties in resolving their disagreements. - Problem: if parties don‘t want to make a peace agreement, there is no power to enforce them Research in Czech Republic COURSE OBJECTIVES Within this research only 10% of participants have responded that they had taken advantage of arbitration and many of them do not even have correct information about it Summary Question 1 –What will be the legal source of our contract? •International treaty •Legal order of certain state •Private rules Question 2 –Who will decide our dispute •National court •Arbitration •Conciliator, mediator