Outline of Legal framework for international business transactions

a. International Conflicts of law

i. Private International Law : The use of domestic choice of law rules to resolve issues of conflicts of laws and recognition and enforcement of foreign judgments. It is a domestic law field referring to a domestic court applying domestic rules to resolve choice of what laws between 2+ nations.

1. Choice of law rules are different from substantive law rules

a. Examples: UCC 1-105 and Restatement Secs. 6 & 188 as choice-of-law rules and UCC 2-207 as substantive law rules.

2. Choice of law rules are different in different countries.

a. In the US, choice-of-law rules are usually specified in statute governing a particular transaction. E.g., UCC 1-105 for sales transactions.

b. If no statutes, then case law or Restatements on Conflicts of Law. The Factors that a domestic court weighs are on p. 24

ii. Harmonization of Private International Law . To harmonize private international law rules, the Hague Conference on Private International Law was convened by the Netherlands government in 1893. It became a permanent intergovernmental organization in 1955 under a statute adopted by a treaty. Has 72 members.

1. Has conventions on choice of laws for many subject areas. E.g., the Convention on the Law Applicable to International Sale of Goods

b. Substantive rules of law that apply to a particular transaction:

i. National laws as chosen by private international law rules

1. Private international law rules are important only if national laws differ

ii. Supranational laws. Supranational laws could replace national laws, making choice of law rules inconsequential.

1. Public international law- international Treaties e.g. CISG.

a. Once public international law is entered into, it is part of the domestic law of a country .

b. In the US, Treaties are federal law. International laws will prevail if they conflict with state laws.

2. Regional Supranational law e.g. EU

3. Uniform Code e.g. Incoterms by ICC

a. Promulgated by private and nongovernmental bodies

b. Have no force of law unless incorporated by contract

4. These supranational laws are sometimes called the New Lex Mercatoria (“New Law Merchant” ). Before there were nation-states, IBT in Europe was governed by Lex Mercatoria , a special body of Common law applicable to business transactions among European merchants. The ” New Lex Mercatoria ” makes the law governing IBT truly international. (p.25)

c. Legal institutions and forums that create and interpret the law

i. UNCITRAL§-United Nations Commission on International trade law

1. Established in 1966; composed of 60 UN member states. Membership represents various geographic regions as well as the principal legal and economic systems.

2. Created multilateral conventions or treaties on international commerce that have the force of law such as the CISG (Convention on Contracts for the International Sales of Goods) and the “Hamburg Rules” (Convention on the Carriage of Goods by Sea) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards .

3. These Conventions are formally adopted by the UN, and then open for countries to sign and ratify.

4. The UNCITRAL is subject to UN pressure, and sensitive to issues to developing nations.

ii. UNIDROIT– The International Institute for the Unification of Private Law

1. Established in 1926 as an organ of the League of Nations ; remained as an independent body after the League of Nations ‘ demise. Has some overlapping goals with UNCITRAL.

2. Principal drafters of UNIDROIT treaties are Western European nations; many developing countries are reluctant to adopt them.

3. Has shifted to non-binding instruments like the Principles of International Commercial Contracts, the world’s restatement of contract law

iii. ICC-International Chamber of Commerce

1. A private nonprofit organization; composed of national chambers of commerce, trade and business associations, and companies from about 130 countries.

2. Represents interests of private business and industry.

3. Creates uniform rules and standards for international business by promulgating nonbinding rules that can be adopted by contract.

a. Incoterms

b. UCP (Uniform Customs and Practice for Documentary Credits)

4. Runs a court of arbitration

III. Problem 1-6 (p. 31)

a. Public law: law regulating rights affecting the public as a whole, such as antitrust, securities, and customs.

b. Private law: law regulating rights of private parties, such as contracts, torts, and property.

c. An international sale of goods transaction could involve:

i. Private international law analysis to determine choice of law.

ii. CISG-public international law that deals with a private law issue.

iii. If CISG doesn’t apply, then the contract law of either country A or B will apply. Private law.

iv. Customs and export compliance laws are domestic laws dealing with public law issues.

IV. Problem 1-7 (p. 33)

a. Why bother with multiple sources of international law? Why don’t just opt out of international law?

i. May not be in the best interest of clients. US lawyers are more comfortable with US laws such as the UCC. But US laws may not always be the best for US clients.

ii. Example: the UCC has implied warranties. If Argentine law doesn’t have implied warranties, it will be better for a US seller to choose Argentine law as the governing law.

b. So do lawyers have an ethical duty to understand IBT?

i. Probably. Professor Brand suggests that automatically opting out of CISG in every case in favor of domestic law is a violation of Model Rules of Professional Responsibility 1.1.

V. Problem 1-8 (p. 34)

a. This problem is about the option of parties to opt out of the CISG (UN Convention on Contracts for the International Sale of Goods)

b. CSG Article 6 says that the parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.

c. HOWEVER, you cannot just say the “law of X” will apply without explicitly saying that the CSG will not. Based on the Supremacy clause, the CSG is automatically applied and overrides the “law of x”

d. How do you tell if a treaty is self-executing (doesn’t it need an additional implementing legislation from Congress to take effect)?

i. Look at the intent of the parties to the convention and also the language used to see if it will be self-executing.

ii. Congress has not passed a law to implement the CSG because it is self executing.

iii. There is no clear-cut rule for deciding whether a treaty is self-executing. It is usually decided based on some desired outcome.

Author: admin

Author: admin

Mentioned in these Entries

Common law, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Hague Conference on Private International Law, International trade law, League of Nations, Lex Mercatoria, New Lex Mercatoria, Private International Law, Treaties, country.