UBI-GM-Presentation07.050112-law pps

Chapter Outline• Basis for legal systems • Common and code law • Other systems: Marxist, Islamic • Jurisdiction in international legal disputes • International dispute resolution • Conci

The International Legal Environment

Chapter 7

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc All rights reserved.

Chapter Outline

• Basis for legal systems

• Common and code law

• Other systems: Marxist, Islamic

• Jurisdiction in international legal disputes

• International dispute resolution

• Conciliation, arbitration, litigation

• Intellectual Property rights

• Counterfitting/Piracy Inadequate protection

• Prior use vs registration International conven’s

• Commercial law within countries

• Marketing laws, green market legislation, antitrust

• US Laws with extraterritorial application

• Cyberlaw: unresolved issues

• Cybersquatters, taxes, jurisdiction

• Basis for legal systems

• Common and code law

• Other systems: Marxist, Islamic

• Jurisdiction in international legal disputes

• International dispute resolution

• Conciliation, arbitration, litigation

• Intellectual Property rights

• Counterfitting/Piracy Inadequate protection

• Prior use vs registration International conven’s

• Commercial law within countries

• Marketing laws, green market legislation, antitrust

• US Laws with extraterritorial application

• Cyberlaw: unresolved issues

• Cybersquatters, taxes, jurisdiction

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc All rights reserved.

Wal-mart’s Pajama Caper

• US embargo forbidding US Businesses to trade with Cuba

• Wal-mart selling Cuban-made pajamas in Canada

• Conflict between US and Canadian law

•US $ 1,0m vs CDN $ 1,2 m fines

• Wal-mart resumed selling the pajamas

• Wal-mart settled with US govt.

Issue of extraterritoriality not resolved

Chapter Learning Objectives

1 The four heritages of today’s legal systems

2 The important factors in jurisdiction of legal

disputes

2 The important factors in jurisdiction of legal

disputes

3 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

counterfeiting

Chapter Learning Objectives

5 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

2 International marketers

must comply with the laws of each country within which they operate

3 The legal systems of

different countries are

disparate and complex

3 The legal systems of

different countries are

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 France, Germany, most of Europe, Japan 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 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 state

Marxist-Prevailing World Legal Systems

The bases for the majority of the legal systems of the world include:

Common and Code Law

Under code law, the legal system is generallydivided into three separate codes:

(1) Commercial code(2) Civil code, and (3) Criminal code

Under 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 law

Islamic 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 casinos

Marxist-Socialist Tenets

• With the collapse of communism, most of the former eastern bloc countries are developing a commercial legal system in conformance with EU practice to engage in international commerce

• Russia is a case apart

• The Czech Republic and Poland revised and

reinstituted pre–World War II commercial legal codes

• 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 nascent

Jurisdiction 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 companies

Legal disputes can arise in three situations:

(1) between governments,

(2) between a company and a government,

(3) and between two companies

Jurisdiction 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 where the provisions of the contract were

performed

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 where the provisions of the contract were

performed

International Dispute Resolution

International disputes can be resolved by:

• Conciliation (also known as mediation) is a nonbinding agreement between

parties to resolve disputes by asking a third party to mediate differences Conciliation sessions are private and all conferences between parties and the mediator are confidential

• The arbitration procedure calls for the parties involved to select a

disinterested and informed party or parties as referee to determine the merits

of the case and make a judgment that both parties agree to honor In most countries, decisions reached in formal arbitration are enforceable under the law

• Litigation deals with filing a lawsuit to settle commercial disputes Lawsuits

should be avoided for many reasons including cost, frustrating delays, and extended aggravation, and fear of creating a poor image, damaging public relations, fear of unfair treatment in a foreign court

Commercial and Marketing Laws

• When doing business in more than one country, a firm must comply with different marketing laws

• All countries have laws regulating marketing activities

in promotion, product development, labeling, pricing, and distribution channels

• In Germany and Austria, premium offers, free gifts, or coupons are considered as cash discounts and are

Intellectual Property Rights,

Counterfeiting and Piracy

• Firms spend millions of dollars establishing brand

names or trademarks to symbolize quality and design only to be counterfeited and pirated

• Piracy and counterfeiting leads to lost sales from the unauthorized use of U.S patents, trademarks, and

copyrights which amount to about $60 billion annually

as well as lost jobs

• Counterfeited pharmaceutical drugs can also lead to death and bad publicity

• There is inadequate protection from products being counterfeited or pirated as many countries do not

recognize trademarks and patents registered in other countries

Intellectual Property Rights,

Counterfeiting and Piracy

• In the United States, a common-law country, ownership

of intellectual property rights is established by prior use, but this must be proved

• In many code-law countries, ownership is established

by registration rather than by prior use

• For example, a trademark in Jordan belongs to whoever registers it first in Jordan so there are “McDonald’s”

restaurants, “Microsoft” software, and “Safeway”

groceries all legally belonging to a Jordanian

International Conventions

The three major international conventions include:

• The Paris Convention for the Protection of Industrial Property, commonly referred to as the Paris Convention, includes the United States and

100 other countries

• The Inter-American Convention includes most

of the Latin American nations and the United States

• The Madrid Arrangement, which established the Bureau for International Registration of

Trademarks, includes 26 European countries

• Many countries (but not all) participate in international

conventions designed for mutual recognition and protection of intellectual property rights

• Many countries (but not all) participate in international

conventions designed for mutual recognition and protection of intellectual property rights

Patent Law: The U.S versus Japan

application date issued

Green Marketing Legislation and Antitrust Issues

industrial pollution, hazardous waste disposal and rampant deforestation

packaging and its effect on solid waste management

management and recycling of packaging waste

enforce their antitrust laws patterned after those in the United States

which lead to less competition and higher prices for consumers

U.S Laws Apply in Host Countries

• Leaving the boundaries of a home country does not exempt a business from home-country laws

• What is illegal for an American business at home can also be illegal by U.S law in foreign jurisdictions for the firm, its

subsidiaries, and licensees of U.S technology

U.S Laws that apply in host countries include:

(1) Foreign Corrupt Practices Act (FCPA)

(2) National Security Laws

(3) Antitrust Laws

U.S Laws that apply in host countries include:

(1) Foreign Corrupt Practices Act (FCPA)

(2) National Security Laws

(3) Antitrust Laws

U.S Laws Apply in Host Countries

or political parties

(1) Foreign Corrupt Practices Act (FCPA)

(2) National Security Laws

(3) Antitrust Laws

technology cannot sell a product to a country which could affect national security of the U.S

to communist countries that were viewed as major threats to U.S security

competition

any privately imposed restrictions to compete on merit

Cyberlaw: Unresolved Issues

• Existing internet law is vague or does not completely cover such issues as the protection of domain names, taxes,

jurisdiction in cross-border transactions, and contractual

issues

• The European Union, the U.S and many other countries are drafting legislation to address the myriad legal questions not clearly addressed by current law

• Laws being considered deal with Cybersquatters—those who buy and register descriptive nouns, geographic names, ethnic groups, pharmaceutical substances and other similar

descriptors and hold them until they are sold at an inflated price

• Another issue in e-commerce concerns the collection of

taxes on sale of products, i.e., when taxes should be

collected, where they should be collected, and by whom, are all issues under consideration by countries around the world