The International Legal Environment: Playing By the Rules Chapter 7 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

Presentation on theme: "The International Legal Environment: Playing By the Rules Chapter 7 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved."— Presentation transcript:

1 The International Legal Environment: Playing By the Rules Chapter 7 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

2 Introduction 1.No single, uniform international commercial law governing foreign business transactions exists. 2.International marketers must comply with the laws of each country within which they operate. 3.The legal systems of different countries are so disparate and complex. 4.Is is best to get expert legal advice when doing business in another country.

3 (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) Marxist-Socialist tenets found 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 state. Bases for Legal Systems The bases for the majority of the legal systems of the world include:

4 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) between two companies. Legal disputes can arise in three situations: (1) between governments; (2) between a company and a government; (3) between two companies.

5 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;

6 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. Arbitration 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. Litigation deals with filing a lawsuit to settle commercial disputes.

7 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.

8 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 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.

9 Green Marketing Legislation and Antitrust Issues Green marketing laws focus on environmentally friendly products and on product packaging and its effect on solid waste management. Germany has passed the most stringent green marketing laws that regulate the management and recycling of packaging waste. The European Community, Japan, and many other countries have begun to actively enforce their antitrust laws patterned after those in the United States.

10 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.

11 U.S. Laws Apply in Host Countries The FCPA makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Stiff penalties can be assessed against company officials found guilty of paying a bribe. (1) Foreign Corrupt Practices Act (FCPA) (2) National Security Laws (3) Antitrust Laws U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country which could affect national security of the U.S. Antitrust enforcement protects American consumers from actions that restrict competition.

12 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.