International Business Law Prof. M.E. Storme 2013-2014

SOURCES international law v. international sources

  Distinction: Rules of international origin Rules of international public law (

ius gentium

) International public law distinguished from: - (national) public law (constitutional, administrative, criminal, tax, ...) - private law including « international private law »

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SOURCES the international legal order (ius gentium)

Classic view: international legal order as legal order between states and/or international organisations / dualism Nuance 1: private organisations as players; access of private parties to international organisations (incl. courts) Nuance 2: direct effect of rules of international law in the internal (national) legal order (if accepted by national constitutional law)

SOURCES sources of international public law

 (Formal) sources of international public law (ius gentium): Treaties Customary law, general principles of law Decisions of international organisations Soft law

SOURCES Treaties (categories)

parties: bilateral, multilateral domain: commerce, war & peace, diplomatic relations, foreigners ...

legal form: traité-convention (mutual obligations) / traité-loi (introducing legal rules).

Some important types: * FNC (friendship navigation commerce); free trade zone or economic union, customs, ...

* founding international organisations * investment treaties, state loans * judicial cooperation (e.g. extradition, evidence) * « demarcation » e.g. double taxation avoidance treaties; jurisdiction and enforcement; conflict of law rules * unification of law

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SOURCES Treaties: unification of law

Domain: either limited to transnational relationships (international sales, international transport, ...) or also applicable to domestic ones (e.g. bills of exchange) Sometimes different versions (creating confusion) How to interpret: General rules in the Vienna Convention in the Law of Treaties In many conventions a clause demanding autonomous interpretation (eg art. 7 CISG, see Ch. 4) usually no institution with the authority to give a uniform interpretation exceptions: Benelux Court, Court of Justice EU, OHADA Common Court (Abidjan), etc.

exchange of information (Lugano Treaty, CLOUT and CISG Digest, …)

SOURCES Some substantive concepts

  Standards of treatment: minimum standard or equitable treatment equivalent (« national ») treatment MFN (most favoured nation) clause – with the possible exception of « preferential treatment » Sanctions: determined by treaty provisions customary law: prohibition of boycott (unless an obligation to boycott is imposed) (in practice business parties may be caught bewteen conflicting policies imposing boycot c.q. prohibiting to take part in it)

SOURCES Treaties: effects

 Effects in the international legal order: international liability of states international jurisdiction (i.a. Permanent Court of Arbitration) possibly sanctions

SOURCES Treaties: effects

 Effects in the domestic / national legal order, before the domestic courts (so-called « direct effect »). Conditions determined by national constitutional law, usually the following: - either implemented or directly applicable by virtue of another rule (adde: doctrine of (vertical) « direct effect » of EU-Directives) - content of the rule must be sufficiently precise and unconditional to be applied without further measures of implementation (self-executing) (NB. This is a question which also arises within a legal order, whether a rule is self-executing or not) Examples in EU (member st. Legal order): many rules in EU-Treaties. Not: GATT

SOURCES International customary law

 Conditions objective element: (widespread) general practice opinio iuris : accepted as law Often disputed ! Sometimes extended to « general principles of law » as a new kind of natural law  Importance limited in the field of international economic law more important in other fields (rights & immunities of states; war & peace; human rights (aspects of), …)

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SOURCES Decisions of internat.organis.

 Sometimes binding: - Decisions concerning the internal operation of an IO - Binding force provided by treaty (see supra on the conditions of direct effect) - e.g. resolutions under Ch. VII UN Charter (Security council). According to art. 103 UN Charter priority over any other rule (thus even ECHR).

- e.g. decisions of EU institutions within their competence (as to direct effect, instruments differ – regulations, directives, decisions, ...) If not binding: = soft law

SOURCES - « Soft law »

  Types: non-binding decisions of International Organisations non-binding treaties (gentleman’s agreements) codes of conduct; recommendations; ‘principles’ Still softer: legislative guides, … The ILC (international law commission – expert group of the UN) has prepared many drafts (treaties, articles, principles) – some have been enacted as treaties (Possible) effects: not legally binding; political consequences; moral effects; commercial pressure; de lege ferenda future rules), chosen as rules by the parties (model for

SOURCES The national legal order

   National law includes international public law (and other international sources) as far as « received » (conditions for reception and possible « direct effect » are determined by national constitutional law) National public law and private law may have sources of international origin (eg human rights, uniform laws, ...) Application of foreign national law in transnational relationships ? Distinction between public law and private law < next slides

SOURCES Effects of national / foreign public law

   Public law includes: administrative law, tax law, criminal law, competition law and other economic public law (e.g. import & export regulation, valuta exchange regulation; supervision of financial institutions and markets, expropriation, ...) Starting point: each country applies only its own public law according to its own criteria of applicability application is usually territorial, sometimes extraterritorial (e.g. taxes, competition,…). In how far accepted by international law ?

demarcation by treaties (e.g. double tax avoiding treaties; criminal jurisdiction, etc.) Exceptions (states applying foreign public law): cooperation treaties in matters of public law, e.g. assistance in enforcing criminal sanctions, collecting taxes, extradition, …

SOURCES The (national) ’international private law’

 Private law = property, contract, tort, restitution, company law, trust, intellectual property, ….

 Application of private law in transnational relationships is determined by rules of « IPL ». Basically 2 types of rules of IPL: conflict rules (national or uniform) substantive rules of IPL (mostly uniform rules) (often applied only after the conflict rule) See topic 3.

PLAYERS States as rule-makers

  State as legislator / rulemaker (government) direct (national sources of national law) creating international sources: concluding treaties, etc. ratifying and implementing international sources (incl. uniform law) founding of, and taking part in international organisations State as party to conventions of international public law engaging itself in obligations (e.g. commodity agreements, bilateral or multilateral trade agreements, ...)

States as trade partners

     Purpose: contracts to obtain or sell goods an services for use by the government of by its citizens Methods: directly as contracting partner or through state companies or mixed enterprises / joint venture (many gradations) Regulation of the internationale trade (s. further, e.g. public procurement opened to foreign business) State as contracting party: corruption risk; international rules to fight corruption esp. on the active side. I.a. UNCAC (UN Convention against corruption, in force 2005) State as contracting party: determine the applicable law(s)

States as trade partners

 UNCAC (UN Convention against corruption, in force 2005)

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States as trade partners UNCAC

UNCAC (UN Convention against corruption, in force 2005) Ch. 2: preventive measures (i.a. anti-corruption bodies, recruitment principles, codes of conduct for public officials, appropriate system of public procurement, money-laundering prevention, Ch. 3: criminalization (bribery of officials, diversion of property by public official, trading in influence, abuse of functions, bribery in private sector, laundering of proceeds of crime, obstruction of justice, etc.

Ch. 3: law enforcement: prosecution; freezing seizure and confiscation, compensation for damage, protection of witnesses etc., overcoming bank secrecy, ...) Ch. 4 international cooperation (extradition, legal assistance, etc.) Ch. 5 Asset recovery; .....

States as trade partners

  Anti-Corruption Policy: Application of the UNCAC: i.a. the EU Transparency Directive and Accounting Directive impose disclosure of payments to authorities - in the US: Foreign Corrupt Practices Act (FCPA)  Companies are expected to take their responsibility when doing business with partners that may engage in corrupt behaviour: - There is a OECD Convention on Combating Bribery of Foreign Public Officials in International Business - The ICC (international chamber of commerce) has a code of “Rules on Combating Corruption” and proposes a model anti-corruption clause to be inserted in contracts

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States - immunities

Immunity from jurisdiction for foreign states before national courts Starting point: immunity, unless waived Many restrictions (national law, treaties). In the US: FSIA (Foreign Sovereign Immunities Act 1976, am. 2008) with exceptions in § 1605 ff, mainly: commercial activity, tort committed in the US, expropriation in violation of international law, terrorism Compare British State Immunities Act 1976/1978 Result: distinguish acta iure imperii / iure gestionis 11 June 1903); not every «’act of state’ is immune.

(already Belgian Cass. Jurisdictional immunity also covers foreign torts (ICJ 3 feb 2012 Germany v. Italy on acts committed by German soldiers in Italy in WW II) Attempt at harmonisation: UN Convention on Jurisdictional immunities of states and their property 2004 (not in force yet, but cited in ECtHR 29 juin 2011 Sabeh El Leil as customary law) In general not contrary to art. 6 ECHR if there is no immunity before domestic courts (see ECtHR in McElhinney, in Fogarty, in Al-Adsani).

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States - immunities

Immunity from enforcement for foreign states Starting point: immunity Result: immunity for assets used by the public service (s. eg art. 55 New York Arbitration Convention) Cass.B. set immunity aside in 3 cases because of lack of effective remedy (art. 13 ECHR). Idem Cass.Fr.

- In the Argentina debt cases, a US Court allowed post judgment discovery of Argentinian assets in the US held by third parties (banks). Compare the ‘ assimilating certain entities to the state itself (eg possibly a central bank). Argentina filed a complaint with the ICJ (international court of justice) alter ego ’ doctrine

States - sovereignty

   Starting point of the international public law: sovereignty also regarding the economic order; equality of rights under international law, also in relation to (participation in) international trade Many international treaties provide benefits for « developing countries » (further benefits for LLDC’s, least developed countries) Disputed « right » to development and « duty » of solidarity (soft law ?)

International organisations

 Universal organisations (in principle open for all states) GATT, now WTO (1994), with a General Council and separate Councils for GATT, GATS, TRIPS UNO, with General Assembly, Security council, EcoSoc Uncitral (international trade law): treaties and model laws Unctad (trade & development): granting developing countries access to the world economy Unidroit: create uniform law (mostly private law) Hague conference: unification of IPL  Restricted organisations, i.a. OECD, OPEC etc.

International organisations

   Free trade organisations Types: free trade zone / customs union / common market / monetary union Examples: EU EFTA, EEA NAFTA, CAFTA (Central America), Mercosur ASEAN / SAARC (SAFTA) Possibly CETA (Canada - Europe) COMESA (East & Southern Africa), …

PLAYERS - NGO’s

  Private organisations: not subjects of international public law, but governed by national law (although sometimes involved in the activities of I.O.’s) Some influential NGO’s : ICC: for standard contracts and uniform rules; Court of arbitration (organising arbitral tribunals) International Accounting Standards Board (IASB), setting the IFRS (International Financial Reporting Standards) - World economic forum Davos Comité maritime international: maritime transport conventions Institut de droit international: tries to « codify » international public law, …..

ICANN = California corporation (internet corporation for assigned names and numbers), with a Governmen,tal advicory committee (111 countries)  Multinational enterprises: sometimes conclude contracts « under international law » (with states or IO’s) instead of under national law.