A Basic Guide to International Business Law

Harm Wevers

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000036190
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

A Basic Guide to International Business Law is an introduction to those parts of European and international law that are relevant to business. Having read this book, students will come away with a broad understanding of the international rules of law within the EEC, institutional rules of the European Union, international contract law, rules of competition and the four freedoms within the EEC.

The edition includes student friendly features, such as summaries of statements and references to relevant case law, making the book an ideal introduction for those on law and/or business programmes.

1
Introduction to International Private Law and European Law

1.1 Introduction International Private Law

1.2 Introduction to European Law

1.3 Cases

International law is law set up by states and applicable to these states and in most cases their nationals. It is laid down in rules referred to as Treaties, Conventions, Regulations and Declarations. Most states around the world have signed up to several thousand of these rules in which case that state is referred to as a Contracting State of this Treaty or Convention. The effect of signing a Treaty can vary from Treaty to Convention. The states that sign a Treaty or a Convention wish to be bound to this set of rules. Sometimes states reserve the right to determine the effect of this Treaty or this Convention on their state or their nationals at a later point in time.

International law can be divided into International Public Law and International Private Law. International Public Law concerns itself with such issues as the set-up of international institutions (United Nations, European Community, and European Human Rights Court), human rights (European Convention on Human Rights) and the extradiction of nationals from another country to their home country.

International Public Law

International Private Law

The aim of International Private Law is to solve legal problems arising out of different legal systems that apply to international, legal relationships. As every country has its own legal system, so a legal relationship f.e. arising out of a contract of sale may have links with at least two national legal systems. In the event the legal conflict only involves two parties living in the same country, no such choice for a legal system exists. International Private Law provides a set of rules to either decide on the matter, or refer the litigating parties to a national legal system where the answer lies. Basically every country has its own International Private Law, but over the years several Treaties and Regulations have been set up to deal with these legal problems internationally. International Private Law deals with three main issues: jurisdiction in case of litigation between two parties coming from different states (including the possibilities of executing the verdict given by the court of law that has jurisdiction, in the countries of the litigating parties), the law to be applied in case of international litigation between two private parties, and solutions to legal problems arising out of an international legal relationship.

Apart from the developments in the field of International Private Law, the law applying to the Member States of the European Community (EC) has become more voluminous and more important over the years. EC law stands for the EC Treaty and all legislation on which it is based, that binds all Member States of the EC. The European Court of Justice of the EC, an institution based on the EC Treaty, has decided that EC law takes precedence over the laws of the Member States of the EC. This is as a result of the transfer of sovereignty by the Member States to the EC in the fields of administration, legislation and jurisdiction. For that reason the EC is referred to as a supranational organisation. EC law deals with several aspects of International Private Law. In these situations EC law sets aside any provision the law of a Member State might have in this field and other Treaties or Conventions to which the Member State is a contracting party.

International Private Law will be discussed in paragraph 1.1. EC law will be discussed in paragraph 1.2. The subject matter dealt with are the institutions of the EC, the sources of EC law, the European Court of Justice and Art. 234 as an addition to the sources of law. Paragraph 1.3 examines several cases given by the European Court of Justice, each of which deal with the essentials of European Law.

1.1 Introduction International Private Law

International Business Law as a part of International Private Law is a specific field in itself. Until recently every country had its own ‘international private law’. Various treaties to cover larger areas of International Private Law were drawn up to offer some guidance as to the use and development of International Private Law. First, here are some examples of topics with which International Private Law is concerned. Every act or conflict in national private law also has an international component.

International Private Law

Examples

An automobilist living in Germany, causes a traffic accident with an automobilist living in France at a parking lot in Amsterdam (Holland), resulting in causing unbearable psychological damage to the Irish setter owned by the German driver, in crushing a very valuable box of Cuban cigars and smashing a bottle of Scotch whisky. The questions are:

• Does a Dutch court of law have jurisdiction in this case, or should parties turn to an English, German, Irish, Cuban, UK or French court of law?
• What law must be applied to this case?

A Dutch national, living in Enschede (Holland) and who works for a German employer established in Gronau (Germany). At the end of his first year there his employer decides to fire him, for no apparent reason. The relevant questions in this situation are:

• Can a Dutch court of law decide on this conflict between a German employer and a Dutch employee?
• Does Dutch law apply to this individual employment contract?

A seller, established in the UK, delivers 1,500 pair of ladies’ shoes to a buyer who is established in Italy. However, the buyer, despite several reminders, does not pay the price they agreed on. The English seller starts litigation against the Italian buyer, in an attempt to cancel the sales contract and to get back the shoes he delivered. The questions in this case are:

• What court of law has jurisdiction in this case?
• Is English law applicable to the sales contract?
• Is there an international Treaty that might deal with matters such as these?
• In case there is a Treaty, does this supersede English law or not?
• Is it possible for the seller – in one way or another – to declare the sales contract null and void, and if so, what are the effects of this act? Will the shoes be returned by the buyer?

The rules of International Private Law provide answers to such cases by focussing on aspects such as the place of residence of the defendant, the place where the employee usually works, or the place of business of the seller and (sometimes) the nationality of one party.

Most of the questions mentioned in the examples given in this paragraph will be dealt with in Chapter 2 up to and including Chapter 5 that examine the contents of three relevant international Treaties and Regulations.

Three main issues of International Private Law can be derived from the examples mentioned. These main issues are also referred to as the three ‘pillars’ of international private law. Hereafter, the three questions raised will have to be linked with the words ‘main issues’.

Three pillars

Question 1: What court of law has jurisdiction in case of litigation? How is the verdict of the court of law that has jurisdiction executed?

Example

A seller established in Holland, supplies 1,500 kilos of cheese to a buyer, established in Germany. The buyer however, despite several reminders, does not pay the price they agreed on.

What court of law has jurisdiction in this case? A Dutch or a German court of law? In case a Dutch court of law has jurisdiction and gives a verdict, how is the verdict going to be effected i.e. executed in (both Holland and) Germany?

To answer questions like these we are going to use the European Communities Regulation on Jurisdiction and Enforcement of Judgements in Commercial and Civil matters, hereafter referred to as the ‘EEX’. The EEX will be dealt with in Chapter 3.

Question 2: What law is to be applied in order to solve the conflict between the – contracting – parties i.e. the parties in the contract?

Example

A man with the Dutch nationality and at that time living in Groningen (Holland) works in Nigeria for his employer Shell Petroleum. At the end of his first year there his employer decides to fire him, due to the fact that the employee has accepted bribes. Does Dutch law apply to this individual employment contract? Or is it still possible to apply Nigerian law, in case this should prove to be more favourable to the Dutch employee?

The treaty to be used here is the European Communities Convention on the Applicable Law on Contractual Obligations, referred to as ‘ECO’ (sometimes as ‘EVO’) and is dealt with in Chapter 4.

Question 3: Is there a specific treaty that provides an immediate solution to the conflict of the contracting parties? During this course this question will be dealt with by using the contract of sale.

Contracting parties

Example

A seller established in Germany, delivers 500 barrels of beer to a buyer, established in Belgium. The buyer does not pay the price they agreed on, because the beer has gone bad during transport from Offenburg to Bruges. The Belgian buyer wants to cancel the sales contract and to get back the down payment he made.

Is it possible for the buyer to declare the sales contract null and void, and if so, what are the effects of this act?

Since the conditions of an international sales contract have been fulfilled, the treaty to use here is the United Nations Convention on the International Sales of Goods, referred to as ‘CISG’. The CISG is dealt with in Chapter 5.

CISG

Bear in mind that, in this particular case if the answer to Question 1 were to be that a Dutch court of law has jurisdiction, this does not automatically mean that, Dutch law should also be applied as a result of this (answer to Question 2). It might very well be that a Dutch court of law must apply Belgian, French, English or any law other than Dutch law, according to the treaty mentioned by Question 2. Question 1 and Question 2 are on different topics and are to be found in different international rules. The conclusion is that these two questions are not to be connected. The same applies to Question 3, i.e. another international treaty with its own topics, contracting states and results. An answer to a problem raised under Question 3 does not give answers to issues raised under the ...