International Law and Business

A Global Introduction

Bart Wernaart

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9789001871574
• eBook ISBN: 9781000421026
• Topic: Business
• Subtopic: Business generale
• Index: Business

This book introduces law in the context of international business. The basics of law are explored using a clear comparative methodology. International and regional economic institutions are discussed, next to the fundaments of private law. These include contract law, liability law, labour law, company law, privacy law, intellectual property law and international private law. The book goes beyond the usual focus on Western legal systems and uses examples from all over the world to provide students with comprehensive knowledge of business law. It is set up rather broadly, so that it can be used by teachers throughout their entire curriculum. Each chapter ends with a clear summary, and practice questions. Due to its colourful cases, this book is accessible and fun to read.

PART 1
Introduction and methods

In this part, we will introduce international law as well as comparative methods in law in an international business context.

In chapter one, we will introduce the main characteristics of law and explain the main features of legal terminology. Also, we will portray the origin and sources of law.

In chapter two, we will explore comparative methods which can be used to compare different legal systems. This is done on a macro level, in which the legal families of the world are discussed, and on a micro level, in which particular phenomenon in law are compared.

1
What is law and where can we find it?

1.1 The organization of just behaviour

1.2 The meaning of just behaviour

1.3 The origin of law

1.4 Legal sources

Summary

Practice questions

In this chapter, we will discuss how law is used in the organization of just behaviour. To this end, we will focus on the relations that are regulated by law, and the different branches of law. Also the meaning of just behaviour will be explained. We will discuss the three elements of ‘just’, that is: justice, opportuness and legal certainty. Furthermore, the origin of law will be explored. In this light, two views on law are explained: natural law and positivist law. Last, the sources of law that are generally used around the world are discussed.

1.1 The organization of just behaviour

In everyday life we are engaged in legal issues and act in compliance with many legally binding rules, as we might see in example 1.1. Such rules are necessary to organize just behaviour in a given society. Or in other words: to regulate what is just to avoid chaos. Law is a tool to create such rules.

Law organizes just behaviour in a society.

Law

Imagine a country in which people could choose randomly their side of the road: one would risk his life when participating in traffic, and probably the one with the biggest or strongest cars will dictate what happens on the road. To avoid traffic chaos, law defines how traffic participants should use the roads. One of these legal rules is the obligation to use a particular side of the rode. Usually, such rules are applicable in a given society. Such a society may have many different shapes and sizes. In the example, the society is a state. However, there are also other forms, such as a small group of people, a city, a state, a region, or sometimes even the entire world. On all these levels, law can be used to organize just behaviour.

EXAMPLE 1.1 Driving on the right side of the road

Article 13 of the Malaysian Highway Code (LN 165/1959) stipulates that: ‘Vehicles should at all times be driven on the left-hand lane of the road, the slower the speed the further left the lane of the road.’ The Malaysian Highway Code stipulates that all traffic participants have to use the left side of the road. This is historically determined due to the fact that Malaysia was a former colony of Great Britain. In Great Britain, people traditionally use the left side of the road. This can be traced back to practical considerations in medieval times: a majority of people is right handed, and when driving your horse using the left side of the road, one can easily draw a sword with their sword arm, or – in more peaceful tidings – offer a greeting to passengers with the ‘right’ hand. In Canada, also a former British colony, the left side of the road was originally used as well. However, the Canadian changed their laws to facilitate smooth traffic flow (and trading) between Canada and the U.S.A., for in the latter country, the right side of the road is used.

To further clarify the concept of law, it is important to explain in what manner law organizes just behaviour, what relations are organized by law, and what different kind of branches of law we distinguish. This is done in the remainder of this section below.

1.1.1 Substantive law and formal law

Law organizes just behaviour by applying two different kinds of rules: rules on content (substantive law) and rules to maintain this content (formal law).

Substantive law

To organize just behaviour in a society we first need standards that define the ‘rules of the game’ that people are required to obey. These rules are about the content of what people are supposed to do, or not to do, such as driving on the right side of the road (and not on the wrong side of the road). In legal terms, we refer to these rules as substantive law.

Substantive law

Substantive law is composed of legal rules that define the content of just behaviour.

Formal law

However, such substantive rules in itself are rather pointless when there are no means to maintain these rules. If there are no consequences when substantive law is violated, a society is depending on the good will of the people to obey the law. As lovely as that may seem, there will always be people who will challenge the substantive rules one way or another for various reasons. Therefore, a legislator will need to adopt different kinds of rules next to the substantive rules: formal rules.

Formal law

Formal law is composed of legal rules that maintain substantive law.

In example 1.2, we see an attempt of the Moroccan legislature to introduce a penalty system that aims to better maintain the substantive traffic rules. When a traffic participant risks losing his points when they break a speed limit, there is a stronger urge for this person to obey speed rules compared to the situation in which there are no legal consequences when driving too fast. This urge is probably even more instant when they risk losing their driving licence, paying a fine or ending up in jail. On top of that, the required traffic education when losing a certain amount of points is designed to make people aware of the need to obey traffic rules. The idea is that the speed limits and other traffic rules are better maintained by this penal system. In other words: the penal system includes formal rules in order to maintain the substantive traffic rules.

EXAMPLE 1.2 The Moroccan highway penalty system

In Morocco, traffic incidents are a major problem. To stimulate safer traffic with fewer casualties, the Moroccan legislature adopted a new Highway Code in 2010, with a refined penalty system (Le Nouveau Code de la Route au Maroc, 2010). Each driving licence holds 30 points (or 20, in case of a new licence). One can lose points when offending the traffic laws and regain points in case of good behaviour, such as following education sessions to improve traffic behaviour. Full credits are regained when traffic laws are not offending in 3 years time. Through this system, one might lose the ability to drive. Besides this approach, the more traditional fines and sanctions exist, and in case of grave violations of traffic law, one might even me imprisoned.

FIGURE 1.1 Substantive and formal law

1.1.2 Public law and private law

In this section we discuss which relations are organized by law. Substantive and formal rules are both created to regulate two particular relations within societies: the relation between the government and its citizens, and the relation between citizens. In legal terminology, the law that organizes these relations is called public law and private law respectively.

Public law

Public law

Public law is the law that regulates the relation between a government and its citizens.

Public substantive law

In many societies it is usually the state that oversees the enforcement of the law, and decides when a citizen needs to be punished for not behaving according to its laws. On the one hand, these legal rules authorize a state to interfere when people are misbehaving. Simultaneously, these rules also restrict the power of a state: the state has to act in accordance with its competences laid down in these rules. In public law, we find both substantive and formal rules as we can see in the ‘Moroccan highway penalty system’ example.

In the first place, there are substantive rules in society everyone should comply with (traffic rules). They are adopted for the public wellbeing/good. When one offends such a substantive traffic rule, the state interferes, and punishes the citizen accordingly, in line with the appropriate formal rules. Regulating this relationship between the state and its citizens is one of the purposes of law, and is referred to as public law. The state adopts the substantive law for the benefit of society in general, and acts when one misbehaves, for the sake of society. This means that traffic rules, from a legal perspective, are rules between the individual and society.

Public formal law

In the second place, there are formal rules that regulate the legal procedures that need to be taken into account when a citizen misbehaves. Mostly, a state is not unlimitedly competent in punishing a citizen: formal procedures need to be followed, and evidence should be of a particular quality before a state may interfere in the life of a citizen. In the Moroccan case, the point system defines the ‘rules of the game’ and is not only a way to make citizens act in compliance with the substantive traffic rules. It also restricts the Moroccan authorities in their power: the rules are designed to make it clear under what circumstances a citizen loses or gains points. When these rules are taken into account by the Moroccan authorities, a citizen cannot not be punished randomly.

Private law

There is however also another relation that needs to be ruled by law. That is the relation between citizens.

Private law

Private law is the law that regulates the relation between citizen or those who act as citizens.

It must be noted here that the meaning of ‘citizen’ is mostly understood in a broader way than just an ‘individual’ in the sense of a human being of flesh and blood.

In most legal systems, a company is considered to be an equivalent to an individual in terms of its capacity to legally act. After all, a company is not a government that acts on behalf of the public good. Therefore, private law also regulates the relation between an individual and a company, or between companies.

Occasionally, a government institution may also be considered acting as a citizen. This could be when a parliament orders food for their lunch break. In such cases, they do not act in their capacity as a government institution, but participate in business just as ...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• Foreword
• Part 1 Introduction and methods
• Part 2 International public law
• Part 3 Business law
• Index