Lecture 1: Actors & Legal Sources Flashcards
Chapter 1 (45 cards)
What are the three key elements of legal systems?
- LAW AND JURISDICTION = Rules and language
- COURT AND JUDGES = Authority to determine rules and language
- ENFORCEMENT MECHANISMS = Tax, fines, imprisonment etc.
What does law do (functions of legal systems)?
- Prevention of undesirable and promotion of desirable behaviour
- Provision of services
- Redistribution of goods
- Settlement of disputes in a regulated and peaceful manner
Who are the eight key actors in international business law?
- States
- State-run companies
- Supranational organizations
- International organizations
- State groups
- Administrative cooperation groups
- Non-governmental organizations (NGOs)
- Private entities
What is a state (actor)?
Political organizations with the power to impose and enforce rules over a population within a territory
- Regulate and participate in trade.
- E.g. Denmark
What is state immunity?
A legal principle that protects a state from being sued in another country’s courts, unless it acts commercially.
- Sovereign: A supreme ruler, especially a monarch / possessing supreme or ultimate power.
- Absolute immunity: States could not be sued, no matter what they did and even if they acted like a business.
- Relative immunity: Countries can only claim immunity if they are acting as a government, like making military decisions.
- No immunity: If states are not acting as a government, there is no immunity and they can be sued just like a company.
When does state immunity apply and what is its current limitations?
State immunity protects states from being sued in foreign courts.
Historically, absolute immunity applied (all acts immune).
Today, most systems apply relative immunity - states are immune for sovereign acts but not for commercial acts (e.g. contracts).
Exceptions include EU rules and treaties like the UN Convention on Jurisdictional Immunities (2004).
What are state-run companies (actor)?
Companies organized under private law or as administrative units with independent status which are controlled by a state.
- Commercial actors controlled by governments.
- E.g. Banedanmark
What are supranational organizations (actor)?
Formed by states. An organization which has authority above its member states, meaning it can make binding decisions that countries must follow.
- Powers transferred from member states.
- E.g. European Union (EU)
- NB! United Nations (UN) is not, since no authority over its members.
What is the EU?
Short for: European Union
A supranational organization with the highest degree of integration worldwide (27 member states)
Two main legal foundations:
1. Treaty of the European Union (TEU): General principles and organizational setup of the EU
2. Treaty on the Functioning of the European Union (TFEU): Matters of integration
What are the three main bodies of the EU?
1. Executive branch: Implements EU laws and sets borad policy direction.
European Council: Sets broad political priorities; composed of heads of state/government.
European Commission: Manages day-to-day operations and proposes new EU laws (administration and legislative initiatives).
2. Legislative branch: Makes EU laws.
Council of the European Union: Represents member states; adopts laws together with the Parliament.
European Parliament: Represents EU citizens; shares legislative power and supervises other institutions.
European Commission (in this role): Holds the exclusive right to propose legislation.
3. Judicial branch: Interprets and enforces EU law.
Court of Justice of the EU (ECJ): Ensures uniform interpretation of EU law; handles cases between institutions and member states.
General Court: Handles cases brought by individuals, companies, and sometimes member states (e.g. competition, trade).
What are international organizations (actor)?
Governmental international organizations, i.e. organizations which are formed by states, but have no statal power.
- Created by treaty.
- E.g. United Nations (UN), World Trade Organization (WTO) and International Monetary Fund (IMF).
What is the WTO?
Short for: ‘World Trade Organization’
An international organization with 164 member states.
- Purpose: To facilitate trade in goods, services and intellectual.
Member states discuss what should be done. If agreement is reach, each member state takes it back to their state and implement. - Means: provides a framework to negotiate trade agreements (elimination of tariffs, quotas etc.)
What is the difference between supranational and international organizations?
Supranational organizations (e.g. EU) have binding powers over member states and may directly affect individuals and companies.
International organizations (e.g. WTO, UN) are based on treaties, have legal personality, but cannot bind member states without their consent.
What are non-governmental organizations (NGOs) (actor)?
International entities based on private corporate and/or individual membership, not associated with states. No authority to bind members, only coercive powers.
- I.e. A private organization that influences global trade (e.g. ICC, Greenpeace), but has no binding authority.
- E.g. International Chamber of Commerce (ICC) seated in Paris, Frace, provide model contracts and trade standards (INCOTERMS and UCP 600)
What is the ICC and what does it do in international commerce?
Short for: ‘International Chamber of Commerce’
A non-governmental organization based in Paris, France, that publishes widely used trade rules (and tools) like INCOTERMS and UCP 600 (and model contracts) to support global business practices.
What are some of the documents published by the ICC, which are of relevance to internatioal trade?
International Commercial Terms (INCOTERMS): Defines trade terms and responsibilities between buyers and sellers in global trade.
- EXW (Ex Works): The seller makes the goods available at their premises; the buyer arranges pickup, transport, and bears all costs/risks.
- DDP (Delivery Duty Paid): The seller is responsible for all costs, including import duties.
Uniform Customs and Practice for Documentary Credits (UCP 600): Governs letters of credit (LCs) in international trade. Used by banks worldwide to standardize documentary credit transactions.
Uniform Rules for Collections (URC 522): Regulates documentary collections in international trade.
What does ‘UCP 600’ stand for?
Short for: ‘Uniform Customs and Practice for Documentary Credits’.
Governs letters of credit (LCs = financial guarantee issued by a bank to seller of a transaction) in international trade. Used by banks worldwide to standardize documentary credit transactions.
What are state groups (actor)?
No formal cooperation, only loose coordination between heads of state.
- Informal forums.
- E.g. Group of Seven (G7) or G20.
What are administrative cooperation groups (actor)?
No formal cooperation, only loose coordination between national heads of administration or administrative key personnel.
- Getting things done, e.g. on stopping drug trafficking.
- E.g. Basel Committee: Set of rules for the bank after financial crash in 2009.
What are private entities (actor)?
Natural persons or corporate entities which engage in cross-border commercial activity.
- Subject to national administration, regulation, taxation and enforcement of home and foreign states.
- E.g. ApS companies in Denmark.
What is the difference between a state-run company and a private entity?
State-run companies are controlled or owned by a government, often enjoy subsidies and may raise issues of state immunity.
Private entities are independent businesses or persons; they operate under private ownership and are subject to domestic and foreign regulation.
What are legal sources and why are they important in contracts?
Legal sources = laws and agreements
Contracts are not autonomous; they might be between a private person and a company, but there is always a state in the background.
Two key questions:
- Binding force: Mandatory and dispositive law
- Position within the norm hierarchy: The hierarchy of legal frameworks
What is mandatory and dispositive law?
Mandatory law can not be suspended.
Dispositive law might be superseded.
What lies under each of the two is different for each countries; in some countries, one is allowed to do more than in other countries.
What is mandatory law?
Laws that can not be suspended = No choice, must follow; so no room for negotiation.
- These laws are strict and must be followed - you cannot change or ignore them.
- The government enforces these laws because they are essential for society.
- Example: Paying taxes, criminal laws, and workplace safety regulations.
