Vocabulary notes

turnkey project – проект «под ключ» (предприятие полностью укомплектовано)

licensing – лицензирование

joint venture – совместное предприятие

subsidiary – дочернее предприятие, филиал

FDI (Foreign Direct Investments) – прямые иностранные инвестиции

disadvantage – неблагоприятные условия

Comprehension and Discussion Questions

1. What are the six ways of entering a foreign market?

2. Which of the ways in your opinion is the most important?

3. When do foreign franchises seem to be optimal?

4. What can help firm establish technical standards?

5. What are two keys to making alliance work?

Text III. International law and business

The legal system of a country refers to the system of rules, or laws, that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained. The legal system of a country is of immense importance to international business. A country’s laws regulate business practice, define the manner in which business transactions are to be executed, and set down the rights and obligations of those involved in business transaction. The legal environments of different countries can and do differ in significant ways. Differences in legal systems can have an important impact on the attractiveness of a country as an investment site and/or market.

Like the economic system of a country, the legal system is influenced by the prevailing political system. The government of a country defines the legal framework within which firms do business, and often the laws that regulate business are a reflection of the rulers’ dominant political ideology. For example, collectivist-inclined states tend to enact laws that severely restrict private enterprise, while the laws enacted by governments in democratic states where individualism is the dominant political philosophy tend to be pro-private enterprise and pro-consumer.

Up to this point, our attention was focused on the legal system of a country and not specifically on international business law. Scholars and practitioners often divide international law into two categories: public international law and private international law.

Public international law governs relations between countries as recognized entities in international society. In exception cases countries participate in private-law relationship if one of the parties is an individual or legal entity and the other party is the state satisfying its needs (for example in awarding state contracts, etc). Public international law does not have a uniform codified set of accepted law.

Private international law, defined as the laws applying to private parties in international transactions, is sometimes described as conflict of laws or the “domain of rights, duties, and disputes between and among persons from different places”, and often involves commercial transactions. In other words, private international law concern how nation’s courts deal with different nation’s laws. Different national legal system may compete for jurisdiction, and the laws they choose conflict. So we may state that private international law is not a law governing relations between countries, but rather the internal law of a country that governs issues important for legal relations with an international element. Although international agreements (contracts) are among the important sources of private international law, these international agreements, too, are part of the domestic legal system if a country is bound by them, i.e. signed the treaties, passed through the ratification process including subsequent publication – the collection of laws, the bulletin, etc.

Just as public international law, private international law has no uniform codified set of accepted law. The field of conflict of laws consists of three areas: choice of law (which law applies to the transaction), choice of forum (who has jurisdiction or the power to hear the case), and recognition and enforcement of judgments. Private international law is also affected by multilateral conventions that provide a base for initial unification of substantive law.

Examples of these conventions include:

• Recognition and Enforcement of Foreign Arbitral Awards (June 10, 1958)

• Service Abroad of Judicial and Extra-Judicial Documents (November 15, 1965)

• Hague Convention on International Child Abduction (1980)

• U.N. Convention on Contracts for International Sale of Goods (April 11, 1980)

In this unit we will focus on three issues that illustrate how legal systems can vary among countries – and how such variations can affect international law and business.

First we look at the laws governing property rights with particular reference to patents, copyrights, and trademarks. Second, we look at laws covering product safety and product liability. Third, we look at country differences in contract law (see Sections D, E).