Legal and Regulatory Environment

Prof. Naval K Bhargava

No single, uniform international commercial law governing foreign business transactions exists, hence the international marketer must pay particular attention to the laws of each country where it operates / transacts
Securing expert legal advice - often locally - is advisable e.g. Kenya It is useful to seek assistance from your countrys embassy about the regulatory systems in that country. The foundation of a legal system profoundly affects how the law is written, interpreted, and adjudicated.

Prof. Naval K Bhargava

Three heritages form the bases for the majority of the legal systems of the world. Common law Civil or code law Islamic law
Even though a countrys laws may be based on the doctrine of one of the legal systems its individual interpretation may vary significantly.

Prof. Naval K Bhargava

No judicial body exists to deal with legal commercial problems arising between citizens of different countries.

Legal disputes can arise in three situations: Between governments Between a company and a government Between two companies
Jurisdiction is generally determined in one of three ways: On the basis of jurisdictional clauses included in contracts On the basis of where a contract was entered into or where the provisions of the contract were performed The most clear-cut decisions can be made when the contracts or legal documents of business transactions includes a jurisdiction clause.
Prof. Naval K Bhargava

Conciliation is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences.
Conciliation sessions are private and all conferences between parties and the mediator are confidential. Although conciliation may be the friendly route to resolving disputes it is not legally binding; thus an arbitration clause should be included in all conciliation agreements.

Prof. Naval K Bhargava

Most arbitration is conducted under the auspices of one of the more formal domestic and international arbitration groups organized to facilitate the resolution of commercial disputes. The popularity of arbitration has led to a proliferation of arbitral centers established by countries, organizations, and institutions. Contracts and other legal documents should include clauses specifying the use of arbitration to settle disputes. Arbitration clauses require agreement on two counts: The parties agree to arbitrate in the case of a dispute according to the rules and procedures of an arbitration tribunal and appointment of the arbitrators They agree to abide by the awards resulting from the arbitration.

Prof. Naval K Bhargava

The best advice is to seek settlement.

DQ discuss examples of disputes between international partners

Deterrents to litigation: Fear of creating a poor image and damaging public relations and press coverage. Fear of unfair treatment in a foreign court. The relatively high cost and time required when bringing legal action. Loss of confidentiality.

Prof. Naval K Bhargava

Finance & accounting Labour practices Some laws regulating marketing activities. Promotion Product development Labeling Pricing Channels of distribution Censorship of advertising is a constant concern.
Discuss some of the laws wrt to the above in UAE

Prof. Naval K Bhargava

Antitrust laws are designed to combat restrictive business practices & encourage competition. e.g. MRTP, (MRTP Act was repealed and replaced by
the Competition Act, 2002, wef Sept. 1, 2009) & FERA changed to Foreign Exchange Management Act FEMA in 1999

In order to emerge as a successful economies countries have modified their anti-trust legislations and made them more attractive for FDIs, M&As and various other global corporate activities. Internationally, developed nations in the West have created sophisticated legal system to deal with such issues. India & several other nations, since the early 1990s, have taken inspiration from them. India has also taken feedback from the international community in developing a friendly and effective anti-trust regime to facilitate and regulate its growing economy.

Prof. Naval K Bhargava

Licensing & Trade Secrets Bribery & Corruption FCPA The Foreign Corrupt Practices Act (USA) & the like

Prof. Naval K Bhargava

Bribery and Extortion: Voluntary offered payment by someone seeking unlawful advantage is bribery. If payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to it is extortion. Subornation and Lubrication: Lubrication involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law. Subornation involves giving large sums of money, frequently & not properly accounted for, designed to entice an official to commit an illegal act
Prof. Naval K Bhargava

Agents Fees:
When a business person is uncertain of a countrys rules and regulations & business value systems, an agent may be hired to advise/guide/represent the company in that country. The Foreign Corrupt Practices Act - Impact on Indian or Singapore businesses ?

Prof. Naval K Bhargava

Green marketing laws focus on environmentally friendly products and on product packaging and its effect on solid waste management. e.g. recent ban on plastic bags in Italy & restrictions in India

The Internet creates a new set of legal entanglements, many of which have yet to be properly addressed. e.g. Blackberry controversy that arose in ME and India The freedom that now exists on the World Wide Web will only be a faint memory before long.

Prof. Naval K Bhargava