IN 441 -- INTERNATIONAL BUSINESS LAW – KEY TERMINOLOGY FOR MID-TERM

 Criminal jurisdiction over foreign defendants : Alvarez-Machain: a close reading of the US-Mexico
extradition treaty does not prohibit forced abductions (similar ruling to Eichmann case).
 Kinds of law –
o international public (diplomatic, disputes between nations) – resolved at international tribunals
such as the International Court of Justice vs.
o private law (disputes between individuals or corporations) – resolved either at municipal – state
courts of one country – or by international arbitration;
o criminal cases (the government is one party – the prosecutor – while the defendant is a private
party, threatened with punishment, such as fines or jail) vs.
o civil cases (disputes between private parties, usually because one side has been damaged or hurt
by the other, with the judgment either ordering one side to pay money damages or to do
something by court order – an injunction).
 Comparative law – the different families of law; Definitions of
o common law – the systems used in English-speaking or English-colonized countries; basic
principle is that the law grows through the history of cases (the common law), which build up
sets of principles which must be followed in future cases (the principle of precedent, or stare
decisis – we stand on the previous decision)
o civil law – derived from Roman law, as revived and expanded by the great Civil Codes of the
19th century, French and German, used in Continental Europe and countries colonized by these
countries (including South America, West Africa, etc.) – based on the principle that we first look
to written Codes or Statutes, developed by legislatures, for concise statements of the law –
however, be careful, in Common Law countries we now have a substantial number of Codes and
Statutes, while in Civil Law countries there is some use of “jurisprudence”, the history of
previous cases, so the difference between these types of law is not as great as you might imagine.
o shari’a, -- Islamic law, used to some extent in approximately 30 countries, focuses primarily on
criminal and family law, based on the Q’uran and the sayings of Mohammad, known for its harsh
criminal penalties and its prohibition on the taking of interest (riba) – which has given rise to the
concept of Islamic banking.
 Personal jurisdiction – In the US, for a court to have jurisdiction over a non-resident defendant that party
must have “minimum contacts” with the forum state; there are two kinds, specific (meaning that in the
case at hand the defendant has minimum contacts, such as signing or negotiating a contract, or frequent
business visits, or advertising, or a permanent office, in the forum state) vs. general (meaning that the
defendant has such substantial contacts with the forum state that the defendant can be sued in any
transaction involving the forum state, even if in the transaction the defendant lacks personal jurisdiction
(Falcoal, Atlas Copco); note that the court ALWAYS has jurisdiction over the plaintiff, because the
plaintiff has consented to the court’s jurisdiction by starting the lawsuit in the first place.
 Forum non conveniens – This means that the “court is not convenient” and is response to a motion to
dismiss; American courts will dismiss cases on this ground only if the party making the motion
establishes that there is an “Adequate alternative forum” – another country where the suit can be held,
and the balancing of the interests and convenience of the parties is strongly in favor of that other
jurisdiction hearing the case (Capital Currency, Bhopal)
 Use of performance bond (Falcoal) – an alternative to a “cash deposit”, it encourages the other side to go
through with their contractual obligations because otherwise the beneficiary of the bond can just seize it.
 Sovereign immunity – restrictive (the modern approach, no immunity when government is involved in a
purely commercial transaction) vs. absolute theories (old-fashioned approach, you could never sue a
government). How does it relate to “head of state immunity” (while a head of state is in office she may
not be sued by anyone) and “diplomatic immunity” (a country’s diplomats are immune to prosecution if
they have been recognized by the official foreign ministry of the host government, e.g., ambassadors,
consuls, etc.)? (Marcos)
 Employment discrimination – BFOQ (bona fide occupational qualification) defense – you can
discriminate if the basis of discrimination is absolutely necessary for the position. (Kern v. Dynalectron)
 Currency fluctuations as excuse for non-performance under theory of “commercial impracticability”.
(Bernina Distributors – currency fluctuations are foreseeable, so they don’t void a contract as
impracticable; this concept is also known as “force majeure”)
 FCPA – who can’t you bribe (foreign officials, private parties OK)? What’s a bribe? (US v. Liebo –
even a “gift” can be a bribe if it is intended to influence the official to do something illegal; note that
“lubrication” is OK – you can pay a gratuity to get an official to speed up a legal activity, such as
customs inspection)
 What’s a “private cause of action” (Lamb – a statute authorizes private parties to begin lawsuits based
on the statute, e.g., US antitrust law)?
 Why…
o incorporate? – to protect the shareholders’ assets behind the “corporate veil” ; protection from
corporate liability
o Partnership? – easy to form, income flows through to partners so no double taxation; but all
partners jointly and severally liable for each others’ liabilities.
 What’s “piercing the veil”? – attacking the shareholder’s personal non-corporate assets. When can you
do it? – when there has been some fraud or under-capitalization of the corporation.
 Is a corporate officer personally liable for the debts of a corporation? – normally, no. How would you
recommend signing your checks? (Finnish Fur) – make sure that you indicate your corporate capacity,
otherwise the creditor may assume you were signing on your own behalf.
 Will US courts enforce foreign judgments (Nelson Bunker Hunt)? – normally they will if they felt that
there was a fair opportunity to be heard in the foreign jurisdiction, but the US is not subject to any global
treaty obliging us to enforce all foreign judgments; in Hunt, the US court refused to enforce a foreign
judgment that was not yet final – it was still on appeal. Note that all European Union countries have
agreed to enforce each other’s judgments automatically.
 What is comity? – a tradition of courts respecting the judgments of foreign courts.
 Will US enforce foreign arbitral awards (Iran Aircraft)? – normally yes, but in Iran the US court felt that
the American defendant had not had a fair chance to be heard and therefore did not enforce the award. Is
there any difference in enforceability between awards and judgments? (Nelson Bunker Hunt, Iran
Aircraft) – yes, actually arbitration awards are in many cases more enforceable than court judgments
internationally because of the near-universal acceptance of the NY Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, which obliges countries to enforce foreign arbitral awards
except under particular circumstances (fraud by an arbitrator)
 What are the major arbitration institutions? – International Chamber of Commerce (ICC); American
Arbitration Association (AAA); London Court of International Arbitration (LCIA). ICC is considered to
be expensive but well-supervised, helps parties enforce their awards. Both parties must agree to
arbitration, the typical way of doing so is with an arbitration clause in the contract. If you are in a strong
negotiating position, you may prefer to specify that disputes be handled by your national courts, because
this will discourage the other side from suing you.
 Are all disputes arbitrable? (Farrell, Tennessee Imports) – no, arbitration awards cannot govern cases
involving “mandatory law”, such as criminal law, tax law, labor law – laws that every country insists on
enforcing through its own national laws; most commercial disputes, however, are arbitrable.