Legal Systems That Influence Business in Different Nations.

Legal Systems That Influence Business in Different Nations

Legal System and Classification

A nation’s legal system, which establishes and enforces laws, helps make its social, political, and economic institutions function effectively. The legal systems of foreign nations can differ widely, but generally the laws of most counties can be classified into two types: common law and civil law. Common law systems, sometimes called case law or judemade law, are derived from English law dating back hundreds of years and are based on the principle of following long-established customs that were written down in important court decisions, called precedents. These prior court decisions that were written and handed down over time have themselves formed a set of laws that help guide the proper behavior of people, businesses, and other institutions. Common law systems often have legislatures that pass laws as well. In the absence of a precedent or a clear legislative act, common law courts can create a new rule of law. England, the United Stales, Canada, Australia, New Zealand, and some other countries that were once part of the British Empire all have common law systems.

In contract to common law systems, civil law systems, sometimes called condified law or Roman law, are based on the principle that the only official source of law of a nation is what is specifically written in a code of books called statutes. Statutory law in a civil law system can be very complex since the lawmakers in a nation based on that system must write statutes to cover nearly every conceivable legal situation. Civil law systems are less flexible and adaptable, therefore, than common law systems. The laws of civil law systems are less subject to interpretation by courts since they do not rely often on precedents that are the basis of common law systems. Courts in civil law systems still must interpret the statutes that passed, but generally, they may not depart from the statutes and develop their own laws. Civil law systems evolved from the legal system of ancient Rome. The best known example of civil law is the French Napoleonic Code or Code Napoleon, which was developed in 1807 by Napoleon Bonaparte and which still exists today. Most European countries, such as France, Germany, Spain, Portugal, and Italy have their legal systems based on civil law, additionally, many Latin American, African, and Asian countries that were once colonies of continental European nations have civil law systems. Japan and South Africa have civil law systems. Parts of civil law systems can be found in the courts of countries whose people are predominantly Musilm.

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Common law and civil law system are not completely separate, however. Many common law countries have aspect of civil law in their legal systems. For example in the United States criminal law is statutory law, defining specific crimes that will result in punishment. Thus in the absence of a criminal statute the courts in the United Stated cannot develop a new law for a new crime. Although France is based on a civil law system, in the French code of laws there are no specific sections dealing with contract formation, so those concepts have been developed by case law precedent in a way that in similar to how they have been developed in a way that is similar to how they have been developed in common law countries. Further more , many non-western countries have legal legal systems that are very different from tradition common law and civil law nations. In may Islamic countries, the statutes are often heavily influenced or base on religious commandments of the Koran. Nations whose legal systems are based primarily on religious authority are called theocracies.

Sometimes laws within a country are classified into substantive and procedural law. Substative law includes laws that define, create, and regulate rights and duties of the public. Procedural law involves the rules for enforcing substantive law rights. Moreover laws may be classified into public law, which concerns the relationship between government and individuals ,and private law, which involves relationships between individuals. Criminal law regulates relationships between individuals and society, and often provides the floor or base for human between individuals and society. Sometimes law is classified as mandatory, meaning these laws must be obeyed by persons affected by them, while other laws may be seen as optional, which may be accepted or modified by parties. Criminal law, property law and tax law are mandatory; some parts of contract law, though , are optional. Individuals businesses and other entities can aspire to act in ways that are beyond the minimum requirements of the law. For example, a law that states that xomeone in not required to obey a contract does not preclude that someone is not required to obey a contract does not preclude that person from still abiding by the agreement, anyway as a result of a moral obligation.

Comparative Law

Certain legal principles are essential to the smooth functioning of every society and nation, and almost every country has laws governing contracts, torts, employment, corporations and business entities, and intellectual property. Comparative law is the study of the similarities and differences of laws between countries. Some laws may differ significantly between countries, while others may be similarly written, but applied in a different way. Thus it is important for people doing business in a foreign country to know the law in that country. Generally, when a person or entity does business in a foreign country, that person or entity is subject to that country’s laws as well as those of the foreign country whre it operates. It is often said in the west that ignorance of the law is not excuse; lack of knowledge about a nation’s laws will usually not be a defense to a determination that a law has been violated.

International Law

International law can be defined as “ a group of written and unwritten laws that are voluntarily agreed to and obeyed by independent nations.” An important aspect of international law in that nations consent to give up some of their own soverighty to abide by rules that have been agreed upon with other nations. These voluntary international rules or laws govern the actions of individuals, businesses, other organizations, as well as nations. The difference between the laws that govern actions of people or organizations within a country, called national law, and international law is that national law can be fully enforced by government authorities. It is sometimes difficult to enforce international law; often enforcement is based on persuasion and diplomacy. However, if a nation violates international law and persuasive tactics fail to convince the offending nation to abide by the international law, usually the most other countries or international organizations can do is to resort to coercive tactics, such as boycotts or the severance of diplomatic relations, to try to change the violating nation’s behavior. War could be used as a last resort.

Conflicts of law and arbitration

For many types of business transactions between individuals, businesses, and organizations of different countries, there may be no single international law that governs that transaction. Frequently individuals, businesses, and other organizations can agree that certain types of law will govern certain types of transactions, and they often agree to follow international rules handed down by international organizations or even the laws of just one nation. Sometimes, however, there is no agreement as to which law will govern a certain type of transaction, and there may be a dispute as to which nation’s law might decide any problems between the parties when there is no overriding international law involved. Thus, there is a conflict as to which nation’s laws might resolve a quarrel. Often nations use certain guiding principles to help decide which nation’s laws should control in those situations. The criteria that are examined to decide this conflict of law problem include: which nation has the most significant relationship to the transaction, the place where the agreement concerning the transaction was reached, the place where the agreement about the transaction was negotiated, the place where the agreement or the transaction was to be performed, and the location of the product or service that is the subject of the agreement or transaction.

Sometimes individuals, businesses, and other organizations involved in an international business transaction do not want to spend a lot of money in a court of law in one nation or before an international court deciding any problems that might arise as a result of their transaction. So the parties often agree at the time they do business together that any dispute they might have will be decided by means of alternative dispute resolution (ADR). There are several types of alternative dispute resolution methodologies, but the two most widely used are mediation and arbitration. Mediation involves the use of an independent person, called a mediator, to help negotiate a settlement between the parties that is acceptable to all of them. Mediation is not binding, however. Arbitration is the resolution of a dispute by someone not connected with a nation’s court or any of the parties, and the decision of this person, known as an arbitrator, is usually binding on the parties. The International Chamber of Commerce is frequently used in the arbitration of disputes involving international transactions.