BCOMLAW International Business Law

INTERNATIONAL BUSINESS LAW
BACHELOR OF COMMERCE
IN LAW
MODULE GUIDE
Copyright © 2020
REGENT BUSINESS SCHOOL
All rights reserved; no part of this book may be reproduced in any form or by any means,
including photocopying machines, without the written permission of the publisher.
BACHELOR OF COMMERCE IN LAW

Table of Contents
CHAPTER ONE:
Introduction to International Law and its Environment ............................................. 6
CHAPTER TWO:
Principles of the International Legal System ......................................................... 17
CHAPTER THREE:
The Individual in International Law ........................................................................ 51
CHAPTER FOUR:
Theory, Application and Enforcement of International Treaties ............................. 57
BIBLIOGRAPHY ................................................................................................... 95
BACHELOR OF COMMERCE IN LAW 1

INTRODUCTION TO INTERNATIONAL BUSINESS

LAW
Welcome
Welcome to the International Business Law Module in your Bachelor of Commerce in

Law programme. This module guide is aligned to your curriculum and the latest
developments in the field of International Business in South Africa.
How to use the Module guide
The International Business Law Module utilises a module guide and prescribed and
recommended readings. You must familiarise yourself with a large amount of content
and should set aside regular study time to work through the material and ensure you
understand the content.
It is also recommended that you make your own notes when working through this
guide in addition to completing the prescribed and recommended reading. It is also
recommended that you find alternative sources of information to supplement your
learning and understanding.
There is a list of outcomes at the beginning of each chapter. This outlines the main
points you should understand when you have completed the chapter.
This module guide also includes case studies, trigger questions and reflective
questions per chapter to evaluate your knowledge, understanding and application of
International Business Law. It is imperative that you work through all the activities in
this guide as it will also help you prepare for assessments.
Good luck in your studies!

Prescribed and Recommended Reading
Your essential (prescribed) reading comprises the following:
Schaffer, R., Agusti, F., Dhooge, L.J. (2018). International Business Law and
Its Environment, 10 th Edition. Australia: Cengage.
Your essential (recommended) reading comprises the following:
August, R., Mayer, D., Bixby, M. (2013) International Business Law. Text,
Cases, and Readings, 6th Edition. Edinburgh Gate: Pearson.
Aim of the Module
This module introduces you to the law and regulations relating to cross-border
business transactions. It provides you with introductory knowledge and principles of
public international law that need to be considered when conducting businesses
between states.
Module Outcomes
After successfully completing this module, you should be able to:
SO 1: Demonstrate knowledge of the principles of the Constitution of South Africa in

relation to international law as well as demonstrate an in-depth understanding
of the laws governing International Business from South African perspectives,
its scope and its application.
LO 1.1: Comment on how contemporary legal dynamics involve the role

of individuals in the International System.
LO 1.2: Review the application of the fundamental principles of the

International legal system.
LO 1.3: Tabulate the theory, application and enforcement of International

treaties and convening governing business transactions and
International relations between states (countries).

Specific Outcomes and Chapter Alignment
SPECIFIC PROGRAMME SPECIFIC OUTCOME

OUTCOMES ALIGNMENT (CHAPTERS)
SO 1: Upon completion of this module, the student should be able to demonstrate

knowledge of the principles of the Constitution of South Africa in relation to
International Law as well as demonstrate an in-depth understanding of the
laws governing International Business from South African perspectives, its
scope and its application.
LO1.1: Comment on how contemporary legal

Chapter 3
dynamics involve the role of individuals in
the International System.
LO 1.2: Review the application of the Chapter 1, 2
fundamental principles of the
International legal system.
LO1.3: Tabulate the theory, application and Chapter 4
enforcement of International treaties and
convening governing business
transactions and International relations
between states.

Specific Outcomes and Assessment Criteria
SPECIFIC PROGRAMME OUTCOMES ASSESSMENT CRITERIA
The student should demonstrate

the ability to
SO 1: Upon completion of this module, the • Comment with the required insight
student should be able to demonstrate on how contemporary legal
knowledge of the principles of the dynamics involve the role of
Constitution of South Africa in relation to individuals in the International
International Law as well as demonstrate System.
an in-depth understanding of the laws • Review and provide positions on

governing International Business from the application of the fundamental
South African perspectives, its scope and principles of the International legal
its application. system.
• Tabulate the theory, application

and enforcement of International
treaties and convening governing
business transactions and
International relations between
states indicative of the
relationship/s between these.

CHAPTER ONE:
INTRODUCTION TO INTERNATIONAL LAW AND ITS
ENVIRONMENT
Specific Learning Outcome

After working through this chapter, you should be able to:
• Review the application of fundamental principles of the international legal
system
• Outline the fundamental principles of the international legal system
• Appraise the application of the international legal system in scenarios of
international law
1.1 Introduction
Most countries are not self-sufficient; they need to interact with other countries. This
is where international law plays a role. International law considers the relationships
between countries, businesses, and individuals globally. As such, it plays a vital role
in the way states (countries) operate on an international level. The legal, political and
economic environment influences the way in which countries, businesses and
individuals interact with each other (Schaffer, Agusti, Dhooge, 2018:2). Businesses
and individuals cannot make their own laws and are therefore subjected to the
international laws governing the home and host countries (Lumen, n.d). This forms
the foundations for the international legal system.
This chapter considers the fundamental principles of international law and outlines the
environment in which countries operate.
(It is important to note that countries may be referred to as ‘states’ in this guide).

1.2 Definitions
Before we start with each chapter, we are going to consider the definitions that are
vital in your understanding of the chapter. It is important to you familiarise yourself with
the definitions before moving on to the sections thereafter. Please note that some
definitions are included to supplement your understanding and may therefore not be
addressed individually.
International law – “International law deals with three kinds of international

relationships: (1) those between states and states, (2) those between states and
persons, and (3) those between persons and persons” (August, Mayer, Bixby,
2013:21); “The body of rules applicable to the conduct of nations with other nations,
and with individuals and other private parties, rules for settling disputes between
nations, as well as rules for intergovernmental organisations (Schaffer et al., 2018:29).
Public international law – “The division of international law that deals primarily with the
rights and duties of states and intergovernmental organisations as between
themselves” (August et al., 2013:22).
Private international law – “The part of international law that deals primarily with the
rights and duties of individuals and non-governmental organisations in their
international affairs” (August et al., 2013:22).
Jurisdiction – “The power of a court to act, criminal jurisdiction is the power of a court
to hear a criminal case and to act over a defendant” (Schaffer et al., 2018:37).
1.3 Fundamental Principles of the International Legal System
There are various fundamental principles that outline the international legal system.
This includes diverse elements but we will explore public and private law, sources of
international law, characteristics of international law as well as crimes in the
international environment and the manner in which international crimes are dealt with.
1.3.1 Public vs private international law
As already defined, international law deals with three types of relationships. These
relationships can be seen in both public and private law.

The figure below provides a broad overview of the ‘focus areas’ of public law and the
court that will consider disputes.
Public law Private law
Public entities
International
(States) and
relations between
international
private persons
organisations
Dispute - State
Disputes -
court (or subject
International
to international
Court of Justice
arbriation)
Figure 1.1 Difference between public and private international law

Derived from: (de Gouyon Matignon, 2019)
In other words, public international law outlines the rules of conduct between nations
and the citizens of various nations (Schaffer et al., 2018:30).
On the other hand, private international law considers the rules that manage the rights
and responsibilities of individuals, corporations, or private parties when it comes to
any international activities and/or transactions (Schaffer et al., 2018:30).
August et al. (2013:22) provides the following differences between public and private
international law.

Table 1.1 Differentiation between public and private international law

Public International Law Private International Law
Sources of international law Torts
International personality Inheritances
State territory Money and banking
State succession Intellectual property
State responsibility to aliens Commercial
Law of the sea Contracts and sales
International dispute settlement Transportation
Law of war Financing
Securities regulations
Antitrust
Taxation
Source: (August et al., 2013:22)
1.3.2 Sources of international law
There are various sources of international law available. Table 1.2 outlines the primary
and secondary sources of international law.
Table 1.2 Sources of international law
Primary sources of international law Secondary sources of international

law
International treaties and conventions Decisions of international courts and
tribunals
International custom (generally accepted Scholarly writings of respected jurists
practice) and legal scholars
General principles of law recognised by
civilised nations
Derived from: (Schaffer et al., 2018:30)
From the above you can see that the primary sources of international law consider
‘prescriptions’ and general practice, whereas secondary sources of international law
consider ideals and interpretations (Schaffer et al., 2018:30).

Some of the primary sources play a key role in both public and private international
law and we will consider these in more detail.
1.3.3 Core characteristics of international law
Core characteristics differentiate national and international law for any country, and
these can be broadly grouped into two categories (Schaffer et al., 2018:29-30).
Law
making Authority
(global)
Figure 1.2 Differentiation between international and national law
Law making
When organisations from different nations engage in business, they do so by choice

and consent. This means that the best conditions for the nations are utilised for
business operations and to reach a common goal. There is therefore not a legislative
body stipulating all conditions for operating.
Global authority
There is no global authority regulating business interactions and transactions between

nations. Later in this guide, we discuss ways in which transactions can be regulated.
1.3.4 Crimes in international business
As we know crime occurs on an international level and affects international law.

Schaffer et al. (2018:38) outlines two types of crime that may affect both public and
private international law. It is important to note that crimes related to international
business law are generally more common.

Transnational organised crime – This includes illegal drug and firearms trade,
smuggling, human trafficking, cybercrime, counterfeiting and ocean piracy, to name a
few.
Transnational business crime – These crimes are related to legitimate business

transactions. They can occur across borders or within one country. These white
collar/economic crimes include, but are not limited to, the following: customs fraud,
criminal violations of export control laws, tax evasions, criminal environmental law
violations or even the business.
International crimes and disputes will be handled by the appropriate court as outlined
in figure 1.1.
1.3.5 International courts
International courts and tribunals may issue judgements against nations where there
have been crimes. It is important that the nation/(s) in question must agree to
participate in these cases and consequently, the outcome is not enforceable. This
means that there are often economic or political sanctions introduced to ‘enforce’ the
ruling of the court.
Countries can deal with international business crimes and protect their interests
through jurisdiction.
“According to the fundamental characteristics of international law (it is the law among
states), individuals can only be subjects of municipal law and cannot be subjects of
international law. In international relations, individuals are represented by their own
countries and if rights and interests (such as entry, residence, employment and
property) are violated in a foreign country, individuals should negotiate with the state
concerned through organs of their home country. Only their home country enjoys the
rights of diplomatic protection in international law” (August et al., 2013:62). This means
authority is given to a legal body to govern justice for a country.
Jurisdiction relates to the principle that a nation can project its laws. If it is done outside
its borders, it is called extraterritoriality or extraterritorial jurisdiction (Schaffer et al.,
2018:38). There are five basic principles of jurisdiction:

Territoriality – “A nation’s jurisdiction over all persons (citizens and non-citizens),

places, and property within the territory, airspace, or territorial waters of a country and
to crimes committed on vessels flying that nation’s flag” (Schaffer et al., 2018:39).
Nationality – “Individuals and corporate citizens owe duties to comply with the laws
of their countries of nationality no matter where they are in the world. It is considered
one of the obligations of citizenship” (Schaffer et al., 2018:39).
Protective principles – “Allows jurisdiction over non-citizens for acts committed

abroad on the basis of a country’s need to protect its national security, vital economic
interests, and governmental functions” (Schaffer et al., 2018:39).
Passive personality – “It gives a country the right to hear cases stemming from
crimes committed against their own citizens by non-citizens outside of their own
territories” (Schaffer et al., 2018:39).
Universality – “Permits any country to prosecute perpetrators of the most heinous

and universally condemned crimes regardless of where the crimes
Let us consider a few short examples to illustrate these principles of jurisdiction:
Example 1:
“Industry executives from competing firms in the United States meet on a golf course
on a Caribbean Island to fix prices and divide up territories among them in the U.S.
market. On what jurisdictional grounds can these executives be prosecuted in the
United States” (Schaffer et al. 2018:38)?
Example 2:
“A citizen of Russia, living in London, attacks and disrupts a major computer network
in the United States. Where can he or she be tried” (Schaffer et al., 2018:38)?
These two examples outline potential crimes that occurred between states. In both
cases, a state can project its laws through jurisdiction.

1.3.6 International Court of Justice (ICJ)
This is the most important international judicial body. It was formed by the United
Nations in 1945. The ICJ has 15 independent judges appointed from various nations.
The ICG’s primary authority is over cases brought under the UN Charter (remember
that there is no global authority in law making). As such, any case that involves a
treaty, convention, international obligation or question related to international law is of
importance to the ICG.. As previously mentioned, countries first need to confirm that
they will participate in an international case before the ICG may review the case.
The following principles apply to the ICJ:
• Judgements are public

• There is no appeal process
• It will only have a biding effect on the parties (businesses, individuals, states)
involved in the case. It will not be binding to the nations in which these are
registered.
• The outcome is enforced based on world public opinion, diplomatic pressure
and good faith of the companies and nations involved in the case.
• Not all outcomes are enforceable (Schaffer et al., 2018:39).
Consider the following case:
Trader Joe’s Co. v. Hallatt, 835 F.3d 960 (9th Cir. 2016)
In Trader Joe’s Co. v. Hallatt, 835 F.3d 960 (9th Cir. 2016), the Ninth Circuit found
that a U.S.-based plaintiff who held many trademark registrations in the U.S. could
sue a foreign defendant whose infringing activity occurred almost entirely outside
the U.S. under U.S. trademark law provided that the plaintiff could demonstrate a
nexus of the infringing activity with U.S. commerce.
Trader Joe’s owns several Federal trademark registrations for the mark TRADER
JOE’S for grocery store services and food products, and claims trade dress rights
in its South-Pacific store theme. Hallatt, a Canadian resident, was purchasing
large amounts of Trader Joe’s products in the U.S. and was reselling them at
inflated prices in his South-Pacific-themed Canadian store, Pirate Joe’s. Trader
Joe’s demanded that Hallatt stop its infringing activity but Hallatt refused, even

paying third parties to purchase Trader Joe’s branded products on his behalf and
shopping in disguise when he was banned from a store.
Trader Joe’s sued Hallatt, alleging that he had mislead consumers into falsely
believing Pirate Joe’s was authorised or licensed to sell TRADER JOE’S products,
had used a confusingly similar trade dress for its store, and resold TRADER JOE’S
products without authorisation and without adhering to Trader Joe’s strict quality
control standards. Trader Joe’s received at least one complaint from a consumer
who became ill after eating a Trader Joe’s branded product purchased at Pirate
Joe’s. The lower court, in the Western District of Joe’s branded product purchased
at Pirate Joe’s. The lower court, in the Western District of Washington, sided with
Hallatt, dismissing Trader Joe’s claims under the Trademark Act for lack of subject
matter jurisdiction.
The Ninth Circuit reversed, stating that the Act reaches infringing activity outside
the U.S. provided the plaintiff can demonstrate a nexus with U.S. commerce.
Furthermore, the issue of the extraterritorial application of the Trademark Act was
found to be an element of the substantive claim and did not implicate a court’s
subject matter jurisdiction.
The Court agreed with Trader Joe’s that Hallatt’s poor quality control standards
would impact American commerce due to the possibility that Pirate Joe’s
consumers may become ill, which would then be known to U.S.
consumers. Moreover, Hallatt’s domestic activity – purchasing products and hiring
third parties to do the same – as well as Hallatt’s lawful permanent U.S. resident
status, Trader Joe’s trademark registrations in Canada, and the fact that a U.S.
injunction would halt Hallatt’s illegal operations, all weighed in favour of applying
the U.S. Trademark Act.
This case opens the door to claims under the Trademark Act in U.S. courts by
companies with large international trademark portfolios. Since this case is highly
fact-driven, a further expansion of the extraterritorial application of the Trademark
Act likely depends on the presence or absence of confusion in the U.S.
marketplace and/or any adverse effect on U.S. commerce resulting from the
defendant’s acts that have a nexus with U.S. commerce. It appears that application
of the Trademark Act to extraterritorial acts of infringement does not implicate a
court’s subject matter jurisdiction, allowing smaller companies to defend their

goodwill even though their goods or services are not sold outside the U.S., avoiding
high international legal fees.
Case study adapted from the full case.
Source: (Janet, 2017)
THINK POINT
1. Why do you think this was the outcome in this case?

2. What do you think are the future implications that could arise from the outcome
of this case?
3. Which principles of jurisdiction are evident in the case?
1.3.7 Application of international law in South Africa
Up until now we have looked at international law and the application on a global front.
It is therefore important that we briefly consider its application of in South Africa.
South Africa is not a party to any treaty that recognises and enforces any judgements
from international courts (Freehills, 2019). It is governed by the following:
• Common law
• Enforcement of Foreign Civil Judgements (EFCJ) Act No. 32 of 1998
We will discuss South African treaties affecting international business law in Chapter
Four.
1.4 Conclusion
This chapter outlined the difference between public and private international law. We
considered the fundamental principles of the international legal system. We noted that
there is no global authority in the international legal system and that international
crimes may be addressed through the ICJ if required conditions are met. In addition,
we considered the role of jurisdiction in the ability of a state to project its law. Lastly,

we noted that there are no treaties in place in South Africa that recognise judgements
from international courts.
In the next chapter, we will consider international business law.
SELF-STUDY QUESTIONS
1. Define and explain international law, public international law and private
international law.
2. Outline the principles of jurisdiction and provide an example of how this can
be used in favour of a state.
3. Explain the purpose of an international court and the conditions related to its
authority.
4. Review international crimes and business and provide examples of how this
can be dealt with internationally.

CHAPTER TWO:
PRINCIPLES OF THE INTERNATIONAL LEGAL
SYSTEM

• Review the application of the fundamental principles of the international legal

system
• Examine the principles, issues and risks governing the international business
environment
• Review conducting business in countries of various economic statuses from an
international business law point of view
2.1 Introduction
In chapter one, we considered the fundamental principles of the international legal

system as a whole. Now, we will explore the concepts related specifically to conducting
business internationally. You may not be aware of it, but doing business globally is a
part of our everyday lives. It may be explained as: “the body of law and regulations,
derived from national and international sources, that governs cross-border business
transactions, the activities of those doing business in foreign countries or subject to
the jurisdiction of foreign courts, and the resolution of international disputes.
International business law includes both public and private international law, and
overlaps with ‘international economic law’” (Schaffer et al.,2018:36). Therefore, if
something happens in the world, it can affect international business.
Consider the international business effects of the COVID-19 pandemic. As an

example, production of appliances has come to a halt in China and the Middle East.
Consequently, it is increasingly difficult to find appliances in South Africa. The laws
and regulations related to trading on an international front have also been influenced
as a result of the pandemic. There are various other considerations which are
impacted by, or impact, the legal environment in which businesses operate
internationally. In this chapter, we explore these in more detail.

2.2 Definitions
Some definitions listed below have been included as supplementary information and
will not necessarily be discussed individually in this chapter.
Trade – “Trade is the import or export of goods and services across national borders,
usually as part of an exchange” (Schaffer, Agusti, Dhooge, 2018:3).
Exporting – “Exporting is the shipment of goods out of a country or the rendering of

services to a buyer located in a foreign country” (Schaffer et al., 2018:3).
Importing – “Importing is the entering of goods into the customs territory of a country
or the receipt of services from a foreign provider” (Schaffer et al., 2018:3).
Trade in services – “Refers to the providing of services to a customer or the operation

of service companies in a foreign country” (Schaffer et al., 2018:3).
Direct exporting - “Refers to a type of exporting in which the exporter, often a

manufacturer, assumes responsibility for most of the export functions, including
marketing, export licensing, shipping, and collecting payment” (Schaffer et al., 2018:3).
Foreign sales representatives – “Independent sales agents who solicit orders on

behalf of their principals and receive compensation on a commission basis” (Schaffer
et al., 2018:3).
Foreign distributors – “Independent firms, usually located in the country or region to

which a firm is exporting, that purchase and take delivery of goods for resale to their
customers” (Schaffer et al., 2018:3).
International trading companies – “Firms that specialise in all aspects of import/export

transactions either by buying goods on their own accounts for resale or by acting as
middlemen to bring other buyers and sellers together” (Schaffer et al., 2018:3).
International business (IB) – “(1) A business (firm) that engages in international (cross-
border) economic activities, and/or (2) the action of doing business abroad” (Peng &
Meyer, 2016:587).
Certificate of origin (CO) – “A document, prepared or provided by an exporter or

shipper, that certifies and attests to the country of origin of the goods being shipped”
(Schaffer et al., 2018:4). There are two types of CO, namely:
Non-preferential certificates of origin – “An ordinary CO, this is the most common form
of the certificate. Non-preferential CO’s are issued to export goods that are not subject

to duty exceptions (or preferential treatment) by the importing country” (STA Law Firm,
2019).
Preferential certificates of origin – “These CO’S offer the export goods preferential
treatment via tariff exemption or reduction, depending on agreements formed between
the export-import countries. Preferential certificate qualification often requires
compliance with customs and documentary credit” (STA Law Firm, 2019).
Export management companies – “Independent firms that assume a range of export-

related responsibilities for manufacturers, producers, or other exporters” (Schaffer et
al., 2018:5).
Intellectual property rights – “Legal rights which result from intellectual activity in the
industrial, scientific, literary, and artistic fields” (Schaffer et al., 2018:6).
Licensing agreements – “Contracts by which the holder of IP will grant certain rights
in that property to another party under specified conditions and for a specified time, in
return for a consideration, such as a fee or royalty or as part of a larger business
arrangement” (Schaffer et al., 2018:7).
Transfer of technology – “The sharing of scientific information, technology, and

manufacturing know how between firms, universities, or other institutions” (Schaffer et
al., 2018:9).
Franchising – “A business arrangement that uses an agreement to license, control,

and protect the use of the franchisor’s patents, trademarks, copyrights, or business
know how, combined with a proven plan of business operation in return for royalties,
fees, or commissions (Schaffer et al., 2018:9).
Foreign branch – “Business presence by the investor in the host country” (Schaffer et
al., 2018:11).
Foreign subsidiary – “A foreign company organised under the laws of a foreign host
country, but owned and controlled by the parent corporation in the home country”
(Schaffer et al., 2018:11).
Joint venture – “A cooperative business arrangement between two or more companies

for profit (Schaffer et al., 2018:11).
Multinational corporations – “Firms that have significant foreign direct investment

assets or that derive a significant portion of their revenues from more than one country

Developed countries – “Countries with a high per capita income, have high standard
of living, and are in the later stages of industrialisation” Schaffer et al., 2018:12).
Developing countries – “Generally have a lower per capita income, a lower standard
of living, higher foreign debt, more rapid population growth, and a history of greater
state control over their economy” (Schaffer et al., 2018:12).
Newly industrialised countries – “Developing countries that have made rapid progress
toward becoming industrialised or technology-based economies” (Schaffer et al.,
2018:12).
Emerging market economies – “Countries or regions with the potential for rapid
economic growth” Schaffer et al., 2018:15).
Least-developed countries (LDCs) – “Lack the basic resources needed for

development and require vast amounts of foreign aid from the wealthier nations”
Export control – “Restriction on exports of goods, services, or technology to a country

or group of countries imposed for reasons of national security or foreign policy”
Sanctions – “Boarder and more comprehensive restrictions on trade and financial

transactions with countries, who sponsor international terrorism, engage in the
proliferation of weapons of mass destruction, threaten international peace, or violate
major principles of international law” (Schaffer et al., 2018:18).
Tariff barrier – “An import duty or tax imposed on goods entering the custom’s territory
or a nation. Most tariff rates today are determined by trade negotiations” (Schaffer et
al., 2018:19).
Non-tariff barrier – “Barriers to the import of foreign goods and services other than
tariffs. They usually are laws or administrative regulations that have the effect, directly
or indirectly, of restricting access of foreign goods or services to a domestic market”
Quota – “A quantitative restriction on imports that limits the quantity of an item that
may enter a country annually” (Schaffer et al., 2018:19).
Exchange rate risk – “Results from the fluctuations in the relative value of two
currencies when one is exchange for the other” (Schaffer et al., 2018:19).

Country risk – “Settling disputes between companies can be much more difficult in
international business than in domestic business. Litigating a case in court in a foreign
country is both costly and time consuming. International cases also involve complex
procedural problems” (Schaffer et al., 2018:24).
Freight forwarders and customs brokers – “Agent for the exporter or importer in
arranging transportation and insurance for goods, preparing import or export
documents, and moving goods through customs” (Schaffer et al., 2018:24).
INCOTERMS – “International commercial terms” (International Chamber of

Commerce, 2020).
It is important to feel comfortable with definitions before moving on to the following

sections.
2.3 International Business Operations
Bourély (n.d) describes international business operations as complex transactions

involving more than one country. Operations may therefore start in one country
through the extraction of raw material but the transformation or assembly of raw
material/(s) into a final product may occur in another country. Often, the companies do
not have direct experience, personnel, or capital to effectively engage in international
trade. As such, these companies involve international trading companies to assist
them in all aspects of international trade (Schaffer et al., 2018:3). Each transaction
requires various legal considerations, and because it is done internationally,
international business law governs the process (Schaffer et al., 2018:2). There are
types and sources of international business law as well as various legal considerations
that may affect international operations and transactions.
2.3.1 International business types
There are various types of business structures for conducting business internationally.
These structures exist between companies, governments or a company and a
government. This also refers to the structure of the foreign investment. Each type of
international business may be influenced by litigation and regulatory issues and this
must be considered before deciding on the best type of international business
(Bourély, n.d).

The types of businesses are:
• Trade through import and export

• Licensing, which includes all intellectual property and technology
consisting of trademarks, patents and copyrights
• Joint ventures (as a form of FDI)
• International project finance
• Mergers and acquisitions
• Foreign Direct Investment (FDI) (Bourély, n.d & World Trade
Organisation, 2012)
Trade through exporting
This is an uncomplicated way in which business may be conducted internationally. In

addition, it allows for a smaller capital requirement than the majority international
business structures that permit smaller businesses to engage on the international
business environment. An important document that must accompany any export and
import into the receiving state is a Certificate of Origin (CO). This document is required
by customs authorities of the state that has imported the products. This can also take
the form of a signed letter on a company letterhead (Schaffer et al., 2018:5).
Exporting can be done through direct exporting or indirect exporting.
Direct exporting:
Direct exporting occurs when the exporter manages all the export-related functions.
Alternatively, the exporter may choose to make use of foreign sales representatives
to manage all the export related functions.
Indirect exporting:
In the case of indirect exporting, the exporter makes use of specialised intermediaries
to provide the exporting functions. These functions may include, but are not limited to,
foreign marketing, foreign sales, finance, shipping (Schaffer et al., 2018:3).

Licensing
Licensing can take various forms but Schaffer et al., (2018:6) outlines the most
commons forms as:
• Patents
• Trademarks
• Copyrights
• Trade secrets
Companies that have significant Intellectual Property (IP) must protect its legal rights
by means of the above and this can be achieved by licencing. In the case of
international licencing, a contract is created by the holder of the IP to grant certain
rights to another party for a period of time. In return, the other party will provide the
holder of the IP with a fee or royalty (Schaffer et al., 2018:7).
Franchising
In this business arrangement, there is a contract whereby the franchisor provides the
‘recipe’ for doing business, including all the required elements to a franchisee. In
return, the franchisor will receive a return as outlined in the franchising agreement.
Franchising is a less complicated environment to do international business in than

some of the other options available. However, due to the differences in states and their
laws, the laws pertaining to a franchise are often conflicted and may cause legal issues
Let us consider the following case:
Dayan v McDonald’s Corp.
Background and facts:
Dayan received an exclusive franchise to operate McDonald’s restaurants in Paris,

France. The franchise agreement required that the franchise meet all quality,
service, and cleanliness (QSC) standards set by McDonald’s. The agreement
stated that the rationale for maintaining QSC standards was that a “departure of
restaurants anywhere in the world from these standards impedes the successful

operation of restaurants throughout the world, and injures the value of [McDonald’s]
patents, trademarks, trade name, and property.”
Dayan agreed not to vary from QSC standards without prior written approval. After
several years of quality and cleanliness violations, McDonald’s sought to terminate
the franchise. Dayan brought this action to enjoin the termination. The lower court
found that good cause existed for the termination and Dayan appealed.
Buckley, presiding justice
Dayan also argues that McDonald’s was obligated to provide him with the
operational assistance necessary to enable him to meet the QSC standards.
. . . Dayan verbally asked Sollars (a McDonald’s manager) for a French-speaking

operations person to work in the market for six months. Sollars testified that he told
Dayan it would be difficult to find someone with the appropriate background that
spoke French but that McDonald’s could immediately send him an English-
speaking operations man. Sollars further testified that this idea was summarily
rejected by Dayan as unworkable even though he had informed Dayan that sending
operations personnel who did not speak the language to a foreign country was very
common and very successful in McDonald’s international system. Nonetheless,
Sollars agreed to attempt to locate a qualified person with the requisite language
skills for Dayan.
Through Sollars’s efforts, Dayan was put in contact with Michael Maycock, a
person with McDonald’s managerial and operational experience who spoke
French. Dayan testified that he hired Maycock sometime in October 1977 and
placed him in charge of training, operations, quality control, and equipment.
As the trial court correctly realised: “It does not take a McDonald’s trained French
speaking operational man to know that grease dripping from the vents must be
stopped and not merely collected in a cup hung from the ceiling, that dogs are not
permitted to defecate where food is stored, that insecticide is not blended with
chicken breading; that past-dated products should be discarded; that a potato
peeler should be somewhat cleaner than a tire-vulcanizer; and that shortening
should not look like crank case oil.”

Clearly, Maycock satisfied Dayan’s request for a French-speaking operations man

to run his training program . . . The finding that Dayan refused non-French-speaking
operational assistance and that McDonald’s fulfilled Dayan’s limited request for a
French-speaking operational employee is well supported by the record. To
suggest, as plaintiff does, that an opposite conclusion is clearly evident is totally
without merit. Accordingly, we find McDonald’s fulfilled its contractual obligation to
provide requested operational assistance to Dayan.
In view of the foregoing reasons, the judgment of the trial court denying plaintiff’s
request for a permanent injunction and finding that McDonald’s properly terminated
the franchise agreement is affirmed.
Decision:
Judgment was affirmed for McDonald’s. McDonald’s had fulfilled all of its
responsibility under the agreement to assist the plaintiff in complying with the
provisions of the license.
The plaintiff had violated the provisions of the agreement by not complying with the
QSC standards. The plaintiff was permitted to continue operation of his restaurants,
but without use of the McDonald’s trademarks or name.
Case taken verbatim from source.
Source: (Schaffer et al., 2018:9-10)
Foreign Direct Investment (FDI)
FDI refers to ownership and operations of productive assets in a business. This is

generally a long-term arrangement. FDI can take various forms and considers the
industry and market conditions, legal considerations, and capital requirement. The
various forms of FDI include:
• Foreign branch
• Foreign subsidiary
• Joint venture

Even though FDI is an option of international business for all businesses, it is often the
focus of multinational corporations as these companies have more resources available
and can operate in various states (Schaffer et al., 2018:11).
Mergers and acquisitions
Acquisition refers to the transferring of management between two companies whereas

mergers refer to the combination of management of two companies (Peng & Meyer,
2016:581;588).
If this is done internationally, the legal and regulatory requirements of both countries
must be considered.
2.3.2 Legal considerations and legal issues
There are various considerations that may influence international business operations.
The World Trade Organisation (WTO) (2012) outlines the following legal
considerations:
• The structure of the proposed investment (as explained in the previous section)
• Selection of an international representative, this may be an international agency
or distributorship law
• Applicable law and jurisdiction
• International commercial arbitration (World Trade Organisation, 2012)
As a result of the legal considerations mentioned above, the state’s laws as well as
industry requirements and various other factors, various legal and regulatory issues
may stem from international business operations.
Bourély (n.d) outlines three categories of issues, namely:

• Transactional issues
• Litigation issues
• Regulatory issues
Let’s now briefly look at the issues affecting these categories:

Transactional issues
Transactional issues can occur in the following instances:
• Agency and distributorship law

• Sale of goods and services
• Contractual issues
• Customs
• Mergers and acquisitions on the international front
• Project financing
• Foreign investment structure (Bourély (n.d))
.
Litigation issues Litigation: the act, process, or practice

of settling a dispute in a court of law
Litigation issues can occur in the following instances:
• Law and forum

• Expropriation conduct
• Foreign domestic rules of procedure
• Enforcement of judgements
• Sovereign immunity
• International commercial arbitration (Bourély (n.d))
Regulatory issues
Regulatory issues can occur in the following instances:
• Financing
• Tax regimes
• Bankruptcy
• Competition
• Antitrust law (Bourély (n.d))
It is important to note that all the above issues play a vital role in the legalities relating
to international business and influence all stakeholders.

2.4 Conducting Business in Countries of Various Economic Status
The type of international business and the legal requirements will be affected by the
socio-economic status of both countries involved in the trade. We therefore must
consider the conditions related to the different economic environments.
2.4.1 Developing countries
Various adverse policies exist for companies that want to engage in business
opportunities in developing countries. These are generally put into place when the
local country can produce the goods itself. As such, these adverse policies act as
a deterrent for international trading practices, and include:
• High tariffs
• Taxes
• Import licensing requirements
• Financial regulation
• Controls on technology transfer
• Trade and investment barriers (Schaffer et al., 2018:12)
Where a developing country cannot create a product itself, it often provides favourable
conditions for foreign trade.
2.4.2 Newly industrialised countries
Conditions for conducting international business in newly industrialised countries are

as follows:
• These countries provide favourable investment conditions and allow for a

transition between agricultural and industrial economies.
• These countries generally export manufactured products. In addition, there is
much investment from various multinationals.
• In addition, they have foreign exchange reserves.
Examples of newly industrialised countries include Hong Kong, Singapore, Taiwan,

and South Korea (Schaffer et al., 2018:15).

2.4.3 Least-developed countries (LDCs)
The following conditions should be considered when doing business in LDCs:

• Inadequate infrastructure
• Poor essential services such as healthcare and education
• No or low technological bases
• Public corruption
• Weak or non-existent financial institutions
• Limited international trading opportunities (Schaffer et al., 2018:15)
2.5 Laws Governing International Business in South Africa
South Africa practices mixed common law and civil law (Peng & Meyer, 2016:46). This
means that the laws and regulations from the country with which South Africa trades
will have an impact on the business and laws related to it.
The family of law practice by South Africa’s major trading partners can be seen in
Table 2.1.
Table 2.1 Legal traditions in South Africa’s major international business

partners
Family of law Sub-group Countries

Civil law Socialist legal system China
Common law American common law United States of America
Civil law Germanic civil law Germany
Common law Mixed with influences of India
Hindu and Islamic law
Common law English law United Kingdom
Other Islamic law Saudi Arabia
(Santander, 2020; Peng & Meyer, 2016:46; Oxford LibGuides, 2020; Library of
Congress, 2020)
In addition to the law practised in South Africa, there have been various changes to
doing business in South Africa since 2014. This section considers the acts and laws
that impact on international business in South Africa (Kleitman & Dekker, 2020):

• Broad-Based Black Economic Empowerment Act 46 of 2013

• Protection of Investment Act 22 of 2015
• Competition Amendment Act 18 of 2018
• Currency and Exchanges Act 9 of 1933
• Special Economic Zones Act 16 of 2014
Broad-Based Black Economic Empowerment Act 46 of 2013
South Africa is in support of foreign investment in all sectors. However, when the BEE
Act 46 of 2013 came into effect in 2014, it impacted the ability of foreign investors to
conduct business, conclude contracts and tenders in South Africa.
The following sectors regulate foreign shareholders:
• Broadcasting
• Telecommunications
• Banking
• Insurance;
• Defence
• Mining (Kleitman & Dekker, 2020)
Protection of Investment Act 22 of 2015
This act regulates investment in South Africa. It outlines the laws that all investors
must abide by when investing in South Africa. An investment, amongst others, takes
the form of a merger or acquisition of an enterprise and another enterprise between
states (Kleitman & Dekker, 2020).
Competition Amendment Act 18 of 2018
The amended act was signed on 13 February 2019 and it is utilising a phased
approach in introducing the amendments (Kleitman & Dekker, 2020).
In terms of the international business environment, it states that a Government

Committee may prohibit a foreign merger if it believes to have a detrimental effect on
South African national security interests (Kleitman & Dekker, 2020).

Currency and Exchanges Act 9 of 1933
The Minister of Finance outlines the policy guidelines governing currency and
exchanges. An authorised dealer must approve all exchange control applications
(Kleitman & Dekker, 2020).
Special Economic Zones Act 16 of 2014
The Special Economic Zones Act came into effect in February 2016. This act outlines
several measures and incentives for foreign direct investment (Kleitman & Dekker,
2020).
The above outlined several Acts that must be taken into consideration in South Africa
when engaging in international business operations. The affects the investment
structure of foreign investors to a large extent.
Review the report below. It outlines the openness to, and restrictions upon, foreign
investment in South Africa. This report was prepared by the U.S Department of State.
Policies Towards Foreign Direct Investment
The government of South Africa is generally open to foreign investment as a means

to drive economic growth, improve international competitiveness, and access foreign
markets. Merger and acquisition activity is more sensitive and requires advance work
to answer potential stakeholder concerns. The 2018 Competition Amendment Bill,
which was signed into law on February 13, 2019, introduced a mechanism for South
Africa to review foreign direct investments and mergers and acquisitions by a foreign
acquiring firm on the basis of protecting national security interests (see section on
Laws and Regulations on Foreign Direct Investment below). Virtually all business
sectors are open to foreign investment. Certain sectors require government approval
for foreign participation, including energy, mining, banking, insurance, and defense.
The Department of Trade and Industry’s (the dti) Trade and Investment South Africa
(TISA) division provides assistance to foreign investors. In the past year, they opened
provincial One-Stop Shops that provide investment support for foreign direct
investment (FDI), with offices in Johannesburg, Cape Town, and Durban, and a
national One Stop Shop located at the dti in Pretoria and online
at http://www.gov.za/Invest percent20SA percent3AOnestopshop.

An additional one-stop shop has opened at Dube Trade Port, which is a special
economic zone aerotropolis linked to the King Shaka International Airport in
Durban. The dti actively courts manufacturing industries in which research indicates
the foreign country has a comparative advantage. It also favors manufacturing that it
hopes will be labor intensive and where suppliers can be developed from local
industries. The dti has traditionally focused on manufacturing industries over services
industries, despite a strong service-oriented economy in South Africa. TISA offers
information on sectors and industries, consultation on the regulatory environment,
facilitation for investment missions, links to joint venture partners, information on
incentive packages, assistance with work permits, and logistical support for
relocation. The dti publishes the “Investor’s Handbook” on its website: www.dti.gov.za
While the government of South Africa supports investment in principle and takes active
steps to attract FDI, investors and market analysts are concerned that its commitment
to assist foreign investors is insufficient in practice. Some felt that the national-level
government lacked a sense of urgency to support investment deals. Several investors
reported trouble accessing senior decision makers. South Africa scrutinizes merger-
and acquisition-related foreign direct investment for its impact on jobs, local industry,
and retaining South African ownership of key sectors. Private sector representatives
and other interested parties were concerned about the politicization of South Africa’s
posture towards this type of investment. Despite South Africa’s general openness to
investment, actions by some South African Government ministries, populist
statements by some politicians, and rhetoric in certain political circles show a lack of
appreciation for the importance of FDI to South Africa’s growth and prosperity and a
lack of concern about the negative impact domestic policies may have on the
investment climate. Ministries often do not consult adequately with stakeholders
before implementing laws and regulations or fail to incorporate stakeholder concerns
if consultations occur. On the positive side, the President, assisted by his appointment
of four investment envoys, and his new cabinet are working to restore a positive
investment climate and appear to be making progress as they engage in senior level
overseas roadshows to attract investment.
Limits on Foreign Control and Right to Private Ownership and Establishment
Currently there is no limitation on foreign private ownership. South Africa’s

transformation efforts – the re-integration of historically disadvantaged South Africans

into the economy – has led to policies that could disadvantage foreign and some
locally owned companies. In 2017, the Broad-Based Black Socio-Economic
Empowerment Charter proposed for the South African mining and minerals industry
required an increase to 30 percent ownership by black South Africans, but was mired
in the courts as industry challenged it. The Charter was retracted for revision and a
new version was proposed in 2018. The Broad-Based Black Economic Empowerment
Act of 2013 (B-BBEE), and associated codes of good practice, requires levels of
company ownership and participation by Black South Africans to get bidding
preferences on government tenders and contracts. The dti created an alternative
equity equivalence (EE) program for multinational or foreign owned companies to
allow them to score on the ownership requirements under the law, but many view the
terms as onerous and restrictive. Currently eight multinationals, most in the
technology sector, participate in this program, most in the technology sector.
Other Investment Policy Reviews
The World Trade Organization carried out in 2015 a Trade Policy Review for the
Southern African Customs Union, in which South Africa accounts for over 90 percent
of overall GDP. Neither the OECD nor the UN Conference on Trade and
Development (UNCTAD) has conducted investment policy reviews for South Africa.
Business Facilitation
According to the World Bank’s Doing Business report, South Africa’s rank in ease of
doing business in 2019 was unchanged from 2018 at 82nd of 190. It ranks 134th for
starting a business, taking an average of forty days to complete the process. South
Africa ranks 143rd of 190 countries on trading across borders.
In 2017, the dti launched a national InvestSA One Stop Shop (OSS) to simplify
administrative procedures and guidelines for foreign companies wishing to invest in
South Africa. The dti, in conjunction with provincial governments, opened physical
OSS locations in Cape Town, Durban, and Johannesburg. These physical locations
bring together key government entities dealing with issues including policy and
regulation, permits and licensing, infrastructure, finance, and incentives, with a view to
reducing lengthy bureaucratic procedures, reducing bottlenecks, and providing post-
investment services. The virtual OSS web site is: http://www.gov.za/Invest
percent20SA percent3AOnestopshop.

The Companies and Intellectual Property Commission (CIPC), a body of the dti, is
responsible for business registrations and publishes a step-by-step process for
registering a company. This process can be done on its website
(http://www.cipc.co.za/index.php/register-your-business/companies/), through a self-
service terminal, or through a collaborating private bank.
New business registrants also need to register through the South African Revenue
Service (SARS) to get an income tax reference number for turnover tax (small
companies), corporate tax, employer contributions for PAYE (income tax), and skills
development levy (applicable to most companies). The smallest informal companies
may not be required to register with CIPC, but must register with the tax authorities.
Companies also need to register with the Department of Labour (DoL)
– www.labour.gov.za – to contribute to the Unemployment Insurance Fund (UIF) and
a compensation fund for occupational injuries. The DoL registration takes the longest
(up to 30 days), but can be done concurrently with other registrations.
Outward Investment
South Africa does not incentivize outward investments. South Africa’s stock foreign
direct investments in the United States in 2017 totaled USD 4.1 billion (latest figures
available), an almost 40 percent increase from 2016. The largest outward direct
investment of a South African company is a gas liquefaction plant in the State of
Louisiana by Johannesburg Stock Exchange (JSE) and NASDAQ dual-listed
petrochemical company SASOL. There are some restrictions on outward investment,
such as a R1 billion (USD 83 million) limit per year on outward flows per company.
Larger investments must be approved by the South African Reserve Bank and at least
10 percent of the foreign target entities voting rights must be obtained through the
investment.
https://www.resbank.co.za/RegulationAndSupervision/
FinancialSurveillanceAndExchangeControl/FAQs/Pages/Corporates.aspx
Information taken verbatim from source.
Source: (U.S Department of State, 2019)

THINK POINT
1. Based on the above report, and the agreements (newly introduced or

amended), do you think that the agreements and laws relating to
international business are bearing fruit?
2. What other amendments to agreements, treaties and laws would you
suggest South Africa put in place to improve international business?
2.6 Risks Related to International Business
When business operates internationally, various considerations are critical. This

includes the socio-economic standing of a country, legal considerations, potential legal
issues, and the type of international business investment structure. In turn, this may
lead to several risks. These can be grouped in various categories of risk and include:
2.6.1 Distance and logistics
International business transactions mean that the sale and delivery of goods (and
services) will be outside the borders of a country. This leads to:
Payment or credit risk
In the case of this risk, the buyer does not want to pay for the products obtained/initially
purchased (Schaffer et al., 2018:15).
Supplier risk
Supplier risk relates to 1) receiving defective products, and 2) fraud (Schaffer et al.,
2018:16).
Property or marine risk
This refers to damage that occurred because of the transportation of the good/s that
occurs between countries (Schaffer et al., 2018:16).

Transatlantic Financing Corporation v United States
Background and facts
The United States contracted with Transatlantic Financing, the operator of a cargo
ship, to transport wheat from Texas to Iran in 1956. The parties never agreed on
the route the ship would take. Six days after the ship left Texas, the government of
Egypt was at war with Israel and blockaded the Suez Canal. As a result, the ship
had to sail around the Cape of Good Hope on the southern tip of Africa, extending
the voyage several thousand miles and adding an additional 14 percent to
Transatlantic’s costs. Transatlantic sued for the added expense, claiming that it
had agreed only to travel the “usual and customary” route to Iran through Suez,
and that its performance became legally impossible. The lower court ruled in favour
of the United States, and Transatlantic appealed.
J. Skelly Wright, Circuit Judge
* * * It is now recognized that “A thing is impossible in legal contemplation when it

is not practicable; and a thing is impracticable when it can only be done at an
excessive and unreasonable cost.” [citations omitted]* * *
It seems reasonable, where no route is mentioned in a contract, to assume the

parties expected performance by the usual and customary route at the time of
contract. Since the usual and customary route from Texas to Iran at the time of
contract was through Suez, closure of the Canal made impossible the expected
method of performance. But this unexpected development raises rather than
resolves the impossibility issue, which turns additionally on whether the risk of the
contingency’s occurrence [closure of the canal] had been allocated and, if not,
whether performance by alternative routes was rendered impracticable.
The contract in this case does not expressly condition performance upon
availability of the Suez route. Nor does it specify “via Suez” or, on the other hand,
“via Suez or Cape of Good Hope.” Nor are there provisions in the contract from
which we may properly imply that the continued availability of Suez was a condition
of performance. Nor is there anything in custom or trade usage, or in the
surrounding circumstances generally, which would support our constructing a

condition of performance. The numerous cases requiring performance around the

Cape when Suez was closed, (The Eugenia), (1964) 2 Q.B. 226 . . . indicate that
the Cape route is generally regarded as an alternative means of performance.
[Thus, the risk of canal closure was not allocated by contract or custom to either
party.]* * *
it is more reasonable to expect owner-operators of vessels to insure against the

hazards of war. They are in the best position to calculate the cost of performance
by alternative routes (and therefore to estimate the amount of insurance required),
and are undoubtedly sensitive to international troubles which uniquely affect the
demand for and cost of their services. The only factor operating here in
Transatlantic’s favour is the added expense, allegedly $43,972.00 above and
beyond the contract price of $305,842.92, of extending a 10,000- mile voyage by
approximately 3,000 miles. While it may be an overstatement to say that increased
cost and difficulty of performance never constitute impracticability, to justify relief
there must be more of a variation between expected cost and the cost of performing
by an available alternative than is present in this case— where the promisor can
legitimately be presumed to have accepted some degree of abnormal risk and
where impracticability is urged on the basis of added expense alone.
Decision
Judgment affirmed for the United States. The closure of the canal and the resulting
additional expenses of the alternate route did not make the contract commercially
impracticable, (and therefore not legally impossible) to perform.
We turn then to the question whether occurrence of the contingency rendered

performance commercially impracticable under the circumstances of this case. The
goods shipped were not subject to harm from the longer, less temperate Southern
route. The vessel and crew were fit to proceed around the Cape. Transatlantic was
no less able than the United States to purchase insurance to cover the
contingency’s occurrence. If anything it is more reasonable to expect owner-
operators of vessels to insure against the hazards of war. They are in the best
position to calculate the cost of performance by alternative routes (and therefore to
estimate the amount of insurance required), and are undoubtedly sensitive to
international troubles which uniquely affect the demand for and cost of their
services. The only factor operating here in Transatlantic’s favour is the added

expense, allegedly $43,972.00 above and beyond the contract price of

$305,842.92, of extending a 10,000- mile voyage by approximately 3,000 miles.
While it may be an overstatement to say that increased cost and difficulty of
performance never constitute impracticability, to justify relief there must be more of
a variation between expected cost and the cost of performing by an available
alternative than is present in this case— where the promisor can legitimately be
presumed to have accepted some degree of abnormal risk and where
impracticability is urged on the basis of added expense alone.
(Schaffer et al., 2018:16-17)
2.6.2 Language and cultural differences
When conducting business internationally, barriers often arise from social

conventions, cultural issues and religious beliefs. To mitigate the risks related to
language and cultural differences, the use of foreign lawyers is recommended where
necessary. In addition, the language barrier can be reduced using Incoterms in
contracts (Schaffer et al., 2018:18).
Incoterms will be discussed further in this chapter. You can also obtain more
information on the Incoterms from the International Chamber of Commerce.
Available from: https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-

2020/
2.6.3 Cross-border trade controls
All international business transactions are governed by government through the state’s
laws and regulations.
The following are the most commonly used by government to regulate international
business transactions:

Export controls and sanctions
This refers to restrictions on exports and includes goods, services, and technology.
They are used to support national security or foreign policy. Sanctions are restrictions
placed on trade and finances with countries who may pose a threat to international
peace (Schaffer et al., 2018:19).
In South Africa, the International Trade Administration Commission of South Africa,

aligned to the restrictions prescribed by the WTO, regulates export controls. It is
applied to:
• Enforce health
• Support the environment
• Security and safety
• Technical standards arising from domestic and international agreements
• 1988 UN Convention Against the Illicit Traffic in Narcotic Drugs and
Psychotropic Substances (ITAC, 2020)
There are 177 tariff lines under export control and 276 tariff lines under import control
in South Africa.
In addition to the above, we must consider the impact of COVID-19 on export control
regulations in South Africa as the effect of the pandemic will arguably be felt for years
to come.
The Minister of Trade and Industry stated that there is an intention to remove licensing
requirements on various medications and related health products and that this will be
achieved through a phased approach. Changes in South African export controls
due to COVID-19
Under the COVID-19 Export Control regime, the following medicines are no longer
subject to export control regulations:
• Penicillin, antibiotics, hormones and vitamins for veterinary use

• Tetracyclines
• Chloramphenico
• Trimethoprim;
• Macrolides
• Fluoroquinolones
• Aminoglycosides

• Other medicaments containing ephedrine or its salts

• Other medicaments containing pseudoephedrine (INN) or its salts
• Other medicaments containing norephedrine or its salts
Furthermore, export permits are not enforced for individual prescriptions or clinical
trials (Government Gazette, 2020).
Tariff and non-tariff barriers
A tariff is an import barrier whereby an import duty or tax must be paid on products
entering the borders of a country. This is negotiated by trade agreements (Schaffer et
al., 2018:19).
Non-tariff barriers
This refers to all barriers related to the import of products and services other than
tariffs (Schaffer et al., 2018:19).
2.6.4 Currency risk
When businesses engage in international transactions, they deal in a currency other

than their own. This means that the host or home country of the transactions may not
have the same currency. As a result, the currency in question may have a direct
impact on the profits generated from international business transactions. This results
in exchange rate risk and currency control risk as well as currency control and political
risks. In addition, currency risk extents to political risks, foreign laws and regulations,
and expropriation (Schaffer et al., 2018:18-21).
Currency control in South Africa
In South Africa, the South African Reserve Bank (SARB) stipulates exchange control
legislation as promulgated by Government Notice No. R9 in Government Gazette No.
33926 of 14 January 2011 (SARB, 2020). It outlines the regulatory requirements for
individuals and companies. In the case of a company, it relates to payment, loans and
investments in foreign countries made by South African residents (Incompass, 2020).

The key points of the South African Exchange Control Regulations are:
• It is applicable to all transactions regardless of the size of value

• No resident may transfer without prior approval
• No company or any legal entity may effect a transfer without prior approval
• Only authorised dealers are permitted to effect a transfer of currency
• Any outward payments may only be made under the conditions approved by
authorised dealers who act on the behalf of the SARB
• The Reserve Bank must be informed of all transactions made to foreign parties
• Personal transfers must adhere to amount prescribed (Incompass, 2020).
It is recommended that you review the following legislation:
Exchange Control Regulations, 1961
Available from:
https://www.resbank.co.za/RegulationAndSupervision/FinancialSurveillanceAndExch
angeControl/Legislation/Documents/Exchange%20Control%20Regulations,%201961
.pdf
Political risk
Whenever a company conducts business internationally, there is a risk of potential

political issues. This could, in turn, affect the investing company’s operations and
interests (Schaffer et al., 2018:22).
Risks related to expropriation
This refers to a scenario where the government of a country takes control of privately-
owned assets in return for compensation. This can pose a risk to international trade if
a company’s investment includes the asset that is being expropriated (Schaffer et al.,
2018:22).
Foreign laws and regulations
Every country has its own laws and regulatory requirements – this is no different
internationally. However, the businesses engaging in trade will both have to adhere to
the laws and regulations managing their contractual agreements. This may result in

risk if one of the businesses does not abide by the laws and regulations (Schaffer et
al., 2018:22).
The following case study outlines an example of risk related to international trade.
DURBAN - Concerns have been raised and directed at South African Chamber of
Commerce and Industry (Sacci) about the rising practice of fraudulent certificates
of origin being issued in South Africa and used to extort importers.
Commenting on the matter, the Durban Chamber of Commerce and Industry, a

Sacci member, said it had a decades-long history of issuing certificates of origin
and trade certifications.
The Durban chamber is a Sars-authorised and International Chamber of

Commerce-accredited issuer of certificates of origin and trade certifications.
“A certificate of origin is an important international trade document that certifies that

goods in a particular export shipment are wholly obtained, produced, manufactured
or processed in a particular country. It also serves as an official declaration by the
exporter adding credibility to their product or service and the export/import
process,” said Palesa Phili, Durban Chamber chief executive.
“Virtually every country in the world considers the origin of imported goods when
determining the duty that will be applied or, in some cases, whether the goods may
be legally imported at all.”
Sihle Zikalala, MEC for Economic Development, Tourism and Environmental

Affairs, commended the Durban Chamber for providing such an important
accredited service to its members and organised business at large.
“Certificates of origin help to promote KwaZulu-Natal and South Africa as a tried-

and-tested export destination for certain goods and products,” said Zikalala.
“Export and trade play a crucial role in promoting sustainable and inclusive
economic growth. They contribute to GDP growth and also drive industrialisation,
manufacturing, technology adoption and much needed infrastructure upgrades,”
he said.

The Durban Chamber said it was the biggest issuer of certificates of origin in South
Africa.
Case used verbatim from source.

(Mercury, 2019)
THINK POINT
What measures are available from an international business law point of view
to combat fraudulent certificates of origin?
(When you have completed this module, come back to this question and try to
answer it again).
Based on the Sacci case, what risk/s can be identified that will impact on current
and/or potential future international business transactions?
2.7 Contracts
Contracts are vital when doing business and the same can be said for conducting
business internationally. Contracts outline the conditions of transactions and the
judicial process (to be discussed in Chapter Four).
2.7.1 Elements to be included in international business contracts
Cueto (2017) outlines the following critical points that must be included in all
international business contracts:
Payment – this includes the international payment modes (payment in advance, open
account, documentary collection and documentary credit).
Termination – this enables parties to terminate the contract prematurely.
Jurisdiction – this point is of vital importance as it ‘assigns’ a court that may resolve
any disputes that arise from the contract.

In general, the wording will be outlined as follows:
“The courts of (state) will have exclusive jurisdiction to adjudicate any dispute arising
under or in connection with this Agreement”.
This will be discussed in more detail in Chapter Four.
Dispute (resolution) – the contract must be clear and must outline the procedure
states must follow in the event of a dispute. It must also be stated if a dispute will be
resolved through arbitration or litigation.
Force
The full term is force majeure. It outlines the conditions under which the conditions of
the contract do not have to be followed. This may be as a result of the performance
being impractical, illegal or impossible.
This is evident during the COVID-19 pandemic. As a result of lockdown worldwide,

businesses could not fulfil their contractual obligations due to measures beyond their
control. Defy, for example, could not manufacture, ship and distribute their appliances
in time and they were therefore not adhering to contract requirements. However, the
reason for this was the pandemic.
Consider the following case study.
It is important to note that the contract included an inspection and notice of non-
conformity clause. As such, the buyer had a short period of time after delivery to check
the quality of the goods (Schaffer et al., 2018:105).
Chicago Prime Packer, Inc. v. Northam Food Trading Co.
BACKGROUND AND FACTS
Chicago Prime Packers, Inc., was a Colorado corporation with its principal place of
business in Avon, Colorado. Northam Food Trading Company was a Canadian
corporation with its principal place of business in Montreal, Quebec, Canada.
Chicago Prime and Northam were wholesalers of meat products. In March 2001,
Chicago Prime contracted with Northam to sell 1,350 boxes of government

inspected fresh, blast frozen pork back ribs, which Chicago Prime purchased from
Brookfield Farms, a meat processor. The agreed-on price for the ribs was
$178,200.00, and payment was required within seven days from the date of
shipment. The ribs were stored at three different locations enroute to Northam’s
customer Beacon Premium Meats but at all times were stored at or below
acceptable temperatures. However, the ribs ultimately proved to be spoiled and
were condemned by the U.S. Department of Agriculture. Nevertheless, Chicago
Prime continued to demand payment from Northam. Chicago Prime sued Northam
for breach of contract because it refused to pay for the ribs.
MEMORANDUM OPINION AND ORDER
In this case, it is undisputed that the parties entered into a valid and enforceable
contract for the sale and purchase of pork loin ribs, Chicago Prime transferred a
shipment of pork loin ribs to a trucking company hired by Northam, Northam has
not paid Chicago Prime for the ribs pursuant to the contract, and Chicago Prime
has suffered damages in the amount of the contract price. Therefore, Chicago
Prime has established the essential elements for a breach of contract claim.
Northam asserts, however, that the ribs were spoiled at the time of transfer and,
as a result, it is relieved of its duty to pay under the contract. The burden is on
Northam to establish non-conformity. The evidence is evaluated in
light of that burden.
1. Northam has failed to prove that the ribs were non-conforming at the time of
transfer.
Chicago Prime produced evidence . . . that the ribs delivered by Brookfield were
processed and stored in acceptable conditions and temperatures from the time
they were processed until they were transferred to Northam on April 24, 2001 . . .
The ribs were appropriately processed and maintained in acceptable temperatures
while at Brookfield; and no other meat products that were processed and stored at
the same time and under the same conditions as the ribs were found to be spoiled
or objectionable.
Northam argues that Chicago Prime has “utterly failed to establish that the ribs
were damaged while at Beacon.” That argument ignores the fact that Northam

carries the burden of proving that the ribs were non-conforming at the time of
receipt.
2. Northam failed to prove that it examined the ribs, or caused them to be

examined, within as short a period as is practicable under the circumstances.
Northam is correct that “there were no contractual [terms] requiring inspection upon
delivery.” . . . When an issue is not addressed by the contract, the provisions of the
CISG govern. Because the contract at issue did not contain an inspection provision,
the requirement under the CISG that the buyer examine the goods, or cause them
to be examined, “within as short a period as is practicable in the circumstances” is
controlling. CISG, Art. 38(1). Decisions under the CISG indicate that the buyer
bears the burden of proving that the goods were inspected within a reasonable
time. See, e.g., Fallini Stefano & Co. s.n.c. v. Foodic BV, [citation omitted] . . . The
determination of what period of time is “practicable” is a factual one and depends
on the circumstances of the case.
Section 3 of Article 38 of the CISG provides that “if the goods are redirected in
transit or redispatched by the buyer without a reasonable opportunity for
examination by him and at the time of the conclusion of the contract the seller knew
or ought to have known of the possibility of such redirection or redispatch,
examination may be deferred until after the goods have arrived at the new
destination.” CISG, Art. 38(3). In this case, Chicago Prime knew, or ought to have
known, that the ribs would be redirected or redispatched after receipt because
Chicago Prime knew that Northam was only a “trading company,” which is defined
as a company that buys and sells meat, but does not own any facilities, brick and
mortar, or trucks. Thus, under the CISG, examination of the ribs could have been
deferred until after they arrived at Beacon.
It is notable, however, that Northam did not present any testimony or evidence as
to why the ribs or a
portion of the ribs were not and could not have been examined by Northam,
Beacon, or someone acting on their behalf when the shipment was delivered to
Beacon or within a few days thereafter . . . Northam points out that the ribs were
wrapped and shipped in sealed non-transparent cartons or packages that are either
white or brown. However . . . nothing would have precluded a Beacon
representative from opening and inspecting the boxes of ribs . . . Northam simply

did not present any evidence indicating why the boxes or at least enough of the
boxes to constitute a reasonable inspection could not have been opened and
examined when they arrived at Beacon or shortly after arrival . . . Accordingly,
Northam has failed to demonstrate that it examined the ribs, or caused them to be
examined within as short a period as is practicable under the circumstances.
3. Northam also failed to prove that it gave notice to Chicago Prime of the alleged
lack of conformity within a reasonable time after it ought to have discovered the
alleged lack of conformity.
Article 39 of the CISG states that “[a] buyer loses the right to rely on a lack of
conformity of the goods if he does not give notice to the seller specifying the nature
of the lack of conformity within a reasonable time after he has discovered it or ought
to have discovered it.”CISG,Art.39.A buyer bears the burden of showing that notice
of non-conformity has been given within a reasonable time. The evidence shows
that, shortly after Beacon discovered the ribs were “off condition” and did not “look
good,” both Northam and Chicago Prime were notified of a potential problem.
Chicago Prime therefore received notice within a reasonable time after Northam
discovered the problem; however, the question here is whether Chicago Prime was
notified within a reasonable time after Northam should have discovered the
problem.
A court in Italy found that the reasonableness of the time for a notice of non-
conformity provided in Article 39 is strictly related to the duty to examine the goods
within as short a period as is practicable in the circumstances set forth in Article
38. See Sport D’Hiver di Genevieve Culet v. Ets Louys et Fils, [citation omitted].The
court further noted that when defects are easy to discover by a prompt examination
of the goods, the time of notice must be reduced. The putrid condition of the meat
was apparent even in its frozen state.
Because this court has found that Northam failed to examine the shipment of ribs
in as short a period of time as is practicable, it follows that Northam also failed to
give notice within a reasonable time after it should have discovered the alleged
non-conformity.
In summary, the object of the CISG in requiring inspection in as short a period of

time as is practicable, and notice promptly thereafter, is to avoid controversies

such as this—where, because of the passage of time, the condition of the goods
at the time of transfer cannot be reliably established. When that happens, the
burden falls on the buyer, who had the opportunity to inspect the goods, but failed
to do so.
Decision. The district court concluded that the buyer failed to satisfy its
obligations with respect to the inspection of the goods and notification of the seller
of non-conformities within a reasonable time. As a result, the court entered
judgment in favor of the seller in the amount of $178,200.00 plus $27,242.63 in
interest for a total payment of $205,442.63.
Comment. This case is interesting not only with respect to ascertaining the
buyer’s duties of inspection and notification but also for its discussion of sources
for interpretation of the CISG. The court cited Dutch and Italian case law in reaching
its conclusion and additionally noted that the CISG must be interpreted in a manner
consistent with its international character and the need to promote uniformity and
good faith in international trade.
Case study taken verbatim from source.
(Source: Schaffer et al., 2018:105-107)
This case study outlines the importance of a contract in all business transactions, but
especially, in international trading.
2.7.2 Incoterms
The use of Incoterms in international business transactions, where the sale of goods
is involved, is valuable. It includes terms that have specific meaning regardless of the
place of language or customs of the nation’s trading with each other. In addition, it
outlines the obligations, costs, and risks of both the business transaction partners
under each rule of the Incoterms (ICC, 2020).
It is therefore important to include the relevant Incoterms in the contract to ensure that
there are no misunderstandings between trading partners.
The following are examples of Incoterms (ICC, 2020):

Rules for any mode or modes of transport
• FCA – Free Carrier

• EXW – Ex Works
• CPT – Carriage Paid To
• DAP – Delivered at Place
• CIP – Carriage and Insurance Paid to
• DPU – Delivered at Place Unloaded
• DDP – Delivered Duty Paid
Rules for sea and inland waterway transport
• FOB – Free on Board

• FAS – Free Alongside Ship
• CFR – Cost and Freight
• CIF – Cost Insurance and Freight
These are a few examples of the ICC’S Incoterms and they have the same meaning
globally (ICC, 2020). It is recommended that these be used in international business
contracts to reduce risks associated with communication.
2.8 Conclusion
This chapter considered the various factors that influence international business
operations. We noted that the type of foreign investment impacts on the potential
issues and may be influenced by the socio-economic conditions of a country. We
outlined the importance of a sound international business contract and how it can
reduce risk. Furthermore, we considered the various legalities that must be considered
when doing business with South Africa and that there have been various changes
since 2014. We also looked at a case highlighting the application international
business.
The next chapter focuses on the legal dynamics of an individual in international

business law.

1. Outline the various business structures for foreign investment and suggest
the most favourable options for foreign investment in South Africa. Motivate
your answer.
2. Assess the various potential legal issues that may arise from doing business
internationally.
3. Review the conditions for international business in countries with various
socio-economic environments.
4. Review the various laws that changed since 2014 that affect foreign
investment in South Africa and outline the practical application thereof.
5. Examine the risks of conducting business internationally and include
examples of application.

CHAPTER THREE:
THE INDIVIDUAL IN INTERNATIONAL LAW

• Comment on how contemporary legal dynamics involve the role of individuals

in the international system
• Outline the legal personality of an individual in the context of international
business law
3.1 Introduction
So far, we have considered the international legal system and looked at international
business law in further detail.
However, you will recall from Chapter One, that international law considers three kinds
of international relationships. This includes the relationship between states and
persons as well as persons and persons (August et al., 2013:21).
This chapter examines the legal dynamics associated with an individual and the role
an individual play in the international legal system.
3.2 Definitions
First, let’s consider a few important definitions:
Human rights – “Basic rights intended to protect all people from cruel and inhumane
treatment, threats to their lives, and persecution” (August et al., 2013:62).
State responsibility – “Liability of a state for the injuries that it causes to foreign
persons” (August et al., 2013:62).

3.3 Legal Dynamics Governing the Position of the Individual in the

International Legal System
International law has various international persons, namely:
• States and their sub-divisions

• International organisations
• Businesses
• Individuals (August, 2013:32)
In the contemporary international legal system, the individual’s international rights and
duties can stem from various quarters. These include:
• Areas of substantive law

• International treaties
• Customary law
• Security Council resolutions
• General principles of law (Parlett, 2012:299)
These influence an individual’s legal personality.
3.3.1 The individual’s legal personality in the international legal system
International law views an individual in one of two ways, namely:
• Ignoring the individual

• Treat the individual as its subject (August et al., 2013:62)
Ignoring the individual
In international law, the individual has derivative rights. This means that a state can
seek compensation for its citizen from another state if injuries occurred. This is called
state responsibility (August et al., 2013:62) and results from the fact that treaties are
based on common consent and as such, states are subjects, and the individual is not
considered separately (Law Teacher, 2019).

The individual as its subject
In this case, the individual is seen to have human rights and as such they can assert
claims on their own behalf against states (August et al., 2013:62). As a result of the
treaties between states, individuals have access to international human rights
organisations (Orakhelashvili, 2001:254). An individual only has rights where it is
recognised by states. If there are states that do not recognise the rights of an individual
as a subject, the individual will have no legal presence (Orakhelashvili, 2001:255).
In additional, individuals can have a legal capacity in the following cases:
• The individual has rights and duties under international law

• There are judicial and quasi-judicial international institutions that protect the
rights of the individual
• International law rules can be applied to the conduct and relationships of the
individual
• Individual and appropriate transnational corporations can participate in
international law-making
• The individual can be held responsible and tried by international bodies and
under international law (Orakhelashvili, 2001:249)
According to Clapham (2010), the individual has obligations and rights under general
international law. However, there are no associated remedies.
Consider the following case study:
In July 1979, the Nicaraguan government of General Anastasio Somoza fell to the
Sandinista revolutionaries. As usually occurs, members of the old regime fled the
country to escape the reach of “revolutionary justice.” But where defeated
aristocracies once emigrated to London or Paris, now they seem to wind up in
Miami. One of the emigres—Mrs. Josefina Navarro de Sanchez, the wife of
President Somoza’s former Minister of Defence—brought the present suit to collect
on a check for $150,000 issued to her by the Nicaraguan Central Bank (Banco
Central de Nicaragua) shortly before Somoza’s fall. Mrs. Sanchez was unable to
cash this check after the new government assumed power and placed a stop-
payment order on it.
[Mrs. Sanchez then brought suit against the Banco Central in a United States court
seeking an order to make it honour the check (which was drawn on a U.S. bank).

The trial court instead granted Banco Central’s motion for a summary judgment
and dismissed the suit. Mrs. Sanchez appealed. The central issue on appeal was
whether an individual (Mrs. Sanchez) who is a national of a state (Nicaragua) can
sue an agency of that state (the Banco Central) in another state’s courts for an
alleged contractual breach.] . . .
International law, as its name suggests, deals with relations between sovereign
states, not between states and individuals. Nations, not individuals, have been its
traditional subjects. Injuries to individuals have been cognizable only where they
implicate two or more different nations: if one state injures the national of another
state, then this can give rise to a violation of international law since the individual’s
injury is viewed as an injury to his state. As long as a nation injures only its own
nationals, however, then no other state’s interest is involved; the injury is a purely
domestic affair, to be resolved within the confines of the nation itself.
Recently, this traditional dichotomy between injuries to states and to individuals—

and between injuries to homegrown and to alien individuals—has begun to erode.
The international human rights movement is premised on the belief that
international law sets a minimum standard not only for the treatment of aliens but
also for the treatment of human beings generally. Nevertheless, the standards of
human rights that have been generally accepted—and hence incorporated into the
law of nations—are still limited. They encompass only such basic rights as the right
not to be murdered, tortured, or otherwise subjected to cruel, inhumane, or
degrading punishment; the right not to be a slave; and the right not to be arbitrarily
detained. At present, the taking by a state of its national’s property does not
contravene the international law of minimum human rights. This has been held to
be true in much more egregious situations than the present, including cases where
the plaintiff had had his property taken pursuant to Nazi racial decrees. It is
certainly true here. As the court noted in Jafari v. Islamic Republic of Iran:
It may be foreign to our way of life and thought, but the fact is that governmental
expropriation is not so universally abhorred that its prohibition commands the
“general assent of civilized nations” . . . — a prerequisite to incorporation in the
“law of nations.” . . . We cannot elevate our American-centred view of governmental
taking of property without compensation into a rule that binds all “civilized nations.”

The doctrine that international law does not generally govern disputes between a
state and its own nationals’ rests on fundamental principles. At base, it is what
makes individuals subjects of one state rather than of the international community
generally. If we could inquire into the legitimacy under international law of
Nicaragua’s actions here, then virtually no internal measure would be immune from
our scrutiny. Concomitantly, actions of the United States affecting the property of
American citizens would become subject to international norms and hence
reviewable by the courts of other nations. In the field of international law, where no
single sovereign reigns supreme, the Golden Rule takes on added poignancy. Just
as we would resent foreign courts from telling us how we can and cannot rule
ourselves, we should be reluctant to tell other nations how to govern themselves.
Only where a state has engaged in conduct against its citizens that outrages basic
standards of human rights or that calls into question the territorial sovereignty of
the United States is it appropriate for us to interfere. Since this is not such a case,
we decline to apply international law to Nicaragua’s conduct.
Affirmed.
Case point
An individual who is a national of a foreign state may not sue an agency of that
foreign state in another state’s courts for an alleged contractual breach. As long as
a state injures only its own nationals, no other state’s interest is involved, and the
matter is regarded in international law as a purely domestic affair.
Case study used verbatim from source.
(August et al., 2013:63-65)
THINK POINT
1. Do you agree with the viewpoint indicated in the case study?

2. Are there other ways to argue this case?

3.4 Conclusion
This chapter looked at the individual’s personality and role in the international law
context. In the case of the individual in international law, the individual can be
considered in two ways: either ignored, or be viewed as a subject with his/her own
legal rights and obligations. Often, the legal personality of the individual in international
law is not clear cut and is influenced by several variables.
Chapter four considers the theory, application, and enforcement of international

treaties.
1. Define human rights and its role in international law.

2. Comment on the two viewpoints in which an individual can be regarded in
international business law. Include an example to illustrate each.

CHAPTER FOUR:
THEORY, APPLICATION AND ENFORCEMENT OF
INTERNATIONAL TREATIES

• Tabulate the theory, application and enforcement of international treaties and

convening governing business transactions and international relations between
states
• Outline the character of national vs international law
• Examine the sources of international business law from a theoretical
perspective
• Assess the impact of the South African Constitution on international business
• Outline the various treaties in South Africa
• Evaluate the application and enforcement of international treaties
4.1 Introduction
International law is governed by various international relations and agreements, which

guide global business activities, and relationships between states, businesses, and
individuals. Often, treaties between states outline the requirements for all states
involved. As indicated in Chapter Three, this may also influence the role and
personality of the individual in international business law. Previous chapters have
mentioned some concepts related to international business law, sources, functions,
and so forth, but this chapter will explore these in more detail. We will also explore the
South African Constitution in line with international business, specifically consider the
treaties involving South Africa, and examine application and enforcement. A list of
international treaties is included as well.

4.2 Definitions
Custom – “A long-established tradition or usage that becomes customary law if it is (1)

consistently and regularly observed and (2) recognised by those states observing it as
a practice that they must obligatorily follow” (August et al., 2013:27).
Customary international law – “Customary international law is based not on written

laws but on consistent state practice along with states’ belief that they are acting in
accordance with a binding norm. Treaty-based international law and customary
international law can exist in parallel and may be in conflict with one another; treaty-
based international law will not necessarily override customary international law”
(ECCHR, 2020).
Persistent objection – “Active rejection of a customary practice from its first

observance by other states” (August et al., 2013:27).
Treaty – “Legally binding agreement between two or more states” (August et al.,
2013:25).
Multilateral treaty – “Treaty between more than two states” (August et al., 2013:25).
Bilateral treaty – “Formal binding agreement between two states” (August et al.,
2013:25).
Conventions – “Legally binding agreements between states sponsored by

international organisations, such as the United Nations” (August et al., 2013:25).
Municipal law – “The ordinances and other laws applicable within a city, town, or other
local government entity”. Municipal law governs the domestic aspect of government
and deals with issues between individuals and between individuals and the
administrative apparatus” (Onyekachi & Ceazar, 2012:5-6).
Subservient – “Subordinate in capacity or function” (August et al., 2013:28).
State – “A political entity comprising a territory, a population, a government capable of

entering into international relations, and a government capable of controlling its
territory and peoples” (August et al., 2013:32).
Independent state – “A state that is sovereign; one that operates independently

internationally” (August et al., 2013:32).
Dependent state – “A state that has surrendered its rights to conduct international
affairs to another state” (August et al., 2013:32).

Doctrine of incorporation – “Customary international law is part of domestic law to the

extent that it is not inconsistent” (August et al., 2013:29).
Doctrine of transformation – “Customary international law is applicable domestically

only after it is adopted by legislation, court decision, or local usage” (August et al.,
2013:29).
Doctrine of Sovereign Immunity – “The actions brought in the court of one nation
against another foreign nation and prevents the sovereign state from being tried in
court without its consent” (HG.org, 2020).
Principle of Comity – “The instance where two nations share common public policy
ideas, one of them submits to the laws and judicial decrees of the other” (HG.org,
2020).
Act of State Doctrine – “Respect that a nation is sovereign in its own territory and its
official domestic actions may not be questioned by the judicial bodies of another
country. It dissuades courts from deciding cases that would interfere with a country’s
foreign policy” (HG.org, 2020).
General Agreement on Tariffs and Trade (GATT) – “A multilateral treaty that

establishes trade agreements and limits tariffs and trade restrictions among its
member nations” (Cheeseman, 2016:799).
World Trade Organisation (WTO) – “An international organisation of 164 member

nations created to promote and enforce trade agreements among member countries
and customs territories” (Cheeseman, 2016:799).
National courts – “The courts of individual nations” (Cheeseman, 2016:800).
Choice of law clause – “A clause in an international contract that designates which

nation’s laws will be applied in deciding a dispute arising out of the contract”
(Cheeseman, 2016:800).
Choice of forum clause – “A clause in an international contract that designates which

nation’s court has jurisdiction to hear a case arising out of the contract” (Cheeseman,
2016:800).
Council for Trade Related Aspects of Intellectual Property Rights (TRIPS) - “Organ of
the World Trade Organisation responsible for administering the Agreement on Trade
Related Aspects of Intellectual Property Rights” (August et al., 2013:526).

Berne Convention for the Protection of Literary and Artistic Works – “Requires member
states to establish common minimum rules to protect the pecuniary and moral rights
of authors without requiring them to comply with particular formalities” (August et al.,
2013:526).
Protection independent of protection in the country or origin principle – “Protection is

granted to any person publishing a work in a member state, even if he or she is not a
national of a member state” (August et al., 2013:529).
International Convention for the Protection of Performers, Producers of Phonograms,

and Broadcasting Organisations – “Prohibits the unauthorised recording of live
performances, the unauthorised reproduction of recordings, and the unauthorised
recording or rebroadcasting of broadcasts” (August et al., 2013:529).
World Intellectual Property Organisation Copyright Treaty – Requires member states

to extend the provisions of the Berne Convention to computer programmes and
databases” (August et al., 2013:530).
International Convention for the Protection of Industrial Property (Paris Convention) –

“Requires member states to provide national treatment, right of priority, and common
minimum rules to protect owners of industrial property rights” (August et al., 2013:530).
Patent Cooperation Treaty – “Establishes an international mechanism that allows

inventors to make a single application for patent protection that is equivalent to making
a filing in all member states” (August et al., 2013:532).
Trademark Law Treaty – “Requires member states to establish common minimum

rules to protect trademarks” (August et al., 2013:532).
4.3 Uniformity in International Law
Before we can consider the source of international law and the application thereof, we
need to note that international law has become more uniform among countries and
regions. This assists international law and helps guide participating states in their
international dealings.
The increase in uniformity can be attributed to the following:
• Forces of free trade, economic integration, and globalisation of businesses has

led to an increased need for uniformity in international businesses.

• There must be international cooperation in terms of certain legal matters that

affect all nations. Examples of this includes intellectual property and
ecommerce.
• The UN and WTO have made contributions in creating uniform standards and
codes.
• Due to the workings of the international tribunals, countries had to amend their
national laws to align to reports and judgements issued internationally.
• Private industry organisations and trade associations have contributed greatly
to a uniform international business environment (Schaffer et al., 2018:37).
Despite the increase in international business law uniformity, international business

law still retains its national characters. In other words, laws affecting, or affected by,
international business law still vary depending on the country. The reasons for this can
be seen in the figure below:
Figure 4.1: National character and international law
Figure 4.1 outlines why there are still differences in international law and regulations
amongst countries despite the increase in uniformity.
The above will therefore have an impact on international business, international

business contracts, the role of the individual and so forth.
4.4 Sources of International Law
Sources of international law are used by courts and tribunals to determine the content
of international law. This list suggests that there is an order of importance of the

sources of international law and courts must consider disputes in line with ‘ranking’ of
the courses (August et al., 2013:25).
Article 38(1) of the Statue of the International Court of Justice states the following:
The Court, whose function it is to decide in accordance with international law such
disputes as are submitted to it, shall apply:
a. International conventions, whether general or particular, establishing rules

expressly recognised by the contesting state
b. International custom, as evidence of a general practice accepted as law;
c. The general principles of law recognised by civilised nations
d. Subject to the provisions of Article 59, judicial decisions and the teachings of
the most highly qualified publicists of the various nations, as a subsidiary means
of the determination of rules of law.
The figure below indicates the suggested hierarchy. It is important to note that this
hierarchy is not prescribed; rather, it is suggested as treaties and conventions are
formal statements and agreements. This can therefore be considered as a main
source (August et al., 2013:26).
International
conventions
International
custom
General principles of law
Judicial decisions and teachings of

publicists
Figure 4.2 The hierarchy of the sources relied on by the International Court of
Justice
Source: (August et al., 2013:26)

4.4.1 Main legal principles recognised in international law
Three main legal principles are considered in international law. These are based on
courtesy and respect and are therefore not enforceable.
These are:
• Principle of Comity
• Act of State Doctrine
• Doctrine of Sovereign Immunity
Consider the following cases:
Act of State Doctrine: United States v. Belmont
Prior to 1918, the Petrograd Metal Works, a Russian corporation, deposited a large
sum of money with August Belmont, a private banker doing business in New York
City under the name August Belmont & Co. (Belmont). In 1918, the Soviet
government nationalized the corporation and appropriated all its property and
assets wherever situated, including the deposit account with Belmont. As a result,
the deposit became the property of the Soviet government. In 1933, the Soviet
government and the United States entered into an agreement to settle claims and
counterclaims between them. As part of the settlement, it was agreed that the
Soviet government would take no steps to enforce claims against American
nationals (including Belmont) and assigned all such claims to the United States.
The United States brought an action against the executors of Belmont’s estate to
recover the money originally deposited with Belmont by Petrograd Metal Works.
THINK POINT
With the information available to you, identify the party who owns the money.
Motivate your answer.
Foreign Sovereign Immunity: Republic of Argentina v. Weltover, Inc

In an attempt to stabilize its currency, Argentina and its central bank, Banco Central
(collectively Argentina), issued bonds called Bonods. The bonds, which were sold
to investors worldwide, provided for repayment in U.S. dollars through transfers on
the London, Frankfurt, Zurich, and New York markets at the bondholder’s election.

Argentina lacked sufficient foreign exchange to pay the bonds when they matured.
Argentina unilaterally extended the time for payment and offered bondholders
substitute instruments as a means of rescheduling the debts. Two Panamanian
corporations and a Swiss bank refused the rescheduling and insisted that full
payment be made in New York. When Argentina did not pay, the Panamanian
corporations brought a breach of contract action against Argentina in U.S. District
Court in New York. Argentina moved to dismiss, alleging that it was not subject to
suit in U.S. courts, under the federal Foreign Sovereign Immunities Act (FSIA). The
plaintiffs asserted that the commercial activity exception to the FSIA applied that
subjected Argentina to lawsuit in U.S. court.
Forum selection clause: M/S Bremen and Unterweser Reederie, GMBH v.

Zapata Off-Shore Company
Off-Shore Company (Zapata) was a Houston, Texas–based American corporation

that engaged in drilling oil wells throughout the world. Unterweser Reederei, GMBH
(Unterweser), was a German corporation that provided ocean shipping and towing
services. Zapata requested bids from companies to tow its self-elevating drilling rig
Chaparral from Louisiana to a point off Ravenna, Italy, in the Adriatic Sea, where
Zapata had agreed to drill certain wells. Unterweser submitted the lowest bid and
was requested to submit a proposed contract to Zapata, which it did. The contract
submitted by Unterweser contained the following provision: “Any dispute arising
must be treated before the London Court of Justice.” Zapata executed the contract
without deleting or modifying this provision.
Unterweser’s deep sea tug Bremen departed Venice, Louisiana, with the Chaparral
in tow, bound for Italy. While the flotilla was in international waters in the middle of
the Gulf of Mexico, a severe storm arose. The sharp roll of the Chaparral in Gulf
waters caused portions of it to break off and fall into the sea, seriously damaging
the Chaparral. Zapata instructed the Bremen to tow the Chaparral to Tampa,
Florida, the nearest port of refuge, which it did. Zapata filed suit against Unterweser

and the Bremen in U.S. District Court in Florida, alleging negligent towing and
breach of contract. The defendants asserted that suit could be brought only in the
London Court of Justice.
(Cheesman, 2016:806-807)
Act of State Doctrine: Libra Bank Limited v. Banco Nacional de Costa Rica
Banco Nacional de Costa Rica is a bank wholly owned by the government of Costa
Rica. It is subject to the rules and regulations adopted by the minister of finance
and the central bank of Costa Rica. The bank borrowed $40 million from a
consortium of private banks located in the United Kingdom and the United States.
The bank signed promissory notes, agreeing to repay the principal plus interest on
the loan in four equal instalments, due on July 30, August 30, September 30, and
October 30 of the following year. The money was to be used to provide export
financing of sugar and sugar products from Costa Rica. The loan agreements and
promissory notes were signed in New York City, and the loan proceeds were
tendered to the bank there.
The bank paid the first instalment on the loan. The bank did not, however, make
the other three instalment payments and defaulted on the loan. The lending banks
sued the bank in U.S. District Court in New York to recover the unpaid principal
and interest. The bank alleged in defence that the minister of finance and the
central bank of Costa Rica had issued a decree forbidding the repayment of loans
by the bank to private lenders, including the lending banks in this case. The action
was taken because Costa Rica was having trouble servicing debts to foreign
creditors. The bank alleged that the act of state doctrine prevented the plaintiffs
from recovering on their loans to the bank.

THINK POINT
1. What do you think of Nigeria’s actions?

2. What do you think could have been done differently to reach a different
outcome?
4.4.2 Treating and conventions
Treaties has already been defined earlier in this chapter. Treaties can have two types
(Schaffer et al., 2018:30):
• Between two countries
Bilateral
• Between three or more countries

• Convention - legally binding; common
Multilateral concern.
• Negotiated under: UN, EU, Council of Europe
Figure 4.3 Types of treaties
It is important to highlight that treaties can only be entered into between states.
Consider the examples below:
The US federal government may enter into a treaty with China. However, the state of
California cannot do the same (Cheeseman, 2016:788).
Similarly, the South African government may enter into a treaty with Japan, but the
Western Cape cannot do it on its own.
Two factors influence the reception rules of treaties, namely:
• The nature of the treaty

• Constitutional structure of the ratifying state

In addition, treaties can either be self-executing or non-self-executing (August et al.,

2013:29).
Treaties and intellectual property
TRIPS is responsible for the administration of intellectual property treaties. Intellectual

property rights are regulated internationally through bilateral treaties as well as
multilateral conventions. TRIPS is a component of the WTO and as such, all member
states of the WTO are default members of the TRIPS agreement.
The TRIPS agreement outlines multilateral and comprehensive rights and obligations
that must be followed when engaging in the international trade of intellectual property.
As such, it provides minimum protection for intellectual property rights of all WTO
states.
The agreement has five ways of achieving this, namely:
• WTO members must observe the substantive provisions of the most important
multilateral intellectual property treaties. This includes:
o 1883 International Convention for the Protection of Industrial Property (Paris
Convention) as revised in 1967
o 1886 Berne Convention for the Protection of Literary and Artistic Works,
Performers, Producers of Phonograms, and Broadcasting Organisations
(Rome Convention)
o 1989 Treaty on Intellectual Property in Respect of Integrated Circuits (IPIC
Treaty)
• The provisions of the TRIPS agreement “fill the gaps” in international intellectual
property conventions.
• It established criteria for the effective and appropriate enforcement of
intellectual property rights. In turn, this assists in the prevention of disputes as
well as the settlement of disputes.
• The TRIPS agreement encourages adoption and application of the rules and
obligations set out by as many nations as possible. This is achieved by the
transition time allowed by the agreement for developing member states and
member states moving from a centrally planned economy to a free market
economy.
• The TRIPS agreement extends the basic principles of GATT to international
property rights (August et al., 2013:528).

4.4.3 Important modern codes
In relation to the above mentioned, several important modern codes have been
developed.
United Nations’ Convention on Contracts
One such is the United Nations’ Convention on Contracts for the International Sale of
Goods. The United Nations uses this code in international sales between the buyer
and the seller. This is currently utilised by most trading nations.
Non-binding standards of conduct (guidelines)
These are created and published by various international organisations and are
utilised globally. They include:
• Fair treatment and protection of workers in a developing country

• Voluntary standards for socially responsible corporations
• Recommendations for environmental protection (Schaffer et al., 2018:36).
4.5 Application and Enforcement of International Treaties in Action
Before we can discuss the application and enforcement of international treaties, we

must consider why there would be any reason for dispute. The most common reasons
for disputes in international business transactions are based on:
• Payment
• Shipping delays
• Quality of goods or services received (The Hartford, 2020)
Disputes, once they occur, may lead to international hearings. It is important to note
that international tribunals consider municipal law to be subservient to international
law. This is because of the extent of the law. “It is a generally accepted principle of
international law that in the relations between [states] who are contracting parties to a
treaty, the provisions of their municipal law cannot prevail over those of the treaty”
(August et al., 2013:28). According to international tribunals, states are required to
align their municipal law to international law (August et al., 2016:29).

Municipal courts must determine if the international law can be applied in a particular
case. This is usually achieved by considering the state’s customary law, and therefore
the doctrine of incorporation. The doctrine of transformation can also be applied by
some courts (United Kingdom and British Commonwealth). This means that
international law will not be ‘automatically’ accepted; it must be introduced by
legislative action, judicial decision, or established local usage (August et al., 2016:29).
Mr. Sei Fujii, a Japanese alien, purchased real estate in California shortly after World
War II. Because he was ineligible for citizenship under U.S. naturalization laws, a trial
court held that his ownership of the land violated California’s alien land law and that
the land escheated to the state. Mr. Sei Fujii appealed; an intermediate appellate court
held that the alien land law violated the United Nations Charter’s human rights
provisions and it reversed the decision of the trial court. The state of California
appealed to the state supreme court.
(August et al., 2013:30)
Important points to note:
• There is no existing treaty between the states in question

• As a result of a lack of the above, the sole question of importance is California’s
alien land law
This case came to the ECJ upon a request for a preliminary ruling by the English
high court. The plaintiff, L’Oréal, is suing the defendant, eBay, seeking to hold it
partially responsible for trademark infringement by the users of eBay’s online
marketplace. One of the key issues concerned the liability for keyword advertising,
by which advertisers are able to select registered trademarks of their competitors
as keywords to prompt advertisements for their own goods and services. Another
issue was whether brand owners could legitimately prevent the offering for sale of
testers, product samples, and the resale of goods without their original packaging.

The defendant eBay is the operator of an online marketplace that facilitates the
exchange of goods on the Internet by individuals through a search engine and a
secure payment system, covering a widespread geographical area. The defendant
has designed and incorporated certain compliance mechanisms on its site to
combat the sale of counterfeit goods. It has also purchased keywords—including
well-known trademarks—from sites like Google AdWords, in order to attract new
individuals to its electronic marketplace. When searched for, the keywords prompt
an advertisement to pop up on the side of the search results, leading customers
directly to the eBay marketplace and often to a competitor’s advertisement.
The plaintiff is a global producer with a large product range, considerable

trademark protection, and a worldwide reputation for some of its trademarked
cosmetics, perfume, and other products. The plaintiff alleges that counterfeit
L’Oréal products have been sold on the defendant’s marketplace. Furthermore, the
plaintiff has claimed that some of the products exchanged on the marketplace were
licensed for sale only in North America and were not meant for sale in the European
Economic Area (EEA)—a practice also known as “parallel importing.” Also, some
of the cosmetic products sold on the defendant’s marketplace are sold without their
original packaging, which damages the plaintiff’s global reputation. The plaintiff
views the purchasing and use of trademarked keywords by the defendant to attract
new business as trademark infringement because customers are led to believe that
they can purchase L’Oréal sponsored products on eBay’s marketplace. The
plaintiff is seeking court orders against the defendant in order to stop individual
sellers on the electronic marketplace from distributing trademarked products and
to better protect its trademarks in the future.
The Court of Justice issued a judgment deciding the following:
1. Trademark owners may only exercise their rights in the context of

commercial activity. Private sellers using the defendant’s electronic
marketplace are not infringing on the plaintiff’s trademarks as long as the
sales of each individual seller do not become commercial activity, in view of
the volume, frequency, or other such characteristics.
2. Parallel importing is seen as an infringement on a trademark in the

European Union when the seller of the goods on the electronic marketplace

is located in a country outside of the EU and the purchaser resides in a

country within the European Union and/or the defendant advertises products
that are not being sold in the European Union to consumers in the EU. Such
sellers have no permission to market L’Oreal goods in the EU and those
goods have not been “placed in the market in the EU” by L’Oreal. These
claims of trademark infringement should be heard at the national court level
on a case-by-case basis.
3. Regarding the resale of unboxed/unpackaged L’Oréal products, such as

product testers, or dramming (bottles bearing the trademark from which
small quantities can be taken to supply to consumers as samples), where a
reseller of branded products removes the packaging prior to sale, the
trademark owner may oppose the resale, as that may harm the image of the
product and thus the reputation of the trademark. Such sample products
have not been “put on the market” under Article 7 of the Trademark Directive
(which causes the exhaustion of the trademark owner’s rights to prevent
further distribution). Also essential information required as a matter of law
(such as the identity of the manufacturer under the EU cosmetics directive)
is no longer on the product and so the trademark owner is entitled to seek
prevention of the sale of such products.
4. Applying the rationale of the recent Google France decision, the court found
that the defendant can be found liable for trademark infringement if it uses
sources such as Google AdWords to advertise products offered in its
electronic marketplace that are trademarked, using a keyword that is
identical to the trademark. This liability may exist unless the advertising
enables “a reasonably well-informed and reasonably observant internet user
to ascertain—without difficulty—whether the goods concerned originate
from the trademark proprietor or on the contrary, a third party.” Furthermore,
the operator of the marketplace, eBay, must make it clear to customers of
the site that the trademarked products being exchanged in its marketplace
are being resold by persons other than the original seller.
5. The European Union E-Commerce Directive (Directive 2000/31) provides

immunity from liability for an “information society service provider” for

information stored by it on behalf of the recipient of its services. The court

said that this directive does provide protection to an Internet service provider
as long as the ISP plays a “neutral” role. However, the immunity can be lost
if the operator:
a. has provided the seller with some sort of “active” assistance, such
as optimizing the presentation of the offer for sale or promoting the
offer; or
b. was aware off acts or circumstances on the basis of which a
diligent economic operator should have realized that the offers for
sale in question were unlawful, and in the event of being so aware,
failed to act expeditiously in accordance with article 12(1)(b) of the
directive.
6. The EU Court of Justice did not ultimately make any decisions on these
issues with respect to eBay, but left the determination to national courts after
further facts have been presented and developed. the court said several
times that such determinations should be made on a case-by-case basis by
national courts by applying the general principles set forth in this decision.
Case point
The decision of the European Union Court of Justice in this case will affect not only
the defendant, eBay, but all other online auction sites. eBay and other online
auction sites can be held liable for advertisements by users of their sites if the ads
do not clearly show that the offered goods do not originate from the trademark
owner. An online provider will also need to put better monitoring systems in place
regarding the products sold on its site, as well as the geographical location of
individual buyers and sellers, and remove trademarked keywords from their
advertising, or face severe legal consequences. This court decision will not only
tighten restrictions of online marketplaces within the European Union, but all over
the world
(August et al., 2013:540-541)

This case came to the ECJ upon a request for a preliminary ruling by the English high
court. The plaintiff, L’Oréal, is suing the defendant, eBay, seeking to hold it partially
responsible for trademark infringement by the users of eBay’s online marketplace.
One of the key issues concerned the liability for keyword advertising, by which
advertisers are able to select registered trademarks of their competitors as keywords
to prompt advertisements for their own goods and services. Another issue was
whether brand owners could legitimately prevent the offering for sale of testers,
product samples, and the resale of goods without their original packaging.
The defendant eBay is the operator of an online marketplace that facilitates the
exchange of goods on the Internet by individuals through a search engine and a
secure payment system, covering a widespread geographical area. The defendant
has designed and incorporated certain compliance mechanisms on its site to combat
the sale of counterfeit goods. It has also purchased keywords—including well-known
trademarks—from sites like Google AdWords, in order to attract new individuals to its
electronic marketplace. When searched for, the keywords prompt an advertisement to
pop up on the side of the search results, leading customers directly to the eBay
marketplace and often to a competitor’s advertisement.
The plaintiff is a global producer with a large product range, considerable trademark
protection, and a worldwide reputation for some of its trademarked cosmetics,
perfume, and other products. The plaintiff alleges that counterfeit L’Oréal products
have been sold on the defendant’s marketplace. Furthermore, the plaintiff has claimed
that some of the products exchanged on the marketplace were licensed for sale only
in North America and were not meant for sale in the European Economic Area (EEA)—
a practice also known as “parallel importing.” Also, some of the cosmetic products sold
on the defendant’s marketplace are sold without their original packaging, which
damages the plaintiff’s global reputation. The plaintiff views the purchasing and use of
trademarked keywords by the defendant to attract new business as trademark
infringement because customers are led to believe that they can purchase L’Oréal

sponsored products on eBay’s marketplace. The plaintiff is seeking court orders

against the defendant in order to stop individual sellers on the electronic marketplace
from distributing trademarked products and to better protect its trademarks in the
future.
The Court of Justice issued a judgment deciding the following:
1. Trademark owners may only exercise their rights in the context of commercial
activity. Private sellers using the defendant’s electronic marketplace are not
infringing on the plaintiff’s trademarks as long as the sales of each individual
seller do not become commercial activity, in view of the volume, frequency, or
other such characteristics.
2. Parallel importing is seen as an infringement on a trademark in the European

Union when the seller of the goods on the electronic marketplace is located in
a country outside of the EU and the purchaser resides in a country within the
European Union and/or the defendant advertises products that are not being
sold in the European Union to consumers in the EU. Such sellers have no
permission to market L’Oreal goods in the EU and those goods have not been
“placed in the market in the EU” by L’Oreal. These claims of trademark
infringement should be heard at the national court level on a case-by-case
basis.
3. Regarding the resale of unboxed/unpackaged L’Oréal products, such as

product testers, or dramming (bottles bearing the trademark from which small
quantities can be taken to supply to consumers as samples), where a reseller
of branded products removes the packaging prior to sale, the trademark owner
may oppose the resale, as that may harm the image of the product and thus
the reputation of the trademark. Such sample products have not been “put on
the market” under Article 7 of the Trademark Directive (which causes the
exhaustion of the trademark owner’s rights to prevent further distribution). Also
essential information required as a matter of law (such as the identity of the

manufacturer under the EU cosmetics directive) is no longer on the product and

so the trademark owner is entitled to seek prevention of the sale of such
products.
4. Applying the rationale of the recent Google France decision, the court found
that the defendant can be found liable for trademark infringement if it uses
sources such as Google AdWords to advertise products offered in its electronic
marketplace that are trademarked, using a keyword that is identical to the
trademark. This liability may exist unless the advertising enables “a reasonably
well-informed and reasonably observant internet user to ascertain—without
difficulty—whether the goods concerned originate from the trademark
proprietor or on the contrary, a third party.” Furthermore, the operator of the
marketplace, eBay, must make it clear to customers of the site that the
trademarked products being exchanged in its marketplace are being resold by
persons other than the original seller.
5. The European Union E-Commerce Directive (Directive 2000/31) provides

immunity from liability for an “information society service provider” for information
stored by it on behalf of the recipient of its services. The court said that this
directive does provide protection to an Internet service provider as long as the ISP
plays a “neutral” role. However, the immunity can be lost if the operator:
a. has provided the seller with some sort of “active” assistance, such as
optimizing the presentation of the offer for sale or promoting the offer; or
b. was aware off acts or circumstances on the basis of which a diligent
economic operator should have realized that the offers for sale in
question were unlawful, and in the event of being so aware, failed to act
expeditiously in accordance with article 12(1)(b) of the directive.

6. The EU Court of Justice did not ultimately make any decisions on these
issues with respect to eBay, but left the determination to national courts after
further facts have been presented and developed. the court said several times
that such determinations should be made on a case-by-case basis by national
courts by applying the general principles set forth in this decision.
Case point
The decision of the European Union Court of Justice in this case will affect not only
the defendant, eBay, but all other online auction sites. eBay and other online auction
sites can be held liable for advertisements by users of their sites if the ads do not
clearly show that the offered goods do not originate from the trademark owner. An
online provider will also need to put better monitoring systems in place regarding the
products sold on its site, as well as the geographical location of individual buyers and
sellers, and remove trademarked keywords from their advertising, or face severe legal
consequences. This court decision will not only tighten restrictions of online
marketplaces within the European Union, but all over the world
(August et al., 2013:540-541)

4.5.1 Judicial procedure
As we have seen from the above cases, when there is an international dispute related
to business transactions, the case must be heard by a court. The information indicated
in the international business contract stipulates the judicial procedure. International
business contracts therefore (usually) contain a choice of forum clause that outlines
which nation’s court has jurisdiction to hear a case related to the contract in question
(Cheeseman, 2016:800). However, there may also be cases where public and private
international law interact before the Court.
4.5.2 Public and private international law
There are four scenarios whereby public and private international law can interact
before the Court, namely:
• The adoption of private international law rules to resolve public international law
disputes

• The interpretation of private international law treaties or the construction of

private international law concepts as a precondition to the resolution of public
international law matters
• The consideration of domestic private international law rules to resolve public
international law matters
• The resolution of public international law matters arising out of states’
application of private international law (Arroyo & Mbengue, 2018:803).
4.6 Enforcing International Treaties
As already mentioned, international law is managed through customs, treaties and

organisations that have an impact on the understanding and implementation of
international law.
The United Nations (2010) states: “A State must express, through a concrete act, its
willingness to undertake the legal rights and obligations contained in the treaty – it
must ‘consent to be bound’ by the treaty. It can do this in various ways, defined by the
terms of the relevant treaty”.
Consent to any treaty can be given in three ways namely, definitive signature,
ratification, acceptance, approval, and accession.
Furthermore, the WTO considers trade disputes between member nations

(Cheeseman, 2016:800). South Africa has been a member of the WTO since 1995.
A treaty can be enforced in several ways but there is no compulsory judicial system in
place for the enforcement of treaties. The following points should be considered for
the enforcement of treaties (United Nations, 2010):
• Disputes between member states may be settled peacefully in line with

international law.
• Duly authorised international organs and agencies may provide advisory
opinions on the matter in question.
• United Nations member states must adhere to and accept the ruling of the
court. However, member states must first accept the jurisdiction of the court.
• In this case, non-acceptance of the treaty agreement and conditions will be
addressed in the International Court of Justice.

• International dispute resolution mechanisms, as established by treaties, may

be consulted and entrusted with the settlement of agreements within their
scope. Examples of these treaties include:
o International Tribunal for the Law of the Sea
o Permanent Court of Arbitration
o World Trade Organisation (WTO) settlement bodies
• Additional treaties may be developed by treaty body regimes to help govern
and encourage participation and adherence to treaty stipulations.
• The Security Council may step in when there are threats to international peace
and security. This is usually managed by sanctions or through force.
In addition, a country/countries may choose the following non-legislative methods to

influence countries and trading efforts who do not abide by international law. These
methods include collective action from various nations against a nation, reciprocity as
well as shaming (OpenStax, 2020).
Convention on contracts for the international sale of sale of goods (CISG)
CISG is a tool used by member states to harmonise international law related to

business and trading of goods. In addition, it has made contributions to the following:
• UNIDROIT principles
• Principles of European Contract Law
• Common European Sales Law
• OHADA Uniform Acts
The following case study is based on a cross border transaction between a business
in England and customers in Denmark. In this case, two businesses are not involved,
but there are transactions across the two countries.
Who is breaking whose copyright?
A fascinating aspect about newspapers in most countries is that they like to report
stories where foreigners break ‘our’ people’s copyright, with scant attention to
copying done in their own country. Chinese business have, for good reason, been
in the firing line for copying product designs for both domestic use and export.

However, in Denmark, a newspaper took aim at British manufacturers: ‘uphill

Danish struggle against British Furniture Copies’. Danes are very proud of a
number of their architects and designers of the 1950’s and 1960’s, such as Arne
Jacobson; their designer chairs, lamps and other furnishings continue to attain
premium prices, and they also export products sought by fashionable Asian
consumers. However, a British manufacturer has been copying those products and
selling them in shops in London, and on the internet (and hence also to Denmark)
for a fraction of the price. ‘Breach of copyright!’, shout the Danes. ‘Perfectly legal!’,
reply the British.
The underlying legal issue is that protection for designs lasts for 70 years after the
death of the designer in Denmark and most other European countries, but only 25
years in the UK. So, it is legal to produce 1960’s Danish designs in the UK. But is
it also legal to export them? In a long-running conflict, Danish courts have ruled
that the Britons may not sell such furniture to Denmark because they breach
copyright. But how can such a ruling be enforced on internet sales? While Danish
businesses seek ways to enforce the copyrights, the British happily sell their
copies.
In the European common market, it is a cause of political tension if products are

legal in one country, but illegal in another. Products flow freely across borders, and
copyright holders can’t stop them from entering their country. Whether 70 years or
25 years is appropriate is a different question, but a common definition of copyright
is necessary to prevent the British (in this case) from undercutting businesses
having to pay for copyright in their own country.
Case study used verbatim from source.
(Peng & Meyer, 2016:48-49)
THINK POINT
In this case, do you think any of the suggested ways to enforce treaties can be
considered? Motivate your answer.

Consider the following article:
Hon Hai Gives Workers Raise
TAIPEI - Hon Hai Precision Industry Co. has decided to increase wages for its
factory workers in China by an average of 20%, but the manufacturing giant
emphasized the raise isn't related to a recent spate of employee suicides.
Discussions about a wage increase arose because of concerns about a tight supply
of workers in the southern industrial city of Shenzhen where Hon Hai employs more
than 400,000 staff, and predate the wave of suicides at the company's giant
Longhau factory there, said Hon Hai spokesman Edmund Ding.
"It is not because of the suicides," said Mr. Ding. "The discussion has been going
on for a long time."
The company has authorized managers in different Chinese provinces to

determine the size of wage increases. "It would be an average 20% increase, which
means some areas will be more than 20%," Mr. Ding said. The company hasn't
finalised the date to carry out the wage increases, but "it should be very soon," he
added.
A day earlier another spokesman denied reports that Hon Hai Chairman Terry Gou
had said the company would increase wage levels by 20%.
Hon Hai employs some 800,000 workers in several provinces in China. Workers at
the Longhua plant are paid a base monthly salary of 900 yuan, or about $132, the
legal minimum wage of Guangdong province. But most work overtime, which can
pay 1.5 times the standard hourly rate.
Hon Hai's final decision on a wage increase was announced on the heels of a
worker's suicide plunge on Wednesday and another's suicide attempt on Thursday.
The 25-year old worker attempted to kill himself by cutting his vein Thursday, the
state-run Xinhua news agency reported. In all, 13 people have either committed
suicide or attempted to do so this year.
Citigroup Inc. estimated that the wage increases might cost the company 2.7 billion
New Taiwan dollars ($84 million) a quarter, likely slicing 10-12% off operating profit.

But some analysts said it is too early to estimate the likely profit impact, as most of
the related details are not yet available.
In 2009, Hon Hai's annual net profit was NT$75.69 billion ($2.35 billion) on revenue
of NT$1.96 trillion ($60.89 billion).
The recent series of suicides among Hon Hai's Longhua employees has brought
scrutiny on the secretive company, which operates under its trade
name Foxconn 2317 -1.23% and makes personal computers and other gadgets
for Apple Inc., Hewlett-Packard Co. , Amazon.com Inc. and others. Several of
those companies said on Wednesday they were investigating the incidents.
Critics say the spate of suicides reflects Hon Hai's poor working conditions,
including compelling employees to work more than the legal number of overtime
hours and creating excessive stress on workers with its military-style rigor. Hon
Hai has defended its treatment of workers and their working conditions. On
Wednesday, in an unusual gesture, the company gave a tour of its Longhua plant
to a group of journalists, and announced plans to outfit its buildings with safety
nets to prevent further suicide plunges. Mr. Gou told the media that the company
would try its best to prevent more tragedy.
Source: (Tsai, 2010)
THINK POINT
1. What do you think is the best way to approach this scenario from an
international business point of view?
2. What authority does the United States have in this scenario (from the
information you have available)?
3. What do you propose as the way forward?

4.7 Fundamental Principles of the International Legal System in

South Africa
The South African Constitution sanctioned the use of foreign law in South Africa. This
was introduced in 1993 by the South African Interim Constitution and retained by the
Constitution in 1996.
Courts in South Africa may consider foreign law in interpreting the South African Bill
of Rights. Therefore, a court, tribunal or forum must interpret the Bill of Rights in terms
of the following guidelines:
• Promote the values that underlie an open democratic society based on human
dignity, equality and freedom
• Must consider international law
• May consider foreign law (Library of Congress Law, 2020)
The Constitution of South Africa outlines international law in section 231, 232 and 233.
The South African Constitution:
(231) International agreements
1. The negotiating and signing of all international agreements is the responsibility of

the national executive.
2. An international agreement binds the Republic only after it has been approved by
resolution in both the National Assembly and the National Council of Provinces, unless
it is an agreement referred to in subsection (3).
3. An international agreement of a technical, administrative or executive nature, or an

agreement which does not require either ratification or accession, entered into by the
national executive, binds the Republic without approval by the National Assembly and
the National Council of Provinces, but must be tabled in the Assembly and the Council
within a reasonable time.
4. Any international agreement becomes law in the Republic when it is enacted into
law by national legislation; but a self-executing provision of an agreement that has
been approved by Parliament is law in the Republic unless it is inconsistent with the
Constitution or an Act of Parliament.
5. The Republic is bound by international agreements which were binding on the

Republic when this Constitution took effect.

(232) Customary international law
Customary international law is law in the Republic unless it is inconsistent with the
Constitution or an Act of Parliament.
(233) Application of international law
When interpreting any legislation, every court must prefer any reasonable
interpretation of the legislation that is consistent with international law over any
alternative interpretation that is inconsistent with international law.
4.8 Role of International Treaties in South Africa
South Africa has not entered into any bilateral or multilateral treaties for the reciprocal
recognition and enforcement of foreign judgements.
In the event of foreign judgement debtors, South African courts will exercise
jurisdiction in enforcement of foreign commercial judgements, when the company is
registered in South Africa. In addition, the following conditions must be met:
• “In the case of a South Africa plaintiff seeking enforcement, where the plaintiff
has attached an asset in South Africa (of any value) belonging to the foreign
defendant;
• Where the plaintiff seeking enforcement is also a foreigner, in addition to the
attachment of an asset of the defendant in South Africa, there is a factor which
links the matter to the South African court (for example the conclusion of a
contract, its breach or performance in South Africa)” (Wakefield, 2012:108)”.
Furthermore, a South Africa court will recognise and enforce a foreign judgement if
the following mandatory requirements are met:
• The foreign court must have had international competence as determined by

South African law
• The judgment must be final and conclusive and must not have become
superannuated
• The enforcement of the judgment must not be contrary to South African public
policy (which includes the rules of natural justice)
• The judgment must not have been obtained by fraudulent means

• The judgment must not involve the enforcement of a penal or revenue law of
the foreign state
• The enforcement must not be precluded by the Protection of Businesses Act
99 of 1978 (Wakefield, 2012:108-109)
Customary international law is considered to form part of South African law provided
that the Constitution and corresponding legislation are applied.
Furthermore, South Africa is involved in various international agreements and these

are depicted by the dots on the map below.
Figure 4.4 World map of South African agreements
Source: (SARS, 2020)
Table 4.1 depicts the countries with which South Africa has international, regional or
bilateral trade agreements.

Table 4.1 South Africa Trade Agreements, propose and countries involved
Agreement Purpose Countries

South African Customs • Duty-free movement of • Botswana
Union (SACU) Agreement goods within SACU • Eswatini
2002 • Common external tariff • Lesotho
on goods imported • Namibia
outside the SACU • South Africa
• Customs union
South African Improve intra-regional • Angola
Development Community trade in goods and • Botswana
(SADC) Treaty, as read services through mutually • Democratic
with the Protocol on Trade beneficial trade Republic of Congo
agreements. • Lesotho
• Madagascar
• Malawi
• Mauritius
• Mozambique
• Namibia
• Seychelles
• South Africa
• Eswatini
• Tanzania
• Zambia
• Zimbabwe
European Free Trade Tariff reduction on • Botswana
Association (EFTA) and selected goods and • Swaziland
SACU Free Trade processed agricultural • Lesotho
Agreement products. • Namibia
• South Africa
• Iceland
• Liechtenstein
• Norway
• Eswatini

SADC-EU Economic FTA between SADC EPA Angola*

Partnership Agreement and EU member states. Botswana
(EPA) Lesotho
Mozambique
Namibia
South Africa
Eswatini
African Continental Free • Goal to create a single 54 of 55 African Union
Trade Agreement continental market for (AU) member states**
(AfCFTA) goods and services;
• Goal for free
movement of
businesspeople and
investments.
SACU-Southern Common Tariff reductions on • Botswana
Market (Mercosur) selected goods. • Eswatini
Preferential Trade • Lesotho
Agreement • Namibia
• South Africa
Zimbabwe-South Africa • Preferential rates of • Zimbabwe
Bilateral Agreement duty • South Africa
• Rebates
• Quotas on certain
goods
Trade and Investment • Bilateral agreement South Africa
Framework Agreement • Bilateral forum to United States of America
(TIFA) address various issues
related to international
business.
Trade, Investment and • Co-operation • Botswana
Development framework agreement • Eswatini
Cooperation Agreement • Provision for parties to • Lesotho
2008 (TIDCA) negotiate and sign • Namibia
agreements relating to • South Africa
sanitary and

phytosanitary • United States of

measures, customs America
co-operation; technical
barriers to trade
• Forum for matters of
mutual interest
Memorandum of Promotion of bilateral South Africa
Understanding between trade and economic China
the Government of the operation
Republic of South Africa
and the Government of
the People’s Republic of
China on promoting
Bilateral Trade and
Economic Co-operation
BRICS Not a trade agreement but • Brazil
emerging countries with • Russia
influence on regional • India
affairs • China
• South Africa
G20 Not a trade agreement but • Argentina
an international forum for • Australia
governments and central • Brazil
bank governors • Canada
• China
• France
• Germany
• India
• Indonesia
• Italy
• Japan
• Republic of Korea
• Mexico
• Russia
• Saudi Arabia

• South Africa
• Turkey
• United Kingdom
• United States
• European Union
*Option to join in future
**Namibia excluded
(Meltzer, Smith, Bubu, Wentzel, 2020)
The above provides an outline of the agreements. You are encouraged to read through
the documents associated with each agreement. These documents are available from:
https://www.sars.gov.za/Legal/International-Treaties-
Agreements/Pages/default.aspx?country=
4.9 List of Treaties and International Agreements
The following treaties and international agreements were in place at the time of writing
this module guide (Schaffer et al., 2018:xxii):
A:
Agreement on the Conservation of Nature and Natural Resources (ASEAN), 564
Anti-Counterfeiting Coalition, 469
Arab Convention on Commercial Arbitration, 59
ASEAN Agreement on the Conservation of Nature and Natural Resources, 564
B:
Barcelona Convention for the Protection of the Mediterranean Sea from Pollution, 564
Basel Convention on Transboundary Movements of Hazardous Wastes and Their

Disposal, 565
Berne Convention for the Protection of Literary and Artistic Works, 460
Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and

Commercial Matters, 65

C:
Central American Free Trade Agreement, 219
Chile OECD Convention, 436
D:
Draft Treaty on Certain Questions Concerning the Protection of Literary and Artistic
Works, 461
E:
European Convention on International Arbitration, 62
European Convention Providing a Uniform Law on Arbitration (Strasbourg

Convention), 59
European Union - European Patent Convention, 455 European Union - Agreement

Relating to Community Patents, 455
European Union - Maastricht Agreement, 398, 400
European Union - Single European Act, 399, 563 European Union - Treaty
Establishing a Constitution for Europe, 400
European Union - Treaty of Maastricht, 400 Friendship, Commerce, and Navigation

treaties, 529
G:
General Agreement on Tariffs and Trade 1947 (GATT), 235–240, 246, 251, 255, 260–
261, 270, 276, 278, 284, 290, 297, 364, 463, 467, 476, 553, 559, 564
General Agreement on Trade in Services (GATS), 237, 240, 255, 270–271
Geneva Act of the Hague Agreement Concerning the International Registration of

Industrial Designs, 456
Geneva Convention on the Execution of Foreign Arbitral Awards, 59
Geneva Protocol on Arbitration Clauses, 59

H:
Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in

Civil and Commercial Matters, 68
Hague Rules. See International Convention for the Unification of Certain Rules of Law
Relating to Bills of Lading
Hague System for the International Registration of Industrial Designs, 456
Helsinki Convention on the Protection of the Marine Environment of the Baltic Sea
Area, 564
I:
Inter-American Convention on International Commercial Arbitration, 59
International Convention for the Unification of Certain Rules of Law relating to Bills of
Lading (Hague Rules), 160
K:
Kyoto Protocol to the United Nations Framework Convention on Climate Change, 563,
567
L:
League of Nations - Warsaw Convention of 1929, 149
London Convention for the Prevention of Marine Pollution by Dumping from Ships and
Aircraft, 563
M:
Madrid Agreement Concerning the International Registration of Marks of 1891 (Madrid

Protocol), 458
Montreal Convention for the Unification of Certain Rules for International Carriage by
Air, 31, 150–151, 155
Montreal Protocol on Substances That Deplete the Ozone Layer, 566, 569

N:
New York Convention. See United Nations – Convention on the Recognition and
Enforcement of Foreign Arbitral Awards
North American Agreement on Environmental Cooperation, 385–386
North American Agreement on Labour Cooperation, 386 North American Free Trade
Agreement (NAFTA), 219, 220, 252, 270, 279, 302, 3654, 367, 368–375, 379–380,
560
O:
OECD Convention on Combating Bribery of Foreign Public Officials in International

Business, Transactions, 45, 436, 442–443 Paris Convention for the Protection of
Industrial Property, 455
P:
Performance and Phonograms Treaty, 461
Patent Cooperation Treaty (PCT), 455–456
S:
Stockholm Declaration on the Human Environment, 564
T:
Tax Information Exchange Agreement (TIEA), 510
Treaty on the Functioning of the European Union (TFEU), 400, 574
Treaty of Paris Establishing the European Coal and Steel Community, 398
Treaty of Rome Establishing the European Economic
Community, 398, 399, 400, 407, 409, 412, 414, 417, 419 United Nations - Charter, 31,
42, 448

U:
United Nations - Convention against Corruption, 38, 436, 444
United Nations - Convention for the Prevention of Marine Pollution by Dumping from
Ships and Aircraft (London), 563
United Nations - Convention for the Protection of Industrial Property (Paris

Convention), 455
United Nations - Convention for the Protection of Literary and Artistic Works (Berne),
460
United Nations - Convention for the Protection of the Mediterranean Sea from Pollution
(Barcelona), 564
United Nations - Convention for the Unification of Certain Rules for International
Carriage by Air (Montreal), 31, 150–152
United Nations - Convention for the Unification of Certain Rules of Law Relating to
Bills of Lading (Hague Rules), 160 United Nations - Convention on Contracts for the
International Sale of Goods, 36, 89–92, 112, 115, 112, 136, 137, 140, 147
United Nations - Convention on International Trade in Endangered Species of Wild

Fauna and Flora, 566
United Nations - Convention on the Protection and Promotion of the Diversity of

Cultural Expressions, 258
United Nations - Convention on the Recognition and Enforcement of Foreign Arbitral

Awards, 59, 60
U.S.–Central America–Dominican Republic Free Trade Agreement (CAFTA-DR), 252,

366
U.S. - Trans-Pacific Partnership Agreement, 220
W:
WTO - Agreement on Agriculture, 273
WTO - Agreement on Basic Telecommunications, 271
WTO - Agreement Establishing the World Trade Organisation, 219, 237

WTO - Agreement on Government Procurement (AGP),237, 269–270
WTO – Agreement on Implementation of Article VI, 237
WTO - Agreement on Implementation of Article VII, 237
WTO - Agreement on Import Licensing Procedures, 237
WTO - Agreement on Pre-shipment Inspection, 237
WTO - Agreement on Rules of Origin, 323
WTO - Agreement on Safeguards, 237, 285–287
WTO - Agreement on the Application of Sanitary and Phytosanitary Measures (the

SPS Agreement), 274–275
WTO - Agreement on Subsidies and Countervailing Measures, 297–299
WTO - Agreement on Technical Barriers to Trade, 237, 265–268
WTO - Agreement on Textiles and Clothing, 376
WTO - Agreement on Trade Facilitation, 237
WTO - Agreement on Trade in Financial Services, 271
WTO - Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),

237, 275, 276, 463–468
WTO - Agreement on Trade-Related Investment Measures (TRIMS), 237, 275–276
WTO - Antidumping Agreement, 291, 294
WTO - Understanding on Dispute Settlement, 237
WTO - Understanding on Rules and Procedures Governing the Settlement of

Disputes, also known as the WTO Dispute-Settlement Understanding, 237, 248–251.
4.10 Conclusion
This chapter considered the theory, application and enforcement of treaties. We noted
that there are various types of treaties and conventions between states. In addition, a
state must first confirm that it will abide by foreign outcomes to disputes before treaties
can be enforced. Enforcement of foreign outcomes can further be encouraged through
various activities including sanctions where the cooperation of the state is lacking. We

noted that South Africa applies customary international law, but that it also considers
the three sections of the South African Constitution that influence international
business law.
1. Outline the principles of the South African Constitution and its impact on
international business transactions.
2. Tabulate the treaties which South Africa is a part of. Include the treaty,
countries involved, and the purpose of the treaty.
3. Examine the process and courts involved in settling international business
disputes.

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INTERNATIONAL BUSINESS LAW

INTERNATIONAL BUSINESS LAW

BACHELOR OF COMMERCE IN LAW

BACHELOR OF COMMERCE IN LAW 1

INTRODUCTION TO INTERNATIONAL BUSINESS

Welcome to the International Business Law Module in your Bachelor of Commerce in

How to use the Module guide

Good luck in your studies!

BACHELOR OF COMMERCE IN LAW 2

Prescribed and Recommended Reading

Your essential (prescribed) reading comprises the following:

Your essential (recommended) reading comprises the following:

Aim of the Module

After successfully completing this module, you should be able to:

SO 1: Demonstrate knowledge of the principles of the Constitution of South Africa in

LO 1.1: Comment on how contemporary legal dynamics involve the role

LO 1.2: Review the application of the fundamental principles of the

LO 1.3: Tabulate the theory, application and enforcement of International

BACHELOR OF COMMERCE IN LAW 3

Specific Outcomes and Chapter Alignment

SPECIFIC PROGRAMME SPECIFIC OUTCOME

SO 1: Upon completion of this module, the student should be able to demonstrate

LO1.1: Comment on how contemporary legal

BACHELOR OF COMMERCE IN LAW 4

Specific Outcomes and Assessment Criteria

SPECIFIC PROGRAMME OUTCOMES ASSESSMENT CRITERIA

The student should demonstrate

student should be able to demonstrate on how contemporary legal

knowledge of the principles of the dynamics involve the role of

Constitution of South Africa in relation to individuals in the International

International Law as well as demonstrate System.

an in-depth understanding of the laws • Review and provide positions on

• Tabulate the theory, application

BACHELOR OF COMMERCE IN LAW 5

Specific Learning Outcome

BACHELOR OF COMMERCE IN LAW 6

International law – “International law deals with three kinds of international

1.3 Fundamental Principles of the International Legal System

1.3.1 Public vs private international law

BACHELOR OF COMMERCE IN LAW 7

Public law Private law

Figure 1.1 Difference between public and private international law

BACHELOR OF COMMERCE IN LAW 8

Table 1.1 Differentiation between public and private international law

1.3.2 Sources of international law

Table 1.2 Sources of international law

Primary sources of international law Secondary sources of international

BACHELOR OF COMMERCE IN LAW 9

1.3.3 Core characteristics of international law

Figure 1.2 Differentiation between international and national law

When organisations from different nations engage in business, they do so by choice

There is no global authority regulating business interactions and transactions between

1.3.4 Crimes in international business

As we know crime occurs on an international level and affects international law.

BACHELOR OF COMMERCE IN LAW 10

Transnational business crime – These crimes are related to legitimate business

1.3.5 International courts

BACHELOR OF COMMERCE IN LAW 11

Territoriality – “A nation’s jurisdiction over all persons (citizens and non-citizens),

Protective principles – “Allows jurisdiction over non-citizens for acts committed

Universality – “Permits any country to prosecute perpetrators of the most heinous

Let us consider a few short examples to illustrate these principles of jurisdiction:

BACHELOR OF COMMERCE IN LAW 12

1.3.6 International Court of Justice (ICJ)