Chapter 5

Legal Environment
Chapter Outline

 Multiplicity of Legal Environments

 Legal Systems
 Jurisdiction and Extraterritoriality
 Legal Form of Organization
 Branch vs. Subsidiary
 Litigation vs. Arbitration
Chapter Outline

 Bribery
- Legal Dimension
- Ethical Dimension
 Intellectual Property
- Categories of Intellectual Property
- Legal Rights and Requirements
Legal Systems

 Common law system

– Relying on precedents and conventions
– E.g., USA, UK, Canada, India
 Statute law system
– Code or civil law system
– Main rules of law embodied in legislative codes
– Japan and most continental European countries
Jurisdiction

 territorial range of authority

 a court's legal power to hear a case
Extraterritoriality

 a country's or court's application of national

laws beyond its border
– E.g., USA and Foreign Corrupt Practices Act
– E.g., Belgium’s universal jurisdiction
How to Settle Commercial Disputes

 Negotiation
 Arbitration
 Litigation
Bribery: Legal Dimension

 Foreign Corrupt Practices Act (FCPA)

 OECD Convention on Combating Bribery of
Foreign Public Officials in International
Business Transactions
Foreign Corrupt Practices Act
(FCPA)
 Bribery is "the use of interstate commerce to offer, pay,
promise to pay, or authorize giving anything of value to
influence an act or decision by a foreign government,
politician, or political party to assist in obtaining,
retaining, or directing business to any person."
 Types of Payment
- Permissible: expediting payments to low-level officials
who exercise only "ministerial" or "clerical" functions
- Illegal: payments to an official exercising discretionary
authority
Bribery: Ethical Dimension

 Morality as a function of culture

 Corporate strategies
– Codes of conduct
– Sensitization of ethics in managers through training
and education
– Ethics audit
Transparency International

 Corruption Perceptions Index (CPI)

 Bribe Payers Index (BPI)
Intellectual Property
"creations of the mind: inventions, literary and artistic
works, and symbols, names, images, and designs used
in commerce"
 Trademark
 Copyright
 Patent
– Functional patent
– Design patent
 Trade Secret
Intellectual Property
 Trademark
- symbol, word, or thing used to identify a product made or
marketed by a particular firm
 Copyright
- protection given to an author or artist for literary, musical,
dramatic, and artistic works
 Patent
- invention of a scientific or technical nature
 Trade secret
- know-how that is kept secret within a particular business
- e.g., manufacturing methods, formulas, plans