INTERNATIONAL LAW- 25TH & 26TH August 21- BBAIB-Div B-A

Conducting business oversees can be a complicated

legal affair. In this lesson, you'll learn some of the
essential legal characteristics of international
business. A short quiz is provided after the lesson .
 Definition-International Law
A body of rules established by custom or treaty and
recognized by nations as binding in their relations with one
another.
International law, also known as public international law
and law of nations, is the set of rules, norms, and standards
generally recognized as binding between nations.
International law consists of rules and principles governing
the relations and dealings of nations with each other, as
well as the relations between states and individuals, and
relations between international organizations.
 The International Legal Environment

• Public international law is the system of rules and

principles governing the conduct and relationships
between states and international organizations as
well some of their persons.
• Private international law governs relationships
between persons and organizations engaged in
international transactions and addresses which laws
will apply when the parties are in a legal dispute.
• Foreign law is a law enacted by a foreign country.
 Conceptual Framework

• If your company engages in any transactions overseas, it will have to familiarize itself
with the general concepts of public and private international law as well as foreign
law, because all can affect the manner in which you can engage in business abroad.
• Public International Law
• Public international law comes from three primary sources.
• Treaties, conventions, protocols, charters of international organizations, and executive
agreements govern relationships between countries and international organizations.
A treaty is an agreement between one or more countries that addresses specific
aspects of international relations between the parties to the treaty.
• A convention is also an agreement between countries and is often negotiated through
international organizations such as the UN, the International Monetary Fund (or IMF),
or World Bank on a regional or global basis, such as the entire continent of Europe.
Protocols are agreements that address matters that are less important than treaty
matters but may relate to matters related to treaties. Finally, executive agreements
are simply agreements between the executives of two or more governments.
Private international law- Governs relationships between persons and
organizations engaged in international transactions and addresses
which laws will apply when the parties are in a legal dispute. Private
international law is the body of conventions, model laws, national laws,
legal guides, and other documents and instruments that regulate
private relationships across national borders.
Private International Law deals with a variety of topics, such as
(international) contracts,  family matters, recognition of judgments,
child adoption and abduction, real property, intellectual property.
Foreign law is a law enacted by a foreign country. Foreign law is the law
of an individual foreign country or, in some instances, of an identifiable
group of foreign countries that have a common legal system or a
common set of rules in a particular field of law.
International Conventions & Trade Law- 26th August 21-
DIV-A
• International conventions are treaties or agreements between countries.
"International convention" is often used interchangeably with terms like
"international treaty," "international agreement," "compact," or "contract
between states.“
• Conventions may be of a general or specific nature and between two or
multiple states.  Conventions between two states are called bilateral
treaties; conventions between a small number of states (but more than
two) are called plurilateral treaties; conventions between a large number
of states are called multilateral conventions
 27 august 21
Th

• International trade law includes the appropriate rules and

customs for handling trade between countries.
• The United Nations Commission on International Trade Law
 (UNCITRAL) is the core legal body of the United Nations
system in the field of international trade law, with a mandate
to further the progressive harmonization and unification of
the law of international trade.
• In 1995, the World Trade Organization, a formal international
organization to regulate trade, was established. It is the most
important development in the history of international trade
law.
• The scope of WTO :
• (a) provide a framework for administration and implementation
of agreements; (b) forum for further negotiations; (c) trade
policy review mechanism; and (d) promote greater coherence
among members economics policies
• Principles of the WTO:
• (a) A principle of non-discrimination (most-favored-nation
treatment obligation and the national treatment obligation) (b)
market access (reduction of tariff and non-tariff barriers to trade)
(c) balancing trade liberalization and other societal interests (d)
harmonization of national regulation (TRIPS agreement, TBT
agreement, SPS agreement).
 International Business Contract-Legal Provision (27/08/21) 30th
AUGUST (Div A) & div_B 1ST Sept 2021

• International contracts are the primary legal tool put in place for companies to limit their risks
when working in the global or international market. 

• When a company plans to expand its products or services into the global market, one or more
contracts will most likely be required from several parties, such as freight forwarders and sales
tax agents.

• International contracts refers to a legally binding agreement between parties, based in different

countries, in which they are obligated to do or not do certain things.
Most businesses create contracts in writing to make the terms of agreement clear, often seeking
legal counsel when drawing important contracts.

• Commercial agent
• Distributor
• Representation office
• Branch
• Joint-venture
 1 Sept 21 div_B
st

Commercial Agent-A commercial agency in international trade is defined as

activities of a commercial agent (a company or a self-employed intermediary)
that has continuing authority to negotiate the sale or the purchase of goods
on behalf of another person or company, usually called the 'principal', or to
negotiate and conclude.
Distributor-An independent person or legal entity that sell goods locally on
behalf of a principal. Distributors can be distinguished from agents as
distributors buy the goods in their own name, then re-sell them at prices
which they have some liberty to set
Representation office-A representative office is an office established by a
company or a legal entity to conduct marketing and other non-transactional
operations, generally in a foreign country where a branch office or subsidiary
is not warranted
Joint Venture-A joint venture (JV) is a business arrangement in which two or
more parties agree to pool their resources for the purpose of accomplishing
a specific task. In a JV, each of the participants is responsible for profits,
losses, and costs associated with it.
 International Business law(27/08/21) 30th
August (div_A)
International business and legal system. A country's law regulate business practices,
defines business policies, rights and obligations involved in business transactions. The
government of a country defines the legal framework within which firms
do businesses. Therefore laws differ from country to country.

Registered agents: Retain a registered agent in the country(s) you plan to do business
with.
The World Trade Organization (WTO): The WTO serves as the regulatory foundation
for international trade.  As the preeminent world trade negotiating forum.
International treaties and operating regulations: Depending on the countries you
trade with, avoiding violations of negotiated treaties and/or business regulations can
become “gotchas” without advice from your legal counsel
Become familiar with local foreign customs, cuisine, and culture in those countries in
which you carry on trade or any business.
International Business Contracts Checklists
• Parties. Before entering into a contract with a foreign company, due diligence should be
performed on that company to verify that the company is registered to do business in its
home country.
• Duties. Misunderstandings arise when one party to a contract believes that the other party is
responsible for taking certain actions or bearing certain costs.
• Geographic scope. If the ability of one of the parties to engage in business will be limited
under the contract to a specific geographic area (e.g., franchises or distributorships)
• Language. When doing business with a foreign company, the parties should not assume that
the contract will be in English 
• Notices. Communication is essential to the successful performance of an international
business contract
• Currency. When doing business with a foreign company, the parties should not assume which
currency will be used for payment
• Intellectual Property. A comprehensive discussion of international intellectual property rights
is beyond the scope of this checklist. 
• Term, Termination, Remedies, Dispute Resolution
Different types of international payment methods-Div A
(30th August_21)-Div_B (1st Sept 21)
• When it comes to trading of commercial goods, there is always a certain level of
risk and trust involved. Whether you’re a buyer or seller, you are bound to be
exposed to some risk when dealing with international transactions.
• The main international payment methods used around the world today include:
• Cash in Advance
• Letters of Credit
• Documentary Collections
• Open Account
• Consignment
 31 August 21- Div_A
st

• Cash in Advance-The buyer completes the payment and pays the seller in full before the
merchandise is delivered and shipped off to the buyer. Other cash in advance methods include:
• Debit card payment
• Telegraphic transfer
• International cheque
• Letters of Credit-A Letter of Credit is one of the most secure international payment methods
for the importer and exporter as it involves the assistance of established financial institutions
such as banks as an intermediary and a certain level of commitment from both parties.
• Documentary Collections-Documentary collections is a process in which both the buyer’s
and seller’s banks act as facilitators of the trade. With documentary collections, also
known as Bills of Exchange, the seller is basically handing over the responsibility of
payment collection to his bank.
• Open Account-Under Open Accounts (also known as Accounts Payable), merchandise are
shipped and delivered prior to payment, proving to be an extremely attractive option for
buyers especially in terms of cash flow. With this payment option, the seller ships the
goods to the buyers with a credit period attached. This is usually in 30-, 60-, or 90-day
periods.
Consignment-The consignment process is similar to that of an open account
whereby payment is only completed after the receipt of merchandise by the
buyer. The difference lies in the point of payment. With consignment, the
foreign buyer is only obliged to fulfill payment after having sold the
merchandise to the end consumer. This international payment method is
based on an agreement under which the foreign seller retains ownership of
the merchandise until it has been sold.
 International sales agreement- 2nd Sept 21 DIV _b

The International Sale Contract is the most used among those governing trade relations
between companies in different countries. This agreement sets out the rights and obligations
of the parties (exporter-seller and importer-buyers) and the remedies for breach.

International Sales Agreement- 11.termination due to breach of contract

1. Date
2. Name of both the parties 12. Insolvency
3. Products 13.taxation
4. Price 14. terms of contract
5. Packaging
6.Means of payment
7. Date of Payment
8.Dispute
9. Annexures
10.Signature
 31/08/20 2ND SEPT 21 (DIV _B)
Rights and Duties of Agents & Distributor

Rights of Agents-

• Right of Retainer: Agent has right to deduct the amount which is due to him by
principal, from amount payable to principal.
•  Right of stoppage in transit: In case where agent is personally liable, he has right
to stop the goods in transit. The good may be moving towards customer or
principal.
• Right to claim Remuneration: As per the terms of agency contract, agent has
rights to claim remuneration.
• Right of Indemnity: Principle of indemnity gets operated between principal and
agent where principal is implied indemnifier and agent is implied indemnity holder.
So agent can make principal answerable for all types of sufferings.
• Right of lien: Agent can exercise right of lien but contract act has not specified
whether it is general lien or particular lien. Therefore the nature of agent’s lien
depends upon mutual understanding.
Duties of Agents-

•  Agent should follow the instructions given by the principal.

•  If agent comes across any complicated situation, he has to communicate that
situation to principal and his advice is to be obtained.
•  Agent should behave in his capacity as agent, he should not run the transaction
in his own name.
•  Agent should not make secret profits by utilizing reputation of the principal.
•  Agent should safe guard property of principal particularly upon happening of
events like death of principal, insolvency of principal, etc.
•  Agent should maintain proper accounting records to enroll the transactions run
by him. Agent has to remit amounts to principal properly.
•  Agent has to remit amounts to principal properly.
•  Agent should not carry on delegation.
 2 Sept 21- Div A
nd

Liabilities of Agents.

1. Terms of contract of agency may create personal liability to agent.

2. The tradition which is in operation in that particular type of
business. May also create personal liability to agent.
3. If agent does not behave in his capacity as agent and thus runs
the transaction in his own way, personal liability arises.
4. When agent acts for foreign principal, agent is personally liable.
5. Pretending agent is personally liable
The ability to make and enforce contracts and resolve disputes is fundamental if markets are to
function properly. Good enforcement procedures enhance predictability in commercial relationships
and reduce uncertainty by assuring investors that their contractual rights will be upheld promptly by
local courts.
Key considerations
Contract law includes the rules set and administered by the state that determine when an agreement
is enforceable, the grounds on which a breach of the agreement will be found and the consequences.
Contract enforcement is one of the pillars of the rule of law.
Effective contract enforcement
When two parties strike a bargain, there must be some mechanism to ensure that each party will
stick to the terms. The main contract enforcement mechanisms are self-enforcement (e.g. posting
bonds, ending a commercial relationship), reputation (e.g. risking a future commercial relationship),
organizational (e.g. third party audits), technology (e.g. to monitor sales) and of course contract law.
Institutional requirements to support contract enforcement
Having a contract law on the books is not sufficient. What matters equally are the role and practices
of the legal institutions that support the effective implementation of contract law. The legal
institutions relate to the organization of courts, an independent and competent judiciary, the legal
profession, the enforcement services and the process of law making itself.
• Continue..
Alternative dispute settlement processes
Exclusive reliance on formal systems of contract enforcement (i.e. litigation through
the judiciary system) can be costly and slow. Alternative dispute resolution systems
seek to resolve differences between parties in a timely and fair manner. The main
examples are arbitration, mediation and conciliation hearings, often by industry
bodies, specialized agencies or third party evaluators, conducted at the national or
international level.
Settlement of Dispute in International Law
Dispute-A disagreement on a point of law or fact, a conflict of legal views or interest
between the parties.

INTERNATIONAL DISPUTES-A disagreement that arises between states concerning

their relations with one another and with other states.  Business disputes are
increasingly becoming multijurisdictional and multi-party in nature. For overseas
disputes, you need an international team of lawyers with wide-ranging commercial
experience; a team that understands both domestic and foreign law in depth. And one
that can offer you a seamless service and excellent practical advice.
KINDS OF DISPUTES  Political Disputes Non- justiciable , political or non-legal issues 
Legal disputes Involves not only questions of law but also the law itself.
 3 Sept 21-Div_B &A (6 Sept21)
rd th

PACIFIC SETTELMENT OF DISPUTES Art.33 of the UN Charter provides for the means of
settling disputes: 1. Negotiation 2. Enquiry 3. Mediation 4. Conciliation 5. Arbitration 6.
Judicial settlement 7. Resort to regional agencies or arrangements 8. Other peaceful
means of their own choice.
NEGOTIATION -Settlement of disputes by direct discussions or exchange of views through
diplomatic representatives
ENQUIRY- Ascertainment of pertinent facts and issues in a dispute  Use of effective fact-
finding bodies in accordance of Art.33 of the Charter
MEDIATION-Settlement of disputes undertaken by a third state, group of state, an
individual, an agency or an international organization. Offers concrete proposals for
statement of substantive questions.
CONCILIATION-The process of adjusting or settling disputes in a friendly manner through
extra judicial means.  Conciliation means bringing two opposing sides together to reach a
compromise in an attempt to avoid taking a case to trial
ARBITRATION -Resolution of differences between states through a legal decisions of one
or more umpires or of a tribunal chosen by the parties.
 6 sept 21 (div_A)
th

RESORT TO REGIONAL AGENCIES OR ARRANGEMENTS-

Regional Arrangements- Agreements under which states of a region
undertake to regulate their relations with respect to the question of
the settlement of disputes. •
Regional Agencies- Regional international organizations created by
regional multilateral treaties under a permanent institution with
international legal personality to perform broader function in the
field of the maintenance of peace and security, including the
settlement of disputes.
JUDICIAL SETTLEMENT  Submitting a dispute to a pre-constituted international
court or tribunal composed of independent judges whose tasks are settle claims on
the basis of international law and render decisions which are binding upon the
parties.
By United Nations General Assembly: Although the Assembly has not been empowered to
settle the disputes by any specific means, it may discuss a dispute under Article 11 para 2
and may make recommendations to the disputant parties under Article 14 of the Charter
for the measures which they may take for peaceful adjustment of any situation.

By United Nations Security Council-Under Article 24 para 1 of the United Nations Charter,
maintenance of International Peace and Security is the responsibility of Security Council
• (i) Investigation of the disputes.
• (ii) Recommendation for appropriate procedure or methods of adjustment.
(iii) Recommendation for the terms of the settlement.
Extra-Judicial Modes of Settlement-When a dispute is settled by the ‘international tribunal’
in accordance with the rules of International law, the process is called judicial settlement.
Compulsive or Coercive Means-Compulsive or coercive means for the settlement for the
of disputes are non-peaceful methods. Such measures involve a pressure or force on a
State to settle the dispute.
 08/09/21- Div_B&A
Basic Principle and Charter of GATT
1.Most favored nation-Most-favoured-nation (MFN): treating other people equally Under
the WTO agreements, countries cannot normally discriminate between their trading
partners. Grant someone a special favour (such as a lower customs duty rate for one of
their products) and you have to do the same for all other WTO members.
2. Reciprocity: GATT advocates the principles of “rights” and “obligations”. Each
contracting party has a right, e.g. access to markets of other trading partners on a MFN
basis but also an obligation to reciprocate with trade concessions on a MFN basis.
3. Transparency-Fundamental to a transparent system of trade is the need to harmonize
the system of import protection, so that barriers on trade can be reduced through the
process of negotiations. The GATT therefore, limited the use of quotas, except in some
specific sector such, as agriculture.
4. Tariff Rates- Since 1947, the GATT has been the standard bearer in an on-going process
of reducing tariff levels. During tariff negotiations (known as “rounds”, including the
“Uruguay Round”, which finished in 1994), members set ceilings on their tariff rates for
individual products and/or sectors.
 GATT
The General Agreement on Tariffs and Trade is a legal agreement between many
countries, whose overall purpose was to promote international trade by reducing or
eliminating trade barriers such as tariffs or quotas

The General Agreement on Tariffs and Trade (GATT), signed on Oct. 30, 1947, by 23
countries, was a legal agreement minimizing barriers to international trade by
eliminating or reducing quotas, tariffs, and subsidies while preserving significant
regulations.
One of the key achievements of the GATT was that of trade without discrimination.
Every signatory member of the GATT was to be treated as equal to any other. This is
known as the most-favored-nation principle.
GATT’s normal business involved negotiations on specific trade problems affecting
particular commodities or trading nations, but major multilateral trade conferences
were held periodically to work out tariff reductions and other issues. Seven such
“rounds” were held from 1947 to 1993.
 Objectives GATT
1.Reduction of barriers to international trade
2. Achieved through reduction of tariff barriers, quantitative restrictions and subsidies
on trade through a series of agreements
3. It was a treaty, not an organization
4. A small secretariat occupied what is today the Centre William Rappard in Geneva,
Switzerland.
5. GATT has certain conventions and general principles governing international trade
among countries that follows the GATT agreement:-
1) Any proposed change in the tariff or any type of commercial policy of a member
country should not be undertaken without the consultation with the other parties
to the agreement
2) The countries that adhear to get work towards the reduction of tariff and other
barriers to the international trade should be negotiated within the frame work of
GATT. BARRIERS a) TARIFF b) NON TARIFF (Change in monetary value) (Quality &
Quantity of product and services)
 Key Takeaways
1.The General Agreement on Tariffs and Trade (GATT) was signed by 23 countries
in October 1947, after World War II, and became law on Jan. 1, 1948.
2.The GATT’s purpose was to make international trade easier.
3.The GATT held eight rounds in total from April 1947 to September 1986, each
with significant achievements and outcomes.
4. In 1995 the GATT was absorbed into the World Trade Organization (WTO),
which extended it
5. A practical outcome of this was that once a country had negotiated a
tariff cut with some other countries (usually its most important trading
partners), this same cut would automatically apply to all GATT signatories
6.Escape clauses did exist, whereby countries could negotiate
exceptions if their domestic producers would be particularly
harmed by tariff cuts.
 9 sept 21-Div-A
th

Resolution of trade disputes

The GATT provided an avenue for resolving trade disputes, a role that
was strengthened substantially under the WTO. Members are
committed not to take unilateral action against other members.
Instead, they are expected to seek recourse through the WTO’s
dispute-settlement system and to abide by its rules and findings. The
procedures for dispute resolution under the GATT have been
automated and greatly streamlined, and the timetable has been
tightened.
TRADE BARRIERS, TARIFF- DIV_B 9TH Sept 21
While free-trade maximizes world welfare, most nations impose some trade restrictions
that benefit special groups in the nation. The most important type of trade restriction
historically is the tariff. When a small nation imposes an import tariff, the domestic price
of the importable commodity rises by the full amount of the tariff for individuals in
nation. As a result, domestic production of the importable commodity expands while
domestic consumption and imports fall.
TARIFFS • Tariffs can be ad-Valorem, specific, or compound. • Ad-Valorem tariff is
expressed as a fixed percentage of the value of the traded commodity. • Specific tariff is
expressed as a fixed sum per physical unit of the traded commodity.
TRADE RESTRICTIONS /TRADE BARRIERS-
An import tariff is a duty on the imported commodity, while an export tariff is a duty on
the exported commodity. • Export tariffs are prohibited by the U.S. Constitution but are
often applied by developing countries on their traditional exports (such as Ghana on it’s
cocoa and Brazil on it’s coffee) to get better prices and revenues. • Developing nations
rely heavy on export tariff to raise revenues because of their ease of collection.
 Charter GATT
In 1964 the GATT began to work toward curbing predatory pricing policies. These
policies are known as dumping. As the years have passed, the countries have
continued to attack global issues, including addressing agriculture disputes and
working to protect intellectual property.

In the period from 1947 to 1986 there were a number of agreements which developed
the basis for international trade relations. The original General Agreement on Tariffs
and Trade, which incorporated relevant sections of the Havana Charter, was
negotiated in 1947 and came into force in 1948. Subsequent years saw a series of
eight negotiating rounds under the GATT, until the launch of the Uruguay Round in
1986.
Havana Charter- The United Nations Conference on Trade and Employment, held in
Havana, Cuba, in 1947, adopted the Havana Charter for the International Trade
Organization which was meant to establish a multilateral trade organization. For
various reasons, the charter never came into force.
• In Havana in 1948, the UN Conference on Trade and Employment concluded a
draft charter for the ITO, known as the Havana Charter, which would have
created extensive rules governing trade, investment, services, and business
and employment practices. However, the United States failed to ratify the
agreement. Meanwhile, an agreement to phase out the use of import quotas
 and to reduce tariffs on merchandise trade, negotiated by 23 countries in 
Geneva in 1947, came into force as the GATT on January 1, 1948.
• Although the GATT was expected to be provisional, it was the only major
agreement governing international trade until the creation of the WTO. The
GATT system evolved over 47 years to become a de facto global 
trade organization that eventually involved approximately 130 countries.
Through various negotiating rounds, the GATT was extended or modified by
numerous supplementary codes and arrangements, interpretations, waivers,
reports by dispute-settlement panels, and decisions of its council.
13/09/21-A
Provisions relating to preferential treatment to developing
countries
The WTO Agreements contain provisions which give developing countries special
rights. These are called “special and differential treatment” provisions. 
The special provisions include-
• longer time periods for implementing agreements and commitments,
• measures to increase trading opportunities for these countries,
• provisions requiring all WTO members to safeguard the trade interests of
developing countries,
• and support to help developing countries build the infrastructure for WTO
work, handle disputes, and implement technical standards
• the GATT 1994 gives developing countries the right to protect their markets from
imports in order to promote the establishment or maintenance of a particular
industry.
• It also gives developing countries the right to protect their markets from imports in
cases of balance-of-payments difficulties.
Part IV of the GATT includes provisions on the concept of non-reciprocal preferential
treatment for developing countries — when developed countries grant trade
concessions to developing countries they should not expect the developing countries
to make matching offers in return.

Enabling Clause for developing countries (goods)

1. The “Decision on Differential and More Favourable Treatment, Reciprocity and
Fuller Participation of Developing Countries”, was adopted under GATT in 1979 and
enables developed members to give differential and more favorable treatment to
developing countries.
2. The Enabling Clause is the WTO legal basis for the Generalized System of
Preferences (GSP). Under the Generalized System of Preferences, developed
countries offer non-reciprocal preferential treatment (such as zero or low duties on
imports) to products originating in developing countries.
General Agreement on Trade in Services (GATS)- aims at increasing the participation
of developing countries in world trade. It refers, among other things, to strengthening
the domestic services competitiveness of developing countries through access to
technology and improving their access to information networks.
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)-
Article 66 of the TRIPS Agreement provides least-developed countries with a longer
time-frame to implement all the provisions of the TRIPS Agreement and encourages
technology transfer.
Waivers-Going beyond legal provisions stated explicitly in WTO agreements, actions in
favor of developing countries, individually or as a group, may also be taken under
“waivers” from the main WTO rules. These waivers are granted by the General Council
according to procedures set out in Article IX:3 of the Agreement Establishing the WTO.
Recent examples of waivers include the EC/France Trading Arrangements with
Morocco.
 Technical regulations and standards

Technical regulations and standards are important, but they vary from country to country.
Having too many different standards makes life difficult for producers and exporters.
The Technical Barriers to Trade Agreement (TBT) tries to ensure that regulations,
standards, testing and certification procedures do not create unnecessary obstacles.
The agreement also recognizes countries’ rights to adopt the standards they consider
appropriate.
The agreement also sets out a code of good practice for both governments and non-
governmental or industry bodies to prepare, adopt and apply voluntary standards.
The agreement says the procedures used to decide whether a product conforms with
relevant standards have to be fair and equitable. It discourages any methods that would
give domestically produced goods an unfair advantage.
It discourages any methods that would give domestically produced goods an unfair
advantage
The agreement also encourages countries to recognize each other’s procedures for
assessing whether a product conforms.
Manufacturers and exporters need to know what the latest standards are in
their prospective markets. To help ensure that this information is made
available conveniently, all WTO member governments are required to
establish national enquiry points and to keep each other informed through
the WTO — around 900 new or changed regulations are notified each year.
 07/09/20
An anti-dumping duty is a protectionist tariff that a domestic government
imposes on foreign imports that it believes are priced below fair market
value.

Dumping, in economics, is a kind of injuring pricing, especially in the context

of international trade. It occurs when manufacturers export a product to
another country at a price below the normal price with an injuring effect.
Designed to discourage the importation and sale of foreign goods at prices
well below domestic prices antidumping tariffs.
What is dumping?
Dumping is, in general, a situation of international price discrimination, where the
price of a product when sold in the importing country is less than the price of that
product in the market of the exporting country. Thus, in the simplest of cases, one
identifies dumping simply by comparing prices in two markets. 

Article VI of GATT and the Anti-Dumping Agreement

The GATT 1994 sets forth a number of basic principles applicable in trade between
Members of the WTO, including the “most favoured nation” principle. It also requires
that imported products not be subject to internal taxes or other changes in excess of
those imposed on domestic goods, and that imported goods in other respects be
accorded treatment no less favourable than domestic goods under domestic laws and
regulations, and establishes rules regarding quantitative restrictions, fees and
formalities related to importation, and customs valuation.
Article VI of GATT 1994, on the other hand, explicitly authorizes the
imposition of a specific anti-dumping duty on imports from a particular
source, in excess of bound rates, in cases where dumping causes or threatens
injury to a domestic industry.
Basic principles-WTO Members can impose anti-dumping
measures, if, after investigation in accordance with the
Agreement
(a) that dumping is occurring,
(b) that the domestic industry producing the like product in the
importing country is suffering material injury, and
(c) that there is a causal link between the two
 Customs valuation
10/09/20
Customs valuation is the process where customs
authorities assign a monetary value to a good or service
for the purposes of import or export. Generally,
authorities engage in this process as a means of
protecting tariff concessions, collecting revenue for the
governing authority, implementing trade policy, and
protecting public health and safety.
Definition-Customs valuation is a customs procedure applied to
determine the customs value of imported goods. If the rate of
duty is ad valorem, the customs value is essential to determine
the duty to be paid on an imported good.
Customs Valuation is the determination of the economic value of
goods declared for importation.
An ad valorem tax is a tax based on the assessed value of an
item, such as real estate or personal property. The most common
ad valorem taxes are property taxes levied on real estate.
However, ad valorem taxes may also extend to a number of tax
applications, such as import duty taxes on goods from abroad.
Most of the custom duties are ad valorem. So goods
have to be valued for purposes of assessment.
Normally, the price paid by the importer for the goods
imported into India is the value of goods imported.
But under the custom act,1962 the concept of value
has been treated separately. The duty is payable on
the basis of value of goods. Package goods have to be
assessed on the basis of their maximum retail price
declared on the package in so far as change of
countervailing duty is concerned.
Article VII of the General Agreement on Tariffs and
Trade laid down the general principles for an
international system of valuation. It stipulated that the
value for customs purposes of imported merchandise
should be based on the actual value of the imported
merchandise on which duty is assessed, or of like
merchandise, and should not be based on the value of
merchandise of national origin or on arbitrary or
fictitious values.
Basic principle: Transaction value The Agreement stipulates that
customs valuation shall, except in specified circumstances, be
based on the actual price of the goods to be valued, which is
generally shown on the invoice
Transaction value- The primary basis for customs valuation
under the Agreement is “transaction value” as defined in Article
1. Article 1 defines transaction value as “the price actually paid
or payable for the goods when sold for export to the country of
importation.
 Custom Valuation Method
Customs valuation is the process where customs authorities
assign a monetary value to a good or service for the purposes of
import or export.
Identical Goods TV Method- the value of the imported
goods shall be the transaction value of identical goods
sold for export to India and imported at or about the
same time as the goods being valued If more than
one TV is available, the lowest value shall be taken.
• METHOD 4: THE DEDUCTIVE METHOD (PRICE
PER UNIT)
• By this method the Customs value is
determined on the basis of sales price in
Montenegro of the goods being valued or of
identical or similar imported goods, less
certain specified expenses resulting from the
importation and sale of the goods.
Cost or value is to be determined on the basis of
information relating to the production of the
goods being valued, supplied by or on behalf of
the producer. If not included above, packing
costs and charges, assists, engineering work,
artwork, etc.
This method is to be used if none of the
previous methods could be applied. It is based
on the previous methods, applied with a
reasonable degree of flexibility. A customs
value determined under this method should be
based on previously determined values to the
greatest extent possible
11/09/20
The Agreement on Trade-Related Investment
Measures (TRIMs) are rules that are applicable
to the domestic regulations a country applies to
foreign investors, often as part of an 
industrial policy
• Dividend balancing is connected to the repatriation
(The sending of money back to own country) of
profit earned by foreign investments to the home
country. In some countries, there are restrictions
on repatriation of dividend outside the country.
• These restrictions require that the outflow of
foreign exchange on payment of dividend shall not
exceed the amount of export earning of the
company.
 14/09/20
Licensing, Franchising, Joint Venture
Licensing gives a licensee certain rights or resources to
manufacture and/or market a certain product in a host country.
Terms
Licensing: A business arrangement in which one
company gives another company permission to
manufacture its product for a specified payment.
License: The legal terms under which a person is
allowed to use a product.
 Key Points
• Licensing is a business agreement involving two companies: one gives the other
special permissions, such as using patents or copyrights, in exchange for payment.
• An international business licensing agreement involves two firms from different
countries, with the licensee receiving the rights or resources to manufacture in
the foreign country.
• Rights or resources may include patents, copyrights, technology, managerial skills,
or other factors necessary to manufacture the good.

• Advantages of expanding internationally using international licensing include: the

ability to reach new markets that may be closed by trade restrictions and the
ability to expand without too much risk or capital investment.

• Disadvantages include the risk of an incompetent foreign partner firm and lower

income compared to other modes of international expansion.
A license where one company, as licensor, allows another
company, as licensee, the limited right to use a trademark for a
limited purpose. Example: An example would include Walt
Disney granting McDonalds a license for McDonalds to co-brand
its McDonalds Happy Meals with a Disney trademarked
character;
 What is a Franchise?

A franchise is a legal relationship where one party, called the

“Franchisor”,  grants to the other party, called the “Franchisee”,
the right to develop, establish, and duplicate the operations of
the franchisor’s business. There are many examples of franchise
relationships throughout the United States economy and include
restaurants like McDonalds etc.
 Key Points
• Under the franchise laws, a franchise relationship is created
when the following three elements exist:
• (a) Trademark License – The license of a trademark, i.e.,
you grant your franchise the license and right to use your
business name or trademark to duplicate your business and
establish a new location or service territory;
• (b) Degree of Control – You require your licensee to enter
into an agreement that gives you, as franchisor, a degree of
control over the operations of your franchisee, i.e., you
restrict what they can and cannot sell from their business;
and 
 Continue..
(c) Payment of an Initial Fee – You receive an upfront payment or
fee, i.e., at the time of granting your license or entering into an
agreement, you are paid a fee, i.e. you receive an upfront fee,
whether or not you call it a franchise fee, a license fee, an
inventory fee, or whatever else you may call it. 
 JVs
An international joint venture (IJV) occurs when
two businesses based in two or more countries
form a partnership. A company that wants to
explore international trade without taking on
the full responsibilities of cross-border business
transactions has the option of forming a joint
venture with a foreign partner.
Types of joint venture
Limited co-operation. This is when you agree to collaborate with another
business in a limited and specific way.
Separate joint venture business. This is when you set up a separate joint
venture business, possibly a new company, to handle a particular contract.

Business partnerships.
Vodafone & Telefónica agreed to share their mobile network. BMW and
Toyota co-operate on research into hydrogen fuel cells, vehicle
electrification and ultra- lightweight materials. West Coast – joint venture
between Virgin Rail & Stagecoach. Google and NASA developing Google
Earth.
 Reasons for forming
• Risk sharing – Risk sharing is a common reason to form a JV,
particularly, in highly capital intensive industries and in industries
where the high costs of product development equal a high likelihood
of failure of any particular product.
• Economies of scale – If an industry has high fixed costs, a JV with a
larger company can provide the economies of scale necessary to
compete globally and can be an effective way by which two
companies can pool resources and achieve critical mass.
• Market access – For companies that lack a basic understanding of 
customers and the relationship / infrastructure to distribute their
products to customers, forming a JV with the right partner can provide
instant access to established, efficient and effective 
distribution channels and receptive customer bases. This is important
to a company because creating new distribution channels and
identifying new customer bases can be extremely difficult, time-
consuming and expensive activities.
 Continue..
• Geographical constraints – When there is an attractive business opportunity in a
foreign market, partnering with a local company is attractive to a foreign company
because penetrating a foreign market can be difficult both because of a lack of
experience in such market and local barriers to foreign-owned or foreign-
controlled companies.
• Funding constraints – When a company is confronted with high up-front
development costs, finding the right JV can provide necessary financing and
credibility with third parties.
• Acquisition barriers – When a company wants to acquire another but cannot due
to cost, size, or geographical restrictions or legal barriers, teaming up with a
company in a JV is an attractive option. The JV is substantially less costly and thus
less risky than complete acquisitions, and is sometimes used as a first step to a
complete acquisition with the JV. Such an arrangement allows the purchaser the
flexibility to cut its losses if the investment proves less fruitful than anticipated or
to acquire the remainder of the company under certain circumstances. [2]
 17/09/20
Patents prevent others from making or selling
an invention, but trademarks protect the words,
phrases, symbols, logos, or other devices used
to identify the source of goods or services from
usage by other competitors.
Patent protection The TRIPS Agreement requires WTO Members to
provide protection for a minimum term of 20 years from the filing date
of a patent application for any invention including for a pharmaceutical
product or process. Prior to the TRIPS Agreement, patent duration was
significantly shorter in many countries.
Patents
The TRIPS Agreement says patent protection must be available for
eligible inventions in all fields of technology that are new, involve an
inventive step and can be industrially applied. Eligible inventions
include both products and processes. They must be protected for at
least 20 years. However, governments can refuse to issue a patent for
an invention if its sale needs to be prohibited for reasons of public
order or morality.
Trade Mark-The basic rule contained in Article 15 is that any
sign, or any combination of signs, capable of distinguishing the
goods and services of one undertaking from those of other
undertakings, must be eligible for registration as a trademark.
The owner of a registered trademark must be granted the
exclusive right to prevent all third parties not having the
owner's consent from using in the course of trade identical or
similar signs for goods or services which are identical or
similar to those in respect of which the trademark is
registered where such use would result in a likelihood of
confusion.
 18/09/20 & 21/09/20
Technology transfer -Developing country members in
particular see technology transfer as part of the
bargain in which they have agreed to protect
intellectual property rights. The TRIPS Agreement
aims for the transfer of technology and requires
developed country members to provide incentives for
their companies to promote the transfer of
technology to least-developed countries in order to
enable them to create a sound and viable
technological base.
A total of 108 WTO members have made commitments to
facilitate trade in telecommunications services. This includes
the establishment of new telecoms companies, foreign direct
investment in existing companies and cross-border transmission
of telecoms services. Out of this total, 99 members have
committed to extend competition in basic telecommunications
(e.g. fixed and mobile telephony, real-time data transmission,
and the sale of leased-circuit capacity). In addition, 82 WTO
members have committed to the regulatory principles spelled
out in the “Reference Paper”, a blueprint for sector reform that
largely reflects “best practice” in telecoms regulation.
• achieving broad coverage in a technology-neutral manner and
significant commitments in all modes of supply
• working with least-developed countries and developing countries to
find ways to encourage new and improved offers and to provide
technical assistance to support this process
• reducing or eliminating exclusive rights, economic needs tests (i.e. a
test using economic criteria to decide whether the entry into the
market of a new foreign firm is warranted), restrictions on the types of
legal entity permitted, and limitations on foreign equity
• commitment to all provisions of the telecommunications Reference
Paper
• the elimination of exemptions to most-favoured nation (MFN)
treatment (i.e. non-discrimination)
CITES (the Convention on International Trade in Endangered
Species of Wild Fauna and Flora) is an international agreement
between governments. Its aim is to ensure that
international trade in specimens of wild animals and plants does
not threaten their survival. It came into force in 1975 with the
goal of ensuring that international trade does not threaten the
survival of wild plants and animals.
There are three appendices: Appendix I, II, and III. Each denotes
a different level of protection from trade.
What animals are protected by Cites?
They include some whole groups, such as
primates, cetaceans (whales, dolphins and
porpoises), sea turtles, parrots, corals, cacti and
orchids. But in some cases only a subspecies or
geographically separate population of a species
(for example the population of just one country)
is listed.
Appendix I includes species that are in danger of
extinction because of international trade. Permits are
required for import and export, and trade for
commercial purposes is prohibited. Trade may be
allowed for research or law enforcement purposes,
among a few other limited reasons, but first the source
country must confirm that taking that plant or animal
won’t hurt the species’ chance of survival. (This is
known as a “non-detriment finding.”) The Asiatic lion
 and tigers are two species listed as Appendix I.
Appendix II includes species that aren’t facing
imminent extinction but need monitoring to ensure
that trade doesn’t become a threat. Export is allowed
if the plant, animal, or related product was obtained
legally and if harvesting it won’t hurt the species’
chance of survival. American alligators are listed on
Appendix II, for example. They were overhunted
through the 1960s for their skin, but their numbers are
now on the rise. CITES Appendix II listing helps ensure
the alligator skin trade doesn’t become a threat again.
Appendix III includes species that are protected in at least
one country, when that country asks others for help in
regulating the trade. Regulations for these species vary,
but typically the country that requested the listing can
issue export permits, and export from other countries
requires a certificate of origin. While honey badgers are 
listed as of least concern by the IUCN, their Botswana
population is on CITES Appendix III because of concerns
that they would be exploited in other African countries
for use in traditional medicine and as bush meat.
What happens at CITES meetings?
Every two to three years, CITES parties meet at what’s
called the Conference of the Parties (or “CoP”) to
evaluate how the convention is being enforced. The
purpose of this two-week meeting is to consider new
proposals for listing or removing species from
appendices, to debate other decisions and resolutions
about implementation of regulations, and to review
conservation progress.
 Practice Quiz 01-18/09/20
Rohit 1 Suyash 1, Rishab-1,Aarya-1,Abhishek volla -1,
Anuradha-0, Sahil-1,Farhan-0
Nitish- 1
Akshata Singh 1
Ipshita- 1
Chaitanya- 1
Meetkumar- 01
Niyati 1
Shiwangi 1
 24/09/20
Taxation Treaties
Tax treaties help to mitigate the risk of double taxation,
reduce tax evasion, and facilitate international trade.
They cover subjects ranging from income taxes, to
inheritance taxes, to the exchange of tax-related
information. The vast majority of tax treaties are
bilateral agreements between two sovereign states.
There is no such thing as an international tax. So what
is 'international tax law'? It is the laws that apply to the
taxing of activity that takes place in two or more
countries.
Many countries have entered into tax treaties (also called double tax
agreements, or DTAs) with other countries to avoid or mitigate 
double taxation. Such treaties may cover a range of taxes including 
income taxes, inheritance taxes, value added taxes, or other taxes.[1] 

Besides bilateral treaties, multilateral treaties are also in place. For example, 
European Union (EU) countries are parties to a multilateral agreement with
respect to value added taxes under auspices of the EU, while a 
joint treaty on mutual administrative assistance of the Council of Europe and
the Organisation for Economic Co-operation and Development (OECD) is
open to all countries. Tax treaties tend to reduce taxes of one treaty country
for residents of the other treaty country to reduce double taxation of the
same income.
Double taxation is a tax principle referring to income taxes paid
twice on the same source of income. It can occur when income is
taxed at both the corporate level and personal level. Double
taxation also occurs in international trade or investment when
the same income is taxed in two different countries.
Double taxation occurs when a taxpayer is subject to comparable
tax on the same income or gains in more than one country, which
in effect taxes income twice. 
Double Taxation Agreements (DTA) are treaties between two or
more countries to avoid international double taxation of income
and property. On the one hand, there can be an exemption
from tax payments or a reduced tax rate on respective payments.
Double tax agreements (DTAs) aim to prevent fiscal evasion
regarding taxation, and to avoid prevent the double taxing of
income by allocating taxing rights over this income between the
treaty partner countries. The taxing rights may either be exclusive
to one of the treaty partners, or shared between them.

The most common form of DTA is treaties for the avoidance of

double taxation of income and capital. Measures in such treaties
to prevent tax evasion typically include exchange of information
provisions and other forms of mutual assistance. Another
common type of DTA covers the avoidance of double taxation in
respect of inheritance (or estate) and gift taxes.
International Double Taxation-International businesses are often
faced with issues of double taxation. Income may be taxed in the
country where it is earned, and then taxed again when it is repatriated
in the business' home country. In some cases, the total tax rate is so
high, it makes international business too expensive to pursue.
To avoid these issues, countries around the world have signed
hundreds of treaties for the avoidance of double taxation, often based
on models provided by the Organization for Economic Cooperation
and Development (OECD). In these treaties, signatory nations agree to
limit their taxation of international business in an effort to augment
trade between the two countries and avoid double taxation.
 KEY TAKEAWAYS

• Double taxation also refers to the same

income being taxed by two different countries.
• While critics argue that dividend double
taxation is unfair, advocates say that without
it, wealthy stockholders could virtually avoid
paying any income tax.
International tax law is found in: 
1) International Tax Agreements: Double Taxation
Agreements (DTAs) - the most common  type of
international tax agreements. These treaties between two
or more countries are also known as Tax Treaties, Income
Tax Treaties or Tax Conventions. For the sake of consistency
and to avoid confusion, in this Guide these agreements are
called Double Taxation Agreements or DTAs. See the 
What is Double Taxation? box on this page for more
information on double tax and DTAs. 
Other international agreements / treaties - these include treaties
between two or more countries that: only cover particular types
of income, such as shipping and air transport;  treaties that only
cover a particular tax, such as social security; and  treaties that
provide for exchange of information and mutual administrative
assistance in collecting taxes.
2) Domestic laws that consider the jurisdiction to tax entities,
and that concern the taxation on foreign income of residents
(worldwide income), domestic income of non-residents and
cross-border transactions.
 OECD MODEL TAX CONVENTION ON
INCOME AND ON CAPITAL
The main purpose of the Organisation for Economic Co-
operation and Development (OECD) Model Convention
 (9th ed, 2014 - open access) is to provide a means of
settling on a uniform basis the most common problems
that arise in the field of international double taxation. The
Council of the OECD has recommended that 
member countries, when concluding or revising double
tax agreements between themselves, should conform to
the current Model Convention and commentary, having
regard to the relevant reservations expressed by countries.
UN MODEL DOUBLE TAXATION CONVENTION BETWEEN
DEVELOPED AND DEVELOPING COUNTRIES

The UN Model Convention is designed for developing countries

and countries with economies in transition as a basis for
negotiation of their DTAs. The Model helps to move forward in a
way that preserves an appropriate share of taxing rights for
developing countries. It also promotes cooperation to deal with
tax avoidance and evasion.
The UN Model Convention and the Manual for the Negotiation
of Bilateral Tax Treaties between Developed and Developing
Countries are reviewed and updated by the Committee of
Experts on International Cooperation in Tax Matters.
 FERA &FEMA
28/09/20
FERA was an act promulgated, to regulate payments and
foreign exchange in India, on the contrary FEMA is an act to
promote orderly management of the foreign exchange in
India.
Foreign Exchange Regulation Act (FERA)Foreign Exchange
Management Act (FEMA)
Parliament of India passed the Foreign Exchange Regulation
Act in 1973 (FERA)
Parliament of India enacted Foreign Exchange Management
Act (FEMA) on 29 December 1999 replacing FERA.
 1/10/20
Continue FERA & FEMA
The Foreign Exchange Regulation Act (FERA) was legislation passed
in India in 1973 that imposed strict regulations on certain kinds of
payments, the dealings in foreign exchange (forex) and securities
and the transactions which had an indirect impact on the foreign
exchange and the import and export of currency.

The Foreign Exchange Management Act, 1999 is an Act of the

Parliament of India "to consolidate and amend the law relating to
foreign exchange with the objective of facilitating external trade
and payments and for promoting the orderly development and
maintenance of foreign exchange market in India"
Foreign Exchange Regulation Act (FERA) was
promulgated in 1973 and it came into force on January
1, 1974. Section 29 of this Act referred directly to the
operations of MNCs in India. According to the Section,
all non-banking foreign branches and subsidiaries with
foreign equity exceeding 40 per cent had to obtain
permission to establish new undertakings, to purchase
shares in existing companies, or to acquire wholly or
partly any other company.
• Features of FERA:
• (1) This Act may be called the Foreign Exchange
Regulation Act, 1973.
• (2) It extends to the whole of India.
• (3) It applies also to all citizens of India outside India and
to branches and agencies outside India of companies or
bodies corporate, registered or incorporated in India.
• (4) It shall come into force on such date as the Central
Government may, by notification in the Official Gazette,
appoint in this behalf:
According to these guidelines, the principle rule was that all
branches of foreign companies operating in India should
convert themselves into Indian companies with at least 60
per cent local equity participation. Furthermore all
subsidiaries of foreign should bring down the foreign equity
share to 40% or less.  The actual impact of this act was
completely negative on the economic development of the
country, because it tied the hands of big corporate houses
to expand their business.
 FEMA
The Foreign Exchange Management Bill (FEMA) was introduced by the
Government of India in Parliament on August 4, 1998. The Bill aims "to
consolidate and amend the law relating to foreign exchange with the
objective of facilitating external trade and payments and for
promoting the orderly development and maintenance of foreign
exchange market in India.
Among the various objectives of the Foreign Exchange Management
Act (FEMA), an important one is to revise and unite all the laws that
relate to foreign exchange. Further FEMA targets to promote foreign
payments and trade in the country. Another important motive of the
Foreign Exchange Management Act (FEMA) is to encourage the
maintenance and improvement of the foreign exchange market in
India.
• Features of the FEMA
• The following are some of the important features of Foreign Exchange
Management Act:
• a. It is consistent with full current account convertibility and contains
provisions for progressive liberalization of capital account transactions.
• b. It is more transparent in its application as it lays down the areas
requiring specific permissions of the Reserve Bank/Government of India
on acquisition/holding of foreign exchange.
• c. It classified the foreign exchange transactions in two categories, viz.
capital account and current account transactions.
• d. It provides power to the Reserve Bank for specifying, in , consultation
with the central government, the classes of capital account transactions
and limits to which exchange is admissible for such transactions.
e. It gives full freedom to a person resident in India, who was earlier resident outside
India, to hold/own/transfer any foreign security/immovable property situated outside
India and acquired when s/he was resident.
f. This act is a civil law and the contraventions of the Act provide for arrest only in
exceptional cases.
g. FEMA does not apply to Indian citizen’s resident outside India.
Current account convertibility- relates to the removal of restrictions on
payments relating to the international exchange of goals, services and factor
incomes, while capital account convertibility refers to a similar liberalization of a
country's capital transactions such as loans and investment, both short term and
Current account convertibility implies that the Indian rupee can be converted
to any foreign currency at existing market rates for trade purposes for any
amount. It allows for easy financial transactions for the export and import of
goods and services.
FERA came into force from January 1, 1974.
FEMA came into force from June 2000.
FERA was repealed in 1998 by Vajpayee Government
FEMA succeeded FERA
FERA has 81 sections
FEMA has 49 sections
FERA was conceived with the notion that Foreign Exchange
is a scarce resource
FEMA was conceived with the notion that Foreign Exchange
is an asset.
FERA rules regulated foreign payments.
FEMA focused on increasing the foreign exchange reserves
of India, focused on promoting foreign payments and foreign
trade.
The objective of FERA was conservation of Foreign Exchange
The objective of FEMA is Management of Foreign Exchange
The definition of “Authorized Person” was narrow.(FERA)
The definition of “Authorized Person” was widened(FEMA)
Banking units did not come under the definition of Authorized
Person.
Banking units came under the definition of Authorized Person.
If there was a violation of FERA rules, then it was considered as
Criminal offence.
If there was a violation of FEMA rules, then it is considered as
civil offence
A person accused of FERA violation was not provided legal
help.
A person accused of FEMA violation will be provided legal help.
For those guilty of violating FERA rules, there was
provision for direct punishment.
For those guilty of violating FEMA rules, they have to pay a
fine, starting from the date of conviction, if the penalty is
not paid within 90 days, then the guilty will be imprisoned.
If there was a need for transferring of funds for external
operations, then prior approval of the Reserve Bank of
India (RBI) is required.
For External trade and remittances, there is no need for
prior approval from the Reserve Bank of India (RBI).
 Foreign Investment
5/10/20
Foreign investment refers to the investment in
domestic companies and assets of another
country by a foreign investor. Large
multinational corporations will seek new
opportunities for economic growth by opening
branches and expanding their investments in
other countries.
Foreign direct investment (FDI) -refers to investments made by
an individual or firm in one country in a business located in
another country. Investors can make foreign direct investments
in a number of ways. Some common ones include establishing a 
subsidiary in another country, acquiring or merging with an
existing foreign company, or starting a joint venture partnership
 with a foreign company.
Foreign direct investment tends to involve
establishing more of a substantial, long-term interest
in the economy of a foreign country.1 Due to the
significantly higher level of investment required,
foreign direct investment is usually undertaken by
multinational companies, large institutions, or 
venture capital firms. Foreign direct investment tends
to be viewed more favorably since they are
considered long-term investments, as well as
investments in the well-being of the country itself.
At the same time, the nature of direct investment, such as
creating or acquiring a manufacturing facility, makes it much
more difficult to liquidate or pull out of the investment. For
this reason, direct investment is usually undertaken with
essentially the same attitude as establishing a business in
one's own country—with the intention of making the
business profitable and continuing its operation indefinitely.
For the investor, direct investment means having control
over the business invested in and being able to manage it
directly. It also involves more risk, work, and commitment
compared to foreign portfolio investment.
•
Example
MERGERS AND ACQUISITIONS
of FDI
This happens when a large company bases in one country acquires a small company with
operations in a different country. The transaction that takes place for the acquisition can be
views as a foreign direct investment from one country to another.
• FACILITIES
This happens when— for example, a tech company is country A builds and operates a data
centre in country B. This is foreign direct investment from country A to country B.
• JOINT VENTURE
A joint venture is when companies bases in two different countries come together to carry
out a business in one of the two countries. If country A and country B start a business in
country B, then this can be viewed as FDI from country A to country B.
• HORIZONTAL
This occurs when a company replicates its business operations in one or more countries.
For example, when company A replicates its business, complete with administration,
sourcing, logistics, and data centre in country B, C and D.
• MANUFACTURING
For example when country A builds a manufacturing unit or factory in country B.
 08/10/20
• Foreign Portfolio Investment (FPI)
• Foreign portfolio investment (FPI) refers to investing in the financial assets of a
foreign country, such as stocks or bonds available on an exchange. This type of
investment is at times viewed less favorably than direct investment because
portfolio investments can be sold off quickly and are at times seen as short-term
attempts to make money, rather than a long-term investment in the economy.
• Portfolio investments typically have a shorter time frame for investment return
than direct investments. As with any equity investment, foreign portfolio
investors usually expect to quickly realize a profit on their investments.
• As securities are easily traded, the liquidity of portfolio investments makes them
much easier to sell than direct investments. Portfolio investments are more
accessible for the average investor than direct investments because they require
much less investment capital and research.
 Example of Foreign Portfolio Investment (FPI)

Foreign portfolio investment (FPI) refers to the

purchase of securities and other financial assets
by investors from another country. Examples of
foreign portfolio investments include stocks,
bonds, mutual funds, exchange traded funds,
American depositary receipts (ADRs), and global
depositary receipts (GDRs).
Foreign portfolio investment (FPI) consists of
securities and other financial assets held by investors
in another country. It does not provide the investor
with direct ownership of a company's assets and is
relatively liquid depending on the volatility of the
market. Along with foreign direct investment (FDI),
FPI is one of the common ways to invest in an
overseas economy. FDI and FPI are both important
sources of funding for most economies.
 KEY TAKEAWAYS

• Foreign portfolio investment (FPI) involves holding financial

assets from a country outside of the investor's own.
• FPI holdings can include stocks, ADRs, GDRs, bonds, mutual
funds, and exchange traded funds.
• Along with foreign direct investment (FDI), FPI is one of the
common ways for investors to participate in an overseas
economy, especially retail investors.
• Unlike FDI, FPI consists of passive ownership; investors
have no control over ventures or direct ownership of
property or a stake in a company.
In foreign portfolio investment, these securities
can include stocks, American depositary receipts
(ADRs), or global depositary receipts of
companies headquartered outside the investor's
nation. Holding also includes bonds or other
debt issued by these companies or foreign
governments, mutual funds, or 
exchange traded funds (ETFs) that invest in
assets abroad or overseas.
 Example of Foreign Portfolio Investment (FPI)

The year 2018 was a good one for India in terms

of FPI. More than 600 new investment funds
registered with the Securities and Exchange
Board of India (SEBI), bringing the total to 9,246.
An easier regulatory climate and a strong
performance by Indian equities over the last few
years were among the factors sparking foreign
investors' interest.
A depositary receipt (DR) is a negotiable certificate issued by a
bank representing shares in a foreign company traded on a local
stock exchange. The depositary receipt gives investors the
opportunity to hold shares in the equity of foreign countries and
gives them an alternative to trading on an international market.
American Depositary Receipts (ADRs) are the stocks of the
foreign companies which are traded in the American markets
and are purchased by the investors in U.S. dollars during the
normal trading hours in the U.S. market through the brokers
which allows the people of America to invest in foreign
companies.
An American depositary receipt is a negotiable
security that represents securities of a company that
trades in the U.S. financial markets.
An American depositary receipt (ADR) is a certificate
issued by a U.S. bank that represents shares in
foreign stock. ADRs trade on American stock
exchanges. ADRs and their dividends are priced in
U.S. dollars. ADRs represent an easy, liquid way for
U.S. investors to own foreign stocks
How American Depositary Receipts Work.
Investors willing to invest in American
Depositary Receipts can purchase them from
brokers or dealers. ... The bank then issues ADRs
that are equal to the value of the shares
deposited with the bank, and the dealer/broker
takes the ADR to US financial markets to sell
them.
Diageo is an alcoholic beverage company that is located in the United
Kingdom. It’s been making efforts to expand its market in the United States.
It trades on the NYSE under the symbol DEO. One Diageo ADR represents
four ordinary DEO shares. Diageo’s dividend yield, as of 2018, is about 3%.
• Demand and Supply
• Once an American Depository Receipt is listed on the NYSE, its price is
determined by the forces of demand and supply. In most cases, the price
of an ADR tends to follow the price of its parent shares trading in the
country of origin. For example, if a Chinese company sells its ADR on the
NYSE, the price will typically mirror the price of the company’s shares on
the Shanghai Stock Exchange. If a major event occurs in the foreign
country, e.g., a lawsuit loss or a ban on the company’s products, the
effects of the event will be reflected in the price of the ADRs.
• KEY TAKEAWAYS
• An American depositary receipt (ADR) is a certificate issued by a U.S.
bank that represents shares in foreign stock.
• ADRs trade on American stock exchanges.
• ADRs and their dividends are priced in U.S. dollars.
• ADRs represent an easy, liquid way for U.S. investors to own foreign
stocks.
• What is ADR example?
• Volkswagen, a German company trades on New York Stock Exchange.
The investor in America can easily invest into the German company,
through the stock exchange. Volkswagen is listed on the American
stock exchange after complying the required laws
 Global depositary receipts
Global depositary receipts are typically part of a
program that a company builds to issue their
shares in foreign markets of more than one
country. For example, a Chinese company could
create a GDR program that issues its shares
through a depositary bank intermediary into the
London market and the United States market.
A global depositary receipt (GDR) is very similar to an 
American depositary receipt (ADR). It is a type of bank
certificate that represents shares in a foreign company,
such that a foreign branch of an international bank
then holds the shares. The shares themselves trade as
domestic shares, but, globally, various bank branches
offer the shares for sale. Private markets use GDRs to
raise capital denominated in either U.S. dollars or
euros. When private markets attempt to obtain euros
instead of U.S. dollars, GDRs are referred to as EDRs.
• Trading of Global Depositary Receipt Shares
• Companies issue GDRs to attract interest by foreign
investors. GDRs provide a lower-cost mechanism in
which these investors can participate. These shares
trade as though they are domestic shares, but
investors can purchase the shares in an international
marketplace. A custodian bank often takes
possession of the shares while the transaction
 processes, ensuring both parties a level of
protection while facilitating participation.
American Depository Receipt (ADR) is a
depository receipt which is issued by a US
depository bank against a certain number of
shares of non-US company stock. Whereas
Global Depository Receipt (GDR) is a depository
receipt which is issued by the international
depository bank, representing foreign
company's stock.
 16/10/20
A branch office represents one of the ways through which a
foreign company can establish its presence on a given
market. The branch office is seen as a dependent structure to
its parent company, thus any decisions and liabilities of the
branch fall under the responsibility of the parent company.
When opening a branch office in a foreign country, there are
numerous aspects that should be considered, such as the
legislation that regulates that activities of this type of
company. Regardless of the country in which the branch
office will be set up, it will be necessary to register the legal
entity with the authorities of the chosen jurisdiction, 
 Who can open branch outside India i.e.
Indian Entity

As per sub-regulation No. (4A) of Regulation 7 of Notification No.10, a firm or a company

or a body corporate registered or incorporated in India (hereinafter referred to as 'the
Indian entity') may open, hold and maintain in the name of its office (trading or non-
trading) or its branch set up outside India or its representative posted outside India, a
foreign currency account with a bank outside India by making remittances from India for
the purpose of normal business operations of the office/branch or representative.
As per Notification, firms, companies or body corporates registered or incorporated in
India can open branch or office outside India. In notification there is no mention of
"Proprietary concern". However if one refers to FORM OBR, there is a mention of
"Proprietary concern" in clause 1(b) of Part I of the said form. The said form was issued
under the regime of FERA however, still, Authorised dealers are relying on this form as a
procedural measure. In our opinion, to avoid any ambiguity one shall write to RBI for
clarification or for seeking permission for opening branch by proprietary concern.
Whether setting up an Overseas Branch is a Capital Account
transaction or Current Account transaction?
It is generally seen that all capital Account transactions are prohibited
unless they are specifically permitted. For setting up a branch outside
India, an Indian entity is required to open foreign currency bank
account outside India. The opening up of bank account outside India
by a person resident in India is considered as capital account
transaction and is regulated by Notification No.10. (as amended by
Notification No.47). Therefore, setting up branch outside India, per se
may not amount to capital account transaction but the opening up of
a bank account outside India, is a regulated capital account
transaction. The said Notification No. 10 provides for rules relating to
opening up of a bank account for offices set up outside India.
 2/11/20
Competition law is a law that promotes or seeks
to maintain market competition by regulating 
anti-competitive conduct by companies.
Competition law is implemented through public
and private enforcement. Competition law is
known as antitrust law in the United States for
historical reasons, and as anti-monopoly law in
China and Russia.
The protection of international competition is
governed by international competition
agreements. In 1945, during the negotiations
preceding the adoption of the General
Agreement on Tariffs and Trade (GATT) in 1947,
limited international competition obligations
were proposed within the Charter for an
International Trade Organization.
• Competition law, or antitrust law, has three main elements:
• prohibiting agreements or practices that restrict free trading and
competition between business. This includes in particular the repression of
free trade caused by cartels.
• banning abusive behavior by a firm dominating a market, or anti-competitive
practices that tend to lead to such a dominant position. Practices controlled
in this way may include predatory pricing, tying, price gouging, and 
refusal to deal.
• supervising the mergers and acquisitions of large corporations, including
some joint ventures. Transactions that are considered to threaten the
competitive process can be prohibited altogether, or approved subject to
"remedies" such as an obligation to divest part of the merged business or to
offer licenses or access to facilities to enable other businesses to continue
competing.
Predatory pricing, also known as undercutting, is a pricing
strategy where a dominant firm deliberately reduces prices of a
product or service to loss-making levels in the short-term.
Tying is the practice of selling one product or service as a
mandatory addition to the purchase of a different product or
service. In legal terms, a tying sale makes the sale of one good to
the de facto customer conditional on the purchase of a second
distinctive good.
Price gouging occurs when a seller increases the prices of goods, services or
commodities to a level much higher than is considered reasonable or fair.
Usually, this event occurs after a demand or supply shock. Common examples
include price increases of basic necessities after natural disasters.

Though in general, each business may decide with whom they wish to
transact, there are some situations when a refusal to deal may be considered
an unlawful anti-competitive practice, if it prevents or reduces competition in
a market. The unlawful behaviour may involve two or more companies
refusing to use, buy from or otherwise deal with a person or business, such as
a competitor, for the purpose of inflicting some economic loss on the target
or otherwise force them out of the market.
Abuse of a dominant position occurs when a dominant firm in a
market, or a dominant group of firms, engages in conduct that is
intended to eliminate or discipline a competitor or to deter
future entry by new competitors, with the result that
competition is prevented or lessened substantially.
 charging unreasonably high prices.
 consumer law in India
5/11/20
On July 20th, 2020, the new Consumer Protection Act, 2019
came into force in India, replacing the previous enactment of
1986. The new Act overhauls the administration and settlement
of consumer disputes in India. It provides for strict penalties,
including jail terms for adulteration and for misleading
advertisements.
 09/11/20
The International Consumer Protection and Enforcement
Network, formerly the International Marketing Supervision
Network, is a global network of consumer protection authorities
which engages in dispute.
The International Consumer Protection and Enforcement
Network (ICPEN) is a network of governmental consumer
protection authorities from over 50 countries, which acts as an
information sharing network on cross border commercial
activities that may affect consumers' interests, while promoting
international cooperation among law enforcement agencies.
 ICPN MISSION AND VISION
• Mission and Vision
• Our mission is to protect consumers by encouraging and
facilitating practical action to prevent cross-border marketing
malpractice. These actions include information sharing on
market developments and regulatory best practice, as well
as coordination and cooperation to tackle market problems.
• Our vision is for ICPEN to be recognized as the international
body which promotes and facilitates consumer protection
enforcement. This includes a growing level of cross-agency
cooperation on consumer protection enforcement matters
crossing international borders.
The long term goals of the network are: to generate and share
information and intelligence on consumer protection issues; to
share best practices in legislative and enforcement approaches
to consumer protection; to take action to combat cross-border
breaches of consumer protection laws; to facilitate effective
cross-border remedies; to identify and promote measures for
effective consumer protection enforcement; and to promote and
encourage wider participation and cooperation with other
consumer protection enforcement organization's.
ICPEN's activities cover issues related to consumers' protection
in the online environment, especially with regard to e-
commerce. The network provides consumers with information
on how to avoid misleading or fraudulent e-commerce practices,
how to protect themselves from technical vulnerabilities
(viruses, spyware, etc.), and how to resolve cross-border
disputed related to online transactions. ICPEN has also
launched specific initiatives.
• What we do
• The mandate of ICPEN is to share information about cross-border commercial
activities that may affect consumer interests and to encourage international
cooperation and collaboration among consumer law enforcement agencies in this
scope. Thanks to its global reach ICPEN is able to better target the consumer
protection challenges and problems faced by consumers around the world.
• ICPEN's core strategies to achieve our mandate are:
• To co-ordinate and co-operate on consumer protection enforcement matters.
• To share information and intelligence on consumer protection trends and risks.
• To share best practice information about key consumer protection laws,
enforcement powers and regulatory approaches to consumer protection.
• ICPEN does not deal with the regulation of financial services or product safety.
 Initiatives

• Initiatives
• The work of ICPEN focuses around specific initiatives, which aim to implement
the Network’s strategic objectives to:
• Generate and share information and intelligence on consumer protection
issues.
• Share best practice in legislative and enforcement approaches to consumer
protection.
• Take action to combat cross-border breaches of consumer protection laws.
• Identify and promote measures for effective consumer protection
enforcement.
• Promote and encourage wider participation, coordinated work, communication
and cooperation with other consumer protection enforcement organizations.
• Facilitate cross-border remedies.
• Fraud Prevention Month
• The Fraud Prevention Month initiative is a series of education campaigns run every year by ICPEN
members under a common theme but focusing on an issue relevant to each individual
participating agency.
• Through this initiative we educate consumers and businesses about scams and furnish them with
appropriate information on how to protect themselves from falling prey to unfair businesses.
• Each year ICPEN participants implement various Fraud Prevention Month activities. We have
addressed such topics as:
• deceptive and aggressive retail tactics used to lure consumers into an agreement,
• identity theft,
• phishing,
• misleading advertising,
• legal requirements concerning pricing information and labelling,
• online shopping,
• false lottery and business directories,
• health fraud.
• International Internet Sweep Day
• The International Internet Sweep Day initiative is a pro-active enforcement
tool to target growth in fraudulent and deceptive conduct emerging on the
Internet and other forms of electronic communication.
• The aim of the International Internet Sweep Day is to build consumer
confidence in e-commerce through having a day dedicated to intensive
searching to provide a list of suspicious sites for later enforcement action.
• Sweeps play a significant role by:
• Improving market conduct by demonstrating an enforcement presence
online;
• Raising the profile of each participating agency by promoting their
involvement in a significant event with agencies from over 30 economies;
• Facilitating further action by each agency from education,
enforcement and international referrals in light of information
revealed from the Sweep; and
• Broadening Internet users awareness by releasing information
through the media.
 Resolve a dispute

• National disputes
• If your complaint does not have a cross border element, your
should take up the case with your national consumer authority.
Not all national consumer authorities have an obligation or the
legal powers to investigate or resolve consumer complaints. Some
national consumer authorities focus on law enforcement actions
to protect the public interest but do not intervene in individual
cases.
• If you have purchased a good or service from a company that is
based within your own country and have a dispute.
• Try to solve it directly with the company
• Contact your local national consumer authority
• Cross-border disputes
• If you have a dispute about an online or related transaction with a foreign
company, first of all you should try to resolve it directly with that company.
Consumer protection laws vary across different jurisdictions and the
protections that you have in your country may not be the same in the
country that the business is registered.
• The main objective of ICPEN is to encourage practical action to prevent
cross-border marketing malpractice and also encourage exchanges of
information. Cross-border complaint information lodged through
econsumer.gov helps ICPEN to identify misleading, deceptive and fraudulent
commercial practices that cross international borders.
• If you have purchased a good or service from a company that is based
outside of the country of your residence and have a dispute. This is referred
to as a cross-border dispute.
• Cross-border disputes - European Union (EU)
• If you have a dispute about an online or related transaction with
the EU, first of all you should try to resolve it directly with that
company. Consumer protection laws vary across different EU
jurisdictions and the protections that you have in your country
may not be the same in the country that the business is
registered. The EC has the Consumer Protection Cooperation
(CPC) Regulation that governs the powers of enforcement
authorities in the EU.
• If you are a citizen of the EU and have purchased a good or
service from a company that is based within the EU and have a
dispute. This is referred to as an EU cross-border dispute.
 Electronic Commerce: Regulatory Framework
24/11/20
The Parliament of India passed its cyber law in the form of the
Information Technology Act, 2000, which provides the legal
infrastructure for ecommerce. The Act received the assent of
the President of India and became the law of the land on17
October 2000. The objective of the Information Technology Act,
2000 would be to provide legal recognition for transactions
carried out by means of electronic data interchange and other
means of electronic communication, commonly referred to as
electronic methods of communication and storage of
information. The act also facilitate electronic filing of
documents with various government agencies.
The purpose of the Electronic
Commerce (EC Directive) Regulations 2002 is to encourage better
use of e-commerce and boost consumer confidence by clarifying
the rights and obligations of businesses and consumers. If you run
a business online or through email orders, you must ensure you
comply with these regulations.
• IT Act
• The IT Act is the principal legislation governing and regulating
the use of the internet in India. The IT Act governs online
conduct and related aspects of e-commerce and recognises
electronically concluded contracts, cybercrimes, internet
surveillance and intermediary liability.