MBA - CFVG

2023

IBL
(International Business Law)
Law and Risk
in a Globalized Context

Pr. Arnaud Raynouard

Part 1 Basics of int'l Business Law
• Part 1.1 Conceptual framework
• Part 1.2 Int'l Law and the Avoidance of Risk
• Part 1.3 Culture and its Relevance on Int'l Law

Part 2 Resolution of Int'l Disputes

Part 3 Int'l Contract Law

Part 4 Traditional Areas of Concern

Part 5 Evolving Areas of Concern

Part 1 Basics of int'l Business Law

Part 1.1 Conceptual framework

• Legal Order: National/International
• Global institutions
• Regulatory approaches

Part 1.2 Int'l Law and the Avoidance of Risk

• Risk and Int'l Transactions
• Corruption / FCPA and other legislation
• Risks in various areas of Law

Part 1.3 Culture and its Relevance on Int'l Law

• Moral/Ethics vs Legal Behavior

Part 2 Resolution of Int'l Disputes

• Options
• Litigation
• Conflict of Laws and of Jurisidiction

Part 3 Int'l Contract Law

• Definition
• Appropriate Clauses
• CISG
• Remedies

Part 4 Traditional Areas of Concern

• WTO / Finance / Transportation

Part 5 Evolving Areas of Concern

• IP Laws / Digital Economy
 Part 2

Dispute resolution
 Disputes… Resolution!

When all goes well… happiness and quietness!

But what happens when things go

wrong, when the relationship goes off
track?

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 Disputes… Resolution!

Ex. 1. Traveling abroad, in Australia or Singapore, you buy an Apple

laptop. Back in Vietnam, one week later, it malfunctions: you can’t
use it anymore!
You want Apple to repair it as it is still covered by the guarantee
issued by the seller.
Apple VN refuses!

Ex. 2. You are accepted in a French Business school, and in the

registering process pay a deposit.
Then your visa is denied: wanting your deposit back…
the School refuses!

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 Disputes… Resolution!

utes Disputes in international transactions

f d isp o Cost
t s o
ni e n o Time (… is money!)
onve
i nc o Relationship (… endangered)
The o Cultural aspects

Why avoid disputes?

o Cost (especially lawyers, in the US/UK)
o Average time for a lawsuit to reach trial
o What happens to the relationship afterwards?
o Do you speak the language? Do you know the local laws? Do you want to be there?

Uncertainty!
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 Disputes… Resolution!

bro ad
o u r t a
te i n c
Di s pu

You NEVER know what will happen!

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 Disputes… Resolution!

‘’Foreign’’ aspects in International Disputes

1.Foreign law
2.Foreign country
3.Foreign judges
4.Foreign language
5.Foreign customs
6.What do you do if you win
7.How do you escape if you lose
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 Case study: “Where are my Shrimps!?”

1. Read the case individually

2. In groups decide the following :
a) Possible solutions for M. Nguyen Tran Van (analyse the
positives and negatives of each possibility)
b) What would your group decide in the case.

3. Once done, each group will orally give their solution.

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 Case study: “Where are my Shrimps!?”
My Dutch Lawyer friend’s (Birgit) response.

1. Time is critical as the goods are perishable, therefore one must

act fast. Litigation is out; arbitration is out. Only possibility is to
arrive at a mutual solution quickly.
2. Bribery is too dangerous.
3. Van needs his money
4. Qiu needs to save face and keep the respect of the Cinese
Shrimp Association

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 Case study: “Where are my Shrimps!?”
Birgit’s resolution proposal.
1. Van offers to deliver 100 % of the shrimp but RT only pays for
70 %.
2. Qiu will ‘assist’ in having shrimps released immediately from
Chinese customs.
3. An independent quality examiner will ensure the shrimp are of
sufficient quality (if not… good luck!).
4. Any poorer quality shrimp will result in a lower proce for RT
and Qiu.
5. In the future Van will sell shrimps through a Chinese distributer
to try to lessen issues with the Chinese Shrimping Association.

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 Foreign aspects in avoidance of disputes

Most important : cultural aspects

Examples
o Americans  win or lose; take no prisoners;
adversarial mentality
o French  always find a person responsible (a
« culprit »!)
o Vietnam  ?

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 Options for resolution

4 possibilities

Negociation Mediation Litigation Arbitration

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 Options for resolution

Dispute resolution planning (it’s about management!)

Negotiation

Mediation

Litigation Arbitration

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 Options for resolution

Vocabulary to be familiar with

1. Litigation
2. To sue
3. A lawsuit
4. Arbitral award
5. Arbitral panel
Why litigation should be used only, in
general, as a last resort in
international resolutions of disputes.
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 Negotiation

Important as it relates to:

1. Cost
2. Length of time for a decision
3. Avoiding unnecessary and unwanted publicity
From the Latin negotiari: “to carry on business.”
The process of reaching an agreement by conferring or discussing

“process of reaching an agreement through discussion between two

parties to a dispute. Negotiation is the most important tool in the
process of dispute settlement”.
- to resolve disputes
- to prevent them
- to lay the groundwork for other forms of dispute settlement
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 Negotiation

“process of reaching an agreement through discussion

between two parties to a dispute. Negotiation is the most
important tool in the process of dispute settlement”.
(Ray August)
- to resolve disputes
- to prevent them
- to lay the groundwork for other forms of dispute
settlement
Is the wording ‘amicable’, as in
‘amicable means of resolution’,
different from a negotiation?

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 Negotiation
Settlement of Disputes
When Party A and Party B have any dispute over or disagreement on the formation,
performance, breach, termination or invalidity or any other provision of this Contract,
both parties shall try to settle the dispute or disagreement through friendly negotiation.
In case either party is unwilling to settle the dispute through negotiation or if both parties
fail to reach any agreement within 30 days after negotiation begins, either party may
submit such a dispute or disagreement to and for settlement through litigation at the
competent people's court at the place where the House is located.
During the period of settling the dispute or disagreement, both parties shall continue to
abide by and perform this Contract.

“(1) The parties have agreed that all disagreements regarding this
agreement be settled amicably by their representatives.;
(2) If it is not possible to resolve disputes amicably, the parties will
address the competent courts of law.”.

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 Negotiation

Negotiation & Culture

It is crucial to remember the cultural issues in Negotiation
 When is ‘yes’ really ‘no’!
 If you make a cultural betise in any part of the negotiation, it
will never succeed

• Completely voluntary
• Can be forced if the law of a country demands it

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 Mediation / Conciliation

From the Latin mediates: “to be in the middle.”

Bringing about a peaceful settlement or compromise
between parties to a dispute through the benevolent
intervention of an impartial third party.

• Non-binding, voluntary, conciliatory

• Both parties must be willing to be assisted by an
independent party
• Always reserve the right to other courses of action

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 Litigation

The process of taking a case to be discussed in

a court of law so that an official decision can be made
about it (lawsuit)

Remember the 5 issues of litigation with foreign parties

and/or a foreign court:
• It can take time (a long time!)
• It is complicated
• It is expensive
• Be ready for anything to happen
• Nothing is guaranteed…‘I can’t lose’
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 Litigation

Parties:
• Plaintiff commences the lawsuit
• Respondent defends the lawsuit

Litigation structure:
• Plaintiff vs. Respondent
• Claim by Plaintiff against Respondent
• Demands relief, i.e. damages
Litigation core documents: n d in g on
a t ly d e pe
• Statement of Claim iffe r gre vio u s ly!
D
u nt r y … ob
the co
• Statement of Defence
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 Litigation - jurisdiction

3 areas to consider:
• Geographic jurisdiction = Which country is
the correct one to decide the case
• Which ‘level’ of court in that country has
jurisdiction (High court or lower court…)
• Subject matter jurisdiction = divorce,
commercial, crime, taxation…

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 Conflict of Laws / Choice of Jurisdiction

3 questions… different, but related:

• In which country should the lawsuit be started?
• Which country’s law applies to the lawsuit?
• How can the verdict be executed?

Warning:
Substantive law applicable to the situation

Formal law applicable to the lawsuit (procedural laws)

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 Conflict of Laws / Choice of Jurisdiction

A court ruling made of China

Ming, a Chinese citizen, sues Laabh, who lives in India.
Ming used to do business with Laabh; it appears that Laabh delivered
wrong, incomplete and malfunctioning products. Ming already paid
Laabh; Ming loses a significant part of his clientele.
According to Chinese private international rules: Ming sues Laabh
in a Chinese Court
(Chinese business contract + characteristic performance of the contract
was to take place on Chinese soil).
Chinese court verdict: damages dues by Laabh to Ming
(Civil Code of China) Laabh is officially informed about this verdict, but
does not pay.

And Laabh sits comfortably in his home in Bombay…

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 Conflict of Laws / Choice of Jurisdiction

THE GUARDIAN, 18 DECEMBER 2015

Dutch appeals court says Shell may be held liable for oil spills in Nigeria
A Dutch appeals court ruled on Friday that Royal Dutch Shell can be held liable for oil spills at its
subsidiary in Nigeria, potentially opening the way for other compensation claims against the
multinational.
Friday’s ruling overturned a 2013 finding by a lower Dutch court that Shell’s Dutch-based parent
company could not be held liable for spills at its Nigerian subsidiary. The legal dispute dates back to
2008, when four Nigerian farmers and the campaign group Friends of the Earth filed a suit against the
oil company in the Netherlands, where its global headquarters is based.
Judge Hans van der Klooster said the court had found that it ‘has jurisdiction in the case against Shell
and its subsidiary in Nigeria’.
Shell’s Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Ltd (SPDC), said in a
statement: ‘We are disappointed the Dutch court has determined it should assume international
jurisdiction over SPDC.’
‘We believe allegations concerning Nigerian plaintiffs in dispute with a Nigerian company, over issues
which took place within Nigeria, should be heard in Nigeria,’ it said.

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 Conflict of Laws / Choice of Jurisdiction

The law that answers the 3 questions is what is called ‘PIL’

• It is different in each country (legal system)
Can cause conflicts
• International legal instruments are adopted to harmonize
these situations
 Substantive private int’l law
 CISG, INCOTERMS…
 Objective private int’l rules: bilateral or
multilateral
 Multilateral ex.: Regional integration (EU)

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 Conflict of Laws / Choice of Jurisdiction

Freedom of choice
is generally recognized for contracting parties
(meaning in contracts only)
Private parties who close a contract can
choose (determine)
- the court that will have jurisdiction, and
- the applicable law
(in case of a legal dispute occuring based on
their contract)

There are limits to this freedom:

- Only about private law,
- Cannot not lead to a violation of fundamental
principles that are recognized in the country
where the verdict will have effect.
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 Conflict of Laws / Choice of Jurisdiction

Dutch woman jailed in Qatar after reporting rape convicted of ‘illicit sex’ (CNN, 13
JUNE 2016)
BY: SCHAMS ELWAZER AND PAUL ARMSTRONG
A Dutch woman who has been in jail in Qatar since mid-March after she reported being
raped, has been found guilty of ‘illicit consensual fornication’ and being ‘drunk in a public
place.’
At a court hearing in Doha Monday, the 22-year old, whom CNN has identified only as
Laura, was handed a one-year suspended sentence and placed on probation for three years
for the sex-related charge, and fined 3.000 Qatari Riyals ($823) for being drunk outside a
licensed location.
She’ll almost certainly be deported immediately.
A Syrian man also appeared alongside her and was found guilty of the same crimes. He was
sentenced to 100 lashes for the illicit fornication charge and a further 40 lashes for the
illegal consumption of alcohol. As a Muslim he is not allowed to drink at all under Qatari
law.
No mention was made of the rape accusation during proceedings. Neither defendant was
present in court, in what was the third hearing in the case.
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 Resolution of dispute: type of law

2 main areas of civil law

1. Contract law
2. Tort law
If there is no provision in the contract, or if it is a
tort case, then what happens?

Courts have developed a list of factors to assist

them in deciding which countries’ domestic
laws to apply in situations of contract breach
or breach of tort law

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 Resolution of dispute: type of law

Confict of Laws case study: Nathalie M’Baye

• Read the case

• Decide
1. In which country do you commence the lawsuit?
2. Which country’s law should you apply?
3. What do you think about the result?

Crucial aspec:
Is this a
1. Contract case, or
2. Tort case
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Some questions to start with

QUIZ
 How good an alternative is "alternative dispute resolution" (ADR)? What
is more efficient – litigation, arbitration or media-tion?

 If you opt for arbitration, is it better to go for an ad hoc arbitra-tion or an

institutional arbitration?

 What do we understand by lex arbitri?

 How challenging is it to challenge an arbitral award?

International Commercial Dispute Resolution (I)

Main options in international commercial dispute resolution

Litigation Arbitration Mediation/Conciliation

Jurisdiction: Based on the Basis: Arbitration clause. Basis: Mediation or

applicable private conciliation clause.
international law rules or
a choice-of-law clause.

State Courts Arbitrator(s) Mediator

 International Commercial Dispute Resolution (II)

Main options in international commercial dispute resolution

Litigation Arbitration Mediation/Conciliation

State Courts Arbitrator(s) Mediator

Power to render decisions that are binding and enforceable. No decision power.

Regular judicial dispute Alternative Dispute Resolution (ADR)

resolution
Ad hoc vs. institutional arbitration
International commercial arbitration
Ad hoc arbitration
Proceedings administered by the arbi-tral
tribunal itself (no support from an
institution).
Institutional arbitration
Proceedings administered by a specific
arbitral institution, e.g.:
 ICC (International Chamber of Commerce
 AAA (American Arbitration Association
 LCIA (London Court of International Arbitration)
 SCAI (Swiss Chambers’ Arbitration Institution)
 Stockholm Chamber of Commerce
 CIETAG (China International Economic and Trade
Arbitration Commission)
 Arbitration issues

Arbitration defined

• A form of alternative dispute resolution (ADR).

 A way to resolve disputes outside the courts (litigation).

The dispute will be decided by one or more persons

(the "arbitrators", "arbiters" or “arbitral tribunal”),
which renders the “arbitral award”.

An arbitral award is legally binding on both sides

and enforceable in the courts.
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 Basis: ICC Arbitration Rules
established by the International
Chamber of Commerce

 Volume: 1,500 cases are managed

by the Court Secretariat at any
time.
 New York Convention (I)

The 1958 Convention on the Recognition

and Enforcement of Foreign Arbitral
Awards (New York Convention) regulates
“the recognition and enforcement of
arbitral awards made in the territory of a
State other than the State where the
recognition and enforcement of such
awards are sought, and arising out of
differences between persons, whether
physical or legal” (Art. 1).
 New York Convention (II): Coverage

Ratified by 157 states.

Source: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status_map.html
New York Convention (III): Arbitration agreements

Article II
1. Each Contracting State shall recognize an agreement in writing
under which the parties undertake to submit to arbitration all or any Recognition of
differences which have arisen or which may arise between them in the arbitration
respect of a defined legal relationship, whether contractual or not, agreement
concerning a subject matter capable of settlement by arbitration.
2. The term “agreement in writing” shall include an arbitral
Agreement in
clause in a contract or an arbitration agreement, signed by the parties writing
or contained in an exchange of letters or telegrams.
3. The court of a Contracting State, when seized of an action in a
Exclusion of the
matter in respect of which the parties have made an agreement within
jurisdiction of
the meaning of this article, shall, at the request of one of the parties, state courts
refer the parties to arbitration, unless it finds that the said agreement
is null and void, inoperative or incapable of being performed.
New York Convention (IV): Arbitral awards

Article III
Each Contracting State shall recognize arbitral awards as
binding and enforce them in accordance with the rules of procedure
of the territory where the award is relied upon, under the conditions
laid down in the following articles. […]

Arbitral awards are binding and enforceable in

every contracting state.

Exceptions: Article V.
New York Convention (V): Exceptions

Article V
1. Recognition and enforcement of the award may be refused, at the request of the party against
whom it is invoked, only if that party furnishes to the competent authority where the recognition and
enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to them,
under some incapacity, or the said agreement is not valid under the law to which the parties have sub-
jected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the appointment
of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters beyond the scope of the submission to
arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from
those not so submitted, that part of the award which contains decisions on matters submitted to arbi-
tration may be recognized and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with
the agreement of the parties, or, failing such agreement, was not in accordance with the law of the
country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a
competent authority of the country in which, or under the law of which, that award was made.
New York Convention (VI): Exceptions (continued)

Article V (continued)
[…]
2. Recognition and enforcement of an arbitral award may also be refused if the competent
authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law
of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy of that
country.
Lex Arbitri

Court seized (forum) Lex fori

Seat of arbitration Lex arbitri

In Switzerland: Chapter XII of the

Swiss Code of Private Inter-
national Law.
Challenging an Arbitral Award (I)

 Competent authority: Swiss Federal Supreme Court.

 Only one level!

 Time limit: 30 days

(Art. 77 of the Swiss
Federal Supreme
Court Act and Art. 191
of the Swiss Code of
Private International Law). Swiss Federal Supreme Court (source: tagesanzeiger.ch).
 Challenging an Arbitral Award (II)

Article 191 of the Swiss Code of Private International Law

1
The award shall be final when communicated.
2
It can be challenged only:
a. If a sole arbitrator was designated irregularly or the arbitral  arbitrators
tribunal was constituted irregularly;
b. If the arbitral tribunal erroneously held that it had or did
 jurisdiction
not have jurisdiction;
c. If the arbitral tribunal ruled on matters beyond the claims
 ultra/infra petita
submitted to it or if it failed to rule on one of the claims;
d. If the equality of the parties or their right to be heard in an
 procedural rights
adversarial proceeding was not respected;
e. If the award is incompatible with Swiss public policy (ordre
 "ordre public"
public).
[…]
Let’s try to answer these questions

QUIZ
 How good an alternative is "alternative dispute resolution" (ADR)? What
is more efficient – litigation, arbitration or media-tion?

 If you opt for arbitration, is it better to go for an ad hoc arbitra-tion or an

institutional arbitration?

 What do we understand by lex arbitri?

 How challenging is it to challenge an arbitral award?