INTERNATIONAL BUSINESS LAWS

INTERNATIONAL BUSINESS LAWS

International business Law is the body of law that governs international sale transactions. A transaction will qualify to be international if elements of more than one country are involved.

INTERNATIONAL LAW

International Court of Justice (also known as the World Court) - body of the United Nations that provides a way to settle international disagreements between countries rather than corporations.

The three legal bodies in the United Nations are: United Nations Commission on International Trade Law (UNCITRAL), The International Commission, and the Sixth Committee of the General Assembly.

WORLD TRADE ORGNIZATION Provide a forum for negotiating trade-related

issues; and issues arising from the WTO Agreement.

Provide a dispute settlement mechanism pursuant to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

Administer the Trade Policy Review Mechanism (TPRM) which examines the trade policies of members.

Cooperate with the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD).

WORLD TRADE ORGNIZATION

GATT 1994 is incorporated into the WTO Agreement, and contains three important basic principles in the context of international commercial law:

Most-favored nation principle (MFN): expresses that any advantage to a product originating or destined for another country shall be treated in accordance with a like product originating in or destined for the contracting country . Each GATT member must treat all trading partners as well as its most favored trading partner.

WORLD TRADE ORGNIZATION

'International Law''': prohibits discrimination between imported and like domestic products, other than through the imposition of tariffs. The WTO panels consider tariff classifications, product nature, intended use, commercial value, price and sustainability.

Reciprocity principle: encourages negotiations between contracting parties on a reciprocal and mutually advantageous basis, directed towards the reduction of tariffs and other charges on imports and exports.

WIPO

The World Intellectual Property Organization (WIPO) is one of the 17 specialized agencies of the United Nations.

WIPO was created in 1967 "to encourage creative activity, to promote the protection of intellectual property throughout the world

WIPO currently has 186 member states, administers 25 international treaties, and is headquartered in Geneva, Switzerland.

WHAT IS INTELLECTUAL PROPERTY?

Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.

IP is divided into two categories:  Industrial property, which includes inventions (patents), trademarks, industrial designs, and geographic indications of source; and Copyright, which includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs.

PATENT LAW

The law of patents is a legal framework that establishes a patent system which supports and encourages technological innovation and promotes economic development. In a challenging environment, where patent law is under increasing public attention, WIPO provides a platform for member States and intergovernmental and non-governmental organizations to coordinate efforts in discussing international norms

UNITED NATIONS

The United Nations is an international organization whose stated aims include promoting and facilitating cooperation in international law, international security, economic development, social progress, human rights, civil rights, civil liberties, political freedoms, democracy, and the achievement of lasting world peace.

ORGANIZATION

The United Nations' system is based on five principal organs

i. the General Assemblyii. the Security Counciliii. the Economic and Social Council (ECOSOC)iv. the Secretariatv. the International Court of Justice.

ECONOMIC AND SOCIAL COUNCIL

The Economic and Social Council (ECOSOC) assists the General Assembly in promoting international economic and social cooperation and development.

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS-

UN-sponsored convention that establishes uniform-rules for drafting international sales contracts, and sets the legal rights and obligations of the seller and the buyer under such contracts. CISG rules apply automatically to the sales contracts between the countries who have ratified the convention

DOUBLE TAXATION

Double taxation occurs when tax is paid more than once on the same taxable income or asset.

TYPES OF DOUBLE TAXATION

Economic Juridical

Types of double taxation:

Double taxation is economic if more than one person is taxed on the same item.

Double taxation is juridical when the same person is taxed twice on the same income by more than one state.

JURIDICAL

JURIDICAL DOUBLE TAXATION ARISES

a) Where each Contracting State subjects the same person to tax on his worldwide income or capital

b) Where a person is a resident of a Contracting State and derives income from, or owns capital in, the other Contracting State and both States impose tax on that income or capital

c) Where each Contracting State subjects the same person, not being a resident of either Contracting State to tax on income derived from, or capital owned in, a Contracting State; this may result, for instance, in the case where a non-resident person has a permanent establishment in one Contracting State through which he derives income from, or owns capital in, the other Contracting State.

KEY STAGES IN A TYPICAL TRANSACTION OF THE INTERNATIONAL SALE OF GOODS

Negotiations between seller and buyer Making the sales contract between parties Shipment of the goods and carriage of the

goods

PROBLEMS ASSOCIATED IN THE INTERNATIONAL TRADE TRANSACTION An international sale will usually involve a

sea transit Customs need to be cleared Import and export licenses need to be

obtained. International sales raise conflict of laws

problems Financial problems Fluctuations in currency

INCOTERMS OR INTERNATIONAL COMMERCE TERMS

International Chamber of Commerce (ICC) has introduced quite a number of special trade terms in use for international trade.

These terms have simplified the sale of goods abroad. They are in universal use in trade transactions

Two extremely useful trade terms, namely: FOB and CIF

FOB ( FREE ON BOARD)

In a FOB contract, the seller has to put the goods on board a ship.

The price under an FOB contract includes the cost of the goods and all expenses up to the board the ship.

Once The delivery is completed then the property and the risk pass to the buyer.

DUTIES OF THE F.O.B BUYER

To nominate the port of shipment, the vessel’s name and procure the necessary shipping space

Nomination of a ship To secure shipping space To obtain the necessary import license Pay any cost incidental to the shipment Pay the seller for the goods in accordance with

the contract

DUTIES OF THE FOB SELLER

To ship goods of contract description at the named port of shipment

To ship goods on time To obtain Export licenses To deliver the necessary documents

CIF CONTRACTS

CIF stands for cost, insurance, freight The letter CIF represents the three contracts

involved The cost –the sale contract Insurance-the contract of insurance Freight- the contract of carriage.

‘SHIPPING DOCUMENTS’ INVOLVED IN CIF CONTRACT The commercial invoice, A shipped bill of lading Policy of insurance during the sea voyage, and Certificate of quality Certificate of inspection Certificate of origin

DUTIES OF THE SELLER UNDER A CIF CONTRACT

To ship goods according to the contract description

To enter into a contract of carriage in order to deliver the goods.

To ensure that the goods are properly insured under a contract of insurance

To procure and prepare proper shipment documents.

DUTIES OF THE BUYER IN A CIF CONTRACT Payment against documents The buyer to name port of destination Buyer to take delivery Import licenses

CARRIAGE OF GOODS A contract whereby a person or company

agrees to carry goods or people from one place to another for a payment is called contract of carriage.

Carriage of goods can be1. Carriage by land (including inland

waterways),2. Carriage by sea3. Carriage by air

CLASSIFICATION OF CARRIERS

Common carriers Private carriers Gratuitous carriers

CARRIAGE OF GOODS BY SEA

A contract for the carriage of goods by sea is called as a contract of affreightment.

The word affreightment means the hiring of a vessel or ship.

A contract of affreightment may take either of the two forms

Charter party a bill of lading

TRIPS

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement administered by the World Trade Organization (WTO)

TRIPS: MAIN FEATURES (1)

Coverage of TRIPS

Areas of intellectual property covered:

Copyright and related rights Trademarks including service marks Geographical indications including appellations of

origin Industrial designs Patents including the protection of new varieties

of plants The layout-designs of integrated circuits Undisclosed information, including trade secrets

and test data.

TRIPS: MAIN FEATURES (2)

Enforcement Provisions General Principles applicable to IPRs Specifies Procedures that must be available

Dispute Settlement Part of the integrated Dispute Settlement System of the WTO

No unilateral action by Members allowed

DOCUMENTARY SALE AND TERMS OF TRADE

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CONTRACTS AS A WAY TO MANAGE RISKCONTRACTS AS A WAY TO MANAGE RISK

Negotiate terms to fit specific transaction Allocate risk - moving goods and money Fix performance obligation and responsibilities Fix price and quality Make sure understanding is reflected in contract

WHERE IS THE THE RISK IN AN INTERNATIONAL TRANSACTION?WHERE IS THE THE RISK IN AN INTERNATIONAL TRANSACTION?

Payment risk Delivery risk Quality risk

DEFINITION

Documentary Sale: –Buyer is required to pay upon presentation of NEGOTIABLE DOCUMENT OF TITLE by seller

Document of title= evidences ownership e.g. dock receipts, warehouse receipts and bills of lading

Ownership of goods passes with the documents

DEFINITION

Negotiability= legally transferred from one to another in return for value.

In the U.S. bills of lading governed by The Federal Bills of Lading Act and the Uniform Commercial Code.

In India, it is governed by India carriage of Goods by Sea Act, 1925.

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THE DOCUMENTARY SALETHE DOCUMENTARY SALE

JapaneseImporter

American Exporter

CollectingBank

Exporter’s U.S. Bank

(Remitting Bank)

Sales ContractCIF Japanese Port

Documents Against Payment

A

A. Sales contract calls for documentary sale

B

B. Documents prepared - export license obtained - goods delivered to carrier

C

F

C. Negotiable bill of lading, insurance policy, certificates of origin, invoice withdraft attached presented to remitting bank

D

D. Documents forwarded for collection through International banking system

E

E. Documents presented for negotiation on payment

F

F. Payment remitted and exporter’s account credited

G

G. Importer claims goods and makes entry

TRADE TERMSTRADE TERMS

Responsibilities of buyer and seller need to be negotiated.

Trade terms used as a short hand for assigned responsibilities and allocating when the risk passes from one party to another.

TRADE TERMS: E TERMS

EXW – Ex works: The seller's only responsibility is to make the goods available at the seller's premises. The buyer bears full costs of moving the goods from there to destination. Risk shifts to buyer when goods made available by seller at named location.

 

TRADE TERMS: F TERMS

FCA – Free carrier: The seller delivers the goods, cleared for export, to the carrier selected by the buyer. The seller loads the goods if the carrier pickup is at seller's premises. Buyer then bears costs of moving the goods to destination. Risk shifts to buyer when goods delivered to carrier.

FAS – Free alongside ship: The seller delivers the goods to the ship in origin port. Buyer then bears all transport costs. Risk shifts to buyer when goods delivered alongside ship.

FOB – Free on board: The seller delivers the goods on board the ship and clears the goods for export. Buyer then bears all transport costs. Risk shifts to buyer when goods cross ship’s

rail. 

TRADE TERMS: C TERMS CFR – Cost & freight: The seller clears the goods for export

and pays the costs of moving the goods to destination. Risk shifts to buyer when goods cross ship’s rail.

CIF – Cost, insurance & freight: The seller clears the goods for export and pays the costs of moving the goods to the port of destination. Risk shifts to buyer when goods cross ship’s rail. Seller must purchase cargo insurance; buyer can claim on policy.

CPT – Carriage paid to: The seller pays for moving the goods to destination. Risk shifts to buyer when goods are transferred to the first carrier. Buyer must procure own insurance.

CIP – Carriage & insurance paid to: The seller pays for moving the goods to destination. Risk shifts to buyer when goods are transferred to the first carrier. Seller must purchase cargo insurance; buyer can claim on policy.

TRADE TERMS: D TERMS (#1) DAF – Delivered at frontier: Seller transports goods

to “frontier” point in destination country. Buyer pays freight from frontier point. Risk shifts when goods handed to buyer at frontier point.

DES – Delivered ex ship: Seller transports goods to destination port. Buyer pays costs of unloading ship. Risk shifts to buyer when goods ready for unloading by buyer.

DEQ – Delivered ex quay: Seller delivers the goods - not cleared for import - to the buyer at the port of destination. Seller bears costs and risks of moving the goods to port. Buyer clears goods for import and pays customs clearance costs and duties. Risk shifts to buyer when goods placed on dock.

TRADE TERMS: D TERMS (#2)

DDU – Delivered duty unpaid: Seller delivers goods - not cleared for import - to buyer at destination. Seller bears costs and risks of moving goods to destination. Risk shifts to buyer when goods delivered at specified location.

DDP – Delivered duty paid: Seller delivers goods - cleared for import - to buyer at destination. Seller bears costs and risks of moving goods to destination, including customs duties and taxes. Risk shifts to buyer when goods delivered at specified location

PRESENTED BY: ANUJ MALHOTRA AVAI MALHOTRA GAURAV SOOD