Document

ESSENTIAL ELEMENTS OF LEGAL SYSTEMS

SEPARATION OF POWERS Module 1.1.1

The principle that government power should be separated so that excessive power does not end up in the same hands.

Meaning?The President is at the head of the "executive" component of government. At the same time, he is precluded from being a member of Congress which is the "legislative" component.

But:

The USA does not allow the power of each component to go unchecked.

for example:

Thus, whilst the Supreme Court ("judiciary") may invalidate laws made by Congress ("legislature") the members of the Court are selected and appointed by the President ("executive").

Has the power to make law

In a democracy, its members will be elected

A State's written constitution may place legal limits on its power (which is "subordinate" as opposed to "sovereign / supreme" power).

Per UK's unwritten constitution, Parliament is sovereign. The Judiciary cannot invalidate laws - only Parliament can do this.

But:

It is possible for the court to declare an Act of Parliament as incompatible with the European Convention on Human Rights, although this does not affect the validity of the law.

c) The Legislature.

Implements or executes the law (brings it into effect).

Comprises central and local government, civil service, ministers, police, army etc.

In France and USA the executive is independent of the legislature and judiciary.

But:

In the UK and in other states adopting "Westminster Model", members of the executive are chosen from the legislature.

Decides issues in relation to the law of the state.

Concerned with criminal matters whereby state punishes offenders and civil matters between citizens which involve claims for compensation.

Judiciary may declare laws as unconstitutional in states where the legislature is not sovereign.

In common law systems (eg. UK, USA) the judiciary will interpret law, and through precedent, rule what the law is.

But:

In civil law systems (eg. France) because codes are comprehensive, the judiciary simply applies the law and need not interpret it.

The U.S. Constitution.The UK has an unwritten constitution. Despite the principle of separation of powers, members of the executive are chosen from the legislature ("Westminster Model").

The UK Constitution.

b) The Judiciary.

The 3 components of power within the

constitution.

a) The Executive.

(example)

(example)

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ESSENTIAL ELEMENTS OF LEGAL SYSTEMSTHE DOCTRINE OF

BINDING (OR JUDICIAL) PRECEDENT Module 1.1.2

In conformity with the doctrine of the separation of powers (refer Module 1.1.1) a judge is not empowered to make new law but only to decide cases in accordance with the current law. When exercising his creative or interpretative function, a judge is bound by the law of binding precedent (which essentially means he is bound by a previous judicial decision). This is a key characteristic of the English legal system and other common law systems (in civil law systems of mainland European countries) judges do tend to follow previous decisions in a similar manner although this is not obligatory in the sense that they will view such decisions as merely persuasive, and not binding).

The operation of the system of judicial precedent (known as “stare decisis” is dependent upon the following:

The court hierarchy – the impact of a previous decision will depend on the position of that court in the hierarchy in relation to the position of the court trying the present case. In effect, inferior courts in the hierarchy are bound by the decisions of the superior courts. The House of Lords (now replaced by the Supreme Court) was the final court of appeal in the English legal system. It’s decisions were binding on all courts below it. Since 1966 it declared its readiness to depart from (“overrule”) its previous decisions if it felt that this would serve to prevent an injustice or contribute to the development of the common law.

(a)

The Court of Appeal’s Civil Division is bound by the decisions of the House of Lords and it, in turn, binds all the civil courts below it in the hierarchy. This court is normally bound by its own previous decisions although per the case of YOUNG v BRISTOL AEROPLANE COMPANY, (1944) it need not do so in the following circumstances -

1. if two of its previous decisions conflict, it may choose which to

follow 2. if its previous decision conflicts with that of the House of Lords

then the decision of the House of Lords must be followed 3. if its previous decision was made with lack of care (“per

incuriam”) The Court of appeal’s Criminal Division is bound by the House of Lords. It’s decisions bind all criminal courts below it in the hierarchy. It need not follow its own decisions if the interests of justice so demand.

(b) The principle of law laid down in a previous decision must be applicable to the facts of the present case.

A judge will state his reasons for reaching a decision. These reasons (consisting of proven facts and legal principles) are the so-called “ratio decidendi” (the reason for the decision). This is what forms the binding precedent for subsequent cases. Thus a later court must determine whether the facts of the case before it are relevant to the ratio decidendi of the previous case (and subject to the position of the courts in the hierarchy). If there are material differences in the facts, then the current case will be “distinguished” on its facts and the previous case will not be followed. Note: It is necessary to understand the distinction between “ratio decidendi” and obiter dictum”. Obiter dicta (plural) are essentially statements of law made by a judge, as part of his judgement, but which relate only to hypothetical circumstances. Thus, they have no bearing on or relevance to the case under consideration and are simply statements made “by the way”.

i.e.

Obiter dicta reflect the manner in which a judge feels the law should apply in a purely hypothetical situation. As such, such statements are only persuasive and not binding on future courts. Thus they may choose to follow obiter dicta but are not obliged to do so (if emanating from the House of Lords or Court of Appeal, then obiter dicta may be highly persuasive and once adopted/applied will become binding principles of law).

i.e.

Advantages and DisadvantagesSee Module 1.1.3

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ESSENTIAL ELEMENTS OF LEGAL SYSTEMSTHE DOCTRINE OF BINDING PRECEDENT

ORTHE DOCTRINE OF “STARE DECISIS”

Module 1.1.3

ADVANTAGES DISADVANTAGES Certainty - the litigants can more or less predict the outcome of a case

Uncertainty - distinguishing or aligning previous decisions may lead to confusing arguments which may distort matters and cloud key issues

Flexibility - because cases are decided by judges, this allows for subsequently overruling or distinguishing decisions if they are considered to be wrong or inapplicable

Rigidity - in order to achieve certainly there is an element of rigidity involved which may hamper the developments of the law

Time-Saving - precedent resolves many legal issues which would otherwise have to be argued from the outset. This saves time for judges, lawyers and litigants

Inaccessible Precedents - previous cases may well be overlooked due to the voluminous case authority available. This may occasion delays in preparing a case with a consequential increase in costs for the client

Speed - allows for development of the law without the need for Parliament to enact legislation

Undemocratic - judicial precedent may result in judges making law (as opposed to applying, or interpreting same). This may be considered inappropriate as judges are not democratically elected. Also, could be regarded as interfering with parliamentary sovereignty.

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D I F F E R E N T L E G A L S Y S T E M S

COMMON LAW SYSTEMS


Module 1.2.1

Role of Judge

i) Apply law following (or overruling if necessary) previous decisions. This is known as judicial precedent which ensures consistency.

it is the legal reason for the decision (ratio decidendi) which constitutes the precedent to be followed the facts of the cases must be materially the same - thus precedent may be avoided if facts are distinguishable superior courts bind inferior courts in the court hierarchy (since 1966 House of Lords is not obliged to follow own previous decisions) ii) Interpret statutes enacted by the legislature, having regard to following PRESUMPTIONS.

statutes do not do away with current laws

statutes do not change the common law

compensation is payable for deprivation of property

statutes do not deprive an individual of his liberty

statutes do not have retrospective effect

statutes do not bind the Crown

statutes apply only in UK

proof of intention is required prior to convicting someone of a crime

statutes do not repeal other statutes

statutes do not apply to items omitted from their provisions [Note: THE PRESUMPTIONS LISTED ARE REBUTTABLE BY ANY EVIDENCE TO THE CONTRARY] In addition to applying the above PRESUMPTIONS, judges have developed the following RULES to assist them with their interpretation functions.

Words are given their ordinary, literal meaning.

Words are interpreted in their proper context.

The purpose of a statute should be determined as an aid to interpreting words.

If general words follow a series of specific words, then the general words are to be interpreted as having a meaning which is of the same kind as the specific words.

If something is specified then something not specified is implicitly excluded.

If a statute is part of a series, then examining the entire series may aid interpretation.

iii) REVIEW THE LAW - to determine whether it is unconstitutional (this only applies to the USA and not the UK (where this falls outside a judge’s judicial functions).

What is it? The body of law built up in England between 1066 and 1400 AD Common Law Principles

i) Law not affected by lapse of time

ii) Presumption that new laws do not change existing laws

iii) Judge follow previous decisions from earlier cases (doctrine of "judicial precedent") Sources of Common Law Systems i) Common law developed through system of judicial precedent

ii) Equity - rules of justice and fairness to overcome rigidity of common law

iii) The Constitution (if "common law" country has one)

iv) European Community law (in EU member states with common law system e.g. UK) (Note: Many EU countries have "civil law" system)

v) Legislation - the law created by Parliament. In the UK this consists of House of Lords and House of Commons which approve Bills which then become law (Acts, Statutes)

Why pass Acts ?

create new law

authorise taxation

codify laws

consolidate statutes

overrule common law precedent vi) Delegated Legislation - This is known as secondary or subordinate legislation i.e. laws made by bodies which have been authorised to do so by Parliament. Saves Parliamentary time and eases the burden on Parliament. Types of delegated legislation: a) Orders in Council - laws enacted by Privy Council for national emergency situations (e.g. earthquakes)

b) Statutory instruments - regulations enacted by government ministers

c) By-laws - made by local authorities/public bodies covering specific locality

d) Court rules - made by Committees to govern court procedures

e) Professional Regulations - made by bodies such as Law Society under Solicitors Act 1974

See Module 1.2.2 for Civil Law Systems and Sharia Law Systems


D I F F E R E N T L E G A L S Y S T E M S

CIVIL LAW SYSTEMS

SHARIA LAW SYSTEMS

(Examples: France and Germany) What is it ? A system of law which has its roots in Roman Law and consists of codified laws. Principles

The codification aspect and the general nature of laws (allowing for broad application) lead to a comprehensible system of law.

The above in turn allows for certainty and therefore predictability of the law. Judicial interpretation is of very limited significance here.

SourcesRelevant state constitutions.

EU law (if EU member state)

Statutes (essentially codified)

Administrative regulations

Custom

What is it ? Law based on the religion of Islam. Principles Sharia is law given by Allah - the divine way to be followed by mankind. Sources i) Quran - Allah’s divine revelation to his prophet Mohammed.

ii) Sunnah - the prophet’s sayings ("Ahadith") which is regarded as acceptable course of conduct.

iii) Madhab - Sunni and Shiite schools of thought based on major historian jurists’ writings.

iv) Constitution

Roles of Judges i) Sharia judges are normally clerics but secular judges in some countries

ii) Judges apply law

iii) Judges have limited power to interpret because laws are essentially those of Allah. Interpretation i) if Quran is not clear, a cleric may refer to the "Sunnah" (acceptable course of conduct taken from sayings of the prophet ("Ahadith"))

ii) Ahadith (refer above) are categorised in terms of their reliability, as follows:

Muwatatir: virtually guaranteed Mashtur: less certain Ahads: little certainty

iii) There are opposing schools of thought in the Muslim world as to the necessity for further interpretation of the law. The Taqlid theory suggests no further interpretation is needed.

vi) Ijthad refers to the various processes used in interpretation of the lawwhich include the following types:

Ijma - jurists’ opinions Qiyas - comparing two things Istihan - the principles of fairness and equity as envisaged by the Quran.

(Other processes are Maslahah, Mursalah, Urf and Istishab). NOTE: Ijthad is not to be carried out on certain matters (e.g. if Allah exists) and is to be done by a Muhtahid who has studied the Quran and is a just, reliable, trustworthy and good practicing Muslim

Role of JudgesIn comparison with common law systems, there is a clearer dividing line between those organs which draft the law and those that implement it.

Judge’s function is to apply the law.

By way of precedent, judges effectively make decisions which are followed by other judges.

InterpretationJudges mainly apply law (rather than interpret) although sometimes they need to determine social purpose or historic intention of the law and apply it accordingly.


Module 1.2.2


ESSENTIAL ELEMENTS OF LEGAL SYSTEMS ECONOMIC, POLITICAL AND LEGAL SYSTEMS

Module 1.2.3

( 1 )

Introduction

Business conducted on a global basis will be affected by a multiplicity of factors and not least by the prevailing economic, political and legal systems of the countries from which parties engage in international trade activities.

( 4 )

Legal Systems

This refers to the manner in which a nation is governed and by whom it is governed.

Law is a system of rules that a society or government develops over time in order to deal with business agreements, social relationships and crimes such as theft, murder or violence (per Collins Cobuild English Language Dictionary). a) What is

Law?

( 2 )

Economic Systems

a) What is

Economics? ( 3 )

Political Systems

a) What are Politics?

There are 2 main types of political systems:

A democracy - where the government of the day is voted into power by the free choice of the people (electorate). In democratic countries there is generally a clear demarcation between the executive, legislature and judiciary (refer Module ......... on “Separation of Powers”) and there is much respect for the maintenance of the rule of law. A dictatorship - where individual freedoms are heavily curtailed and where individuals have little or no say how their lives will be regulated but instead are expected to behave in a manner dictated by the state in conformity with state-made law. This type of system inevitably affects the way in which laws are made and the manner in which resources are regulated and controlled.

b) Types of Political Systems

Economics is essentially concerned with the means by which countries will determine how to finance their economics with due regard to:

what goods to produce (or what services to offer) how to go about production for whom it should produce

There are 3 types of economic systems: (i) A planned economy - whereby the government of the day will be the key decision-maker as to the manner in which their nation’s natural resources are to be utilised, and what is to be paid for same as well as for any goods produced there from .

(ii) A market economy - unlike the above, any decisions as to the utilisation of a nation’s natural resources will be determined by the market forces of supply and demand (so that scarcity of resources will generate a higher price than an abundance thereof which will necessarily lead to lower price levels)

(iii) Mixed Economy- effectively a combination of the economics in i) and ii) above where both the private and public sectors have a role to play. Such economics are commonplace although individual states tend to differ in the degree to which private enterprise and government will apportion the decision-making function in relation to their country’s economic strategy.

b) Types of Economic Systems

There are 3 main types of legal systems which operate globally:

(i) Common Law (UK & USA) (ii) Civil Law (France & Germany) (iii) Sharia Law (Iran, Pakistan)

b) Types of Legal Systems

With the increasing importance of international trade, there has been a need for law to extend its reach beyond the narrow confines of domestic/local jurisdictions. This has generated moves to develop international legal principles with the prime objective of achieving harmonisation in an effort to facilitate international commercial transactions between parties operating in different states.

c) Need for International Law

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ESSENTIAL ELEMENTS OF LEGAL SYSTEMSDISTINGUISHING CIVIL LAW & CRIMINAL LAW

Module 1.2.4

Although there are a number of differences between civil and criminal law, it is nevertheless possible that one particular act can give rise to both civil and criminal liability.

If a motorist knocks over a cyclist by dangerous driving he will have committed a crime as well as a civil wrong (known as a “tort”). It follows that the State will prosecute the driver (in a criminal court) for the offence of dangerous driving. If the motorist is convicted (found guilty), he will be punished by being fined, imprisoned or banned from driving for a specified period of time. In addition, the cyclist might sue the motorist in a civil court for the tort of negligence. If successful, the cyclist can demand compensation from the motorist in the form of damages for loss or injuries sustained (medical expenses, loss of earnings, damage to bicycle etc.).

For example!

Examples of civil law are the law of contract, the law of tort and property law. Criminal law includes offences such as theft, murder, rape, robbery and criminal damage. The key differences between civil and criminal law are set out in the following table:

The State (the Crown) prosecutes the accusede.g. R v SMITH(R= Regina = Queen representing the Crown)

To punish the accused who has committed an offence

An individual (the claimant) institutes a civil action against another individual (the defendant)e.g. BROWN v HORTON

Who is involved?

Objective?

To compensate the claimant who has sustained loss or has been injured by the defendant’s act

The accused will either be acquitted or convicted (if convicted, he will be sentenced to a fine, term of imprisonment etc.)

Outcome of Proceedings

If the claimant is successful he will be granted a remedy (compensated with damages or granted specific performance)

The case will be heard in either the magistrates court or the Crown Court

Courts

The case will be heard in the civil courts (county court or high court

The burden of proof is on the prosecution to prove the accused’s guilt beyond a reasonable doubt

Burden of Proof & Standard of Proof

The burden of proof is on the claimant to prove his case on a balance of probabilities

An individual cannot discontinue a prosecution at will, as it is brought in the public interest

Discontinuing Claim

The claimant may discontinue civil proceedings at any time

The Crown may pardon a crime

Pardon

The Crown cannot pardon a civil wrong

Attempt to regulate the behaviour of the whole court

Attempts to regulate the relationships and behaviour between individuals

Regulation

CIVIL LAW

CRIMINAL LAW

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ESSENTIAL ELEMENTS OF LEGAL SYSTEMSUK COURTS AND THEIR HIERARCHY

Module 1.3.1

House of Lords (an Appeal Court)

Highest court of appeal in the UK in both Civil and Criminal cases.

Appeal to European Court of Justice

Appeal toEuropean Court of Human Rights

COURT OF APPEAL (an Appeal Court)

CRIMINAL DIVISIONHears appeals from the Crown Court.

CIVIL DIVISIONHears appeals from County Courts and High Court of Justice.

HIGH COURT (a Trial Court for Civil Matters)

Queens Bench DivisionDeals primarily with contract and tort cases.

Chancery DivisionDeals with land law, trusts, probate, company law, partnership law, revenue and insolvency cases.

Family DivisionDeals with matrimonial matters.

CROWN COURTS(a Trial Court)

Deals with serious criminal offences (judge and jury).

MAGISTRATES COURTS(a Trial Court)

Deals with less serious crimes and family matters.

Appeal To

COUNTY COURTS(a Trial Court)

Civil matters only

Appeal To

Appeal To

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THE RULES OF STATUTORY INTERPRETATION

Module 1.3.2

( 1 )THE LITERAL RULE

Words must be given their literal, ordinary everyday meaning. Under this rule, the words of the Act must be followed (if they are clear) even though the meaning given is manifestly absurd (clearly ridiculous). A court will not be concerned whether the application of the rule does or does not lead to a sensible result.

( 4 )EJUSDEM GENERIS

RULE

This is known as the “ejusdem generis” rule.

( 2 )CONTEXTUAL

RULE ( 3 )

MISCHIEF RULE

This is known as the “mischief” rule and rather than concentrating on the actual words used in the statute, it concentrates on the purpose for which Parliament enacted the statute.

This recognises the fact that words can take on a more precise meaning when they are placed in the context of other words and that words (particularly general words) cannot be read in isolation.

In INLAND REVENUE COMMISSIONERS v HINCHY (1960) the court had to interpret the words “treble the tax which he ought to be charged under this Act” in order to determine what penalty was payable by a person submitting an incorrect tax return under the Income Tax Act 1952. Applying the literal rule, the court said that the penalty was 3 times the whole tax amount payable for the year in question (in fact Parliament later changed the law because their intention was that the penalty should be three times the amount of tax unpaid).

Case in Point

In SMITH v HUGHES (1960) the Street Offences Act 1959 made it an offence to “solicit on the street”. A prostitute encouraged men, from her apartment window, to avail themselves of her services. HELD - The purpose of the Act was to prevent prostitutes from annoying people in public places. Thus, the prostitute’s conduct fell within the purpose of the Act even though she was not literally soliciting “in the street”.

Case in Point

POWELL v KEMPTON PARK RACECOURSE CO (1899).

Under the Betting Act 1853, betting was prohibited in a “house, office, room ....... or other place”. The court had to consider whether a “racecourse” came within the meaning of this provision. HELDThe specific words “house, office and room” were followed by the general words “or other place”. A racecourse could not be regarded as “other place” for the purposes of the Act as it was not ejusdem generis (of the same type) with the specific words. The specific words were indoor places and racecourse, being outdoors, was not of the same type.

Case in Point

The golden rule was introduced to reduce the impact of the literal rule in cases where the plain meaning of the words produced a manifest absurdity. Thus, if a statute was ambiguous, the court applies the least ridiculous meaning to avoid an absurd result.

Case in Point

In ADLER v GEORGE (1964) , the Official Secrets Act 1920 made it an offence to obstruct a member of the army “in the vicinity of a prohibited place”. A demonstrator who ran to a sentry post inside an army base was charged under the Act. She argued that she was inside the base and not in its vicinity. HELDA literal interpretation of “vicinity” would produce an absurd result. By being inside the army base area, she clearly committed the offence.

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ESSENTIAL ELEMENTS OF LEGAL SYSTEMS INTERNATIONAL COURTS

Module 1.4

( 1 )International

Court of Justice (ICJ)

a) Institution The ICJ is the main judicial organ of the United Nations and sits in The Hague, Netherlands. The official languages are English and French. b) Applicable Law The ICJ’s decisions are reached in conformity with:

international conventions treaties custom international law judicial decisions

c) Access to ICJ Only member states of the UN have access to the ICJ and, as such, both individuals and corporations cannot resort to the court’s jurisdiction. Disputes between states vary in nature and may concern a diverse range of issues concerning asylum, borders/boundaries, etc. d) Functions The ICJ’s functions are:

i) to settle disputes between states in accordance with international lawi) to settle disputes between states in accordance with international lawii) to give advice/opinions on legal issues submitted to it by international organisations/agenciesii) to give advice/opinions on legal issues submitted to it by international organisations/agencies

e) Procedures The ICJ’s procedures are laid down by the Rules of Court under the UN Statute which provide for:

i) a written phase involving the submission and exchange of pleadingsi) a written phase involving the submission and exchange of pleadingsii) a public oral phaseii) a public oral phaseiii) judgement by the court, at a public sitting, following its deliberationsiii) judgement by the court, at a public sitting, following its deliberationsiv) no appeal (final judgement)iv) no appeal (final judgement)v) the injured party’s right to apply to the Security Council for remedial action in the event of the other

party’s failure to comply with the ICJ’s rulingv) the injured party’s right to apply to the Security Council for remedial action in the event of the other

f) Jurisdiction States can submit to the jurisdiction of the ICJ in one of the following ways:

i) by specific agreementi) by specific agreementii) in conformity with a jurisdictional clause in a treaty to which the states are signatoriesii) in conformity with a jurisdictional clause in a treaty to which the states are signatoriesiii) by virtue of the UN Statute (assuming that the dispute in question is with other parties to the Statute)iii) by virtue of the UN Statute (assuming that the dispute in question is with other parties to the Statute) Note: Should there be any doubt as to whether the ICJ has jurisdiction, then the matter will be determined by the ICJ itself.

g) Composition of the Court The ICJ comprises 15 judges who are elected (for nine year terms) by the general assembly and security council of the UN. At any given time, there may not be more than one judge of the same nationality (in any case, a judge is obliged to conduct himself independently and not as a representative of his country’s government). Should any particular state be a party to a dispute but does not have one of its nationals sitting in the ICJ, then that state may nominate someone as an “ad hoc” judge in respect of the court hearing in question.

( 2 )International

Criminal Court (ICC)

a) Background The ICC is an independent international organisation which was established in 2002 by virtue of the treaty known as the Rome Statute of the International Criminal Court 1998. b) Purpose The ICC was set up to ensure that the most serious of crimes (as defined in the Rome Statute) such as genocide, crimes against humanity and war crimes do not go unpunished. c) Procedure Following preliminary investigations by the Prosecutor, he will seek a warrant of arrest from the pre-trial division.The lawfulness of the arrest may be put in question before judges who will decide on the issue.Any ensuing trial will be held by the trial division.Appeal lies with the appeals divisionThe ICC can pass a maximum sentence of 30 years (or life) imprisonment should circumstances warrant this. d) Jurisdiction The ICC has jurisdiction over states (or individuals in those states) which have signed the Rome Statute, in respect of crimes specified therein. A prosecution may be initiated upon referral by: i) a state ii) UN Security Council iii) the Prosecutor

a) Background The ICA was established by the International Chamber of Commerce (ICC) in 1923 as a forum for international commercial arbitration. From its inception, the ICA has been involved with over 12000 cases covering a multiplicity of countries around the world. b) Functions The ICA is responsible for overseeing all aspects of the arbitration process when members refer disputes between them to arbitration. For example:

The ICA appoints arbitrators or confirms their appointment. Determines arbitrators’ fee levels. Approves arbitral awards. Decides on challenges to arbitrators.

c) Purpose As an alternative to litigation, to provide international business with an effective practical dispute resolution mechanism by way of arbitration.

( 3 )International

Court of Arbitration



INTERNATIONAL ORGANISATIONS Module 1.5.1

( 1 )

The United Nations (UN)

The United Nations is an international organisation which was established in 1945 by member states which ratified the UN Charter. The UN’s primary objectives are to:

i) Maintain peace and security i) Maintain peace and security

ii) Develop friendly relations among nations ii) Develop friendly relations among nations

iii) Co-operation in solving social, cultural and humanitarian problems iii) Co-operation in solving social, cultural and humanitarian problems

iv) Promote respect for human rights and international freedoms iv) Promote respect for human rights and international freedoms

Background and Aims

( 2 )

International Chamber of Commerce (ICC)

The ICC was formed in 1919 by business leaders from the USA, France, Belgium, UK and Italy. The aims of this organisation are to benefit world business by:

a) promoting trade and investment a) promoting trade and investment

b) opening markets for both goods and services b) opening markets for both goods and services

c) facilitating the free flow of capitalc) facilitating the free flow of capital The ICC currently has members drawn from thousands of companies and associations across 130 countries and primarily focuses on undertaking the following tasks:

i) co-operating and advising the UN on matters relating to the formulation of international law

i) co-operating and advising the UN on matters relating

ii) providing practical services to businesses and encouraging them to adopt codes of practice

ii) providing practical services to businesses and

iii) combating commercial crime (e.g. money laundering) iii) combating commercial crime (e.g. money laundering)

iv) communicates with governments on matters concerning international trade.

iv) communicates with governments on matters

(Note: A major achievement of the ICC was the establishment of the International Court of Arbitration in 1923 , which will be covered in another Module).

Background, Aims and Functions

( 3 )World Trade Organisation

(WTO)

a) Background

The WTO was established in 1995 to replace its predecessor GATT, (the General Agreement Tariffs and Trade) which was formed in the aftermath of World War II (1948). The organisation boasts 149 members which translates into 97% of international trade.

The United Nations has the following legal bodies:

a) UN Commission on International Trade Law (UNCITRAL) a) UN Commission on International Trade Law (UNCITRAL)

b) The International Court of Justice (ICJ) (will be dealt with in the module dealing with International Courts).

b) The International Court of Justice (ICJ) (will be dealt with in the module dealing

Key Legal UN Organs

The ICC comprises:

- The World Council - The World Council

- The National Committees (representation of ICC in their nation states )

- The National Committees

- The Secretariat- The Secretariat

Organisational Structure

UNCITRALUNCITRAL is a legal body which was set up in 1966 and comprises 61 states chosen by the UN General Assembly. Essentially, the General Assembly established UNCITRAL to overcome obstacles which hampered international trade by harmonising national laws to overcome conflicting legal approaches to given transactions. This harmonisation and unification of international trade law is achieved by:

- carrying out work at annual sessions held at UN Headquarters in New York and Vienna (non members can participate as “observers”)

- carrying out work at annual sessions held at UN Headquarters in New York and

- operating through six working groups (made up of all member states) which deal with the areas covering privately financed projects, international arbitration, transport, electronics, insolvency and security respectively (non-members can participate as “observers”)

- operating through six working groups (made up of all member states) which deal

- encouraging participation in international conventions - encouraging participation in international conventions

- encouraging acceptance of model and uniform laws - encouraging acceptance of model and uniform laws

- ensuring consistency in the interpretation and application of laws and conventions in the field of international trade

- ensuring consistency in the interpretation and application of laws and conventions

- reporting legal developments and relevant case law. - reporting legal developments and relevant case law.

UNCITRAL’s AchievementsUNCITRAL has introduced a number of Model Laws and Conventions including, but not limited to, the following which will be covered in other Modules :

UN Convention on Contracts for the International Sale of Goods

UNCITRAL Model Law on International Commercial Arbitration

UN Convention on International Bills of Exchange and International Promissory Notes

UNCITRAL Model Law on Cross-Border Insolvency

The purposes of the WTO are:

i) to facilitate the free flow of trade by overcoming and eliminating obstacles

ii) ensuring that states and corporate sectors are familiar with rules governing global trade

b) Purposes

The functions of the WTO are:

i) to administer trade agreements i) to administer trade agreements

ii) to serve as a forum for trade negotiations/agreements ii) to serve as a forum for trade negotiations/agreements

iii) to settle trade disputes iii) to settle trade disputes

iv) to review national trade policies iv) to review national trade policies

v) to assist developing countries in trade policy issues v) to assist developing countries in trade policy issues

vi) to co-operate with other international organisationsvi) to co-operate with other international organisations

c) Functions

WTO Agreements will embrace trade issues such as member states commitments to reduce customs duties and to provide feedback on trade policies. Matters such as DSB procedures for settling disputes may also be covered.

d) Nature of WTOAgreements

The structure of the WTO is as follows:

i) The Secretariat – this is located in Geneva and is responsible for extending technical support to the councils, committees and ministerial conferences.

i) The Secretariat – this is located in Geneva and is responsible for extending technical support to the

ii) The Ministerial Conference – the top decision-making body. Meetings take place at least once every two years.

ii) The Ministerial Conference – the top decision-making body. Meetings take place at least once every

iii) The General Council – meets regularly in Geneva (sometimes as the Trade Policy Review Body)iii) The General Council – meets regularly in Geneva (sometimes as the Trade Policy Review Body)

Sometimes, the General Council meets as the Dispute Settlement Body (DSB) when circumstances require. In this capacity, it is authorised to deal with trade disputes (between member countries) by selecting a panel comprising 3-5 experts from various states to hear a case. (The Panel of Experts). The DSB is empowered to accept or reject this panel’s conclusions or any appeal (on a point of law only). In addition, the DSB is responsible for monitoring the implementation of rulings and recommendations, and authorise sanctions in the event of non-compliance with any rulings.

iv) The Appellate Body is set up by the DSB (see above). It consists of seven members, (three of whom will hear appeals) with recognised standing in the field of law and international trade and not affiliated with any government. The Appellate Body can uphold, modify or referee the Panel of Experts findings although the DSB has the final decision to accept or reject appeals report within 30 days.

iv) The Appellate Body is set up by the DSB (see above). It consists of seven members, (three of whom

e) Structure

continued Module 1.5.2



INTERNATIONAL ORGANISATIONS Module 1.5.2

( 4 )Council of

Europe (COE)

a) Background

The COE is an organisation of 4 European member states (with an additional 5 non-European countries holding observer status). The COE is in fact an entirely separate entity from the European Union although many European countries enjoy membership status of both organisations.

( 5 )Organisation for

Economic Co-operationand Development

(OECD)

c) Functions

The functions of the OECD include:

i ) creating legally binding agreements (e.g. bribery) ii ) issuing non-binding guidelines Note: The OECD encourages both member and non-member states to be parties to agreements and ensures a broader involvement of additional countries.

( 6 )International Institute for the Unification of

Private Law (UNIDRDIT)

a) Background The harmonisation of private commercial law between states.

The COE’s functions are as follows: i) producing conventions for member states covering diverse areas such as wildlife protection, doping, cloning, etc.). If adopted these will be legally bindingii) improving judicial procedures and harmonising national legislation

b) Functions

c) Structure

The COE comprises the following:

i) The Committee of Ministers - this is the key decision-making body manned by the foreign ministers (or their representatives) of the member states and based in Strasbourg.

ii) The Parliamentary Assembly - made up of a President and 630 members from the 47 parliaments of member states.

iii) The Congress of Local and Regional Assemblies

iv) The Secretariat - consists of a secretary general and 1800 members.

The OECD is an organisation which was established in 1961 and which draws its member states from most of the world’s continents. It has its roots in an entity which was set up to co-ordinate USA and Canadian aid to Europe in the aftermath of World War II.

a) Background

The OECD is an organisation which was established in 1961 and which draws its member states from most of the world’s continents. It has its roots in an entity which was set up to co-ordinate USA and Canadian aid to Europe in the aftermath of World War II.

b) Purpose/Aim

Based in Rome, UNIDROIT is an independent inter-governmental organisation which was established in 1926 and consists of 60 member states that have acceded to the UNIDROIT Statute.

b) Purpose/Aim UNIDROIT has a three-tiered structure comprising: i) The Secretariat – as the executive organ, it is responsible for UNIDROIT’s day-to-day work programme. It is headed by the Secretary-General who is supported by a staff of international civil servants. ii) The Governing Council – is entrusted with the supervision of the Secretariat’s work programme (drawn up by the Council). It is manned by one “ex officio” member (the UNIDROIT President) and 25 elected members (including judges, practitioners, civil servants and academics). iii) The General Assembly – this is made up of one official from each member state and is the key decision-making body which is entrusted with the following tasks:

voting UNIDROIT’s annual budget

approving the work programme every 3 years

electing the Governing Council every 5 years

c) Structure

UNIDROIT’s functions include: i) the drawing up of international conventions which, on adoption, would take priority over domestic laws ii) the drawing up of model laws to enable states to consider them and adopt or adapt them when drafting their own domestic legislative provisions covering the subject matter in question iii) drawing up general principles which are directed at judges, arbitrators and contracting parties who are at liberty to choose whether they will utilise/implement same.

d) Functions

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ESSENTIAL ELEMENTS OF LEGAL SYSTEMS - ARBITRATION -

Module 1.6.1

This is the oldest of alternative dispute resolution (ADR) procedures for resolving disputes without resorting to court action. It is available in civil (but not criminal) cases as a procedure by which parties in dispute refer the contentious issue to a 3rd party for resolution (as opposed to utilising the court system). The arbitrator may be a lawyer or an expert in the particular field in which the dispute has arisen. Arbitration is particularly suited to the commercial sector where parties in dispute would be keen to avoid the intimidating atmosphere of court proceedings and to preserve valuable business relationships. Thus, arbitration clauses are commonly found in commercial contracts.

( 1 )INTRODUCTION

What is Arbitration?

( 2 )ADVANTAGES

Arbitration ensures the involvement of those who tend to possess specialist knowledge of disciplines relevant to the dispute. This not only serves to accelerate the procedure but helps to arrive at a more equitable outcome.

a) Expertise

b) Neutrality of Venue

Cross-border disputes may be settled by arbitration at a neutral venue (as opposed to court in foreign country).

c) Speed

The court system is notorious for delays which in turn lead to inflated costs and acute disruptions in business activity to the ultimate detriment of the litigants. Arbitration significantly speeds up the process of resolving disputes.

d) Accessibility & Informality

Arbitration may result in a reduction of overall costs (particularly if the parties are not legally represented) although there may be situations where costs may be relatively prohibitive.

f) Privacy/Lack of Publicity

Arbitration dispenses with the unnecessary formality of court proceedings and to a large extent does not concern itself with complex rules of evidence. Parties tend to feel more at ease in what is essentially a relaxed environment. Arbitration proceedings can be arranged with relative flexibility and ease (unlike court hearings).

( 3 )DISADVANTAGES

The absence of judges or legal expertise may not be helpful when a dispute involves complex legal issues (although arbitrators may seek the advice of legal experts if circumstances so dictate).

c) Lack of Legal Expertise

e) Cost

g) Conciliation

Arbitration necessarily encourages the parties to reconcile their differences in a more relaxed and less intimidating environment with a view to maintaining personal and business relationships intact.

h) Closure

Parties to an arbitration may achieve closure of their dispute (particularly in the absence of any further time-consuming appeal) and must abide by any decision which may be enforced in court.

b) No Judicial Precedent

Unlike arbitration, the conventional court system offers appropriate appeal mechanisms for disenchanted litigants.

a) No Appeal

Arbitration avoids undesirable publicity which may be damaging in business disputes involving sensitive financial information or trade practices. Privacy is more or less ensured and maintained in the absence of proceedings being reported (as with court cases).

Unlike court decisions which rely on the doctrine of precedent, each dispute in arbitration is judged on its own particular merits, on a case-by-case basis. Thus, it would be more difficult to predict the outcome of any proceedings.


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Module 1.6.2 ( 1 )

When adopted?

UNCITRAL adopted the Model Law in 1985.

( 4 )What is an Arbitration

Agreement?

The Model Law deals with rules governing the receipt of written communications which are to apply to any arbitration agreement in the absence of any agreement to the contrary.

An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship whether contractual or not. An arbitration agreement may be in the form of: i) an arbitration clausei) an arbitration clause

- or –- or – ii) a separate agreement.

UNITED NATIONS COMMISSION ON TRADE LAW (UNCITRAL)

MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

( 2 )

When is arbitration

“International”?

( 3 )Written

Communications

A written communication is deemed to have been received under Article 3 on the day it is delivered per any of the following means:

a) if it is delivered to the addressee personally a) if it is delivered to the addressee personally b) if it is delivered to addressee’s place of business,

habital residence of mailing address b) if it is delivered to addressee’s place of business,

c) if neither (a) or (b) can be found after making a reasonable enquiry, then the addressee’s last-known place of business, habital residence or mailing address by registered letter (or other recorded delivery) will suffice.

c) if neither (a) or (b) can be found after making a

( 5 )Form of Arbitration

Agreement

Per the Model Law an arbitration agreement must be in writing. This requirement may be satisfied in one of the following ways:

i) where a contract (in writing) entered into between parties, refers to another document which incorporates an arbitration agreement

i) where a contract (in writing) entered into between parties,

ii) where it is to be found in a document which constitutes written evidence of the agreement

ii) where it is to be found in a document which constitutes

iii) where it is referred (by one party) in its documents pertaining to legal proceedings and the other party does not dispute its existence.

iii) where it is referred (by one party) in its documents

Arbitration is to be regarded as “international” for the purposes of the Model Law, in the following circumstances: - where the parties to the arbitration agreement have their

places of business in different states- where the parties to the arbitration agreement have their

- or - - or - - if the parties’ places of business are in the same state

and the chosen arbitration venue is in a different state- if the parties’ places of business are in the same state

- or - - or - - the arbitration agreement covers subject matter in more

than one country- the arbitration agreement covers subject matter in more

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(b) Arbitral Award

The following points are relevant to the arbitral award:

i) it must be in writingi) it must be in writingii) it must be signed by all arbitratorsii) it must be signed by all arbitratorsiii) it must state the reasons for its decision, unless

otherwise agreediii) it must state the reasons for its decision, unless

iv) it must state the date of awardiv) it must state the date of awardv) it must state the place of arbitrationv) it must state the place of arbitrationvi) each party must receive a copy of the awardvi) each party must receive a copy of the award

Note: The arbitral award shall be regarded as binding and may be enforced by written application to court per Article 6. These requirements are embodied in Article 31 of the Model Law.

1) Requirements

Arbitral Tribunal


UNITED NATIONS COMMISSION ON TRADE LAW (UNCITRAL) MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

Module 1.6.3

Per Article 31 , a party may ask that an additional award be made (in relation to claims made during the proceedings but not forming part of the final award). Such a request must be made within 30 days of receipt of the award following which the arbitral tribunal may, (if it considers same justified), grant the additional award within 60 days.

(c) Arbitral Decision

The following points are relevant to the arbitral decision:

i) it shall be made in accordance with the rules of law chosen or agreed by the parties (Article 28)

i) it shall be made in accordance with the rules of law chosen or

ii) in the absence of any such agreement, the arbitral tribunal will consider what law to apply, having regard to appropriate conflict of laws rules

ii) in the absence of any such agreement, the arbitral tribunal will

iii) the decision will be made by a majority of the arbitrators iii) the decision will be made by a majority of the arbitrators

iv) should the disputing parties settle their differences prior to any arbitral decision, then the arbitration proceedings will come to an end. Such settlement shall, (at the request of the parties and upon the tribunal’s consent), be recorded and regarded as though it were an arbitral award.

iv) should the disputing parties settle their differences prior to any

d) Arbitrators

2) How Many?

The parties may decide upon the number of arbitrators , failing which the Model Law provides for three arbitrators.

The parties are at liberty to determine how the arbitrators are to be appointed subject to the following:

i) unless otherwise agreed, nationality shall not preclude anyone from being an arbitratori) unless otherwise agreed, nationality shall not preclude anyone from being an arbitratorii) in the event that no procedure is agreed between the parties, each of the parties will appoint one arbitrator,

the two of whom (arbitrators) will in turn appoint a third one.ii) in the event that no procedure is agreed between the parties, each of the parties will appoint one arbitrator,

But!

Per Article 11 , one of the parties may request the relevant court or authority (specified by each state when adopting the Model Law) to appoint an arbitrator in the following circumstances:

a) if a party does not appoint an arbitrator within 30 days of being asked to do so by the other partya) if a party does not appoint an arbitrator within 30 days of being asked to do so by the other party- or -- or -

b) the two arbitrators appointed (by each of the disputing parties) fail to appoint a third arbitrator per (ii) above.b) the two arbitrators appointed (by each of the disputing parties) fail to appoint a third arbitrator per (ii) above.

iii) should the parties agree that there will be one arbitrator only, then they must agree on who to appoint.iii) should the parties agree that there will be one arbitrator only, then they must agree on who to appoint. But!

In the event of failing to agree on the sole arbitrator, then either party may submit a request to the relevant court or authority (specified in that party’s national law) to appoint such arbitrator.

The parties themselves may establish procedures for challenging an arbitrator, failing which the Model Law sets out a procedure. An arbitrator may be challenged if: i) questions arise as to his impartiality or independence i) questions arise as to his impartiality or independence

ii) there is an issue as to his qualificationsii) there is an issue as to his qualifications If the parties agreed challenge procedure (if any) is not successful, then it is open for the challenging party to refer the matter to the relevant court or authority within 30 days. In the interim, and pending the outcome of the court process, the arbitration may continue accordingly. Per Article 13 of the Model Law, if the parties themselves have not agreed to a procedure, the party who wishes to challenge an arbitrator’s appointment is obliged to send a written statement of his challenge to the arbitral tribunal within 15 days of his becoming aware of who will be on the tribunal.

1.) The challenged arbitrator resigns from the arbitral tribunal. 2. )The other party agrees to the challenge and the arbitrator withdraws. 3.) In the event that the arbitrator does not withdraw and the other party does not agree with the challenge, the arbitral tribunal will deal with the issue and decide on the challenge.

Should it become impossible for an arbitrator to act, (per Article 14 ) , an arbitrator may withdraw for any de facto or de jure reason (or the parties may agree that his appointment is terminated).

1) When Arbitrator Unable to Act

(a) Arbitral Proceedings

See Module 1.6.4

2) Correction of Award

3) Additional Award

4) Setting Aside of Arbitral Award

3) Appointment?

4) Challenging Appointment

5) Implications of a Challenge

Per Article 33 , either party may request the tribunal to:

i) correct any error (computation, clerical, typing) in the award

i) correct any error (computation, clerical, typing) in the

ii) explain or interpret any point made in the awardii) explain or interpret any point made in the awardNote:Either of the above requests must be made within an agreed time or (if not agreed) within 30 days and if the tribunal determines same to be justified, it will make the correction/interpretation accordingly, which will thereby be regarded as an integral part of the arbitral award.

Per Article 34 , the parties may submit an application to the relevant court or authority to set aside the arbitral award due to:

i) a party is under incapacityi) a party is under incapacityii) agreement invalid under applicable lawsii) agreement invalid under applicable lawsiii) no proper notice given of proceedingsiii) no proper notice given of proceedingsiv) no proper notice given of arbitrator’s appointmentiv) no proper notice given of arbitrator’s appointmentv) party unable to present his casev) party unable to present his casevi) award not in conformity with arbitration agreementvi) award not in conformity with arbitration agreementvii) arbitral tribunal not properly constitutedvii) arbitral tribunal not properly constitutedviii) issue under consideration was not capable of being

settled under local lawsviii) issue under consideration was not capable of being

ix) the award was incompatible with public policy.ix) the award was incompatible with public policy.


(i) Statements of Claimand Defence

Per Article 25 , the claimant must submit a statement of claim, in response to which the defendant shall present a statement in defence (within agreed time-limits or as prescribed by the tribunal).

Arbitral Tribunal

ESSENTIAL ELEMENTS OF LEGAL SYSTEMS- ARBITRATION -

UNITED NATIONS COMMISSION ON TRADE LAW (UNCITRAL)MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

Module 1.6.4

(iii) Jurisdiction

Should one of the disputing parties contend that the arbitral tribunal lacks jurisdiction (has no power to deal with the case) then this argument must be made prior to submissions in defence. It should also be noted that:

a) a person will not be precluded from questioning the arbitral tribunal’s jurisdiction if he was involved in the arbitrator’s appointment

a) a person will not be precluded from questioning the arbitral tribunal’s

b) the jurisdictional issue can be ruled upon by the arbitral tribunal itself with a right of appeal to the relevant court or authority

b) the jurisdictional issue can be ruled upon by the arbitral tribunal itself

c) there is also a right to plead that the tribunal has simply exceeded its jurisdiction, as soon as this occurs

c) there is also a right to plead that the tribunal has

a) Arbitral Proceedings

Statement of ClaimMust include:

i) facts supporting claimi) facts supporting claim

ii) points of issueii) points of issue

iii) relief or remedy soughtiii) relief or remedy sought

iv) supporting documents (if any)iv) supporting documents (if any) Note: In the event that the claimant fails to provide his statement of claims then the arbitral tribunal shall terminate proceedings.

Statement in DefenceMust state defence in relation to the particulars given in the statement of claim (also supporting documents, if any). Note: Failure to furnish a statement of defence shall not be construed as an admission by the defendant of the claimant’s allegations and the arbitral tribunal will continue with the proceedings.

(ii) Interim Measures

The arbitral tribunal may order either of the disputing parties to take interim measures of protection during the course of the arbitral proceedings.

(iv) General Rules

(v) Termination of Proceedings

Per Article 32 , arbitral proceedings shall be regarded as terminated:

by the final award by court order, if claim is withdrawn by agreement between the parties by the tribunal itself if it considers proceedings unnecessary or impossible

i) Per Article 18 , the parties shall be treated with equality and given a full opportunity to present their respective cases

i) Per Article 18 , the parties shall be treated with equality and given a full

ii) Per Article 19 , the parties are at liberty to agree on the procedure to be followed (subject to Model Law)

ii) Per Article 19 , the parties are at liberty to agree on the procedure to be followed

iii) Per Article 19 , in the absence of any agreement on procedure, the arbitral tribunal will conduct the arbitral proceedings in any manner it sees fit

iii) Per Article 19 , in the absence of any agreement on procedure, the arbitral tribunal

iv) Per Article 20 , the parties are at liberty to agree on the pace of arbitration iv) Per Article 20 , the parties are at liberty to agree on the pace of arbitration

v) Per Article 22 , the applicable language is to be agreed between the parties, failing which the arbitral tribunal will decide (any documentation may be translated into the operative language if the tribunal so instructs)

v) Per Article 22 , the applicable language is to be agreed between the parties,

vi) Per Article 24 , the arbitral tribunal will decide whether proceedings will be conducted orally or through the lodging of documentation

vi) Per Article 24 , the arbitral tribunal will decide whether proceedings will be

vii) Per Article 24 , any documents, statements, expert reports etc. must be made available to the disputing parties

vii) Per Article 24 , any documents, statements, expert reports etc. must be made

viii) Per Article 25 , if any party does not attend any hearing or omits to present any documentary evidence , then the tribunal may proceed to make a determination on the basis of the evidence in hand.

viii) Per Article 25 , if any party does not attend any hearing or omits to present any

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