International Business Law

The emergence of United Nations in the international scenario brought along many Laws, treaties and conventions on to the international screen to govern the business between countries. There are many bilateral and multilateral treaties defining the rules and regulations governing the inter country business in all aspects of business and problems arising out of business like taxation, defaults, frauds, torts etc.

The conventions of the United Nations in respect of Trade, Services and transport worth mention in this context.

The United Nations Convention on Contracts for the International Sale of Goods is intended

  • For the establishment of a New International Order.
  • For the adoption of uniform rules to govern international sale of goods to remove barriers in international trade.
  • For promotion of international trade among 65 member countries who participated in the convention.

This convention applies to contracts of sale of goods between parties in different contracting countries. It does not apply to personal goods, auctions, stocks, shares, investments, negotiable instruments, ships, vessels, aircrafts, hovercrafts, electricity, supply of labour or other services. The convention is intended for observance of good faith in international trade.

There is a UN Convention of Period in International Sale of Goods as amended by the Protocol amending the convention on the limitation of period in the international Sale of goods.

In the field of Procurement and Construction the international Law is governed by the UNCITRAL Model Law on Procurement and Construction [1993]. The objectives of this Law are

  • maximizing economy and efficiency in procurement
  • fostering participation by contractors regardless of the nationality to promote international trade
  • promoting competition
  • providing fair and equitable treatment to all suppliers and contractors
  • promoting integrity, fairness, transparency.
  • This Law does not apply to Defence and Security procurements

The UNCITRAL Model Law on Procurement of Goods, Construction and Service [1994] also has the same scope but includes services also. It lays down the qualifications of suppliers and contractors and the circumstances of their disqualification.

The United Nations Convention on the Carriage of Goods by Sea [1978] between 19 member countries governs the Law in Transport. This convention lays down its scope. The interpretation of the convention is to be done with regard to its international character and to promote uniformity. It fixes the responsibility of the carrier to the period in which the carrier is in charge of goods. It also defines the basis of responsibility and also the limits of liability.

The United Nations Convention on the liability of Operators of Transport Terminals in International Trade [1991] was designed considering the legal hurdles and uncertainties with regard to international carriage of goods when they are in charge of the transport terminals.

The intention of this convention is to establish uniform rules concerning liability for loss, damage or delay in handling by transport terminals. The period of responsibility is fixed and the terminals are to issue documents acknowledging receipt of goods stating the condition of goods when received. The convention also fixes the basis of liability in as much as it is not to exceed 8.33 units of account per Kg of gross weight of goods damaged.

There are laws covering global patents, patent protection, access to Pharmaceuticals, drugs etc. Though the Law is in spirit intended to give equal treatment to all countries, as is seen from the intention of the above referred conventions, in reality, there is a feeling among member countries that special and differential treatment is meted out to various countries at the World Trade Organisation [WTO] especially with regard to pharmaceutical access and patent protection. In 2003, the WTO amended the Agreement on Trade Related Aspects and Intellectual Property Rules to help developing nations to have further access to essential medicines. But still the basic problem persists.

Another problem is the accountability of MNCs in respect of frauds, torts like human rights abuse etc. While it is right that MNCs exist for profit making, it is also right that they should take responsibility for human rights abuse. In this context it is necessary to observe the effectiveness of the Alien Torts Claims Act and unfortunately all attempts to book the defaulting MNCs under this Law have been unsuccessful.

Another area where the International Law does not stand to the expectations of the world countries is Direct Investment. Developing countries are signing Bilateral treaties with a desire to attract more and more direct investment totally disregarding the fact that they have to agree to concessions which would put them in a compromising situation.

Be that as it may, the various conventions and treaties comprising the International Business Law cover all most all aspects of international trade and business, making it easy for member countries to promote their business ties without any care or concern.