There is per se no international business law and international commercial courts. The problem of extraterritorial jurisdiction has its origin in clash of sovereigns. Two important questions need answer: Whose laws? Whose courts?
Answer is to insert the requisite clause in the contract to avoid ambiguity. If not done so, then apply the laws of the nation where contract was signed. But many contracts are not signed at one place (a contract to export Myanmar pulses by a Singapore firm to an Indian firm: Sellers sign in Singapore and the buyer signs in India), then apply the laws of the nation where performance occurs.
But in case of international trade contract the performance takes place at two places – export in one country and import in other country. At times the performance may take place in the third country.
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Thus the problem of jurisdiction becomes an important legal issue. In case of dispute the first choice will be to sue in the home country court. But for enforcement help of host country court is essential.
In cases where decree was to be executed in China, could not take place as Chinese courts stalled recognition of awards made outside China within the stipulated period of six months “Compliance has, of course, long been a prominent issue in international law. Because international norms often have no enforcement power behind them
While the court’s jurisdiction will depend upon who is suing whom. Another issue is whose national laws shall be applicable. Again, it must be inserted in the contract. If inserted, a US court could listen a French company applying French Law against a US Company. The Brussels Convention on Jurisdiction and Enforcement of judgments is an important convention on the subject of jurisdiction and enforcement.
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A bigger problem relating to jurisdiction is extraterritoriality. Extraterritoriality means the laws of home country governing the operations of a company including its subsidiaries and sales offices located in other countries. The US laws cover not only US businesses, and their subsidiaries but also licensees of US technology irrespective of place where they operate.
The question is why does a nation want to exercise its judgments on the operations of its businesses taking place in other’s territory? The answer of the state is that it cannot permit any activity or action, wherever it may occur, if it adversely threatens national interest.
Conversely whenever a home country company faces serious problems in the host country it asks the home government to intervene, then why the home government should not ask the home country company to follow home country laws even when operating abroad. While extending the jurisdiction of local laws to operations in foreign country over local resident firms creates double legal standards. An activity which is legal in host country may be treated as illegal in home country due to legal differences between the two countries.
In case of UK, one can sue anyone for libel in a British Court, even if both parties are foreigners, and so is the publication, as long as the disputed material can be accessed online anywhere in England or Wales. Jurisdiction is irrelevant; it does not even have to be in English. The onus of proving that it’s not libel is on the defendant, and London’s Courts have a reputation of handling out massive damages.
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With regard to extraterritoriality the nation to be singled out is the US.
The US laws, extraterritorial in nature, cover the following:
i. Bribery paid in Foreign Countries Law
ii. National Security Laws
iii. Antitrust laws
iv. Anti boycott Laws
With the advent of internet, new sorts of extraterritoriality problems have crept in, because of the likelihood – That activity in one geographical location will affect people in another location.
Apart from the above, the recent judgment on Bhopal Gas Tragedy of 1984 has also raised many issues. Is the parent company responsible for the tragedy taking place in an international subsidiary company? What is the liability of the parent company in case of damage to human life? Is it to be different in developed and developing countries? Can the host country laws be kept over the shelf when some powerful MNC head is involved? If the subsidiary company is sold to another MNC, does the liability also pass on to the incumbent MNC?