International Business Chapter 9

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1. What is the significance of determining whether a country follows the rule of law? Because it makes encouraging foreign investment easier because foreign businesses will know that their interests will be protected. Following the rule of law also makes ensuring protection of human rights of local people easier. 2. How does international law differ from national law? What are the sources of international law? International law includes legal relations between governments, including laws concerning diplomatic relations between nationals and all matters involving the rights and obligations of sovereign nations. Private international law would cover matters involved in a contract between businesses in two different countries. National law is made of three major legal systems of the world today. They consist of civil law, common law and religious law.

The sources are treaties, customary international law.
3. What objections do other countries have to extraterritorial application by the United States of its law? It is enforce laws abroad is done not by force but through traditional legal means. For example, the U.S. government imposes taxes on U.S. citizens and U.S. permanent residents regardless of either the source of income or the residence of the taxpayer. If a U.S. citizen is living in Madrid and receives all of her income from Spanish sources, the United States will still expect the taxpayer to comply with the U.S. tax laws. Likewise, when U.S. companies operate in other countries with U.S.-based personnel, the U.S. companies must comply with U.S. laws, including employment laws. 4. What are advantages of submitting contract disputes to arbitration instead of to litigation in courts? Litigation can be extremely complicated and expensive, it also entails lengthy pretrial activities, including discovery. Litigation usually involves problems with cross-border litigation is the question of which jurisdiction’s law should apply and in which...
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