Globalization is the shift toward a more interdependent and integrated global economy, fueled by declining trade and investment barriers and new technologies, such as the internet, which creates greater opportunities for international business. International business encompasses a full range of companies, from a large multinational firm with thousands of employees doing businesses in many countries across the world to a small one-person company acting as an importer or exporter in a single country, and the cross-border commercial exchanges of goods, services, or resources between two or more nations.
These “Nation-states generally have unique government systems, laws and regulations, currencies, taxes and duties, and so on, as well as different cultures and practices” (International Business). When doing International Business with most foreign countries, “there are cultural differences about which it is essential to question and to learn; Do men and women shake hands with each other? ;In business meetings, do participants “get right down to business” or would that be considered impolite? ; Should the American visitors’ clothing be approximately the same as the foreign hosts?
; What languages are used? ” (Maxwell) “Every company’s competitive environment varies by company, industry, and country” (Samii), and while there are points of convergence in all three areas, … When operating in an international business environment, companies must respect the transnational local laws and politics that differ greatly and are essential for companies to respect when doing international business and negotiations. “The type of legal system in a country determines the conduct of business transactions, who has what rights and obligations in the transaction, and the sorts of legal redress open to those who believe they’ve been wronged” (Samii).
Common Law is a system based on tradition, judge-made precedent, and usage, the law continually evolves in addition to being amended by laws passed by the legislature. Common law legal systems are in use in England where it originated in the Middle Ages, and in nations that trace their legal heritage to England as former colonies of the British Empire, including the United States, Singapore, Pakistan, India, Ghana, Cameroon, Canada, Ireland, New Zealand, South Africa, Hong Kong and Australia (International Basics).
(. Civil law, in this sense, is usually referred to in comparison to criminal law, which is that body of law involving the state against individuals (including incorporated organizations) where the state relies on the power given it by statutory law. Civil law may also be compared to military law, administrative law and constitutional law (the laws governing the political and law making process), and international law. Where there are legal options for causes of action by individuals within any of these areas of law, it is thereby civil law).
Civil law is the branch of law dealing with disputes between individuals or organizations, in which compensation may be awarded to the victim. Civil Law systems charge political officials, not government-employed judges, with responsibility for specifying accessible, detailed, and written law that applies to all citizens. Rather than create law, as they do in the common law system, judges in the civil law system apply existing legal and procedural codes to resolve disputes, “developed by judges through decisions of courts and similar tribunals (called case law), rather than through legislative statutes or executive action, and to corresponding legal systems that rely on precedential case law” (Chand).
There is no room for making analogical arguments, creative interpretations of the law, or complying with the spirit of the law rather than the letter of the law. The civil law system, also called a codified legal system, is based on a detailed set of laws that make up a code. Rules for conducting business transactions are a part of the code. The judicial courts rely upon the detailed written legal codes rather than interpretation of tradition, precedent and customs and may consist of contractual disputes.
The courts under this system do not have much flexibility, as compared to the courts of common law system. It is the most prevalent and oldest surviving legal system in the world. Code law or Civil law has its roots in the Roman law and more than 80 countries of the world, including Germany, France, Japan, Russia, most of Europe, Latin America, China, Taiwan and South Korea operate with this Civil law system (Chand). (INTERNATIONAL BASICS) Cueto states that there are both benefits and nuisances that come with both Common and Civil laws.
He states “The benefit of a common law system is that you can be confident of what will happen in your case if a similar case has been heard before. The drawback is that if you have an unusual case, there is nothing to stop a judge creating a new law and applying it to your case” “The benefit of a civil law system is that you can only be judged by the laws which were actually written down in front of you at the time. The drawback is that even if previous cases show you should win your case, there is no guarantee a judge will interpret the code in the same way on your case.
” (Cueto) He suggests that while the distinction between both systems is a basic tenet of international law, their unique legal approaches should be factored into every major international business decision that is made. Customary Law is based on norms of behavior practiced over a long period of time. Customary law is considered by the International Court of Justice, jurists, the UN, and its member states to be among the primary sources of international law. “Customary international law” results from a general and consistent practice of states that they follow from a sense of legal obligation” (Shaw).
Customary law may play a significant role in matters of personal conduct in countries with mixed legal systems . The vast majority of the world’s governments accept in principle the existence of customary international law, although there are many differing opinions as to what rules are contained in it. Theocratic Law is a system that “relies on religious doctrine, precepts, and beliefs to define the legal environment” (Samii) where religious leaders are often the political leaders meaning there is no separation between church and state.
This system is based on religious teachings, as they are enshrined in the religious scriptures, to “regulate business transactions and social relations” and “regulates public and private matters” so government, law and religion are one (Samii). The best example is Islamic or Muslim law, Shari’a, is the most widely practiced religious legal system in today’s world. “It is based on morality rather than commercial requirement of human behavior in all aspects of a person’s self and social life” (Chand). Islamic law is based on the Holy book of Islam, the Quran and on interpretation of the practices and sayings of Prophet Mohammad.
“It also follows the writings of scholars and teachers of Islamic scholarship, who derived rules by analogy from the principles established in the holy Quran” (Chand). The basic foundations of Islamic law remain unaltered even after many centuries because they have been derived from the holy book and are acceptable to all devout Muslims. Chand goes on to forewarn that this is not the most beneficial way for Muslims to handle business relations. “Even though Islamic jurists and scholars constantly debate the application of Islamic law to the modern world, their debates are only scholastic deliberations.
However, to keep pace with the advancement of life, many Muslim countries have a blend of Common law and Civil law system along with the Shari’at law. ” References: “International Business. ” Encyclopedia of Management. 2009. Retrieved March 20, 2015 from Encyclopedia. com:http://www. encyclopedia. com/doc/1G2-3273100136. html Cueto, Santiago A. “International Basics: What’s the Difference Between Common Law and Civil Law? ” International Litigation (2010, May 5). Retrieved March 19, 2015 from: http://www. internationalbusinesslawadvisor. com/2010/05/articles/international-litigation/international-basics-whats-the-difference-between-common-law-and-civil-law/ Chand, Smriti. “3 Kinds of Legal Systems that exist in Different Countries across the world” Your Article Library.
Retrieved March 18, 2015 from: http://www. yourarticlelibrary. com/law/3- kinds-of-legal-systems-that-exist-in-different-countries-across-the-world/5918/ Maxwell, Dorothy. “International Business. ” Encyclopedia of Business and Finance, 2nd ed.. 2007. Retrieved March 20, 2015 from Encyclopedia. com: http://www. encyclopedia. com/doc/1G2-1552100177. html Malcolm N. Shaw, International Law 80 (5th ed. , Cambridge, 2003).
Cornell Univesity Law School. https://www. law. cornell. edu/wex/customary_international_law Samii, M. (2011). In Olver J. M. , Lant T. K. , Plant R. , Majeske K. D. and Kursh S. R. (Eds. ), International business (13th ed. ). Boston: Pearson Learning Solutions. Zeiler, Thomas W.. “Globalization. ” Encyclopedia of American Foreign Policy. 2002. Retrieved March 22, 2015 from Encyclopedia. com: http://www. encyclopedia. com/doc/1G2- 3402300068. html “Globalization. ” Encyclopedia of Management. 2009. Retrieved March 22, 2015 from Encyclopedia. com:http://www. encyclopedia. com/doc/1G2-3273100119. html.