3 Legal & Regulatory Environment

7/31/2019 3 Legal & Regulatory Environment

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Legal and Regulatory Environment

Prof. Naval K Bhargava


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No single, uniform international commercial law governing foreignbusiness transactions exists, hence the international marketer must

pay particular attention to the laws of each country where it operates /

transacts

Securing expert legal advice - often locally - is advisable e.g. Kenya

It is useful to seek assistance from your countrys embassy about the

regulatory systems in that country.

The foundation of a legal system profoundly affects how the law is

written, interpreted, and adjudicated.



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Three heritages form the bases for the majority of the legal systems ofthe world.

Common law

Civil or code law

Islamic law

Even though a countrys laws may be based on the doctrine of one of

the legal systems its individual interpretation may vary significantly.



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No judicial body exists to deal with legal commercial problems arisingbetween citizens of different countries.

Legal disputes can arise in three situations:

Between governments

Between a company and a government

Between two companies

Jurisdiction is generally determined in one of three ways:

On the basis of jurisdictional clauses included in contracts

On the basis of where a contract was entered into

or where the provisions of the contract were performed

The most clear-cut decisions can be made when the contracts or legaldocuments of business transactions includes a jurisdiction clause.



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Conciliation is a nonbinding agreement between parties to resolvedisputes by asking a third party to mediate differences.

Conciliation sessions are private and all conferences between parties

and the mediator are confidential.

Although conciliation may be the friendly route to resolving disputes

it is not legally binding; thus an arbitration clause should be included

in all conciliation agreements.



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Most arbitration is conducted under the auspices of one of the moreformal domestic and international arbitration groups organized to

facilitate the resolution of commercial disputes.

The popularity of arbitration has led to a proliferation of arbitral

centers established by countries, organizations, and institutions. Contracts and other legal documents should include clauses

specifying the use of arbitration to settle disputes.

Arbitration clauses require agreement on two counts:

The parties agree to arbitrate in the case of a dispute according to

the rules and procedures of an arbitration tribunal and appointmentof the arbitrators

They agree to abide by the awards resulting from the arbitration.



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The best advice is to seek settlement.

DQ discuss examples of disputes between international partners

Deterrents to litigation: Fear of creating a poor image and damaging public relations and

press coverage.

Fear of unfair treatment in a foreign court.

The relatively high cost and time required when bringing legalaction.

Loss of confidentiality.



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Finance & accounting Labour practices

Some laws regulating marketing activities.

Promotion

Product development

Labeling

Pricing

Channels of distribution

Censorship of advertising is a constant concern.

Discuss some of the laws wrt to the above in UAE



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Antitrust laws are designed to combat restrictive business practices &

encourage competition. e.g. MRTP, (MRTP Act was repealed and replaced by

the Competition Act, 2002, wef Sept. 1, 2009) & FERA changed to ForeignExchange Management Act FEMA in 1999

In order to emerge as a successful economies countries have modified their

anti-trust legislations and made them more attractive for FDIs, M&As and

various other global corporate activities.

Internationally, developed nations in the West have created sophisticated

legal system to deal with such issues. India & several other nations, since

the early 1990s, have taken inspiration from them. India has also takenfeedback from the international community in developing a friendly and

effective anti-trust regime to facilitate and regulate its growing economy.



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Licensing & Trade Secrets

Bribery & Corruption

FCPA The Foreign Corrupt Practices Act (USA) & the like



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Bribery and Extortion:

Voluntary offered payment by someone seeking unlawful

advantage is bribery.

If payments are extracted under duress by someone in authority

from a person seeking only what he or she is lawfully entitled to it

is extortion. Subornation and Lubrication:

Lubrication involves a relatively small sum of cash, a gift, or a

service given to a low-ranking official in a country where such

offerings are not prohibited by law. Subornation involves giving large sums of money, frequently & not

properly accounted for, designed to entice an official to commit an

illegal act



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Agents Fees:

When a business person is uncertain of a countrys rules and

regulations & business value systems, an agent may be hired to

advise/guide/represent the company in that country.

The Foreign Corrupt Practices Act - Impact on Indian or Singapore

businesses ?



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Green marketing laws focus on environmentally friendly products andon product packaging and its effect on solid waste management. e.g.recent ban on plastic bags in Italy & restrictions in India

The Internet creates a new set of legal entanglements, many of whichhave yet to be properly addressed. e.g. Blackberry controversy that

arose in ME and India

The freedom that now exists on the World Wide Web will only be a

faint memory before long.


3 Legal & Regulatory Environment

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