Application of International Law
Dawn M. Engel
Business Law and Corporate Ethics
May 28, 2014
In the United States, Calvin Coolidge signed the Federal Arbitration Act (FAA) into law in 1925, to be effective on January 1, 1926. (Wikipedia, 2014). “International commercial arbitration in Russia is governed by another statute: Law No. 5338-1 . . . It follows the UNCITRAL Model Law almost verbatim.” (Nikiforov, 2013). Both were “enacted to establish validity and enforcement of arbitration agreements”. (James, 2011). An arbitration agreement is then written to solve disputes later on. An arbitration agreement should include what law will govern the arbitration, where and when the arbitration will take
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Third is the cultural dimension, a failure to understand a different culture can lead to big mistakes. (Kubasek, Brennan, & Browne, 2009) An example of this is when Walmart tried to open stores in Germany. As Walmart’s success is built on “streamlined distribution channels, high-volumes sales and low prices”, it did not fit well with German consumers, who tend to believe in “small and medium-sized retailers that know the ins and outs of the country's restricted business hours, intricate labor laws and multi-layered distribution systems.” As Germans are less price sensitive than North Americans are, they might also question the quality of items with discounted prices. (Gallant, 2012). Last is the legal dimension, when doing business with a foreign country, one should learn what legal system they are using. “The major families of law are common law, which relies primarily on case law and precedent; civil law, which relies primarily on codes and statutory law; Islamic law, which relies on the Shari’a, a religious code of rules; socialist law, which is based on Marxism–Leninism and does not recognize private property; and Hindu law, which relies primarily on the Sastras, a religious code.” (Kubasek, Brennan, & Browne, 2009).
One should also be aware of the risks in international business. These include: (1) Expropriation of private property by the host foreign nation, this is the taking of private property by a host-country government either for political