Legal Aspect of International Business Transactions

Group Members:

Amelia – 34415011

Stella Levina Budiani – 34415017

Carolina Lestari – 34415018

Clarissa Delindanoren – 34415034

Fionna Mathilda - 34415039

Part 1 Question 1 : International, National and Private Law

International Law

International law refers to a set of rules that are accepted to bind nations, which can either be public or private. The subject matter of international law are: “relations and activties between nations, rules regarding international organization operations and state treatment of individuals and juridical persons”. The parties regulated by international law include: the states (governments), individuals, international organizations, and non-governmental organizations formed by  individuals and multinational (multinational companies).

There is no definitive single international law in the world because each country has its own rules and laws. Therefore, international does not have a single source. However, there are sources that can be used or referred for international law including: international treaties or agreements, customary international law, recognized general principles of law and court decisions.

        Treaty is the agreement between countries or between international organizations, including bilateral and multilateral relationship. The example would be the START treaty on nuclear weapon between Russia and United States (Appendix 1). By agreeing and complying for the treaty, both countries have agreed to limit nuclear warheads and delivery systems. The treaty allowed both Russia and United States to develop nuclear weapons however the number of nuclear warheads have to be under certain limit. Customary international law refers to the source of international law being based on international custom. There are codified and non-codified customary international law. The example of customary international law is the non-refoulement law in which a country is forbidden from returning asylum-seekers to their countries where they would be endangered (Appendix 2). Recognized general principles refer to norms that are widely recognized by countries as the source of international law. The example of this is “pacta sunt servanda”, a basic principle that agreements must be kept. Lastly, court decision refers to a legal opinion from dispute resolution bodies (for example the International Court of Justice, the juridicial branch of the United Nations). The example of court decision would be the decision by ICJ on Pulau Ligitan and Sipadan dispute between Indonesia and Malaysia that says that both islands belong to Malaysia.

National Law

        National law refers to a domestic law, a set of rules recognized and exists in a specific country. The subject matter of national law includes all actions and behaviors by individuals and juridical persons in that specific country. The law enforces punishment on violations of what has been stated in the law. The parties that are regulated by the national law are all the government, individuals, organizations, and non-governmental organizations formed by  individuals and juridical persons that are in that specific country. Meanwhile, the law is enforced by the police, prosecutors, advocates and judges. For example in Indonesia, the judges as one of law enforcers work under Mahkamah Agung.

        The source of national law is varied for each country, however the source generally comes from the constitutions, government regulation, presidential regulation, custom and treaties. In Indonesia, for example, the source of law include: the 1945 Constitution of the Republic of Indonesia (UUD 1945) and its Amendments, Laws (UU)/Government Regulations in lieu of Laws, Government Regulations, Presidential Regulations, Local Regulations, custom, jurisprudential (judges’ decisions), treaties and legal doctrines.

Private Law

        Private law is the branch of law that regulates and deals with relations between individuals or institutions. An example of private law are the law of contracts and the law of obligations. The subject matter of private law is the relations and/or disputes between individuals and institutions. Meanwhile, the parties that are regulated by this private law are all private individuals, families and businesses or organizations.

        The source of private law differs from one country to another. However, the source generally consists of the laws (UU), presidential instructions, jursprudential, custom and book of law. In Indonesia, the source of private law are:  Algemene Bepalingen van Wetgeving, KUH Perdata, KUH Dagang, Undang-undang No. 5 Tahun 1960, Undang-undang No. 1 Tahun 1974, Undang-undang No. 4 Tahun 1996, Undang-undang No. 42 Tahun 1999 and Instruksi Presiden No. 1 Tahun 1991.

Part 1 Question 2 : Several Legal Systems vs Harmonized Legal System

Indeed if we talk about practicality, it is better for international business transactions to be regulated by a harmonized single legal system. Several different legal systems create complexity and rise higher probability of violations and mistakes. However, we should see whether it is possible to have a harmonized single legal system for international business transactions and for all nations in the world. The thing is that, every nation is different and all nations in turn have different rules and laws. While all nations, or mostly, may agree on laws for basic aspects like human rights, it is hard to come up with a harmonized legal system for every nation on other aspects, especially those with practices highly affected with culture and also regarding legal requirements.

This is even more difficult to settle as it has been showcased through a lot of cases in which the laaws between countries differ from one to another. For example, Airbnb was fined with €600,000 for offering unlicensed accomodation through its website (Appendix 3). This happened because there is a difference in Barcelona’s regional rules which says that any home to be rented needs to be included in tourism registry and be licensed. This is different from most cities in United States which allow the rooms to be rented without any license. The rule in Barcelona is placed because the government puts priority on tourism.

Another case would be the cigarette plain packaging issue due to FCTC rule (Appendix 4). In the case, Indonesia with some other countries filed complaint over new rule for cigarette products to have plain packaging in Australia. Indonesia is filing this complaint because the new rule can hurt the competitiveness of Indonesian tobacco and cigarette products. Meanwhile, Australian government is adamant with the rule due to health reasons. With case like these, it is unlikely to have a uniformed set of rules for international business transactions due to different law applied in each country. Therefore, we would say it is better to have several different legal systems for international business transaction for better legal compliance.