What is international law?

Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.

This article is the first in a series that addresses international law.

RALEIGH, N.C. - As business becomes increasingly global, it is important to understand the concepts related to international law.

The purpose here is not to delve deeply into an analysis of international law, but to understand the basic principles that affect and impact the interaction of people and nations in the global business environment.

International Law is divided into public international law and private international law.

Public International Law:

• the rules and principles which govern the relations and dealings of nations with each other

• concerned with questions or rights between several nations, or nations and the citizens or subjects of other nations


• regulates the conduct of independent nations toward each other

Private International Law:

• deals with controversies between private persons, natural or juridical, arising out of situations having significant relationship to more than one nation

• decides the tribunal before which and the law by which private rights shall be determined

Therefore, when we are dealing with the legal relationship or rights between two sovereigns, we are in the area of public international law. Customary law, treaty law and general principles common to the major legal systems of the world are the primary sources of public international law.

When we are dealing with an international business transaction between or among person(s) or business entity(s), any issues or conflicts are resolved by applying principles of private international law to determine which country’s domestic law to apply. In most countries, parties to a contract or transaction can also agree in advance to apply the law of a specified country, or to resolve conflicts by arbitration or application of internationally accepted recourse or standards.

Sovereignty

Sovereignty is also a concept that affects international dealings. It is the supreme authority of an independent nation or state.

Sovereignty is characterized by:

• equality of the nation or state among other nations or states

• exclusive and absolute jurisdiction and self-government within a sovereigns own territorial limit

• jurisdiction over a sovereigns citizens beyond its territorial limits

Therefore, when we are discussing the United States and its rights over its citizens in the international arena or in foreign territories we are in the area of the right of a sovereign over its citizens, and thus applying US domestic law.

Significance

As business people in the global economy we deal directly with private international law principles in our business transactions. It is important to be aware that the domestic laws of other countries may be applied to our international business dealings when we do not expect them to be, and that some of those foreign domestic business laws may be substantially different from what we are accustomed to in the US.

As US citizens, we also should be aware of the US reach in international law as it affects global business. The US as our sovereign will apply US domestic law to us and our business dealings even when we are doing business in foreign countries and even if those dealings are legal in those countries.

About the Author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com.