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14 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
Management Overseas SA signed it on Moonmouth’s behalf. The agreement provided that “the courts of the
State of Delaware shall have exclusive jurisdiction over any action * * * with respect to this Subscription
Agreement.” Later, when CCC entered liquidation, Plaza threatened to hold it liable for all damages that
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Notes and Questions
How might these parties have avoided the time and expense of settling their dispute in a foreign
jurisdiction? These parties might have most effectively avoided the cost and time of settling their dispute in a
V. U.S. Laws in a Global Context
A. U.S. ANTITRUST LAWS
Persons in foreign nations are subject to U.S. antitrust laws, as well as protected by those laws from
B. INTERNATIONAL TORT CLAIMS
All nations have laws governing torts, but there are significant variations in the application and effect of
CASE SYNOPSIS—
Case 24.3: Daimler AG v. Bauman
Twenty-two residents of Argentina filed a suit in a federal district court in California against Daimler AG, a
German company, alleging that Mercedes–Benz Argentina (MB Argentina), an Argentinian subsidiary of
Daimler, collaborated with state security forces to kidnap, detain, torture, and kill certain MB Argentina
workers, including the plaintiffs and their relatives. These claims were asserted under the ATCA. Personal
jurisdiction was based on the California contacts of Mercedes–Benz USA, LLC (MBUSA), a Daimler
CHAPTER 24: INTERNATIONAL LAW IN A GLOBAL ECONOMY 15
subsidiary incorporated in Delaware with its principal place of business in New Jersey. The court dismissed
the suit for lack of jurisdiction. The U.S. Court of Appeals for the Ninth Circuit reversed. Daimler appealed.
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Notes and Questions
What effect might the application of the principle of comity have had on the result in this case?
The principle of comity refers to legal reciprocity. One nation will defer and give effect to the executive,
ADDITIONAL CASES ADDRESSING THIS ISSUE—
U.S. Laws in a Global Context
Cases involving the application of U.S. laws in a global context include the following.
• Kiobel v. Royal Dutch Petroleum Co., __ U.S. __, 133 S.Ct. 1659, __ L.Ed.2d __ (2013) (dismissal upheld
of plaintiffs’ claims in U.S. federal district court filed under Alien Tort Claims Act against Royal Dutch
Petroleum Co. and others alleging that defendants aided and abetted Nigerian military and police atrocities
against Nigerian citizens protesting oil exploration and production in Nigeria)
16 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
ADDITIONAL BACKGROUND—
Cultural Differences
To conduct business successfully in a foreign nation can require knowledge of that nation’s laws and
some familiarity with its cultural system, economy, and business climate. Cultural differences can cause
problems—language and communication (gestures can be misinterpreted, for example), colors and numbers
(which can have different meanings in different countries), perceptions of time, and management styles
(confrontational v. nonconfrontational, for instance).
C. ANTIDISCRIMINATION LAWS
Under the Civil Rights Act of 1991, Title VII of the Civil Rights Act of 1964 covers U.S. citizens working
abroad for U.S. employers, unless compliance with Title VII would violate the laws of the country in
which they work.
VI. Space Law
Space law consists of the international and national laws that govern activities in outer space. These activities
were once wholly the province of governments but are now beginning to include efforts by private companies.
A. INTERNATIONAL SPACE LAW
This consists of international treaties—primarily negotiated by the United Nations (U.N.)—and U.N.
1. Exploration and Exploitation
The U.N. Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer
Space, including the Moon and Other Celestial Bodies—generally referred to as the Outer Space
Treaty—is the foundation.
• Articles I and II—Outer space is free for the exploration and use of all nations. The moon, the
planets, asteroids, and other celestial bodies are not subject to the appropriation of any single
nation.
CHAPTER 24: INTERNATIONAL LAW IN A GLOBAL ECONOMY 17
2. Astronauts and Space Objects
• Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects
Launched into Outer Space (the Rescue Agreement)—Each nation will undertake to rescue
and assist astronauts in distress, and recover errant space objects, and return them to their
“launching State.”
3. Space Debris
Space debris mitigation guidelines endorsed by the U.N. reflect the current practices of national
and international organizations. The guidelines apply to the planning, design, manufacture, and
operational phases of spacecraft.
B. U.S. SPACE LAW
1. Commercial Space Flight
• The Federal Aviation Administration (FAA) regulates private spaceports and the launch and
reentry of private spacecraft under the Commercial Space Launch Act.
2. Exports of Space Technology
U.S. regulations classify all spacecraft as “defense articles.” This restricts the transfer of space
3. Property Rights to Space Resources
• Under U.S. law, the government must have sovereignty over territory before it can confer title
to associated property to its citizens. And Article II of the Outer Space Treaty bans the national
appropriation of territory in space.
18 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
ADDITIONAL BACKGROUND—
Principles Expressed in the Outer Space Treaty
ARTICLE I
The exploration and use of outer space * * * shall be carried out for the benefit and in the interests of * * * all
mankind.
Outer space, including the moon and other celestial bodies, shall be free for exploration and use by all States.
ARTICLE II
Outer space, including the moon and other celestial bodies, is not subject to national appropriation.
* * * *
ARTICLE IV
ARTICLE V
States Parties to the Treaty shall regard astronauts as envoys of mankind in outer space and shall render to
them all possible assistance in the event of accident, distress, or emergency landing.
ARTICLE V
ARTICLE VI
States Parties to the Treaty shall bear * * * responsibility for national activities in outer space, * * * whether
ARTICLE VII
Each State Party to the Treaty that launches * * * an object into outer space * * * is internationally liable for
damage * * * by such object.
ARTICLE VIII
CHAPTER 24: INTERNATIONAL LAW IN A GLOBAL ECONOMY 19
ARTICLE IX
20 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
TEACHING SUGGESTIONS
1. International business transactions require students to visualize situations in which several different con-
tractual parties are involved. It may be helpful to have students engage in “role playing” exercises in which
they play the parts of parties involved in negotiations over the purchase of a certain product.
2. Many foreign governments have claimed that arguably commercial activities carried out by foreign gov-
ernmental agencies are functions of the state and should therefore be protected from suit in U.S. courts. Ask
3. The expropriation of property by foreign states is permitted under international law but the act of state
doctrine may prevent a U.S. company from obtaining an enforceable judgment in a U.S. court. Ask students
4. Explain that historically, Americans have not been as active in international trade as have citizens and
businesses of other nations. Over the last decade, however, the federal and state governments in the United
5. Discuss some of the effects that the increasingly smaller size of the global community is having on the
cultural, legal, and other differences among nations. Points may be well illustrated by anecdotes—some stu-
dents may have traveled to other countries and heard rock music playing in a remote location or seen
American movies available in unlikely places—as well as by the sweep of larger events. What effects are
6. Bring to class various examples of international contracts and discuss the differences among the
Cyberlaw Link
What effect might the Internet have on the uniformity of law among nations? Might the effect be
different on international laws?
CHAPTER 24: INTERNATIONAL LAW IN A GLOBAL ECONOMY 21
DISCUSSION QUESTIONS
1. What is the principle of comity, and why do courts deciding disputes involving a foreign law or
judicial decree apply this principle? Under the principle of comity, one nation defers and gives effect to the laws
2. How is the principle of comity applied? Like the act of state doctrine and the doctrine of sovereign
immunity, the principle of comity is based primarily on courtesy and respect, and is applied in the interest of
maintaining harmonious relations among nations. And like the states in our federal form of government, in which each
state honors the legal obligations formed in other states, as well as the judicial decisions with respect to such
obligations, on a global basis, nations aim to honor judgments rendered in other countries when it is feasible to do so.
But nations are not required to honor the actions of other nations. Under the principle of comity, a nation will
not give effect to an executive, legislative, or judicial act of another country if the act is inconsistent with the nation’s
own law and public policy. What other considerations can take precedence over comity? A nation’s own laws and
3. Discuss the act of state doctrine. The act of state doctrine is a judicially created principle that provides that
the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign
4. What is the difference between expropriation and confiscation? Expropriation occurs when property is
6. What are some of the differences among common law and civil law systems? The judges of different
common law nations have produced differing common law principles. Thus, although the United States and India
both derived their legal traditions from England, the common law principles governing contract law differ in some
22 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
7. How does the Sherman Act affect international business? Section 1 of the Sherman Act declares that its
provisions are applicable both in the U.S and abroad; it purports to reach any conspiracy (foreign or domestic) that
has a substantial effect on U.S. commerce. Foreign governments as well as natural persons can be sued for
8. Do U.S. discrimination laws apply in foreign countries? Title VII of the 1964 Civil Rights Act regulates
9. What are some of the differences among nations’ judicial systems? Judges play a similar role in
virtually all countries: their primary function is the resolution of litigation. The characteristics and qualifications of
10. What are some of the significant variations in the practical application and effect of contract laws
among nations? The requirements of offer and acceptance are common, although what is considered an offer
varies by jurisdiction. Many nations (such as Germany) require that an offer, once made, must remain open for
acceptance for some minimum period of time. Germany also does not require the exchange of consideration for a
CHAPTER 24: INTERNATIONAL LAW IN A GLOBAL ECONOMY 23
ACTIVITY AND RESEARCH ASSIGNMENTS
1. Obtain and fill out copies of detailed form international licensing and franchise agreements and distribute
these copies to the students. Divide the class into two groups and ask the students to advise the licensor (franchisor)
2. How does a custom or practice become part of international law? Much of what we know as interna-
tional law is based on customs that evolved from commercial practices. The principle that the high seas should be
3. Have students research other nations to determine which currently represent good investments for U.S.
businesses. Ask them to note what makes such research difficult (the unreliability of statistics, particularly in
developing countries). Have them outline the major changes in the last forty years that make some places more
amenable than others (the end of World War II, the fall of communism, etc.). Why have some areas remained
4. Ask students to research the investments of domestic firms in other countries to discover the common pattern
(in neighboring countries, in former colonies, and in places with valuable resources, large domestic markets, and
educated workforce). The United States is the leading host nation for foreign investment. Besides fulfilling all of
EXPLANATIONS OF SELECTED FOOTNOTES IN THE TEXT
Footnote 8: Juridica Investments, Ltd. (JIL), entered into a contract with S&T Oil Equipment & Machinery,
Ltd., in Guernsey, which is one of a group of British islands in the English Channel. The contract stated that it was
executed in Guernsey, it would be fully performed there, and any dispute between the parties was subject to
In S&T Oil Equipment & Machinery, Ltd. v. Juridica Investments, Ltd., the U.S. Court of Appeals for the
Fifth Circuit affirmed. The court explained that a provision for arbitration in a foreign jurisdiction is enforceable under
24 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
Foreign arbitration awards are usually easier to enforce than foreign court judgments. The enforcement of
court judgments normally depends on the principle of comity and bilateral agreements providing for such
enforcement. The international Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also
known as the New York Convention) provides for the enforcement of foreign arbitration provisions and awards.
Could S&T have convincingly claimed that it did not understand the arbitration provision at the time
What might be some other advantages of arbitrating disputes involving international transactions?
Are there any disadvantages? Any of the advantages of arbitration over litigation would answer the first question.
What would happen if Congress did not require a reasonable relationship with a foreign state for
arbitration agreements between U.S. citizens? Would there be more or fewer agreements to arbitrate disputes
abroad? There would be more agreements to arbitrate disputes abroad. Under the Convention’s implementing
How might these parties have avoided the time and expense of settling their dispute in a foreign
jurisdiction? These parties might have most effectively avoided the cost and time of settling their dispute in a foreign
jurisdiction by fully complying with the terms of their contract. Once a dispute arose, the parties could have fully
Footnote 10: Shell Petroleum Development Co. of Nigeria, Ltd. (SPDC), a Nigerian firm, engaged in oil
exploration and production in Ogoniland, Nigeria. When some Ogoni residents protested the environmental effects of
SPDC’s practices, the Nigerian government violently suppressed the demonstrations. Some protesters who were
In Kiobel v. Royal Dutch Petroleum Co., the United States Supreme Court affirmed. The presumption
against extraterritoriality applies to claims under the ATS, nothing in the statute rebuts that presumption, and all the
conduct of which the petitioners complained took place outside the United States. “There is no indication that the ATS
was passed to make the United States a uniquely hospitable forum for the enforcement of international norms.”
If the Court had found a basis for the plaintiffs’ claims to proceed in a U.S. court, does international
CHAPTER 24: INTERNATIONAL LAW IN A GLOBAL ECONOMY 25
What are the ramifications for the respondents of the ruling in this case? Royal Dutch Petroleum Co.
and Shell Petroleum Development Company of Nigeria, Ltd. (the respondents) were not exonerated by the decision in
If the Court had adopted the petitioners’ view, how might U.S. citizens have been affected? If the Court
had adopted the petitioners’ view in the Kiobel case, the decision would have provided the plaintiffs—foreign
