The following report of the international business community will discuss the various legal ramifications and laws, concerning the two primary categories of law; the common and civil laws systems. This article will examine several of the similarities and differences between the two legal systems as well as a few of the challenges that United States-based companies could face when conducting business internationally. Furthermore, the conclusion of this essay will state whether or not one legal system creates an unfair advantage over the other and why.
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The international business community in conjunction with the various legal ramifications and laws can be identified by two major categories; civil and common law systems. As like any law, these sets of legal systems are meant to uphold a certain code of standards as far as how people live and conduct business. To better comprehend the two legal systems and their structures, please see the descriptions below:
Common Law vs. Civil Law:
Common Law is a law that based from previous cases, traditions, judgments, and decisions. Because this law is more or less shaped from previous judgments, it is opened more to interpretation and can be considered the most flexible of the two laws as well as judgments can ultimately shape future cases. This also means that common law being that it is so open to interpretation is the most confrontational as the debating parties of the court (plaintiff and the defendants representation) will explore various perspectives in hope that the judge favors one interpretation over the other. This set of laws are practiced in Australia, Canada, United States, United Kingdom, Ireland, India, Sri Lanka, Singapore, Israel, Hong Kong, Malaysia, New Zealand, and Zimbabwe (Peng, 2009, pp. 36-38).
Once known as Roman law, civil law is, the most influential as well as the most widely distributed internationally. It utilizes comprehensive statues and codes as a primary means to form legal judgments, whereas more than eighty countries actually practice civil law. Civil law is less flexible than common law as the judges only have the jurisdiction and ability to apply and uphold current laws, which makes this set of laws much easier to interpret, as they are definite and are not up to interpretation (either you broke a law or you did not.) This set of laws are practiced in South Korea, Brazil, Taiwan, Greece, Egypt, Belgium, Austria, Argentina, China, Indonesia, Mexico, Germany, Netherlands, Greece, Russia, Sweden, Chile, and Switzerland (Peng, 2009, pp. 36-38).
Challenges for United States Companies:
One of the major challenges that any court case faces when dealing with foreign civil law versus common law is the determination of jurisdiction. For example in the cases of Federal Express Corporation, a United States based delivery service company versus ‘Eli Lilly do Brasil’ of September 22, 2006 through September 11, 2077 (Docket No. 06-0530-cv.) Eli Lilly do Brasil hired the Federal Express Corporation (through a separate party; Nippon Express do Brasil) to deliver their products from Brazil to Japan by going through FedEx’s Memphis Tennessee hub. Before the shipment left out of Brazil, the shipment was hijacked and stolen ($800,000 worth, yet was only insured through FedEx contract up to $28,000) while in FedEx’s legal care. Due to a series of circumstances, the District Court ruled that the case should be argued by applying federal common law, instead of Brazilian law. Many of the issues that contributed to the disagreement are the varied perspectives of contracts. Whereas Common law is very descriptive and lengthy and Civil law based contracts are shorter and less descriptive (ELI LILLY DO BRASIL LTDA v. FEDERAL EXPRESS CORPORATION, Sept. 22, 2006. — September 11).
Another example of how United State based companies could face challenge in a civil law applied court can be seen in the case of Microsoft vs. Beijing Yadu Science and Technology Group. This case involved Microsoft suing the Beijing Yadu Science and Technology Company for piracy. Although the company admitted that their computers had pirated copies installed in their business computers as well as claimed they were acquired through the Yadu Group, a separate company located in the same building by the same owner. The Peoples Court of China claimed that Microsoft did not have direct evidence that link the specific company to Microsoft’s copyright infringement policy, therefore rejecting the case. Whereas in common law cases concerning this matter would have been able to rule in favor of Microsoft as the evidence as well as court precedents would have deemed the evidence brought against Beijing Yadu Science and Technology Company would of sufficient to make a judgment (Sci-tech: Microsoft Loses Suit Against Beijing Company, 1999).
In conclusion, because in common law cases the judge play a passive role compared to jury members, representatives and the parties involved with the trial judgments are reached through agreement of some type. Whereas civil law cases the judge, plays a major role where they can take on many of the roles and functions that representatives and jury members take in common law cases. This can sometimes be very bias, if a judge views a United States based company as foreign and hold some prejudice, which ultimately can affect the integrity of the case presented it can affect how the verdict is reached. In addition, it would be within a foreign company’s benefit to thoroughly research the civil code of the company they are operating in, selling to, buying from or have or other types of business dealings with. As well as what they would have to do to achieve jurisdiction with their home court or if they have to challenge in another, come prepared with extensive knowledge and sound unquestionable evidence.
ELI LILLY DO BRASIL LTDA v. FEDERAL EXPRESS CORPORATION. (Sept. 22, 2006. — September 11, 2007). ELI LILLY DO BRASIL, LTDA, Plaintiff-Appellant, v. FEDERAL EXPRESS CORPORATION, Defendant-Appellee., (Docket No. 06-0530-cv.). Retrieved July 10, 2011, from http://caselaw.findlaw.com/us-2nd-circuit/1444091.html
Peng, M. (2009). 2: Understanding formal institutions, politics, laws and economics. In J. Calhoun (Ed.), Global business (pp. 36-38). Mason, OH: South-Western Cengage Learning.
Sci-Tech: Microsoft Loses Suit Against Beijing Company. (1999, December 18). Retrieved July 11, 2011, from Peoples Daily Web site: http://english.peopledaily.com.cn/english/199912/18/eng19991218T105.html