Critically Consider the Importance of Public International Law to International Business - Essay Example

?Introduction The overall complexity as well as the size of the organizations has increased over the period of time. Firms are now not just limited to the borders of their own countries but they have expanded themselves into new markets in search for cost cutting as well as finding new markets. Though businesses have expanded however, they increasingly have to meet the legal requirements and laws of the land in which they tend to operate. The domain of international law therefore not only regulates the transactions by the international businesses but also affect the way they operate in international market. With the advent of market based globalization and e-commerce, implications of international law have become more significant for the international firms. Not only the traditional areas of business are affected however, new areas such as intellectual property rights as well as dispute settlements have also become significant. Public international law which primarily dealt with the structure and conduct of the sovereign states and intergovernmental organizations has now become more significant for the multinational corporations also. Increases in global trade, environmental degradation, human rights violation by the international firms are some of the key issues which underline the link between public international law and the international firms. There are numerous examples of firms which have been critically affected by the public international law due to their overall activities and conduct in the international markets. This paper will attempt to explore and critically analyze the importance of public international law to international business. Public International Law Public international law comprises of body of rules which governs the relationship of the States with each other when they interact with each other under different settings. The rules primarily therefore govern the relationships of the States however, States are not the only subjects under the law as international organizations also come under the domain of the rules identified under this law. International law and its implications can be based upon two different sets of laws which govern the relationship and conduct of one State with another State and the rest of the world. The universal international laws are those laws which govern the relations of one State with all the States in international arena however; particular international law may only be governing the relationships and conducts of one State with another State. (Bederman, 2002) At a larger scale, public international law governs the relationships of the States with each other and plays critical role in authoring treaties and formal agreements between the States. However, if States agree with each other, the overall scope of the law can also be extended to the individual persons and organizations. What is however, critical to note that in public international law, the political and legal elements are closely intertwined with each other hence the overall implications of the public international law can be significant for the nations. (Aust, 2010) The most important issue which has remained the cause of debate is whether States should only be the subjects of international law or should other subjects be also brought under its ambit. Public International law and International Business The debate on increasing the scope of international law beyond States therefore outlines that the international business firms, intergovernmental organizations and other relevant bodies should also be brought under the scope. It is because of this reason that Public international law is now applicable on the individuals, relationships as well as transactions which take place across the borders. International law not only governs the use of common resources of the world but also provides framework for managing the transnational problems faced by the international business firms. (Shaw, 2003) The advent of globalization as well as the spread of the communication technologies also necessitated the need to have international trading as well as financial structures which would come under the influence of international laws. The overall integrated nature of the global economy and increasing dependence of firms on the countries therefore helped to increase the over scope of the international law much beyond the States and it now encompasses not only the States but also the international firms. The overall moral justifications for increasing the number of subjects to be covered under the international law is based on the premise that the individuals and the firms have the international rights and obligations therefore they should also be governed by the set of international rules and regulations as the States are being governed under the international law. (Schaffer, Agusti, & Earle, 2008) The above discussion therefore points towards the overall significance of international law for the international business firms. Significance of Public International Law for International Businesses International law therefore can be of great significance for the international firms as they are affected in different manners through the implications of the business law. Some of the ways in which public international law can be great significance for international firms are discussed below: Foreign Direct Investment Though foreign direct investment arrives in the country when two countries make some treaties however, firms, spotting the opportunity can also enter on their own in new international markets. It is critical to understand that a foreign investor assumes different risks when making a decision to enter into a new international market. It therefore becomes the responsibility of the host state to provide a mechanism for the foreign investors to settle different issues through domestic as well as international law. The interaction between the host States and the States of the multinational firms therefore is often focused on the enactment of the treaties which can facilitate the liberalization as well as the easy entry and exist for the international firms. The enactment of treaties to facilitate the foreign investors therefore can allow the international firms to easily enter the markets. Further such treaties can also govern the way profit repatriation can take place from the host country to the domestic country of the multinational corporation. (Sornarajah, 2010) This clearly indicates that the international law can actually facilitate the entry of foreign firms into any country and also outline as to how the host state will actually facilitate the international firms in terms of repatriation of funds, establishment of new facilities as well as other support in terms of disputes etc. Bilateral investment treaties between States are also another important way through which firms can be affected by the international law. Public international law governs the formation of bilateral investment treaties and many international firms expanded into the new markets due to such agreements between states. One of the key advantages of bilateral treaties for the international firms is that they can provide the protection for the investments. Providing guarantee and protection therefore can allow international firms to have peace of mind and they can than divert their resources and energies in building up profitable businesses in their host countries. (Trachtman, 2008) Dispute Settlement One of the key advantages of the bilateral agreements between the States is the fact the international firms know first hand as to what legal options are available in case disputes arise with the host States. In the absence of any such agreements under the Public International Law, international firms first have to exhaust the local options available to them before they can tap into the international options available to them. International law therefore can provide a safe conduit for the international firms to come out of the disputes arising with their hosts. Further, effective dispute settlement under the international law can also save costs for the firms and therefore can effectively ensure that the international firms can easily tackle the dispute issue. An effective dispute settlement in place also allows the international businesses to become more responsive to the changes taking place and evaluate as to how the same can affect their future in their host environment. International financing Another associated factor which can have significant impact on the international firms is the domain of international financing. The movement of capital flows across borders and the role of international banks in facilitating such movement come under the domain of international law. Historically, firms tend to raise their capital from their own countries however; de-regulation of the financial sector has allowed the firms to actively look for international sources of finance. International law becomes more significant when the nationality of the international bank and the foreign investor are different. Protection to each party to such transactions is provided by the home state of the country and the same is also governed by the international law especially in terms of the disputes arising out of the transactions. Intellectual Property Historically, international law has focused on the transfer of intangible assets across borders however, the recent issues of the transfer of intellectual property is one of the key issues which affect the international firms. The advances in the information and biotechnology are largely dependent upon the protection and transfer of their intellectual property. Thus the international firms working in such industries may be heavily affected by the way their technologies are imitated by countries like China. Intellectual property issues are relatively of more concerns for the firms operating from developed countries. The resulting bilateral treaties between the States specially to govern the foreign direct investment therefore are now focusing more on the protection of the intellectual property of these firms. International law still lacks a comprehensive framework for dealing with the issues like intellectual property. It has now become obvious that when international firms make an entry into a foreign firm, technology transfer could take place at greater extent. However, the issue becomes more significant when such transfer of technology takes place in developing countries. As such developed countries tend to force the implementation of the intellectual property of their firms through inclusion of specific clauses in the bilateral agreements. Environmental degradation and Sustainability Due to global expansion of the firms, the overall environmental degradation as well as sustainability of earth’s resources has become one of the key issues for the international firms. International law on the issue of environmental degradation and sustainability is based upon the principle of common but differentiated responsibility. (Elver, 2006) Rio declaration makes it necessary for the States to ensure that the ecosystem of the earth should be conserved and protected under different circumstances. Climate Change Convention also outlined similar requirements for the States to ensure that environment of the world as a whole is protected. (Sands, 1995) Presence of such laws therefore outlined that it is the responsibility of the States to ensure that the activities of the manufacturing concerns specially does not result into the environmental degradation and does not harm the eco-system of the world. Organizations engaged in exploration are specially the targets of the environmentalist groups at the global level. As such global organizations like Shell and British Petroleum tend to be affected by the impact of their activities on the environment. During the recent oil spill in the Gulf of Mexico, BP was specifically penalized by the American Government despite the fact that British Petroleum is a British firm. Such consequences therefore outlines that the international law can have significant impact over the way organizations contribute towards the conservation of the environment. Human and Labor rights Issues such as unfair labor practices, violation of human rights and Child labor are some of the key issues which pertain to the international law. Due to expansion of the supply chains of global firms, the reported incidents of human rights violation as well as child labor are on increase. Firms like NIKE have been criticized for their role in the child labor through their contracted factories. Treaties between the States also outline the respect for the human rights and liberty however, international organizations, directly or indirectly, can be involved in such practices. The outcome of such practices could not only result into serious reputation damage at the global level but firms may also be forced to go out of the market due to their activities especially in the developing world. The issue of fair wages to the labor and providing conducive working environment are some of the key issues which can directly affect the international firms. Conclusion Public international law governs the domain of States and their relationship with each other however, over the period of time, its scope and application has increased. The subjects of international law are not now just limited to States and how their relationships are governed however; international organizations are also increasingly coming under the ambit of this law and are greatly affected by the international law. One of the key elements of international law is that it governs the bilateral agreements between the States. Bilateral agreements however, also provide required level of protection to the international firms in terms of getting protection of their investment. Foreign direct investment is one of the ways through which international firms make entry into the international markets. However, without bilateral agreements between the States, it may be difficult for international firms to take advantage of such opportunities. International law also can provide a very safe conduit to the international firms for settling their disputes with their host countries. Dispute settlement as well as the settlement of the international financing can be effectively done with the help of international law. Another important significance of international law for the international firms protection provided to their intellectual property. International law can also provide support to the international firms in dealing with issues like child labor, unfair labor practices as well as human rights issues. Environmental protection as well as sustainability issues is also important for international firms where public international can affect them. Bibliography Aust, A. (2010). Handbook of of International Law. Cambridge: Cambridge University Press, . Bederman, D. J. (2002). The spirit of international law. Georgia : University of Georgia Press. Elver, H. (2006). International Environmental Law, Water and the Future. Third World Quarterly , 27 (5), 885-901. Sands, P. (1995). Principles of international environmental law I:frameworks, standards, and implementation. Manchester: Manchester University Press ND. Schaffer, R., Agusti, F., & Earle, B. (2008). International Business Law and Its Environment. London: Cengage Learning. Shaw, M. N. (2003). International law. Cambridge: Cambridge University Press. Sornarajah, M. (2010). The International Law on Foreign Investment. Cambridge: Cambridge University Press. Trachtman, J. P. (2008). The economic structure of international law. Boston: Harvard University Press. Read More