COMPARATIVE LAW AND BUSINESS

QUESTION

Question 1: (2000 words)

Select a jurisdiction in accordance with the instructions given in paragraphs E5-E7 of the Course Book. Your selected jurisdiction must not be on the black list unless it is specifically referred to on the white list.  Identify which legal tradition or traditions (civil law, common law, Islamic law, East Asian law) yourselectedjurisdiction embodies. Justify your view.  If your selectedjurisdiction also embodies other legal traditions discussed in Glenn (ie. chthonic [chapter 3], Talmudic [chapter 4] or Hindu [chapter 8]), you should also discuss them. If yourselectedjurisdiction draws on legal traditions not discussed in Glenn (eg. Roman-Dutch law or Scandinavian law), you should discuss them as well. To what extent is Regionalisation evident in yourselected jurisdiction? Justify your view. To what extent are Diasporas evident in yourselectedjurisdiction? Give examples where appropriate.

 

Question 2: (2000 words)

You are the Marketing Managerfor an Information Technology (IT) corporation based in your selectedjurisdiction, that has big plans to embrace the opportunities presented by Globalisation.  The IT corporation manufactures and retails IT products that attempt to compete with Apple Inc.  The IT corporation has developed an eMac, ePod, ePhone, and ePad etc.  The Board of the IT corporationhas identified huge target markets in the United States, European Union, Asia and the Middle East.

 

The Board has asked you toprepare for the next Board meeting by being in a position to outline what issues need to be considered in deciding to what extent the IT corporation can expect to expand into one of the identified target markets by negotiatingstandard terms contracts that largely favour the IT corporation, to be used with wholesalers and retailers in various countries within those target markets.

 

Choose a country that embraces a legal tradition that differs from the legal tradition embraced by your selected jurisdiction.Your chosen country must not be on the black list unless it is specifically referred to on the white list.

 

  • Clearly identify your chosencountry in your answer.

 

Using the private international law of your selected jurisdiction, outline how you can ensure that:

 

  1. These contracts will be governed by the contract law of your selected jurisdiction; and

 

  1. Any legal disputes arising under the contract will (to the extent that is possible) be dealt with in only the courts of your selected jurisdiction.

 

In choosing a country, you must ensure that yourselected jurisdiction is being compared with either the common law (if yourselected jurisdiction does not embrace the common law tradition) or the civil law (if your selected jurisdiction does not embrace the civil law tradition), but not both. If your selectedjurisdiction does not embrace either the common law tradition or the civil law tradition, compare with only one of these.

 

Question 3: (500 words)

Does your selectedjurisdiction recognise corporations that have (1) separate legal personality to its owners, and (2) limited liability for the owners of the corporation? If so, how does it do this? If not, what is the major form of business organisation recognised in your selectedjurisdiction?

As you discuss this, compare briefly with either the common law tradition (if your selectedjurisdiction does not embrace the common law tradition) or with the civil law tradition (if your selectedjurisdiction does not embrace the civil law tradition), but not both. If your selectedjurisdiction does not embrace either the common law tradition or the civil law tradition, compare with only one of these.

SOLUTION

Legislation, basic term connoting the legal principles evolved and propagated presenting the basic structure present in any legal system of the country. As rightly pointed out by Austin, Law is command of Sovereign backed by sanction. In view of the above, the basic structure present in Indian legal system is discussed herein below outlining the models of rules and policies preached and practice.

Statutory laws also refer as laws passed by the legislature, is a formal act in written form. It declares the will of the Legislature. It must be clear and unambiguous. Infact, it must be in consonance to the ideological concepts keeping in view the changing rules of society foreseeing all future developments. A statute is the inference of an objective which is formulated and propagated to serve political, social, economic needs of the nation.

Legislation in India

Legislation in India is a long developing process which came into inception following the British rule period. Earlier, in India it was all Panchayati Raj system where people among different villages choose their heads to adjudicate different dispute among themselves. However, since the time India became a colony of Britain, legislation, as a source of law, was introduced as a concept to govern different people with respect to caste, religion, race under one single law formulating and propagating one law for everyone.

Few pre-independent legislation which are still followed in India are:

• Indian Penal Code, 1860
Indian Evidence Act, 1872
• Indian Contract Act, 1872
• Civil Procedure Code, 1908
• Government of India Act, 1935

The above legal principles also displays the farsightedness of the legislators while propounding such rules and policies that have served the nation for a century perse and are still holding their evidentiary value in the lights of changing and ever-growing society.

Development of legislation in India

The parliament of independent India came into existence post independent where burden of formulating prospect laws were fallen upon the shoulders of Mr. B. R. Ambedkar to formulate a constitution for a new independent nation. The Constitution is one of the most primary and indispensable source of legislation to which the subsequent laws has to be read in consonance of it. Infact, the Indian Bar role also outweighs the role of any other group/activist in making India a nation what is witnessed today with the help of leaders like Jawaharlal Nehru, M. K. Gandhi, which were both exemplary lawyers.

Consequent, to common understanding of law and legal principles and at the same time admiring its importance in formulation and propagation of such principles to meet the needs of the upcoming society, the aforesaid common leaders pooled in their efforts and energy in formulating the most indispensable document of the nation i.e. The Constitution of India, 1950 which acts as a guiding light in enunciating the roles of 3 most important organs of the state i.e. executive, legislative and judiciary in the country.

Some of the post-independence statutory laws in India are:
• Criminal Procedure Code, 1973
• Motor-vehicle Act, 1988
• Information Technology Act, 2000
• Right to Information Act, 2005

Common Law: World and Indian Legal System
Origin of Common law
In ancient medival times, justice was met through formulation of local courts which were presided by bishop and sheriff, exercising jurisdiction over matters of both civil, criminal nature. Common law also known as judge made law emerged after the Norman conquest of 1066 AD and it traces its origins to England. William J after conquering England declared that all rights based on land were now under the king. Consequently the local decisions of county courts were reviewed by the four judges appointed by the king. This method not only cured the defects in order passed by the local county courts but also at the same time centralized the control of the king over the local courts making him the supreme authority which lead to becoming an catalyst for the development of common law in England.

In 1154, Henry II propagated the concept of common law by creating a mechanism commonly known as unified system which was common to the entire country. The jury reached its verdict on basis of special knowledge possessed and not on the basis of jurisdiction which lead to passing of single laws dealing similar sets of facts and circumstances.

History of common law in India

Common law also known as judge made law developed through decisions of courts and similar tribunals which is aim to remove inflexibilities in decision making process by applying the same legal principles to similar facts arising on different occasions. Statutory laws are codified laws enacted by legislature which governs the decision making process. As a source of law, statutes are considered primary authority. However, in its absence, common law is used as a guiding principle. On the other hand, equity basically refers to set of legal principles which supplement strict rules of law and also mitigate the rigor of common law. The common law system as reiterated is a system based on judicial precedents enunciated by the Courts in similar matter. During British regime, Privy Council were the apex court of appeal. As per the law, the state can be sued or sue in the name of the British sovereign in her official capacity as Empress of India which is prevalent even today as provided in Article 300 of Indian Constitution.

Shaping of the Judicial Structure

Legislation in India is a long developing process which came into inception following the British rule period. Existence of uniform rules of justice dispensation is evident from the establishment of Supreme Court, Apex Court and High Courts and other local subordinate courts within the local territories of India. Thus, the Indian Legal system does not have a dual system of courts in comparison to federal courts as the judiciary is considered as one having different hierarchy where the Supreme Court is considered as an Apex court to which all other courts are subordinate to it. The questions of law and has to be undergone the same hierarchy before the Apex Court decide the aforesaid issue. As such there are no separate federal courts to decide federal questions exclusively.

As discussed earlier, Legislation in India is a long developing process which came into existence following the British rule period. Earlier, in India it was all Panchayati Raj system where people among different villages choose their heads to adjudicate different dispute among themselves. However, during British regime, codified laws were passed by Legislature reflecting the will and intention of legislature to adjudicate over the matter in issue.
Well, the success of the legislation can be measured only on the basis of law enacted and its impact on the common man. The Indian government while enacting the legislation has time and given due share to international obligations with respect to the appertaining treaties and Conventions over the subject matter in issue keeping in mind the principles guided by Treaties/conventions over the appertaining subject. However, certain legislations such as Monopolies and Restrictive Trade Practices Act, 1969, TADA etc has faced a thorough share of criticism with regard to obsolete and conservatory approach failing to consider the modern day needs and requirements. Similarly, in their absence the common law is relied to likewise in medical laws, where the health care providers are only entrusted to report to the health department who has the necessary responsibility to trace down the contacts and notify the third parties in lieu of the harm which could be caused to them in consequence of their ignorance.

Research Analysis: Indian Legislation v Common Law

In comparisons to both sources of law, it can easily be summarized that common law though don’t have a binding value but have been used as a persuasive tool in adjudication of several disputes in Indian Legal System. Well, the doctrine of common law is well propounded as in United Kingdom keeping in view the unified laws prevailing between both countries in an identical manner following the same set of legal principles.

The judiciary has been entrusted with power to deal with circumstances which the legislators failed to address. In such cases, common law acts as a necessary guiding tool to interpret the law in terms of the legal principles set out by the different courts all over the world. It becomes further easier for India because the Indian Constitution is a draft model of British law. However, it shall be always kept in mind that judges are mere interpreters of law, they are not law makers. They are just to interpret law. Primary job of the judge is to interpret law in consonance to the principles set out by the legislators in the Act and anything in contravention to the scheme of the Act becomes null and void. Under the provision of common law, the decisions given by the judges are considered as laws and are well known as precedent or judge made laws.

In precedent, if the judge will say, ‘I follow the X rule.’ So after the decision is given, that X rule becomes a law. These laws were binding on all lower courts and at par and these precedents were only been allowed to be overruled by a court of higher jurisdiction. This was the greatest fault in this law system. The reason was because House of Lords, being the top most court of law in UK, if deliver any wrong judgment then even it itself was not having the power to overrule it. Amendments took place and the House of Lords were given power to overrule its previous judgments.
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Further, I have also analyzed that legislation can make law on its own initiatives. It does not need any case to be held up in court of law to make a law. It has power to make law and do make law for the future problems. For example, we have Information Technology Act, 2000. This Act was enforced to control different types of cyber crimes in India. Another most important Act which came into being for benefits is Right to Information Act under which we can ask information from any authority. In one of the cases of RTI, Shri Surinder Singh Rajpurohit, President, RIICO Industries Association, F- 8,Phase-III, Bewer- 305901.Letter dt 13-02-2009 received in DFCC on 20-02-2009 Deposited Rs.500/- Under RTI for information and document. Another power which lies with the statute making body is that if they feel that any previous law, maybe a precedent or even a codified law is unjust then they can abrogate that law. Legislation can also abrogate its own law. In a famous case of M C Mehta v Union of India, it was witnessed how a common law principle was changed.  Strict liability was abolished and principle of absolute liability was set as new law in similar circumstances. Now as per the present scenario in Indian Legal System, one can easily figure it out that statutory laws are now made for almost all areas of crimes and wrongs. There are few areas even now where the law has not been codified completely and its example is tort law. Many of the cases in India follows or have followed precedents of common law. One of the precedents set up in Ryland v Flethcher which dealt with principle of strict liability was considered in India but few parts of the judgments were overruled.  So, as of the present state of Indian Legal System we can easily analyze from the research that Statutory Law is prevailing over the case law as far as India is concern.

Regionalization of Indian Legal system
The Indian Legal System is one of the oldest legal systems which has developed and absorbed with time. The spearhead of Indian Legal System is based on its Constitution which is often termed as ”basic structure of the Indian Constitution”. At the same time, it also reflects the Anglo-Saxon character of judiciary which is basically drawn from the British Legal System. However, The states have been given liberty to enact laws over the subjects falling within the ambit of State list and Concurrent List.

You are the Marketing Manager for an Information Technology (IT) corporation based in your selected jurisdiction, that has big plans to embrace the opportunities presented by Globalisation.  The IT corporation manufactures and retails IT products that attempt to compete with Apple Inc.  The IT corporation has developed an eMac, ePod, ePhone, and ePad etc.  The Board of the IT corporation has identified huge target markets in the United States, European Union, Asia and the Middle East.

The Board has asked you to prepare for the next Board meeting by being in a position to outline what issues need to be considered in deciding to what extent the IT corporation can expect to expand into one of the identified target markets by negotiating standard terms contracts that largely favour the IT corporation, to be used with wholesalers and retailers in various countries within those target markets.

Choose a country that embraces a legal tradition that differs from the legal tradition embraced by your selected jurisdiction.  Your chosen country must not be on the black list unless it is specifically referred to on the white list.

Using the private international law of your selected jurisdiction, outline how you can ensure that:

1.    These contracts will be governed by the contract law of your selected jurisdiction; and

2.    Any legal disputes arising under the contract will (to the extent that is possible) be dealt with in only the courts of your selected jurisdiction.

In choosing a country, you must ensure that your selected jurisdiction is being compared with either the common law (if your selected jurisdiction does not embrace the common law tradition) or the civil law (if your selected jurisdiction does not embrace the civil law tradition), but not both.  If your selected jurisdiction does not embrace either the common law tradition or the civil law tradition, compare with only one of these.

Information Technology
Information Technology has gained immense popularity in the past few years which is evident from the detailed estimate revenue and its net contribution to Country’s GDP. It is one of the most booming sectors that world have ever witnessed which has large scale operations all over the world. When the Information technology started ruling and consuming the time of people of every generation, then much like the Corporate Sector did not had any clue to how to deal with the aforesaid. It’s now become more of human tendency to stay connected with the world and ministering and securing the data relating to security and privacy of nation. Infact, it was witnessed everywhere that most of the people used to spend huge amount of time utilizing services all over the world which credit goes to Information technology.
However, with growing feasibility and economic viability, market research becomes an indispensable tool in determining the prospective market. In view of the aforesaid core issues, it becomes critical that you assess market’s potential and profitability. The questions which basically address such core issues are as follows:
1.    Firstly, the major aspect is to look into the target country’s market to which our product would cater the needs of consumer? Once, it is located, the profit margins of the company and business sustainability and viability is to be evaluated.

2.    Secondly, the political environment over the said target company becomes one important factor to determine company’s sustainability in long run. In view of that, system of government, its policies, internal and external forces, its relation with native country and its corporate policies.

3.    Thirdly, the demographic conditions have to be studied in brief. The size, growth, population of the country. The per capita income of average individual and their average expenditure etc. The country currency situation, inflation rates, Bank rate policies, financial distribution of wealth, government cooperation towards foreign corporations etc. The infrastructure has also to be studied with respect to mobility of goods in different parts of country etc. Its technological development, physical distribution via road, rail, sea and other modes of transport.

4.    The law of that country also becomes one of the primary factors in evaluating of setting up of business plant. The code of laws, employment laws, patent laws etc has to be studied in brief before setting up of plant etc. The government assistance towards setting up of foreign corporate firm and its liberal facilities towards availing requisite clearance from importing/exporting raw materials from native countries to other countries etc.
Consequent to financial crunch the world witnessed in 2009, the nations such as US and other European nations have started recovering. The loss that IT industry suffered during financial crises was witnessed all over the world, therefore on the verge of recovering each step must be taken cautiously. IT market indicators showed an end to declines, setting the stage for stronger growth in 2010. As per the facts and records, the US IT market is set to grow by 8.4%; the global IT market in US dollars will grow by 7.7%.
Retail and Wholesale Trade in California (US)
The retail industry and wholesale industry is a sector which caters the needs of the economy keeping price mechanism under control. The aforesaid sector basically comprises of individuals and companies which are engaged in the selling of finished goods to consumer. In fact they act as a chain between manufacturer and the consumer. Therefore, strong relations with the aforesaid not only keeps pricing methods in control but at the same time keeps an effective communication channel with consumer which would help as a catalyst to achieve long term goals of the company. Multi-store retail chains in the California (U.S.) are common phenomenon which are both publicly traded on the stock exchange and at the same time privately owned. The retail industry is one of the primary sources of national revenue being second largest in US and at the same accounting for more than 12% employment in US. Infact the appertaining unorganized sector has boomed with respect to companies running their small retail homes/chains accounting to single store business which caters the needs of consumers from food to electronics’ etc. The biggest retailer in the world is Wal-Mart, which generated over $344 billion in revenue in its last fiscal year.
The retail industry and wholesale industry are two basic forms of retailers where the whole sale retailers are also known as big box” retailers which caters the needs of the consumers by providing them goods/services at throwaway prices. In fact the WalMart store is the biggest and the largest wholesale trader in world with its branches spread all over the world. Multi-store retail chains in the California, U.S. are common phenomenon where specialty retailers offer consumer electronic goods at a very cheap prices where time and again special discounts are given to consumers to sell a wide variety of items. Most common retailers operating in US are like Best Buy or office supply retailers such as Staples.
Big box retail stores account for only a small percentage of the total number of stores in the total ‘General Merchandise Stores’ sector in the US. In 2008 there were 35 big box retailers with 3,451 outlets. Despite this, the industry still generated revenue of approximately $335.0 billion over the year which equates to more than half of total revenue in ‘General Merchandise Stores’ sector in the US. Therefore, it becomes very important to analyze the aforesaid sector and target the big players such as walmart by making them good proposals and giving them higher profit margin to establish the base of the company’s operation in the base country such as US where competition is much higher in IT sector.

Arbitration also referred as alternative dispute resolution, in the context of California (United States), being an alternative to litigation whereby the parties to a dispute agree to submit their claims to a third party i.e. the arbitrator for resolution of its disputes. In practice arbitration is widely acknowledged as a substitute for not so successful prolong judicial systems, keeping in view the delay and time consuming process, not to forget the inflexibility in legal system.
Commercial and other forms of contract arbitration
During the Industrial Revolution, large corporations came forward and opposed to present judicial system and demanded a law which caters the mechanism of resolving disputes appertaining to issues conflicted among the parties and the same time ensure quick, inexpensive remedy.
The result was the California Judicial Arbitration Law being followed by the United States Arbitration Act of 1925 which is codified in Ca Civ Pro. The California Judicial Arbitration Law acknowledge the demand raised by industrialist during industrial revolution appertain to recognition granting to methods of alternative dispute resolution which was reiterated by US Supreme court in list of cases during 1980’s and 1990 to enlarge the cope of arbitration to interstate commerce.
Since commercial arbitration is based upon law of the land or the parties adjudicating before a nominated arbitrator with respect to resolution of disputes, there is always a controversy pertaining to the law governing arbitration. However, such dispute could be resolved by parties by entering into commercial agreement with respect to settlement of disputes via arbitration and the law governing the aforesaid.

Does your selected jurisdiction recognise corporations that have (1) separate legal personality to its owners, and (2) limited liability for the owners of the corporation?  If so, how does it do this?  If not, what is the major form of business organisation recognised in your selected jurisdiction?

As you discuss this, compare briefly with either the common law tradition (if your selected jurisdiction does not embrace the common law tradition) or with the civil law tradition (if your selected jurisdiction does not embrace the civil law tradition), but not both.  If your selected jurisdiction does not embrace either the common law tradition or the civil law tradition, compare with only one of these.

Company: Artificial Legal person
A company is a collection of individuals who come forward and pool in their resources to form business organization. However, company once formed cannot be dissolved irrespective any member comes and go. Since, company is a created by law, therefore it only come to an end through dissolution. A company is formed for common objective or purposes with a common aim i.e. gain profit. In fact, members who pooled in their capital and other resources works for profit motive. Company is usually considered as a legal person in the eyes of law who is represented by its members acting on its behalf. The California law cloth corporations with distinct features such as separate legal entity, limited liability etc.
In the California,(United States) a company is commonly denoted as corporation which exists as an association, partnership, or union to carry out an enterprise. A company may be in a form of a “corporation, partnership, association, joint-stock company, society etc. In English law and in the Commonwealth realms a company comes into existence when it is registered under the Companies Acts or legislation appertaining to as such. A company is distinct from its members and can sue or be sued in its name. Such distinct features of company distinguish the aforesaid form of corporation from other entities such as partnership, co-operative society, sole-proprietorship etc.
The terms Company derived its origin from the Old French military term compaignie, meaning “body of soldiers”. However, it is popularly abbreviated as “business association” and “co.” throughout the world.
A company as reiterated could sue or sued in its name. However, prior to industrial revolution the typical form of business association which existed was either a sole proprietorship or partnership where the owners were held liable for the debts, however it hamper growth and expansion. In view of the above, the common law enunciated principles appertaining to corporate personality by clothing it with features such as perpetual succession, common seal, artificial legal person and most importantly Limited liability.
In view of the aforesaid, whenever there is a default in payments by company, then its members cannot be sued personally, and the remedy which remains was to sue the company for its default. There is no personal liability attached with its members and only the company’s assets can be realized for its defaults. There was no accountability for corporate wrong-doing.
In Louisville, C. & C.R. Co. v. Letson, the U.S. Supreme Court held that “for the purposes of the case at hand, a corporation is “capable of being treated as a citizen of [the State which created it], as much as a natural person.”  The aforesaid principle was subsequently reiterated in Marshall v. Baltimore & Ohio where it was held that “those who use the corporate name, and exercise the faculties conferred by it should be presumed conclusively to be citizens of the corporation’s State of incorporation” . The aforesaid concepts are well provided in codified statutes where U.S. jurisdiction statutes specifically address the domicile of corporations.

California (United States)
Company as reiterated being an artificial person exists irrespective of its members. Therefore, the legal principles enunciating company are different in comparison to other organizations/structures such as sole-proprietorship/partnership etc. The California has its own codify statute with respect to regulations appertaining to the Corporation in the aforesaid state bearing titled as “California Corporation Code“.
In fact, certain legal rights/constitutional rights have been granted in favor of company which is evident by the precedents laid down by U.S. Supreme Court which has repeatedly held that certain constitutional rights protect legal persons (like corporations and other organizations). Santa Clara County v. Southern Pacific Railroad is one of the best example where the Hon’ble Chief Justice observed that “the court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny any person within its jurisdiction the equal protection of the laws, applies to these corporations”.
The corporations must also be recognized as person with respect to grant of constitutional rights and it is not out of question to deny them any fundamental right such as right to expression/speech etc when they have been granted legal right with respect to hold/alienate property etc.

LIST OF REFRENCES:

1.    Brief history of law in India, Bar Council of India, http://www.barcouncilofindia.org/about/about-the-legal-profession/legal-education-in-the-united-kingdom/

2.    British History: Middle Ages “Common Law – Henry II and the Birth of a State”. BBC. http://www.britannica.com/EBchecked/topic/188090/English-law ; http://www.bbc.co.uk/history/british/middle_ages/henryii_law_01.shtml

3.    Brief history of law in India, Law in British-ruled India, at http://www.barcouncilofindia.org/about/about-the-legal-profession/legal-education-in-the-united-kingdom

4.    “India, being a common law country”., at http://supremecourtofindia.nic.in/new_links/Abu_Dhabi__as_delivered.pdf

5.     “Debate Glossary”. Hansard Society. November 2003. At http://www.headsup.org.uk/content/default.asp?page=s41_5 , (Oct 2, 2010)

6.    M.C.. Mehta v. Union of India and Ors. [(1996) 8 SCC 462].

7.    Rylands v. Fletcher (1868), L.R. 3 H.L. 330
http://en.wikipedia.org/wiki/Rylands_v_Fletcher

8.    Louisville, C. & C.R. Co. v. Letson, 2 How. 497, 558, 11 L.Ed. 353 (1844)
http://supreme.justia.com/us/43/497/case.html

9.    Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 329, 14 L.Ed. 953 (1854).
http://supreme.justia.com/us/57/314/case.html
10.    Jerold S. Auerbach, Justice Without Law?: Non-Legal Dispute Settlement in American History (Oxford: Oxford University Press, 1983)

11.    Mark J. Astarita, Esq., Introduction to Securities Arbitration (SECLaw.com, 2000 – www.seclaw.com/arbover.htm)

12.    David Sherwyn, Bruce Tracey & Zev Eigen. “In Defense of Mandatory Arbitration of Employment Disputes: Saving the Baby, Tossing out the Bath Water, and Constructing a New Sink in the Process,”

13.    Ed Brunet, J.D., Arbitration Law in America: A Critical Assessment, Cambridge University Press, 2006.

14.    Gary Born, International Civil Litigation in United States Courts (Aspen 4th ed. 2006) (with Bo Rutledge) (3rd ed. 1996) (2nd ed. 1992) (1st ed. 1989)

GI01

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