Block I: INTERNATIONAL BUSINESS LAW

Lesson 1: INTERNATIONAL BUSINESS IN THE CONTEXT OF INTERNATIONAL TRADE

1. Introduction

Law is the science that studies facts, acts, and relationships between different subjects in a structured manner, analysing them according to legal systems.

International Trade is a discipline concerned with international transactions—businesses, contracts, and related activities—whose nature is broadly economic, including finance, the exchange of goods, and services.

This course focuses on International Business Law (IBL) from the perspective of Business Law (Derecho Mercantil / Business and Commercial Law), a branch of law that deals with three key areas: (i) commercial acts, such as contracts and business negotiations; (ii) the organization of entrepreneurs, including companies, sole proprietorships, and foundations engaged in trade; and (iii) market activity, including unfair competition, free trade, monopolies, and exchanges. Accordingly, IBL emphasises Business Law with a cross-border dimension, focusing on commercial transactions (primarily contracts), markets (particularly from a commercial perspective), and the organisation of entrepreneurs (especially companies).

• Excluded from IBL are certain aspects of international trade, such as tax and customs law or the regulation of cross-border workers; these topics are addressed in other subjects.

International Business Law governs relationships between private entities with cross-border implications. It regulates interactions among actors—individuals, companies, and other entities—typically carried out through structured “commercial acts” such as contracts, the formation of companies or associations, or the establishment of secure payment systems. Some consequences in IBL are incidental: they may be unplanned and non-contractual, such as an accident during the transport of goods in an import-export operation. IBL provides tools to address these non-contractual events as well.

Business and trade occur within markets, and thus they must operate under laws governing free competition, intellectual property, financial stability, and related areas. IBL plays a critical role in these domains.

Given the cross-border nature of IBL and its impact on international business relations, it is essential to determine the applicable legal system(s) for each operation. Equally important is identifying which national courts have jurisdiction over IBL disputes, as well as understanding available out-of-court conflict resolution mechanisms.

2.Subjective, objective, and territorial aspects

International Business actors include both natural persons and legal entities: citizens, traders, entrepreneurs, companies, and groups of companies. It is therefore important to identify their legal capacity, nationality, and other relevant attributes.

The main actors in International Business Law (IBL) are: States, International Organizations, Private Sector Organizations, and Hybrid Organizations. (Lesson 2 addresses companies and other private entities in detail.)

2.1 States
Sovereign States are institutional actors in International Law. They participate in International Trade and IBL primarily by:

• Enacting laws and regulations
• Negotiating international treaties and conventions (some of which create International Organizations)
• Exercising judicial powers through courts and judges

Example: In Spain, under Article 149-1, the State has exclusive competence over:
      3. International Relations
      6. Commercial Law
      9. Legislation on Intellectual Property
     10. Customs, tariffs, and foreign trade

2.2 International Organisations (and State Arrangements) Members of these organisations are primarily States. They vary in powers:

• Legislative Powers: Some organizations, e.g., the European Union, have legislative authority granted by member States.
• Drafting Powers: Others can draft agreements and treaties (e.g., WIPO), which only become legally binding after ratification by States.
• Soft Law Issuance: Most publish recommendations, model laws, and guides.
• Membership and Treaty Participation: Some organizations may join other IOs or sign treaties (e.g., the EU).

There are different types of these International Organisations and State Arrangements (Treaties/Conventions/Agreements/Conferences), and they can be classified Iin different manners, such as this:

• Following their scope and geographical area of activity:
  • Regional organisations through bilateral agreements: e.g., Commonwealth, Francophonie
  • Multilateral/plurilateral Free Trade Areas: e.g., ASEAN, NAFTA/TLCAN, EFTA
  • Internal Market Organisations: e.g., EU, MERCOSUR (to a lesser degree of supranational integration)
  • Global Trade Organisations:
    • WTO: International Organization that administers treaties on goods, services, intellectual property, and dispute settlement
    • GATT: State Arrangement related to Trade in goods. It operates since (1948) – , it operates with principles like Free Trade, National Treatment, Most Favored Nation. Since 1995 it is administered by WTO
    • GATS: State Arrangement related to Trade in services within WTO
    • TRIPS: State Arrangement related to Trade-Related Aspects of Intellectual Property within WTO
    • Dispute Settlement System within WTO
• Following the main type of work they do:
  • Drafting Treaties, Principles:

    • The Hague Conference on Private International Law: drafts conventions ratified by States; influential even when such conventions are not ratified

    • UNIDROIT: Issues principles and resolutions (e.g., Principles of International Commercial Contracts 2010)

    • OECD: Guidelines for multinational companies

    • UN Bodies: UNCITRAL, UNCTAD, UNIDO, WIPO

  • Operations and soft law in the Financial Sector :

    • World Bank (WB),

    • IMF,

    • Financial Stability Board (FSB)

• Other Arrangements/Conferences:
  • G20, BRICS, Shanghai Cooperation Group

2.3 Private Sector Organisations with International Impact
Their Members are private entities (companies, consultants, etc.). They cannot legislate but issue influential Soft Law, especially in contracts and dispute resolution.

Examples:

• ICC (International Chamber of Commerce): drafts INCOTERMS, arbitration center
• ISO: develops voluntary international standards
• IFRS Foundation: accounting and sustainability disclosure standards
• WFEO, BAFT, IBF, FIDIC, and others: technical standards, market best practices

 

2.4 Hybrid Organizations (Public-Private)

Organisations with both public and private members.

Example: IOSCO (International Organisation of Securities Commissions). About its members:

• Ordinary members (130): national securities commissions/governmental bodies
• Associate members (34): supranational, subnational regulators, international standard-setting bodies
• Affiliate members (69): self-regulatory organisations, exchanges, investor protection funds, other international bodies