Challenges
Today’s legal approaches aren’t keeping pace with the huge rise in international business.
While trade barriers are falling, legal barriers are not. The number of countries has more than tripled in the past 50 years. Businesses find themselves dealing with more individual countries, each with their own commercial laws and legal systems.
If there are more borders to cross, there’s also more cross-border business. During the last 15 years, world exports for goods have grown on average 6% a year.
Twenty years ago, people often associated business law with a particular nation. Today, they cannot afford to. A variety of international trade rules and practices — often outside the scope of national law — are shaping the way trade is conducted.
Where legal systems have not evolved, investors operate in a climate of uncertainty. In the last decade, many developing countries have become WTO members; yet few have ratified more than 30% of the world’s 200 most important trade treaties.
All business people know deals can go wrong, no matter how tightly negotiated. With more deals being done, more cases are finding their way to the courts. Countries that haven’t invested in alternatives to court trials are seeing backlogs of cases, with associated high costs and lost business opportunities.
New arbitration and mediation centres can lack experience and credibility in the business community.
With different business and legal cultures and practices across the world, small firms need help to export in terms they and their foreign business partners understand. Most cannot afford lawyers. Nor can they afford to isolate themselves from international trade.
We need new ways to facilitate business deals, settle disputes and create secure legal environments that attract foreign partners.
Solutions
- Adopt common ground rules. Ratify trade treaties and adopt international model laws, which set out common, basic principles for international sales, arbitration, patents, trademarks, transport and other trade issues. Use model contracts to answer the most frequent questions that arise in negotiations and provide internationally recognized definitions of responsibilities. Harmonize commercial laws at the regional level to facilitate trade among neighbouring countries.
- Fix bottlenecks. More disputes need to be resolved out of court. Arbitration and mediation centres may be the best current alternative.
How ITC Can Help
- Lega Carta. Internet-based maps that tell, at a glance, whether a specific country has ratified the world’s 200 major trade treaties.
- Juris International. The world’s biggest online collection of major legal instruments, free of charge, in English, French and Spanish.
- Model contracts. A total of 150 model contracts for perishable goods, printing and publishing, and joint ventures — the contracts most requested by developing countries according to an ITC survey. The model contracts are free, in simple language and neutral, reflect cultural and legal diversity, based on pro-bono research and drafting by 50 legal experts from around the world.
- Arbitration and mediation services. Improving in-country dispute settlement services through training and symposia.
- Regional harmonization of trade laws. Support and advocacy, at the level of business lawyers, for regional efforts to harmonize trade laws and regulations.
