{"id":1955,"date":"2019-12-06T03:49:58","date_gmt":"2019-12-06T03:49:58","guid":{"rendered":"https:\/\/delaneysilva.com\/blog\/?p=1955"},"modified":"2019-12-09T19:09:46","modified_gmt":"2019-12-09T19:09:46","slug":"the-common-law-syndrome-international-business-and-the-systems-of-law","status":"publish","type":"post","link":"https:\/\/delaneysilva.com\/blog\/the-common-law-syndrome-international-business-and-the-systems-of-law\/","title":{"rendered":"The Common Law Syndrome: International Business and the Systems of Law"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">We are in an era dominated by global corporations and international \ncapital investors who own and run their operations simultaneously in \nmany parts of the world. Notwithstanding the many advantages that \ninternational business may have in the world economy, cross-border \ntrading and dealing between different jurisdictions may give rise to \nissues of a legal nature and problems of conflict of law. Because of \nthis, it is important for international investors to understand the \nprincipal differences between the main systems of law when taking their \nbusiness overseas.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Common Law system establishes a set of contractual principles and legal doctrines which the courts must apply <em>a posteriori <\/em>in\n order to determine the enforceability of the transaction should one of \nthe parties later contest its validity. On the other hand, the Civil Law\n system is based on legal formalities and codified statutes, and takes a\n preventative approach, relying heavily on the Notary as a guarantor of \ncontractual security from the moment the contract is entered into.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The process of \u201cAmericanization\u201d \u2014fueled by the United States\u2019 \nbargaining power as the dominant force in international trade and \nbusiness\u2014 carries, as a consequence, that its Common Law principles \ntowards company contracts and commercial transactions are being imposed \ninternationally. For example, it is not unusual for the United States to\n condition trade agreements to legislative reforms in countries with \nwhich it signs. Thus, countries tend to reduce procedures that may \nrepresent a burden to international trade and business practices. As a \nresult, the role of the Notary is sometimes minimized by international \ninvestors, who often see it as an unnecessary cost and delay for \nbusiness.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, others believe that this liberal approach rather opens the \ndoors for Notaries, since it is a fact that most industrialized \ncountries, who are the exporters of investment capital, maintain a \nsystem of Common Law, while many developing countries, which are the \nchief receivers of this capital \u2014and under whose laws this investment \nwill take form\u2014 maintain a system of Civil Law, where Notaries play a \ncentral role.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>&#8220;Notwithstanding the many advantages that international business may have in the world economy, cross-border trading and dealing between different jurisdictions may give rise to issues of a legal nature and problems of conflict of law.&#8221;<\/strong><\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Civil Law is extremely formal. Some notarial experts consider the Civil Law system as taking a <em>regulating<\/em>\n approach to company contracts due to the fact that the law requires (a)\n the intervention of the Notary as an independent legal professional to \nintermediate in private agreements, (b) the mandatory use of exclusive \ngovernment-issued legal tax paper for private transactions, (c) the \nburden of costs and delays that Notaries may add to commercial \ntransactions, (d) the exclusivity of public documents to carry \nevidenciary value in court, and (e) the excessive, and sometimes \nunnecessary, formalities that these public documents must contain. In \nshort, the law must regulate the manner in which certain commercial \ntransactions are carried out, and, although Notaries may delay and \nincrease the cost of business, they are necessary <em>regulators<\/em> to secure the validity of commercial agreements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On the other hand, most capital investors prefer the Common Law approach, and consider this system a <em>facilitator<\/em>\n of business based on (a) the more liberal approach of Common Law \njurisdictions, (b) the absence of excessive formalities in order to \nenter into commercial contracts, (c) the freedom of the parties to draft\n their own contracts privately according to their needs, (d) the lack of\n excessive documentation in order to transfer property and company \nassets, (e) the economic advantages and time-saving benefits of not \nhaving to resort to a Notary, (f) the direct negotiation between the \nparties themselves without the need of an intermediary, and (g) the role\n of the judiciary in determining the validity of a transaction, after a \ncommercial contract has already been agreed and signed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is imperative for international business persons to be aware of  the legal framework that will govern their companies and operations in  every country and to understand the differences between both these  systems of law. If companies adapt to these changes, a more realistic  vision of how to start and operate their business at the local level  will be possible, which will allow for better planning and, ultimately,  to greater success.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"491\" height=\"370\" loading=\"lazy\" src=\"https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/CommonLawSyndrome.png?resize=491%2C370&#038;ssl=1\" alt=\"\" class=\"wp-image-1956\" srcset=\"https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/CommonLawSyndrome.png?w=491&amp;ssl=1 491w, https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/CommonLawSyndrome.png?resize=300%2C226&amp;ssl=1 300w\" sizes=\"auto, (max-width: 491px) 100vw, 491px\" \/><\/figure><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Notwithstanding the many advantages that international business may have in the world economy, cross-border trading and dealing between different jurisdictions may give rise to issues of a legal nature and problems of conflict of law.<\/p>\n","protected":false},"author":1,"featured_media":1957,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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the many advantages that international business may have in the world economy, cross-border trading and dealing between different jurisdictions may give rise to issues of a legal nature and problems of conflict of law.","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts\/1955","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/comments?post=1955"}],"version-history":[{"count":3,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts\/1955\/revisions"}],"predecessor-version":[{"id":2059,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts\/1955\/revisions\/2059"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/media\/1957"}],"wp:attachment":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/media?parent=1955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/categories?post=1955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/tags?post=1955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}