Abstract
The legal business environment, including laws and regulations formulated to control the conduct of business activities is one of the most important external factors that affect major commercial decisions by business organizations (Pathak, 2013, p. 96). This legal framework influences decision making by businesses right from registration, workplace safety of employees, decisions on employment or dismissals, product safety, business agreements, to financing and marketing decisions (Campbell, 2009, p. 154). Businesses enterprises, according to Miller and Jentz (2011) must always operate within the purview of this legal framework as they make decisions on the various commercial activities, processes and operations internally and externally. Examples of legal aspects that impact on business decision-making include employment law, sale of good laws, insurance law, law on product liability, tort law, property law, commercial law, law of agency, administrative law, e-commerce, law negotiable instruments and intellectual property law (Miller, 2008, p. 5). These are the key points that will be discussed within the paper with reference to case briefs from selected cases touching on business management. The aspects of these areas in law tremendously affect and constrain the manner in which businesses makes important management decisions. It has been argued that “to make good business decisions, a basic understanding of the laws and regulations governing these activities is central” (Miller, 2008, p. 3).
Introduction
Business decision making process is affected by a number of legal factors that businesses must take into consideration when making decisions. Some of the legal issues that normally arise in the decision making process include employment or labor, contract, intellectual proprtyy and tort of negligence in form of product liability. This paper gives a brief of some of the decided cases which touch on some of these legal aspects. A case brief is a summary of a case or legal argument as was presented before an appellate court showing the title, citation, brief material facts, procedure, legal issues, holding, reasoning and sometimes concurring or dissenting opinions where they contribute to the judgment. Writing a case brief makes it easy for one to quickly note the brief facts of the case, the issues before the trial court, its holding and reasoning for that holding. This way, a client or their attorney can easily make a ecision on whether or not to appeal the case. The appellate court also finds it easier to go through the briefed case at a glance than a full judgment of the trial court.
Citation: ITLOS Case No 2 (Official Case No) ICGJ 336 (ITLOS 1999) (OUP reference)
Facts
This was a case between St Vincent the Grenada and Guinea Bissau. The M/V Saiga was an oil tanker that supplied oil in form of fuel and water to fishing vessels off the West African coast. The owner of the ship was Tabona Shipping Company Ltd, a company registered in Nicosia, Cyprus and its management was under a company called Seascot Ship management Ltd. of Glasgow, Scotland. The ship left Senegal’s coast enroute the Gulf of Guinea in 1997 but by on nearing Guinea’s EEZ, it was attacked and shot at by a Guinean patrol boat. This resulted in serious injuries to two crew members and damage of the ship. Guinea then ordered the arrest of the ship and its master. After negotiations between the Guinean authorities and St Vincent owners of the ship failed to secure release of the ship, St Vincent instituted proceedings before the International Tribunal for the Law of the Sea seeking a prompt and immediate release of the ship by Guinea based on article 292 of the Law of the Sea Convention (Fayette, 2000, pp. 468-469).
Procedure
Unlike in the Merits case, this case before the Tribunal in the first instance was deeply divided with the judgment being by 12 votes to 9
Issues
The main legal issues that fell for determination in this case were as follows:
Did the Tribunal have the jurisdiction to hear the dispute between the parties?
Was Guinea in violation of international law of the sea with reference to rights of crew aboard the ship, the law of hot pursuit and use of force?
Were the claims and objection s submitted before the Tribunal concerning g the registration and nationality of the ship admissible?
Had Guinea violated the general principles of international law through its failure to promptly release the M/V Saiga and her crew as demanded by St Vincent?
How was the amount of compensation against the offending party to be calculated and assessed?
Holding
Concerning the issue of jurisdiction, the Tribunal held that it had jurisdiction under the Exchange of Letters Agreement of 1998 between the parties and also based on article 297 (3) (a) of the Law of the Sea Convention
Further, on the legality of the arrests under international law, the Tribunal held that the arrest violated international law and the rights of the Grenada. On hot pursuit, the Tribunal held that there was no legal basis for the pursuit of the ship by Guinean authorities. Concerning the use of force, the Tribunal came to the conclusion that Guinea had applied excessive force that endangered lives of those aboard
As to the admissibility issue, the Tribunal rejected Guinea’s objections on questions of admissibility
Concerning the assessment of damages, Tribunal relied on article 111 and 304 and the ratio decided in Chorzow Factory Case.
Reasoning
The main reasoning of the case was that Guinea could not claim to use laws and customs within its EEZ to violate international law of the sea principles on use of force, hot pursuit and prompt release of ships held for alleged violation of coastal laws and regulations
Concurring/dissenting opinions
Judges Warioba , Caminos, Yanikov, Aki, Vukas, Anderson and Ndiaye dissented on merits of the judgment.
Citation: United States Court of Appeals, Sixth Circuit, June 8, 1995. 55 F. 3d 1227 (1195); 1995
Facts
The claimants in this case who were investors in the Society of Lloyd’s sued the defendant and sought to rescind an investment contract they had signed under the Ohio Securities Exchange Law. The agreements between the two parties contained a choice of law and forum selection clauses. The plaintiff had claimed that the defendant violated the law by selling non-exempt and unregistered securities hence the contrct was illegal. The defendant in turn brought a motion to dismiss claiming improper venue or forum selection under Rules 12 (b) (3) of the Federal Rules of Civil Procedure. According to the defendants, it was the English state courts that had the exclusive jurisdiction on the matter. The District Court agreed and ruled on their favor thus granting their motion, but the plaintiff’s cross appealed. In the appeal, they argued that the forum selection clause were unjust as they deprived them of their substantive rights under the securities laws. He also claimed that public policy outweighed such laws (August, Mayer & Bixby, 2009).
Procedure
The Appellate court agreed with the District Court’s findings, affirming the motion by the defendants to dismiss the appeal. It upheld the enforceability of the choice of law and forum selection provisions in the contract.
Issue(s)
Was the plaintiff entitled to rescind the contract with the defendants?
Did the English courts possess the exclusive jurisdiction under the forum selection clauses under Rule 12 of the Federal Civil Procedure Rules?
Were policy issues important for the determination of the rights of the parties under these forum selection clauses?
Holding
The defendant had not breached the contract with the plaintiff. The court held with regard to the right to rescind, that the plaintiff would be in breach of contract themselves if they rescinded a valid contract with the defendant.
As to the jurisdiction of English courts, the court held that the agreement between the parties was to be construed and take effect in accordance with the English law.
Concerning forum selection clauses of a contract, the court held that the forum selection clauses were valid and that given the international nature of the transactions, it was not contrary to public policy.
The appellate court also rejectd the plaintiff’s arguments on the basis that they already had sufficient remedies under the English law. It had failed to prove to the court that the English courts unfair or biased hence not the appropriate forum for hearing the matter.
Reasoning
The court reasoned that the plaintiff had failed to prove that there was an element of fraud or misrepresentation on the part of the defendants that would allow them to rescind the contract with the defendants.
Concurring/dissenting opinions
There were no dissenting opinions as all the appellate judges concurred.
Citation: [1989] 1 QB 728.
Facts
The plaintiff deposited money in the defendant’s bank called Bankers Trust Bank in New York and London branches. Later, there was a policy by the US government that required that all the Libyan assets in the country be frozen. The plaintiff was thus unable to access his money, hence it brought this suit seeking to have the defendant compelled to release the money held (August, Mayer & Bixby 110).
Procedure
The plaintiff was awarded a combined $ 131 it had initially claimed and a further 161 which is the amount they had petitioned the court to award them. The plaintiff’s other claims were however rejected.
Issue(s)
Was the plaintiff bank to be governed by the local US law or Libyan law?
How is a subsidiary or branch of A Company (bank) to be treated vis-à-vis its central registered office under the law?
Holding
Yes, the bank was to be governed by the local US laws and a bank branch would be treated differently
Reasoning
The court based its reasoning on the fact that since the money was a property of the Libyan Arab Bank; it had to be given to them.
Concurring/Dissenting opinions
There were no dissenting opinions
Tittle: Japan-Taxes on Alcoholic Beverages (Supplemented by Case 3-1 Japan – Taxes on Alcoholic BeveragesCitations: Canada, European Communities & Japan vs Japan (1995, 1996) WTO
Facts
This was a case in which the European Communities, United States and Canada brought complaints before the World Trade Organization dispute settlement body. These countries in requesting consultations with Japan alleged that the Japanese taxation system discriminated against the alcoholic spirits and other beverages exported to from these countries, thus violating the fundamental WTO principles of national treatment and most favored nation. They claimed that Shochu, a local alcoholic Japanese alcoholic beverage, received more favorable treatment in terms of taxation compared to vodka, an import.Procedure
The Appellate Body upheld the Panel’s findings that Shochu was taxed less than vodka, which was a like imported product and that this violated article III: 2 of the GATT on the national principle. Further, the Appellate Body was in agreement with the Dispute Panel that the Japanese Liquor Tax Law was in violation of Article III: 1 of GATT on most preferred nation principle. Issue(s)
Were Shochu and Vodka like products as defined by the first sentence of article III: 2 of the GATT?
Were these products substitutable or competitive products to which internal taxes and charges are prohibited by Article 3 (2) second sentence of GATT?
Did the Japanese Liquor Tax Law treat these items differentially?
Was Japan in violation of its obligations under the WTO rules and principles?Holding
Both the Panel and the Appellate Body answered these questions in the affirmative.Reasoning
The two WTO dispute resolution bodies both based their reasoning on the fact that since the Japanese Taxation law treated Shochu, a domestic product, different from the way it treated other imported products from US, EC and Canada, this legislation was in violation of strict WTO principles. Japan was therefore liable.Concurring/dissenting opinions
All the members of the Panel and the Appellate Body unanimously endorsed the judgment with no dissenting voices.Tittle: Monsanto Co. v. Cora Mandal Indag Products, (P) Ltd
Citation: 1986 AIR 712, 1986 SCR (1) 120
Facts
This was a case on intellectual property rights of a business in which the plaintiff-cum-appellant brought this suit against the defendant claiming that the defendant had infringed its inventions in the form of a patent in "Grass Selective Herbicide and “Phytotoxic Compositions". These products contained an active ingredient known as “Bachelor” which the defendant company marketed as "Delchor-50". The plaintiff alleged the violation of a number of provisions of the Indian Patent Act, 1970.
Procedure
The trial court agreed and ruled in favor of the claimant but on appeal, the Court of appeal dismissed the claim of infringement of patent under section 61 (1) (d).
Issue(s)
Was the defendant liable for violating the plaintiff’s patent rights by marketing their inventions as different product?
Holding
The appellate court held that the defendant’s act did not constitute an infringement of the plaintiff’s patent rights
Reasoning
The two appellate courts based their rulings on the reasoning that since the details of the Herbicide CP 53619 (Butachlor) was already in the public domain or knowledge before the other patent allegedly infringing it was invented, it did not satisfy the meaning of a patent under the Act as something noble.
Concurring/dissenting opinions
There were no dissenting opinions
V: Conclusion
In summary, these case briefs show how law can affect decision making by business organizations. For instance, the case brief of Libyan Arab Foreign Bank v. Bankers Trust Company is an example of how the law can shape major business decisions. According to Padhi (2013, p.1), it has become important for businesses to effectively manage contracts since they define almost every aspect of businesses today. Most of these case briefs show that contract law and its related principles play an important role in major business decisions. Furthermore, as the case briefs emonstrate, there are a myriad of legal issues that confront business enterprises in their day-to-day, most of them emanating from alleged breaches of contract. It is therefore crucial for business organizations to understand how the legal business environment operates and the relevant factors that are likely to impact adversely on the business processes and decisions. This knowledge will enable them to devise strategies for ensuring compliance with the legal aspects of business decision making including government policies, laws and regulations.
References
August, R., Mayer, D., & Bixby, M. (2009). International business law. London: Pearson Education.
Campbell, C. (2009). Legal aspects of doing business in Europe [2009] Volume 1. New York: Yorkshaw Law Publishing.
Fayette, L. d. (2000, April). International Tribunal for the Law of the Sea: The M/V "Saiga" (No.2) Case (St. Vincent and the Grenadines v. Guinea), Judgment. The International and Comparative Law Quarterly, 49(2), 467-476. Retrieved January 12, 2016, from http://www.jstor.org/stable/761689
Miller, G. (2008). The legal business environment: Text, cases, ethical regulatory, global and e-commerce . London: South-Western Cengage Learning.
Miller, R. L., & Jentz, G. A. (2011). Business law today: Text & summarized cases:E-commerce, legal, ethical and gloabl environment. Stamford: South-Western Cengage Learning.
Padhi, P. (2013). Legal aspects of business . New Delhi: PHI Learning Privated Ltd.
Pathak, A. (2013). Legal aspects of business. New Delhi: McGraw Hill Education (India) Private Ltd.
