Introduction
In our interconnected world, private individuals and businesses frequently engage in international transactions. In the buying and selling of goods and services, business interactions usually cross national boundaries. This article delves into the legal aspects of private international business, shedding light on the complexities involved in these cross-border exchanges.
Some Aspects of International Trade
We will now shed light on some crucial aspects of international trade and address some of the complexities involved. This part will consider international contracts, the significance of trade agreements and the importance of complying with sanctions and export control.
At the core of international business transactions lies contract law. Individuals hailing from different nations must craft legally binding agreements that meticulously outline their respective rights and obligations. To ensure the enforceability of these agreements, it is imperative that parties comprehend the nuances of contract law in their respective jurisdictions.
One of the primary focal points in international contracts is the choice of law and jurisdiction governing the agreement. Deciding which country’s laws will govern a contract is a pivotal consideration in international business transactions. The chosen governing law should be unequivocally stated within the agreement, providing clarity on the jurisdiction to which parties can turn for enforcement, as exemplified in the case of TOF Energy Company. Ltd. & Ors v Worldpay LLC & Anor[1] it was statedthat where there is an ouster of jurisdiction given to a court by Statute, it should be by clear and unequivocal words. This differs from the typical process in domestic transactions within a specific country, where jurisdiction is mostly determined by the provisions of domestic statutes.
In contrast, international contracts grant parties the discretion to select the jurisdiction governing their agreement, irrespective of their origins or physical location. By agreeing to a specific jurisdiction, whether domestic or foreign to either party, they willingly subject themselves to the legal processes and outcomes of that jurisdiction. By upholding the parties to their agreement, including their decision to subject all of their disputes to the exclusive jurisdiction of a foreign court, courts are obligated to give respect to the parties’ freedom of contract[2]. Among other effects, a foreign jurisdiction clause in international commercial agreements ensures neutrality and also achieves relative certainty as the parties know in advance where they may sue or be sued under the contract[3].
Nevertheless, a potential downside arises if parties are unfamiliar with the applicable laws or the judicial processes of the chosen jurisdiction. In such instances, it is advisable to stick to jurisdictions that are familiar to parties.
Trade Agreements
Trade agreements are formal pacts between two or more countries, stipulating the terms and improvements that govern the exchange of goods and services. A deep understanding of international trade agreements relevant to the specific industry and countries involved is pivotal for the success of cross-border trade.
There exist three primary types of trade agreements: Bilateral Trade Agreements, Regional Trade Agreements, and Multilateral Trade Agreements. Recognizing which trade agreement governs each party’s country of origin or trade location can significantly ease the conduct of business. For instance, if parties to an international transaction hail from Nigeria and the United States, they can leverage the African Growth and Opportunity Act, 2000 (AGOA). This Act establishes a preferential trade agreement between the United States and certain Sub-Saharan countries, including Nigeria, eliminating trade and investment barriers[4].
Furthermore, the African Continental Free Trade Area Agreement, 2019, aims to facilitate the unrestricted movement of African-made goods and services within the continent. This free trade zone grants businesses access to reduced tariffs and expanded market opportunities beyond their home country’s borders[5].
Compliance with Sanctions and Export Control
International transactions must comply with sanctions and export control laws, particularly in industries like technology and defense. Violations can lead to severe legal consequences, including fines and restrictions on future business activities.
Parties must exercise due diligence to ensure they do not engage in business with entities or individuals from countries that have been subjected to sanctions by their own government. For instance, the United States has imposed embargoes on countries like Russia, Cuba, Iran, North Korea, and Syria, making it crucial for American parties to refrain from conducting business with entities associated with these nations[6].
Conclusion
Private international business transactions are complex, involving a multitude of legal dimensions. Individuals and businesses must be well-versed in international contract law, jurisdictional issues, trade regulations, compliance with sanctions and export control. By understanding these legal aspects effectively, individuals can engage in cross-border commerce while safeguarding their interests and ensuring the success of their international business ventures.
[1] (2022) LPELR-57462(CA)
[2] Owners of the MV Lupex v Nigerian Overseas Chartering & Shipping Limited [2003] 15 NWLR (PT. 844) 469 at 48
[3] Ibid
[4] ‘Trade Agreements’ by the International Trade Administration accessed at https://www.trade.gov/country-commercial-guides/nigeria-trade-agreements#:~:text=Bilateral%20Trade%20Agreements,to%2021%20investment%2Drelated%20instruments. On the 25th of September, 2023 at about 3pm.
[5] ‘The African Continental Free Trade Area (AfCFTA) and Opportunities for MSMEs in Nigeria’ by the Lagos State Employment Trust Fund accessed at https://lsetf.ng/content/african-continental-free-trade-area-afcfta-and-opportunities-msmes-nigeria#:~:text=In%20Nigeria%2C%20the%20AfCFTA%20is,businesses%20beyond%20the%20country’s%20borders. On the 25th of September, 2023 at about 2pm.
[6] ‘Embargoed and Sanctioned Countries’ by the Office of Trade Compliance, University of Pittsburgh accessed at https://www.tradecompliance.pitt.edu/embargoed-and-sanctioned-countries on the 25th of September, 2023 at about 2pm.
