Political and Legal System in International Business

China is particularly dangerous in terms of political risks. The possibility of nationalizing industries must be considered. In fact, this has already happened in China (1949). There is also a risk of confiscation, expropriation, currency inconvertibility and termination of the contract. Currency devaluation and runaway inflation are possible scenarios in many countries that make the adequacy of insurance limits catastrophic as one of many potential problems. There is also a risk of personal harm or kidnapping to the company`s employees and a risk of extortion attempts for the company. A unique form of political risk occurs in China, and that is the constant struggle between the country`s central government and provincial and municipal governments over applicable law and its compliance or non-compliance. This makes it difficult for companies operating in China to know exactly what the rules are. A political system is basically the system of politics and government in a country. It governs a comprehensive set of rules, regulations, institutions and attitudes. A key distinguishing feature of political systems is the philosophy of each system regarding the rights of the individual and group, as well as the role of government.

The local economy and business environment are determined by politics, which is influenced by the philosophy of this political system. There are more than thirteen main types of governments, each consisting of several variants. [MUSIC] So far, in this lesson, we have focused on the different types of political systems that can be found in the world. But a political system is only a framework. In the political system of a nation, there must be a legal system that serves to operationalize and implement the political system. In this video, we will explore the main types of legal systems used in countries around the world. National laws derived from a country`s political system. A national legal system is therefore a mechanism for creating, interpreting and enforcing national laws. There are five main types of legal systems. There are civil law systems, customary law systems, theocratic legal systems, customary law systems and mixed legal systems. Let`s look at each of these systems, civil law systems are based on a set of codes established by the political system, essentially a set of rules with fixed and explicit codes and statutes. Laws and statutes are created by legislation, they are usually complete and updated frequently.

They focused on clarity and accessibility, and they are sometimes called legislative laws because they are well founded on laws. The historical basis of civil law is Napoleonic law, which was founded in 1804 with the Code of Napoleon. This was the first pan-European legal structure in the book right is an early copy of the Napoleonic Code, including a royal portrait of Napoleon himself. Napoleon was not known for his successive modesty. It then gained global influence and was adopted very strongly from country to country, but it is the most widely used international legal system. Common law systems focus on precedent, where courts rely on custom and precedent rather than statutes. Therefore, it is sometimes referred to as case law. It uses historical decisions to resolve current cases. The common law follows the principle that similar situations should lead to similar results over time.

Precedence is therefore equal to laws and regulations that may be promulgated by the State. Common law rules developed in England for many centuries and remain widespread in England and its former colonies such as the United States, Canada, Australia and South Africa. Courts in many common law countries have retained the traditional insignia of ancient British courts, including red robes and powdered wigs like those Zimbabwean judges depicted on the right. The common law is based on norms and traditions that are widely accepted as law by a community. They include the rights and obligations acquired by a long custom. Customary law is often unwritten, but our ancient traditions and histories are passed down from generation to generation. Common law is sometimes referred to as tribal law because it has always been practiced by clans and tribes rather than nations. The photo on the right shows village elders deliberating on an important legal issue in 19th century Ukraine. Today, the common law is often associated with civil or customary law systems.

Examples include Ireland, India and many countries in Africa, and often developing countries have some form of customary law as part of their legal system. Theocratic law is based on religious commandments and requirements. The law is based on religious texts and traditions found in Christianity, Judaism, Buddhism, and Islam. At present, the predominant examples of theocratic law are countries that observe Sharia law on the basis of the Islamic Quran. Countries with strong Sharia legal systems include Saudi Arabia, Yemen, Ethiopia, Iran, Iraq, Pakistan and Afghanistan. In mixed jurisdictions, two or more of the existing systems are combined into a single composite legal system. Many countries have mixed systems, for example South Africa, Scotland and Puerto Rico make common law with civil law. China, Japan, Korea and Ethiopia combine civil law with customary law.

Ghana, Hong Kong, Nepal and Uganda combine common law and customary law systems. And civil and theocratic legal systems are combined in Iran, Egypt, Iraq and Algeria.