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Discussion Assignment: External Environments/Risk/Global Trade and Investment
Ashley Waldo
School of Business, Liberty University
Author Note
Ashley Waldo
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to
Ashley Waldo
Email: amwaldo@liberty.edu
Discussion Assignment: External Environments/Risk/Global Trade and Investment
Common Law and Why I Am Interested in It
I am interested in exploring and researching the key term of “common law” (Satterlee, 2018). The term initially sparked my interest because I remember reading about it during an undergraduate law class, but I ultimately decided to research common law because of how relevant it is in conducting both international and domestic business. Although most of the world follows civil law, the United States is based on common law, so this precedent-abiding legal system dictates how we conduct business and interpret international trade decisions and relations. As a manager in human resources, I am also especially interested in learning more about the key term since I have to be very mindful of our common law system and its impact on labor through employment, compensation, and recruitment.
Explanation of Common Law
Common law originated in England during the Middle Ages and is based on tradition and custom in abiding by past judicial decisions (Satterlee, 2018). This legal system revolves around following legal precedents, and courts are expected to apply the rulings and interpretations of past cases to similar ones in the present rather than relying on legislature and codified statutes. Within a common law system, this principle of being obligated to follow precedent is called “stare decisis” (Starger, 2013). Another important aspect of common law is the corresponding adversarial approach. The prosecution and the opposing defense are each responsible for gathering and presenting evidence, arguing, and cross-examining for their side in order for a judge or jury to make a decision, unlike the civil law system which expects the courts to produce the content of the case. Common law is practiced in the United States and upheld by most English-speaking nations with a few exceptions such as India and Hong Kong (Satterlee, 2018).
Major Article Summary
In Jing Li’s article, “Globalization of Anglo-American Common Law vs. Strong National State: Evidence from the Use of Legal Counsel in Cross-Border Business Transactions Involving China”, he explains how the common law system is growing in popularity and spreading across borders through international transactions (Li, 2020). Within international markets, global business managers must keep in mind the many different legal systems of other countries and how the gaps bring risk to their operations, ownership, and relationships (Satterlee, 2018). Over an eight-year period, Li conducted a study of 1,393 international business transactions of successful Chinese companies to see their legal system preferences in global markets (Li, 2020). Li found that Chinese companies and business leaders strongly preferred conducting business with common law nations like the United States and the United Kingdom. Not only did these firms prefer to do business with and invest in common law nations, but they also sought out legal counsel and advice from the influential law firms within these nations that dominate the market to help with other overseas transactions in civil law nations (Li, 2020).
The many Chinese firms followed this trend because they believed that implementing common law leads to better business relationships with the system being trustworthy, reasonable, and enforcing with contracts in comparison to a civil law system (Li, 2020). Because common law actually allows lawyers to argue for their side rather than a judge deciding alone, businesses and their lawyers can create private contracts with their own terms and be bound by them without worrying about a code or statute interfering too much (Satterlee, 2018). Companies in China have firsthand experience with operating a business under authoritarian rule and dominating government power, so they have seen both sides while expressing a clear preference for the more freeing system outside of their own country. Because of its benefits in business, Li also found that as countries operate more interdependently, common law is becoming a globalizing trend in which many nations want to participate (Li, 2020).
Discussion
Jing Li’s article provides an exceptional analysis of common law that complements the explanation of the legal system. In the article, Li expands on the definition of common law from the textbook, and he also shows a real-world application of the key term through an extensive study and explains how it impacts international business. This is directly relevant to our module where we are learning about the many risks of international business and how to mitigate them (Satterlee, 2018). By understanding the common law system that many countries have adopted, we as global business managers are able to facilitate the cross-border interactions and relationships to surpass the barriers and intimidating risks to conduct fluid international business transactions (Li, 2020).
Although all of the articles I researched were full of valuable insights about common law, I chose to analyze Li’s article because it provided a study full of evidence to back his specific claim about common law’s growth and included a deep dive into how legal systems affect international business and risks with China, the US, and the UK (Li, 2020). The second article I considered described an extensive timeline of “corporate America” and how common law has changed the corporate environment, but it did not talk about the impacts on international business (Morley, 2016). The third article I researched discussed a set of organizational principles that can be established to help unify nations with differing legal systems, but it failed to acknowledge that legal systems are just one of the many barriers of international relations (Brödermann, 2020). The fourth article I considered thoroughly explained how common law affects human rights and labor laws across the country, but it had insufficient discussion about international trade itself (Cabrelli, 2019). The last article I explored covered the many fiduciary duties and expectations of business owners within a common law system, but its focus was more on domestic business (Penn & Warren III, 2019).
References
Brödermann, E. (2020). Bridge over Troubled Waters for International Commercial Contracts–The UNIDROIT Principles 2016, An Overview from a Long Time User. Tulane Journal of International & Comparative Law, 28(2), 193-257. https://ezproxy.liberty.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=lgh&AN=144741047&site=ehost-live&scope=site
Cabrelli, D. (2019). Liability for the Violation of Human Rights and Labour Standards in Global Supply Chains: A Common Law Perspective. Journal of European Tort Law, 10(2), 108-129. https://ezproxy.liberty.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=lgh&AN=138294991&site=ehost-live&scope=site
Li, J. (2020). Globalization of Anglo-American Common Law vs. Strong Nation State: Evidence from the Use of Legal Counsel in Cross-Border Business Transactions Involving China. . International Lawyer, 53(3), 383-415. https://ezproxy.liberty.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=149035562&site=ehost-live&scope=site
Morley, J. (2016). THE COMMON LAW CORPORATION: THE POWER OF THE TRUST IN ANGLO-AMERICAN BUSINESS HISTORY. Columbia Law Review, 116(8), 2145-2197. https://ezproxy.liberty.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=lgh&AN=120087866&site=ehost-live&scope=site
Penn, E., & Warren III, M. G. (2019). THE COMMON LAW FIDUCIARY DUTIES OF BUSINESS OWNERS. University of Louisville Law Review, 58(1), 147-173. https://ezproxy.liberty.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=lgh&AN=143258663&site=ehost-live&scope=site
Satterlee, B. C. (2018). International Business with Biblical Worldview. McGraw-Hill.
Starger, C. (2013). The Dialectic of Stare Decisis Doctrine. Precedent in the United States Supreme Court, 33, 19-45. http://ezproxy.liberty.edu/login?url=https://link.springer.com/chapter/10.1007/978-94-007-7951-8_2
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