Doing business in a foreign country offers opportunities, but also pitfalls ? particularly in cases where the judiciary is corrupt or even non-existent.
International trade and investment laws are in place to help companies that find themselves in sticky situations, but it's a complex area and each country ? and each treaty ? is unique.
International law is becoming increasingly important, because it secures Canadians' access to foreign markets, and 45 per cent of Canada's economy is dependent on trade. This means that close to half of the economy relies on Canada's international trade relations with the U.S. and other countries, says Milos Barutciski, partner with Davies Ward Phillips & Vineberg LLP and president of the International Law Association.
Most of the major Canadian law firms have international or cross-border practice groups. The articles in this special international law section will focus on some of the areas in which Canadians are tops in the world.
Trade law is really about the rules for economic relations between countries. If a company is having problems in an emerging market ? for example, it's being charged an extra tax, or a regulation is putting its product at a disadvantage ? that's where trade law comes into play.
"I would look at the trade rules under the WTO agreements or some other treaty," says Barutciski. "If they're violating the rules, we would come up with a strategy to get that other country to change those rules."
Sometimes that means suing the government directly; other times it means convincing the Canadian government to petition the foreign government.
"Nobody likes to operate in a vacuum, and globalization is just a fancy word for saying people are looking past their own backyard to trade with other people in the next neighbourhood," says Clifford Sosnow, a partner with Blake Cassels & Graydon LLP.
Because they're operating in a strange neighbourhood, they want some protections, he notes. They may not know the culture, court system, or language very well, and more often than not that creates miscommunication ? and miscommunication often creates conflict.
So governments rush in to protect these people by negotiating protective umbrella agreements, he says, such as bilateral investment treaties, regional trade agreements such as NAFTA, the WTO, and bribery and corruption conventions.
"They're all intended to ensure people operating in a strange environment are not operating in a vacuum," he says. "If you're not comfortable going to the domestic judiciary, there is an alternative for you that the other country has agreed to be bound by."
Business regulations with a criminal component used to be primarily domestic, but now are more international in scope. Price fixing, for example, is a criminal offence in Canada, the U.S. and the U.K., and quasi-criminal in many other countries. Money laundering has always been a criminal offence in Canada, but after Sept. 11, 2001, governments around the world have become much more conscious of how money acquired unlawfully ? whether it's drug, terrorist, or mob money ? is moved around within the legitimate banking industry.
"Money moves at the speed of mouse clicks," says Barutciski. "Now that movement is subject to strict reporting requirements and potentially criminal violation."
A major challenge for Canadians abroad is dealing in countries where there is no rule of law, says Robert Amsterdam, founding partner of Amsterdam & Peroff, who was on former Yukos Oil executive Mikhail Khodorkovsky's defence team at his criminal trial in Russia.
"We've been involved in disputes in emerging markets where their employees have been threatened with arrest," he says. "We advise companies on corporate social responsibility and how they can try to behave in that type of situation so as to avoid finding themselves in those traps."
Dealing with these disputes often involves arguing the case in various courts, and attempting to take situations that are not easily resolved in what can be a potentially corrupt or nonexistent judicial system and deal with them politically or through trans-national organizations like human rights courts, he says. In some cases, it's a civil matter, but in others it becomes a criminal matter.
International investment law is distinct from trade law in that provisions are designed to provide protections to investors of one country who invest in another country. If an investment is being "injured" by the laws of another country, that investor can seek compensation.
This has been a huge growth area over the past 10 years, says John Terry, a partner with Torys LLP. Aside from the WTO and NAFTA, there are individual bilateral investment treaties between countries, and these treaties contain provisions that allow an investor to take their case to a tribunal appointed by both parties that can make binding decisions and award damages.
"You need to have the treaty first of all, and usually corrupt governments don't negotiate treaties, but often it will be a previous government that will have put that in place," he says. If Canada does not have a bilateral investment treaty with a specific country but the U.S. does, a Canadian company can make its investment through a U.S. subsidiary, which is likely sufficient to give it bilateral investment treaty protection.
There's also a huge increase in the number of free trade agreements and international legal instruments to protect both the business side and the human rights side, says Sosnow.
"The International Criminal Court is a prime example of the move toward recognizing that people operating in another country are not immune from legal oversight," he says, "even if the country that they're operating under doesn't choose to prosecute them."
Judge Philippe Kirsh, a member of the Quebec bar, is the first president of the International Court. He's a perfect example of how Canadians are playing a major role in international criminal law. Former Supreme Court justice Louise Arbour was the chief prosecutor for the war crimes tribunals for Rwanda and the former Yugoslavia. She's now the UN's high commissioner for human rights. Many other Canadians are involved with those war crimes tribunals as prosecutors and defence counsel. Canadians, many from Quebec, have experience with both civil and common-law systems and also speak French and English, so are very valuable on the international legal stage.
