International trade is governed by a complex legal framework that includes the legal systems of States, international treaties, intergovernmental organisations and private international organisations. These legal systems and instruments aim to facilitate, secure and regulate international investments and the exchange of goods and services among countries, while also promoting fair competition, securing the actors, protecting the rights of all parties involved, and solving disputes peacefully.
Legal systems of States
The legal systems of States form the basis of international law. In practice, international contracts are frequently governed by a State law and disputes relating to these contracts are subject to the
jurisdiction
1 – In French: compétence. Refers to the extent of the powers of a court, its ability to adjudicate a dispute. 2 – In French: juridiction. Refers to the territory in which an institution is competent.Jurisdiction
The European Union
In the European Union, EU
regulations
1 – Regulations are legally binding rules issued by an authority, usually a government or regulatory body, to implement, interpret, or supplement statutes. They provide detailed provisions on how laws should be applied in practice and often have the same enforceability as statutes. Regulations are typically adopted by executive agencies rather than legislatures. Regulations should comply with laws that are higher in the normative hierarchy. In French, “regulations” can be translated as “réglementation” (referring to the general body of rules) or “règlements”(referring to specific regulatory texts). 2 – In the European Union, regulations are a type of binding legislative act that has direct effect in all Member States without the need for national implementation. Unlike directives, which require transposition into national law, EU regulations apply uniformly across the EU as soon as they enter into force. They are used to ensure legal harmonisation in areas such as competition law, consumer protection, data protection, and product standards.Regulations
International treaties
The United Nations Convention on Contracts for the International Sale of Goods (CISG) signed in Vienna in 1980 is a multilateral treaty between 97 States (in 2023), governing contracts for the international sale of goods between private businesses, excluding sales to consumers and sales of services, as well as sales of certain specified types of goods. The Convention applies automatically when the contract concerns the international sale of goods between parties who are established in Contracting States (parties to the Convention). The parties to an international contract may, however, decide to exclude its application.
Intergovernmental organisations
UNIDROIT is an intergovernmental organisation that proposes, notably, a legal regime for international contracts (for the sale of goods, but also for services): the UNIDROIT Principles of international commercial contracts (2016). It is not a treaty (it is not applicable as of right). The parties can freely choose it as a governing law.
Private international organisations
The International Chamber of Commerce (ICC) is a private organisation that presents itself as the institutional representative of more than 45 million companies in over 100 countries. ICC is a leading arbitral institution for international business matters. The ICC defines the Incoterms (International Commercial Terms). These private terms may be legally binding only if the parties so decide freely.
The Incoterms are trade terms that may be incorporated in contracts for the delivery of goods. The Incoterms 2010 edition comprises 11 rules concerning the delivery of goods. The Incoterms are not a governing law (they do not provide for a legal regime of contracts).
World Trade Organization (WTO)
The WTO is the primary global organization that deals with the rules of trade between nations. It sets out the legal framework for international trade through agreements negotiated and ratified by member states. The WTO ensures that trade flows as smoothly, predictably, and freely as possible. The dispute settlement system of the WTO aims to enforce trade rules and resolve conflicts in a fair and timely manner.
International Trade Agreements
Countries enter into bilateral and multilateral trade agreements to establish preferential trade terms, reduce trade barriers, and promote economic cooperation. Examples include the North American Free Trade Agreement (NAFTA), the Trans-Pacific Partnership (TPP), and the European Union (EU) trade agreements.
Customs and Tariffs
Customs regulations and tariffs play a significant role in international trade. Each country has its own customs laws and procedures to control the flow of goods across borders. Tariffs, or import/export taxes, are often used to protect domestic industries, regulate trade, and generate revenue.
Intellectual Property Rights (IPR)
Protection and enforcement of intellectual property rights are crucial in international trade. Various international agreements, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), provide a framework for the protection of copyrights, trademarks, patents, and other intellectual property rights.
Sanctions and Trade Restrictions
Governments impose trade restrictions, such as embargoes or sanctions, against certain countries or entities to achieve specific policy objectives. These restrictions can limit or even prohibit trade in certain goods or services.
The legal framework of international trade is constantly evolving as new agreements are negotiated, trade practices change, and global geopolitical dynamics shift.