. Civil Law System
These are written rules that are consolidated in an organized coded system. They are used in disputes that concern individuals. In using these rules, the judge is only meant to interpret the codes and give the ruling using the interpretation. It is therefore meant to govern and protect the citizens of a given country. The law is also used in cases that involve contracts and partnerships between individuals, property and family matters. It is known to be the oldest and the most commonly used form of legal system that was first used in Rome. The sources of these laws are the constitution as well as statutes of the state government (Sornarajah, 2010).
Distinction between civil law, common law system and sharia law
A common law kind of a legal system, also called the English law, which is made by judges. It derived from the traditional customs of the society. Though not all, these customs are taken by the legal section of the state through judges and made law. They therefore become a reference point to be used by the judges in a court of law. This law is meant toe protect the government as well as individuals on the bases of the societal customs and traditions. Judges that use the courts where common is enacted depend on the historical records, which they get law reports, of the case at hand or previous similar cases. They are therefore obliged to depend on their predecessor’s ruling on such cases whose details are similar. The decisions referred to must from the same court or a lower one.
However, due to the constant changes that occur in a society, these judges do have a provision of referring to other sources in decision making process. In order to attain a degree of uniformity and predictability, stare decisis principle is used. The neutral judge listens to both sides of arguments, and passes out a judgment that obviously will in favor of one of the parties using the law. There is usually room for appeal for the defeated party. This in this system, all people, despite their position of authority are bound by the same set of laws which also limits their authority. Sharia law, also called Islamic law, is based on the religious believes and practices of Islam (Perdomo, 2007).
The source of this law is the Quran and Sunna (practice). It deals with cases concerning marriage, divorce, property and inheritance. It also addresses other secular issues like politics as well as personal matters diet and religious responsibilities. It is popularly used in Islamic countries. Sections of are however used in other countries e.g. in common law when a case involves a party that subscribes to Islam religion. It usually incorporated in civil law. The main difference between civil law and common law is that a judge using civil law is guided by the abstract written law while the one using common law is guided by historical facts of similar cases. Additionally, civil law coded while common is not. The third difference is based on their sources.
1b.How a law system can affect the structure/form and product(s) of a globally operated organization
Structure of an organization is the manner in which people are arranged in an organization with an aim of attaining certain outlined goals. The structure affects all the fields in that organization i.e. finance, production, sales, human resource etc. In most multination corporations the product division is controlled by vertical kind of organizational structure. An organizational structure is influenced by several external factors like the business strategy, prevailing economic conditions and the law of the country (Campbell, 2008).
All businesses in a given country are required to abide by the laws of that country. This implies that when the laws of the country change, the organization has to be affected. Laws define the policies in which a business is to operate as well as its restrictions. Businesses are bound by contract law since they are commonly involved in contract. A company like coca cola company, a soft drinks company, that operates worldwide is normally forced to adjust to policies that operate in the different countries it operates in. In some cases the adjustments involve the production process which also affects the product itself.
2a.Differences between the provisions of General Agreement on Trade in Services (GATS) and North American Free Trade Agreement (NAFTA)
GATS is an extension of General Agreement on Tariffs and Trade (GATT). However the difference between the two is that, while GATT caters for the goods sector, GATS deals with the service sector. GATS is a agreement of WTO that was created to cater for issues of multilateral system of trade of services. The goal of this treaty is to eliminate barriers of trade in the service sector so that it is susceptible to competition. This service sector includes; education, health, banking, tourism and transport air transport services and those that not supplied for commercial reasons. It was created after the Uruguay Round of negotiations and later effected in 1995. It was meant to create fairness to all parties participating in trade (Gallagher, 2008).
The provisions under this agreement are; Most Favored Nations (MFN) where members countries allow equal opportunities for completion in the sectors it has allowed foreign involvement, for transparency purposes, members are supposed to have centers where enquiries can be conducted as well as publishing the condition of the agreement, reviews concerning monopolies that exist in that country, no discriminations between foreign and local businesses as long they are members to this agreement and market access limitations where member countries are not to limit ;suppliers or the value of transactions of services, service operations, number of workers in the sector and that member should not put legal restrictions.
NAFTA is a trade agreement between Canada, Mexico and The United States. It was effected in 1994. It was meant to eliminate trade and investment barriers among these countries. Between United States and Canada, the agricultural sector that had been reached earlier was included into the new agreement. On its implementation, tariffs on most of the goods in these countries were eliminated. The difference between GATS and NAFTA is that the former covers a more countries (140- all those where WHO operates) while the latter applies to the three countries. The other difference is that, the provisions under GATS involve services while NAFTA addresses all but mostly goods. While GATS gives provision in some cases, NAFTA aims that gradually all barriers will be eliminated e.g. in agricultural sector, Canada and US had eliminated tariffs in most of the products except of pork and dairy products (Graham, 2005).
IGOS that are responsible for protection of workers protect workers
As globalization continues, concerns on the well being of workers have also increased. For this reason several organizations have come up to protect workers from exploitation by employers. Other existing ones have extended their policies to cover this aspect. One of these organizations is the United Nations which has generated international labor standards that have been accepted by many countries. This was done together International Labor Organization, another NGO that also caters for workers welfare. COVERCO is another NGO in Guatemala that monitors reports the findings to lawyers. They also provide an avenue through which workers can present their grievances. Migrant Care is another NGO that fights for workers rights in Malaysia. It is seeks to get a uniform and standard contract that matches with the national and international standards (Hardy et al, 2006).
Amnesty International on the other had bargains for workers liberty and rights according to different countries conditions. In Egypt for example, the organization is pushing for freedom in creation of workers union. OECD is also one of these organizations. In its fight for workers welfare the organization has come up with guidelines to protect workers from MNE employers. These are; the freedom of workers to associate among themselves, employers should support the collective bargaining agreement for workers, adequate information should be provided to representation of workers during negotiations, MNEs should strive to establish a good system of reconciliation in times of disputes according to that country’s conditions.
3a.Systems adopted by countries to address the issue of double taxation
Double taxation is a situation that arises to individuals who work in foreign countries or get an income from a foreign country. In this case the individual may also refer to a business. It occurs when the individual is taxed by both the home country and the host country. This hinders progress. Countries have therefore sought to eliminate this phenomenon through basic systems which include; exemption, credit and reduction systems. The mode of operation of the exemption system is that the individual is not taxed by the home county on the foreign income but by the host country where the income has been generated from. On the basis of the credit system, the individual will pay for the foreign to the home country but will reduce his taxes on domestic income by the amount of the tax of foreign income. In the last system i.e. the reduction system the individual is allowed to deduct the taxes paid on the foreign income while paying for the local income tax. The exemption system is the most preferred system by tax payers as it encourages foreign investments at low tax rates. However, most countries prefer the reduction system since it favors domestic investments which advantageous to the country in terms of resource utilization as well as tax revenue.
Tax haven
The argument that tax evasion, though unfavorable to countries, unavoidable is true. It is also true that it is favorable to businesses. Tax haven refers to countries, regions or territories where some taxes categories are not taxed at all and if they are, they are levied at a lower than normal rate. Such systems encourage businesses to avoid taxes by moving to these areas. Therefore for a country to retain investors, and encourage more, it has to set low rates of taxes or even where necessary elevate them or simply ignore the issue of tax avoidance by businesses. The main aim of tax haven is to avoid taxes through the set laws; no taxes, no information to be used by foreign country for taxation purposes thus no transparency in it (Blankson, 2005).
During this season of economic meltdown, tax haven becomes a strategic plan for most businesses. This is due to huge amount of losses that most businesses experience. Similarly, by evading taxes, some businesses are able to boost little profits earned. On the same note, for businesses experiencing shortage of capital, evading tax becomes an appropriate option in reducing operating costs. Also with the increased globalization, completion has also grown stiffer. Therefore, businesses are in search of areas where they can get a competitive advantage over their competitor as a survival tactic. Infant businesses as well as those which are collapsing can be able to grow in an environment where taxes are paid at rates or not at all.
Sectors that have been closed for foreign investments and the resultant effect on globalization
A country can close certain sectors of its economy from foreign investment through the policies regarding those sectors. In Philippines for example, there laws that restrict investment in to the mass media apart from recording. The laws in this sector require 20% radio ownership. In other industries like those recruitment, 25% is the proportion required, in extraction industry a restriction has also been placed. China on the other hand restricts to foreign investors on provision of telecom service provision and internet services (Graham, et al, 2005).
Similarly Indonesia has not opened up foreign investment o telecommunications industry. These hindrances of foreign investments in certain areas hinder globalization a great extent and therefore lack the benefits associated with it. Globalization allows exchange of ideas and technology. The implication of this is that these sectors remain underdeveloped. Moreover, resources remain either unutilized or underutilized. Closing up certain sectors of the economy may have bad effects on the global economy in that resources needed for continued production are not accessible. This hinders economic growth.
Rights of an investor
Foreign investment guarantees are meant to encourage investments by foreigners into a country. This is done through political risk insurance. This gives the investors the guarantee that the losses that result from out of the business environment are catered for. Other guarantees include support for building capacity of the investment, providing advice and the government mediating where necessary. The other major guarantee is that of rights of an investor. The general rights of an investor are; power to vote i.e. voting the leadership of the organization one wishes to invest in this ensures that the management of the investment is managed by the people the investor chooses and believes in, ownership which can be transferred which creates flexibility. The investor also has the right to sue the company in the case of bridge of contract. These rights are important since they protect both the investor and his investment.
References
Campbell ,D.(2008).International protection of foreign investment .California: Lulu press.
Blankson, S. (2005).The Ultimate Guide to Offshore Tax Havens. California: Lulu Press.
Graham, M.,Oding N.,Welfens P.(2005).Internationalization and economic policy reforms in transition countries. New Delhi: Birkhäuser.
Gallagher K. (2008).Handbook on trade and the environment. Chicago: Edward Elgar
Hardy, S., Upex V.(2006).Employment Law for Business Students. Chicago: SAGE.
Sornarajah, M.(2010).The International Law on Foreign Investment. London: Cambridge University Press.
Perdomo, R., Merryman J.(2007).The civil law tradition. London: Stanford University
