It's important to know which type of legal system applies in the market you're targeting. There are essentially four types of legal systems across the world.
1. Common law – is a body of law based on judicial decisions and customs as distinct from statute law.
- Common law countries depend on both case law and statutory law (legislation), which varies between countries – and even between state jurisdictions.
2. Civil law – is based on an explicit written codification of what is permissible, and what is not.
- Laws are documented in criminal, civil and commercial codes which can be used to settle disputes.
- The precise wording of legal codes means the system is less adversarial than common law.
3. Theocratic law – is based on rules relating to faith and the practice of a particular religion.
- We recommend that you seek advice and support from local intermediaries because states that govern by theocratic law are likely to lack a clear and precise due process and appeals procedure.
- States that govern by theocratic law will probably have strict views on certain goods entering the country – for example, you may have problems exporting alcohol to an Islamic country.
4. Bureaucratic law – is largely determined and enacted by the bureaucracy of the government in power.
- The laws are often interpreted and applied in an inconsistent way.
- Advice and support from local intermediaries is recommended in order to ensure that contracts are accurate, legally binding, and enforceable in the event of a dispute.
- Contracts should be clearly worded and cover all key clauses, and are best drawn up by an experienced lawyer who knows your business and the intricacies of exporting to your particular market.
Food safety and quarantine
Specific products may be subject to the domestic laws of your target market. For example, businesses wanting to import Victorian food and beverages into China must meet its Food Safety Law, which includes strict monitoring and supervision, and tough safety standards.
Familiarise yourself with the quarantine requirements of your export destination as many nations have very strict quarantine laws.
Avoiding and dealing with disputes
To help avoid commercial disputes:
- clearly define contract terms with all key parties – highlighting rights and obligations
- specify dispute resolution procedures in all contracts – with the intention of litigation or arbitration as the last possible option
- decide which language version of the contract is to prevail in the event of a discrepancy.
At a minimum, your export contract should cover:
- A sufficiently detailed description of your goods helps to avoid any disputes between exporter and importer, and enables the correct classification to be applied by customs on arrival.
- Price – with the per-unit cost clearly expressed.
- Sale currency.
- Allocation of responsibilities for freight and insurance.
- Packing details so buyers know how the goods will be packed in terms of numbers of units, weights and dimensions – this will have implications for transport and storage of goods on arrival in market.
- Payment terms – usually agreed during negotiation, and should be clearly stated to avoid misunderstanding and dispute.
- Choice of law – where the state of jurisdiction determines the law under which disputes (including arbitration, conciliation or other means of settlement) will be conducted.
All trading terms within the contract should be explicit and relate to the internationally accepted Incoterms rules.
Companies involved in international commercial disputes should seek appropriate legal advice in Australia or overseas. Austrade can provide referrals to legal service providers.
Several international arbitration commissions exist to facilitate international dispute resolution. Victorian companies should seek legal advice when deciding on an arbitration body.
Legal questions to consider before exporting
- Are there any laws that make access to your target market expensive or uneconomic?
- What legal issues may affect your export operations?
- What is the normal commercial practice in the supplier's country?
- Are there laws that protect local industries against your product?
- Are there legal restrictions on capital flows and foreign ownership?
- What are the pricing and competition regulations in your export destination?
- Are there particular standards, specifications or labelling/packaging requirements in your target market?