Test 1- chapter 5

Question 0

Confiscation

Answer 0

occurs when no compensation is provided

Question 1

Expropriation

Answer 1

Governmental action to dispossess a foereign company or investor; Compensation should be provided in a prompt, effective and adequate manner

Question 2

nationalization

Answer 2

a government takes control of some or all of the enterprises in an entire industry

• acceptable when:
• satisfies public purpose
• includes compensation

Question 3

Creeping of expropriation

Answer 3

limits economic activities of foreign firms
May include:
-Limites on repatriation of profits, dividends, or royalties
-Technical assistance fees
-increased local content laws

Question 4

Common vs Civil Law

Answer 4

The napoleonic code of 1804 drew on roman legal systems an is the basis for continental european law today. Code law is also known as civil law.
Common Law:
-companies are legally incorporated by state authority
-Code law is used in only a few areas: The US uniform Commercial Code

Civil Law:

• Legal system reflects the structural concepts and principles of the Roman Empire
• Companies are formed by contract between two or more parties who are fully liable for the actions of the company

Question 5

Anti Trust Issues

Answer 5

• Law are designed to combat restrictive business practices and to encourage competition
• enforced by FTC, Fair Trade, and Euro Commission
• Sherman act of 1890

Question 6

Bribery and Corruption

Answer 6

Foreign Corrupt Practices Act:

• Requires publicly held companies to institutes internal accounting controls that would record all transaction
• provides payments to third parties
• its a crime for US corp to bribe foreign officials

Omnibus Trade and Competitiveness Act:
-allows for grease payments to cut red tape

Question 7

Arbitration

Answer 7

Settles disputes outside of court