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Unit 4: International Legal Environment

advent of cable TV however, is creating problems for regulation. In most countries, apart from Notes
those laws that control investment and related matters, there are a number of laws that regulate
the conduct of the business. These laws cover such matters as standards of product, packaging,
promotion, ethics, ecological factors, etc. Business policies and regulations have much to do
with the political system and the characteristics of the political parties and politicians. In many
countries with a view to protecting consumer interests, regulations have become stronger.
Regulations to protect the purity of the environment and preserve the ecological balance have
assumed great importance in many countries.
Some governments specify certain standards for the products (including packaging) to be marketed
in the country: some even prohibit the marketing of certain products. In most nations promotional
activities are subject to various types of controls. Several European countries restrain the use of
children in commercial advertisement. In a number of countries, including India, the
advertisement of alcoholic liquor is prohibited. There area host of statutory controls on business
in India. Although the controls have been substantially brought down as a result of the
liberalization, a number of controls still prevail. Many countries today have laws to regulate
competition in the public interest. Elimination of unfair competition and dilution of monopoly
power are the important objectives of these regulations.

4.1 Legal Systems

In order to understand and appreciate various legal systems and their legal philosophies among
countries, it is essential to distinguish between the two major legal systems: common law and
statute law.

Notes There are about 25 common law or British Law countries.

A common law system is a legal system that relies heavily on precedents and conventions.
Statutes guide judges’ decisions not so much as by previous court decisions and interpretations
of what certain laws are and should be. As a result, these countries’ laws are tradition oriented.
Countries with such a system include United States, Great Britain, Canada, India and other
British colonies.
Countries implying a statute law system, also known as code or civil law, include most European
countries and Japan. Most countries, which are approximately 70, are guided by statute law legal
system. As the name implies, the main rules of law are embodied in legislative codes. Every
circumstance is clearly spelt out to indicate what is legal and what is not. There is also a strict and
literal interpretation of law under this system.
In actual practice, the two systems greatly overlap and the distinction between them is not clear-
cut. Although US judges greatly rely on other judges’ previous rulings and interpretations, yet
they still refer to many laws that are contained in statute or codes. For statute law countries,
many laws are developed by courts and are never reduced to statutes. Therefore, the only major
distinction between the systems is the freedom of the judge in interpreting laws. In common law
countries, the judges’ ability to interpret laws in a personal way gives the judge a great deal of
power to apply the law as it fits the situation. In contrast, a judge in civil law countries has a
lesser role in using personal judgment to create or interpret laws because judges must strictly
follow the law.

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