IMPLEMENTATION OF LAW IN INTERNATIONAL BUSINESS
CONTRACTS
Introduction
In international business, contracts play an important role; this role is evident from the
increasing number of cross-border trade transactions. Such trade transactions are usually set
out in contract documents. The increasing forms of trade transactions have brought other
consequences, where with the development of trade transactions, the forms of international
contracts have also developed. Since a contract is nothing but an agreement or agreement
that gives birth to law, the law governing this field is consequently born and developed from
the agreements of the parties.
Professor Sudargo Gautama (1976) argues that international contract law is a national
contract in which there are foreign elements. 5 Professor Sudargo Gautama's limitation has
become a doctrine. Since this field of contract law is essentially national law, it is not only
alive and developing in accordance with the development of the business world, but also the
role of the government has intervened.
This role is especially necessary because of the public interest that must be protected. The
role of the government is also very important considering that for international contracts, the
attention and interest of the state in it is certainly difficult to avoid.
Any contracts with foreign parties will show various problems and issues in practice. For
this reason, the rules that apply to the contracts made are needed. For example, in contracts
made between United States and foreign parties, there are often clauses about the applicable
law (applicable law) for the contract in question. Where contracts are drafted by legal
counsel for the companies concerned, there will invariably be a clause setting out the
applicable law.
Based on the description above, the author is interested in writing a scientific paper in the
form of this thesis with the title: "Implementation of Law in International Business
Contracts."
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
v Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
Problem Formulation
What are the legal arrangements in international business contracts?
How is the implementation of dispute resolution law in international business contracts?
Research Methods
In general, the scope of this research is the discipline of law, namely Business Law and
International Trade Law, especially with regard to the legal implementation of international
international business activities. then this research is part of legal research by examining
library materials called library legal research. 6 While the approach method used in this
research is normative juridical, which is research focused on examining the application of
rules or norms in normative law.
Discussion
Legal Arrangements in International Business Contracts
International Business is a business where business activities consist of business
transactions between parties from more than one country. Also called international
marketing as business transactions carried out by companies in one country with other
companies or individuals in other countries on the basis of mutual agreement. The parties in
question can be between individuals, between individuals and the government of a country
or the government of a country and the government of a country government of another
country.
The legal regulation of international business transactions is categorized as being in the
realm of private law, so that freedom is given to the parties to determine the contents of the
agreement which become achievements in an engagement. Nevertheless, business
transactions carried out by two legal subjects of different nationalities must still heed
international law regarding the business transactions they carry out, in addition to having to
pay attention to the rules of national law of each country.
According to Huala Adolf8 , an international contract is a contract in which there is or has
a foreign element. The foreign element in question includes the existence of legal subjects of
different nationalities.
International business transactions are generally based on contracts that have been agreed
by the parties. With the existence of a binding contract, the parties have confidence in the
expectations that they will get from the implementation of the contract. And for these
expectations, the parties are willing to use their resources in return for the desired
expectations.
To ensure the expectations of the parties, the contract is not only a source of moral
obligation, but also a legal obligation whose implementation must be obeyed.9
Consequently, in the event of a dispute, neither the judge nor a third party may interfere with
the contents of the agreement made by the parties.
In conducting business cooperation or business transactions between countries, business
people need international business contracts, be it in the scheme between government and
government (G to G), between government and private (G to B), or between private and
private (B to B). An agreement on the terms of business cooperation or international
business transactions between Business actors from two or more countries are usually
outlined in an international business contract.
International business contracts are the basis of legal relations and mutual guidelines for
business actors from different countries in carrying out business cooperation or international
business transactions. Therefore, business people who are engaged in business cooperation
or international business transactions must fully understand the intricacies of international
business contract law.
International business transactions are a study of private law, where in private law, the
law provides wider opportunities for each party to make, promise and implement the clauses
they make. However, it cannot be denied that to be able to carry out these business activities,
the parties must carefully understand and understand the legal rules that exist in the country
of the opposing parties. This will greatly affect the implementation of the agreement.
The legal principles regulated in international business transactions refer to the principles
of international treaty/contract law agreed by the parties, and international trade
conventions. The principles of international business law can be seen from the applicability /
source of international contract law, Huala Adolf12 in his book explains that there are 7
(seven) forms of law that can be the source of international contract law, namely:
National Law
Contract Documents
Habits at international trade customs related to contracts
General legal principles of contract
Court decision
Doctrine
International agreements on contracts.
From these seven sources of law, it can be explained that, although international business
contracts are the realm of private law, and apply the legal principles of freedom of contract
and the principle of sovereignty, they must still heed several other sources of international
contract law.
Implementation of Dispute Settlement Law in International Business Contracts
Dispute resolution, whether to a court or to arbitration, is often based on an agreement
between the parties. The usual step is to make an agreement or include a dispute resolution
clause in the contract or agreement they make, either to the court or to an arbitration body.
In general, in addition to agreeing on the institution or forum that will resolve the dispute,
the parties also need to agree on what law will be applied by the new judicial body agreed by
the parties.
The legal basis of the forum or dispute resolution body that will handle the dispute is the
agreement of the parties. This agreement is made either at the time the contract is signed or
after the dispute arises. Usually, the parties' failure to determine the forum will result in
difficulties in resolving the dispute because the lack of choice of forum will be a strong
reason for each forum to declare itself authorized to examine a dispute.
Common law is known as the concept of long arm jurisdiction. Under this concept, a
court can assert its authority to accept any dispute brought before it even if the relationship
between the court and the dispute is tenuous. For example, judicial bodies in the United
States and the United Kingdom often accept disputes brought before them even though there
is little connection between the dispute and the judicial body. In addition to the court forum,
the parties may also submit their disputes to alternative means of dispute resolution,
commonly known as ADR (Alternative Dispute Resolution) or APS (Alternative Dispute
Resolution). The alternative arrangement here can be an alternative way besides the court. It
can also mean alternative resolution in general, namely various alternative dispute
resolutions that the parties can use, including alternative resolution through the courts.
Usually, the clause also includes or states the law that will be applied by the dispute
resolution body.
In the practice of international trade, there are often cases that question which state law
will be used in the event of a dispute. The answer to this problem lies in the agreement of the
parties concerned contained in the contract where they agree to contain a clause about which
country's law will be used.
Generally, trade disputes are often preceded by negotiated settlements. When this fails or
is unsuccessful, other means of settlement such as court or arbitration are pursued.
The issue of choice of law to be applied is one of the most important issues in an
international trade contract. The terms choice of law in other languages include: Partij
autonomie, autonomie des parties (French), intension of the parties (English) or (choice of
law). The parties to a contract are free to make choices, they can choose the law that should
be used for their contract. The parties can choose a particular law.
Alternative dispute resolution (ADR) or alternative dispute resolution (APS) is an effort
to resolve disputes outside of litigation (non-litigation). In ADR/APS there are several forms
of settlement dispute. The forms of ADR/APS according to Suyud Margono (2000:28-31)
are: (1) consultation; (2) negotiation; (3) mediation; (4) conciliation; (5) arbitration; (6)
good offices; (7) mini trial; (8) summary jury trial; (9) rent a judge; and (10) med arb15 .
As to what law to choose and apply to the contract, it depends entirely on the
agreement of the parties. There are various laws that the parties can choose from. These laws
are: (1) The national law of a country, particularly the national law of one of the parties; (2)
Customary law; (3) International treaties; and (4) International law.
National Law
The choice of national law by the parties is the most common choice. Even in developing
countries, the choice of national law is in some cases mandatory. For example, a
Singaporean entrepreneur enters into an agricultural product distribution contract with an
United States entrepreneur. The choice of law can be any of the laws of these contracting
states which has consequences for the contract. The choice of law will determine which law
will apply to determine the validity of the contract and how the contract should be
interpreted.
Customary International Law
Parties may and are also free to choose customary law as the law that will apply to the
contract. This choice of law is usually chosen for an object or transaction in a contract. This
choice is deliberately chosen because the law governing the object or transaction has
crystallized into a customary international law that is generally recognized. Customary
international law has been recognized for its binding force. Various instruments of
international contract law, even United States national law as contained in Articles 1339 and
1347 of the Civil Code recognize the existence of this customary law.
Article 1339 of the Civil Code states: "An agreement is not only binding For things that
are expressly stated therein, but also for everything that, according to the nature of the
agreement, is required by propriety, custom or law." Meanwhile, Article 1347 KUH Civil
Code states:
International Agreements
Parties may also choose international treaties that govern international contracts. One
example is the choice and application of The United Nations Convention on Contracts for
the International Sale of Goods (CISG) 1980, which is a convention on International Sale
and Purchase. This choice of international treaty law is usually limited to a condition,
namely whether the state of the parties to the contract is a member of or bound by the
international convention or treaty.
In United States, international agreements are regulated and are subject to Law No.
24/2000 on International Agreements. In Article 1 Paragraph (1) of the law, international
treaties are defined as follows: "International Agreements are agreements, in a certain form
and name, which are regulated in international law made in writing and give rise to rights
and obligations in the field of public law."
An international treaty can be a bilateral treaty between two countries. Such bilateral
agreements have direct or indirect effects, which can be in the form of agreements in the
fields of navigation, trade or friendship. Another form of treaty is a multilateral treaty that
applies to more than two countries, namely soft-law or non-binding, which is in the form of
the Model Law on International Commercial Arbitration and hard-law or binding treaties,
which can be a voluntary declaration of submission to an international treaty.
International Law
The choice of international law is somewhat controversial. However, it has been used as
an alternative for contracts where one of the parties is a state. One common reason is that
international law in principle regulates cross-border relationships in the field of public law,
not civil law.
We can see an example of a case that occurred between the United States oil company
Texaco and the Libyan government, namely the Texaco vs Libya dispute (Texaco Overseas
Petroleum Co and California Arabic Oil Co vs Libya, 1977).17 In this dispute, the role of
international law as the lex causae (legal basis) was raised. In this dispute, Libya
nationalized all assets. property and rights of the United States company in the concession
contract.
In this choice, it appears that Libyan law will apply to the concession contract. However,
the Libyan law is limited in its applicability, i.e. to the extent that it conforms or is similarly
regulated by principles of international law. Interpreting or interpreting the principles of
international law in question is very difficult. For this reason, in applying this law, the sole
arbitrator in this case, Professor Dupuy, who is a French arbitrator, has stated that the law
that will apply to the concession contract is the law chosen by the parties. Professor Dupuy
held that the contract made between the Libyan government and the US oil company Texaco
was binding. This is in accordance with the principle of international law, namely the
principle of pacta sunt servanda. Thus the law applicable to the contract is the principle of
international law pacta sunt servanda.
Combination of Certain Laws
In practice it can happen that the parties to a contract subject the provisions of the
contract to several legal systems. The choice of several legal systems in the contract is also
known as the split proper law method. This method has been recognized by international
institutions such as The Institute of International Law (ILA), which in its annual session in
Athens in 1979. issued a resolution entitled "The Proper Law of the Contract in Agreements
Between a State and a Foreign Private Person." In Article 2 of the resolution. it appears that
the choice of law is possible more than one or even a mixture of two legal systems or
sources. Article 2 reads in full "the parties may especially in choosing the right law concerns
the contract of one or more legitimate domestic systems or the customary principles of such
systems, or principles of common law, or principles applied in international economic
relations, or international law, or a combination of these sources of law".
The step of choosing more than one legal system to regulate a contract is usually taken
because the object of the contract cannot or cannot be regulated in its entirety by one legal
system.
Conclusion
Legal arrangements in international business contracts can be found in the rules and
principles of international contract law that regulate the provisions of international
business transactions. The provisions in the international convention regarding
Contracts for the international Sale of Goods (CISG) and the UNIDROIT Principle of
International Contracts in 1994. The UNIDROIT principles are a source of international
contract law created as an effort to create harmonization of laws and rules in
international trade. The principles of contract law include; the principle of freedom of
contract, the principle of legal recognition of business custom, the principle of good
faith and fair dealing, the principle of force majeure and retroactive effect of avoidance.
Regarding the available forums or forms of dispute resolution, it appears that each has
its strengths and weaknesses. Whether it is APS or courts, each has its own
characteristics. According to its form, the choice of law can be a choice expressly stated
by the parties in a contract clause in which a particular legal system they choose is
affirmed. The choice of law may be tacit or implied. The choice of law may also be left
to the court by agreement of the parties, which is usually done when the parties fail or
have difficulty in reaching agreement on the law to be chosen.
