Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.

This article is the second in a series that addresses international law.

RALEIGH, N.C. – According to the Legal Information Institute at Cornell Law School, the line between public and private international law has become increasingly uncertain in recent years. Issues of private international law may also implicate issues of public international law, and many matters of private international law have substantial significance for the international community of nations.

The interplay and overlap of public international law, private international law and sovereignty in essence introduces the US into all our global business dealings.

Power of the United States in the Global Business Environment

When we discuss the involvement of the US in our international business dealings, we are addressing the implications of the US’ actions in imposing US business culture, US business concepts, US business standards and US domestic laws in international business transactions and the global arena. This is accomplished by the enforcement of US domestic laws upon US persons (“persons” includes physical persons or entities) transacting business with foreign persons in cross-border transactions or in foreign countries. The power of the US to apply and enforce its laws in this manner is intrinsic in a sovereign’s rights over its subjects.

Thus the US becomes involved in all cross-border transactions and all transactions in foreign countries involving a US person. As a result US domestic laws become important in the foreign markets not only for the US person, but for any foreign person transacting business with that US person. This becomes critical and even controversial the further the US extends its reach.

Balance in Foreign Countries

Balancing the interests of the United States in having jurisdiction over its citizens as they leave the United States, is the sovereign right of other nations. Each sovereign has the exclusive and absolute jurisdiction or right throughout its own territorial limits.

The broader is the interpretation of the application or enforcement of US domestic laws upon US persons doing business in foreign countries, the more likely a conflict will arise with the sovereign right of other nations.

Theoretically, all nations are equal and on a level playing field in terms of rights, obligations, international legal concepts, sovereignty. The question raised by this discussion concerns the role of the US involvement in business transacted in foreign countries, and the line at which US right and jurisdiction should terminate and the right and jurisdiction of the foreign sovereign prevail. At what point do the business culture, business standards, business concepts and domestic law of the foreign country prevail in a transaction in a foreign country that includes a US person?

In addition as the US aggressively applies US laws and policy on US persons doing business in foreign countries, US persons may be held to different legal standards from other persons doing business internationally, and possibly be at a competitive disadvantage because of this.

Future Trends

Although some of this discussion borders on the academic, there are very practical implications for the future. Leaving aside military strength, it is the economic advantage that one nation possesses that enables it to wield more power and influence internationally. As the global business environment is increasingly empowered by countries such as China or India, and as the economic advantage of the US wanes, will US business people be at a disadvantage by the US’ far-reaching imposition of US business culture, standards and laws? How should the US respond to growing global competition and the competitive ability of US businesses in the global business environment?

About the author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com.