INTRODUCTION

Introduction to the Social and Historical Context

If sheer size, populousness, and continuity of influence are the measures of a superpower, China stands virtually unchallenged among the nations of the world. The actual age of a civilization self-identified as Chinese remains unknown and subject to reestimation with every stunning archaeological discovery, but if one were to apply retrospectively the definition of statehood under modern international law, China has been a “state” for more than two thousand years: it has had a defined territory (although ever expanding), a population (although ever growing), a government in control of the population and territory (which became ever more sophisticated in managing a large, densely inhabited space), and the capacity to engage in foreign relations with other states (the nomadic peoples of Inner Asia in ancient times, the global community today).

Given China's long history, in order to understand any aspect of contemporary Chinese law, it is important to recognize the persistence of tradition, in particular the influence of Confucianism. “Indeed, Confucianism is still an integral part of the ‘psycho-cultural construct’ of the contemporary Chinese intellectual as well as the Chinese peasant; it remains a defining characteristic of the Chinese mentality.” Tu Wei-ming, The Confucian Tradition in Paul S. Ropp., ed. Heritage of China: Contemporary Perspectives on Chinese Civilization 136 (1990). In the West, we tend to forget that, if one looks closely enough at so-called Western legal systems, the threads of tradition, from Greece to Rome to modern Europe and the Americas, are clearly present.

INTRODUCTION

The French Constitution, the basis of the Fifth Republic, was approved by the populace and promulgated in 1958. The Parliament does not have the predominant role in the government that it occupied in the Constitution of the Fourth Republic. In former regimes, the Parliament had the power to determine law. Section 34 of the Constitution lists the areas in which the Parliament can legislate.

INTRODUCTION TO THE SOCIAL AND HISTORICAL CONTEXT

Although one of several countries around the rim of the traditional Chinese empire, Japan was able to develop its own distinctive indigenous culture without being overwhelmed by Chinese influence. Unlike Korea or Vietnam, Japan was physically separated from the Asian continent by over one hundred miles of water. It was never invaded by China. Japanese absorption of Chinese culture – its writing system, Buddhist religion, and Confucian ethics – was slow, gradual, and voluntary. John King Fairbank, Edwin O. Reischauer, & Albert M. Craig, East Asia: Tradition & Transformation 324 (rev. ed. 1989). See also John Owen Haley, Authority Without Power: Law and the Japanese Paradox 31 (1991) (law was a small, although still important, element in borrowing from China).

The origins of the Japanese “people” in the islands dates back one hundred thousand to two hundred thousand years, based on archaeological evidence. The Japanese language is a member of the Altaic family, similar to Korean, the languages of north and central Asia, and ultimately, Turkish. Therefore, despite extensive borrowing of vocabulary from Chinese, its distinctiveness has contributed to the maintenance of a separate ethnic identity from China. Fairbank et al., supra, at 326-27.

When Admiral Perry sailed into Yokohama harbor in 1854, to compel Japan to open its doors to foreign trade, the country had been virtually closed to all outside contact for 250 years.

GENERAL OVERVIEW

EU: Growing Number of Member States

Since its beginning, what has become the European Union has been expanding geographically but also conceptually from what was strictly a regional international organization of limited scope made up of independent nations toward something that has some aspects of sovereignty that in some senses makes it a government independent of its Member States. The Treaty of Amsterdam of 1997 marks that change with the language describing the EU as “an ever closer union among the peoples of Europe, where decisions are taken as closely as possible to the citizen.” That replaces the language – “Union with a federal goal” – used only five years earlier in the Maastricht Treaty. That movement toward further union is now on pause because by referenda the French and Dutch people voted against the ratification of the proposed EU Constitution, which was designed to simplify the Treaties underlying the EU. Although eleven states had ratified the Constitution by the time of the vote in France and the Netherlands, the rejection by the two in 2005 has resulted in the establishment of a “period of reflection” about the future. That period was recently extended until mid-2007.

The European Union has, since its beginning in 1957, been engaged in an ongoing process of geographic enlargement. The first six founding members were: Belgium, France, Germany, Italy, Luxemburg and the Netherlands.

INTRODUCTION

When the North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994, it created the world's largest free trade zone. Roy L. Heenan et al., NAFTA/NAALC, in International Labor and Employment Laws 20-1 (2d ed., William L. Keller & Timothy J. Darby, eds., 2003) (hereinafter Heenan NAFTA/NAALC). NAFTA also was, by virtue of its labor side agreement, the first trade agreement significantly linking labor rights and trade. Bob Hepple, Labour Laws and Global Trade 107 (2005) (hereinafter Hepple, Labour Laws). Indeed, the North American Agreement on Labor Cooperation (NAALC) has provided a template, with some important variations, for systems of cross-border workplace law monitoring in all of the United States' subsequently negotiated free trade agreements. Marley S. Weiss, Two Steps Forward, One Step Back – or Vice Versa: Labor Rights Under Free Trade Agreements from NAFTA, Through Jordan, Via Chile, to Latin America, and Beyond, 37 U.S.F. L. Rev. 689, 689-90 (2003) (hereinafter Weiss, Two Steps).

Despite its subsequent effect, the NAALC at the time of its drafting was an afterthought. Weiss, Two Steps, at 701. NAFTA, at its 1992 signing by U.S. President George H. W. Bush, Mexican President Carlos Salinas de Gortari, and Canadian Prime Minister Brian Mulroney, lacked detailed labor and environmental chapters. That omission provoked considerable public discussion, and was a major issue in the 1992 U.S. presidential campaign. Heenan, NAFTA/NAALC, at 20-2, 20-7.

INTRODUCTION

The German Reich was founded as a constitutional monarchy in 1871. The monarchy survived until the end of World War I. The Weimar Republic was then established and it lasted until the Nazi state was established in 1933. After the end of World War II, Germany was divided into four zones occupied by the United States, the United Kingdom, France, and the Soviet Union. In 1949, the three western zones joined to form the Federal Republic of Germany (FRG) and the Soviet zone formed the communist German Democratic Republic (GDR). With the collapse of the Soviet Union and the Berlin Wall, the country was reunified on October 3, 1990, with the east joining the west. See generally Inga Markovits, Imperfect Justice: An East-West German Diary (1995), describing the shift from the Socialist system of justice to the Western system as part of the reunification. Manfred Weiss & Marlene Schmidt, Labour Law & Industrial Relations in Germany 16-17 (3rd ed. 2000) (hereinafter Labour Law in Germany).

The Basic Law (the Constitution) of the FRG (Grundgesetz) was adopted in 1949 and it establishes “a democratic, parliamentary, and federal republic.” Id. at 17. Since the 1990 unification, there are sixteen states (Lander) in the federal union governed by the Basic Law. In most areas of labor and employment law, the states have the duty to enforce federal labor law.

INTRODUCTION

The globalization of business management greatly increases the chances that the actions of American corporations will affect the lives of foreign workers toiling outside U.S. borders. Stephen B. Moldof, The Application of U.S. Labor Laws to Activities and Employees Outside the United States, 17 Lab. Law. 417 (2002). Whether operating a foreign subsidiary or as a virtual corporation that has outsourced to contractors a core function such as production, U.S. transnational corporations (TNCs) clearly derive benefits from foreign labor. Consequently, they are increasingly seen as bearing responsibility for working conditions on foreign soil. Undoubtedly, many of the jobs provided by the international activities of U.S. TNCs are equal or superior to those not connected to the global economy. Donald C. Dowling, Jr., The Multi-National's Manifesto on Sweatshops, Trade/Labor Linkage, and Codes of Conduct, 8 Tulsa J. Comp. & Int'l L. 27 (2000). Yet well-publicized cases of U.S. corporate connections to foreign workers laboring in sweatshop conditions are a troubling reminder that low cost goods for American consumers are often the product of the hardships of those who produce them.

Many of the devices available for promoting corporate accountability have been discussed in previous chapters of this book. For example, advocates concerned about substandard working conditions might make use of the labor and employment laws in the country where the workers reside. Although this strategy makes sense if the workers are employed in an industrialized country, labor market regulation by developing nations can be problematic.

INTRODUCTION

Imagine that you are an employment lawyer whose firm represents transnational corporations. Your client, a U.S. manufacturer of medical devices, plans to issue stock options to its executives. In return for the options, the client wants executives located in twenty-two national jurisdictions to sign covenants not to compete that will prevent them from working for the client's competitors for a certain period of time after their departure from the company.

Think about the ways in which this assignment is challenging. Noncompete agreements are devices increasingly used domestically by U.S. employers to prevent former employees from using the human capital they develop on the job on behalf of a competitor. In the United States, employers sometimes enforce these agreements by filing suit seeking to enjoin the postemployment activities of former employees.

INTRODUCTION

That inferior labor conditions in one country can supply it with a trade advantage over its competitors is not an idea of recent vintage. Likewise, pleas for universal labor standards on humanitarian and economic grounds were first made over 150 years ago. Edward E. Potter, The International Labor Organization, in International Labor and Employment Laws 40-1 (2d ed., William L. Keller & Timothy J. Darby, eds., 2003) (hereinafter Potter, The ILO). Despite some insipient efforts, however, scant progress was made toward establishing global labor standards until 1919. In that year, in the aftermath of World War I, the International Labour Organization (ILO) was established by the Treaty of Versailles as an autonomous body within the ill-fated League of Nations. Bob Hepple, Labour Laws and Global Trade 29-30 (2005) (hereinafter Hepple, Labour Laws). The ILO survived the disintegration of League, becoming in 1946 a specialized, tripartite agency of the United Nations, with member nations sending delegations comprised of representatives from government, organized labor and employers. As of October 2006, it had 179 member countries.

Animating the formation of the new organization in 1919 were the goals of promoting fair trade and ensuring worker protection from exploitation. The ILO was also founded on the principle that advancing social justice is a key element to establishing lasting peace. To those ends, the ILO's role is to promulgate international standards for implementation by its member nations, mainly by adopting, as will be described later, conventions and recommendations.

INTRODUCTION TO THE HISTORICAL AND SOCIAL CONTEXT

As the world's second most populous country after China, India is, at the same time, the world's largest democracy. Where China and other developing countries sought economic progress through the imposition of one-party, authoritarian rule, since gaining independence in 1947, modern India has pursued the three strands of a “seamless web:” national unity and integrity, the institutions and spirit of democracy, and socioeconomic revolution to better the material lot of the masses. The framers of India's Constitution were motivated by the belief that these three strands were “mutually dependent and inextricably intertwined,” no one strand should be advanced at the expense of another. Granville Austin, Working A Democratic Constitution: A History of the Indian Experience 6 (1999).

The reality at present is quite far from achievement of these noble goals. National unity is precariously maintained in the face of border conflict with India's neighbors, Pakistan and China, and frequent police actions to quell separatist movements and interreligious conflicts. Political power is centralized in the prime minister, the Cabinet, and the top echelons of the administrative bureaucracy. Prime ministers insulate – and isolate – themselves by relying on an inner circle of loyal advisers. Although more representative of the population at large than at Independence, Parliament occupies a diminished role as the power of the executive branch has grown. The civil service, once the favored destination of the best and the brightest, is widely regarded as impersonal, inflexible, and corrupt.

INTRODUCTION

The United Mexican States, the third country in North America, is considerably different in many important ways from the United States and Canada. Unlike the United States and Canada, the initial European explorers, who were from Spain rather than England, France, and the Netherlands, found a large indigenous population made up of Aztec, Mayan, and Olmec cultures. Those differences, along with others, have resulted in a contemporary society that is quite distinct from the two other North American countries. Mexico's population in 2005 was over 105 million, with a per capita gross national income, in U.S. dollars, of $6,613. Some 11.6 million people born in Mexico live in the United States, with about six million Mexican immigrants in the United States not documented. In 2005, about five hundred thousand unskilled workers crossed the border illegally, with only two receiving permanent visas. Julia Preston, Rules Collide with Reality in the Immigration Debate, www.nytimes.com/2006/05/29/us/29broken.html.4 (hereinafter Preston, Rules Collide with Reality). By comparison, the gross national income per capita for Canada's population of over thirty-one million is almost four times as large at $24,470. In the United States, the population is over 290 million people with a per capita gross national income of $37,870. See World Bank, World Development Indicators 2005, www.devdata.worldbank.org.

INTRODUCTION

As Professor Hardin suggests in the quote above, the labor and employment law of the United States is not a cohesive set of laws. Instead, it has developed over time with different underlying principles prompting the development of the law at different times. Broadly, the periods of U.S. law may be divided into the organized labor/collective bargaining period from the 1930s to the early 1960s, and the individual employment rights period from the early 1960s to the present. The one prominent exception to these divisions is the Fair Labor Standards Act, an individual employment rights law (imposing a minimum wage and overtime pay and restricting child labor) enacted in 1938. Although the FLSA was not based on the organized labor/collective bargaining model, it was viewed as supporting the collective bargaining model, and the legislation was supported by organized labor.

In the 1930s, the paradigm of organized labor and collective bargaining and collective action prompted Congress to pass the Wagner Act (or National Labor Relations Act), which protected the rights of employees to join unions and engage in collective bargaining with their employers.

UNIFORM LAW FOR THE INTERNATIONAL SALE OF GOODS

International trade historically has been subject to numerous domestic legal systems, mainly by virtue of the rules of private international law. The disputes arising out of international sales contracts have been settled at times according to the lex loci contractus, or the lex loci solutionis, or the lex fori. This diversity of the various legal systems applied has hindered the evolution of a strong, distinct, and uniform modern lex mercatoria. Such legal diversity creates legal uncertainty and imposes additional transactional costs on the contracting parties.

The idea of a unified international trade law represents the revival of an ancient trend toward unification that can be traced to the Middle Ages and that had given rise to the “law merchant.” Historically, international trade law has developed in three stages: the old “law merchant,” its integration into municipal systems of law, and finally, the emergence of the new “law merchant.”

The 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) represents the most recent attempt to unify or harmonize international sales law. The Convention creates a uniform law for the international sale of goods.

This is clearly stated in the Preamble9 that introduces the Articles of the Convention:

INTRODUCTION

CISG Article 58 is located in the Convention's Part III “Sale of Goods,” Chapter III “Obligations of the Buyer,” Section I “Payment of the Price”; the stated provision governs the time for the buyer's payment of the purchase price in relation to performance by the seller.

In essence, CISG Art. 58 regulates the important matter of when must the buyer pay the price for the purchased goods. There are, however, several related questions concerning payment that are answered in Art. 58: is the seller obliged to hand over the goods before he is paid, how does a contract that calls for carriage of the goods affect the payment of the price against the handing over of the goods, and whether the seller may require the buyer to pay the purchase price before the latter has an opportunity to examine the goods.

The counterpart provisions of the PECL dealing with similar matters are located in the Principles Chapter 7 “Performance,” Articles 7:102 “Time of Performance” and 7:104 “Order of Performance.”

EXCHANGE OF GOODS FOR PRICE: THE PRINCIPLE OF SIMULTANEOUS PAYMENT OF THE PRICE AND HANDING OVER OF THE GOODS (CISG ART. 58(1))

The general rule stated in CISG Art. 58(1), first sentence, is that, subject to a contrary arrangement agreed by the parties to the contract, the buyer is obliged to pay the price at the time the seller makes the goods available to the buyer, by placing either the goods or documents controlling their disposition at the buyer's disposal.