Business Law I
PART 1 | European LAW
Law is an objective system of values that confers subjective rights to people.
Objective law à rules governing the relationships of people living in society and sanctioned by
a constraint from the public authority
The prerogative of subjective rights à right or privilege conferred to a person to do or demand
anything, under any rule of law and punished by a constraint from the public authority
Example: Art. 21 of the EU Charter of Fundamental Rights
“Nondiscrimination (1) Any discrimination based on any ground such as sex, race, colour, ethnic
or social origin, genetic features, language, religion, or belief, political or any other opinion,
membership of a national minority, property, birth, disability, age, or sexual orientation shall be
prohibited.”
The subjective right → you may sue or fight against anyone who discriminates you (your right
against theirs)
The objective right →
• Discrimination is arbitrary treatment
• You cannot treat someone arbitrarily based on one of these attributes, then you are
discriminating them
You might have a subjective right, but in practice can you realise that right?
Many cases of discrimination even in countries with developped laws like France
With social media there are even algorithms that are biassed and people don’t even know that
they are being discriminated against
Features of the rule of law
• Law is made by a state or transnational bodies, while the state itself is bound by it
• Law strives to be fair and in the common interest, its application is predictable
• Law has a legitimate source
• Law creates and acknowledges enforceable rights and obligations and limits powers,
guarantees individual freedoms
• Functioning court system and law enforcement bodies – attorneys, police, etc.
• Absence of corruption
Advantages of the rule of law for businesses
1
, Ø Investments are more secure. Property is protected from arbitrary or criminal action.
Ø Contracts are reliable
Ø Higher predictability of business outcomes
Ø Possibility of fair dispute resolution
Ø Lower risk and lower costs of doing business that results in more economic activity
How individual businesses may undermine the rule of law:
• Corruption
• Excessive lobbying
• Systematic tax avoidance and tax evasion
Sources of law
à Legal Fragmentation
• Global perspective – law is fragmented; there is no hierarchy
• On a national level, law is organized hierarchically
à Layers of legal environments
• Local laws • International laws, --these need to
• Regional laws be ratified before becoming law
• National laws (principally addressed to signatory
• Supranational laws (like the states—usually ratified through
European Union) parliamentary votes)
European law has a strong influence on business law in the EU. Main sources are the TREATY ON
EUROPEAN UNION (TEU) and the TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION
(TFEU), as well as European DIRECTIVES, REGULATIONS, commission decisions and case law of
the COURT OF JUSTICE of the EU.
Pyramid of Laws – France (example)
2
, Hierarchy of legal texts in France (pyramid) – an inferior text must be in conformity with the
superior text.
Case law in France?
à No. In France it is not judges who make the law, they simply apply it.
Art. 5 CC forbids judges to render judgments through the creation of applicable rules
à while there is no formal case law, if a court in France like Cour de Cassation decides on a
certain interpretation of a law, all lower courts will follow this example
Non-state law? Can a private organization create authoritative norms?
FIFA as an example
• Possess laws such as rules on the number of team players, their uniform, etc.
• If members don’t comply, they pay a fine to FIFA and can be disqualified from world cup
• They can impose a fine because teams voluntarily submit to them to be able to play
• Cannot send players to prison because they are not a state à individual members
submit to FIFA’s powers but may now exceed the powers it has under Swiss laws
Fairtrade and Facebook are also examples, as well as accounting standards agencies like IFRS,
GAAP, IASB
How does law come into action? Three basic ways that law is applied.
• Application of criminal law: state prosecution v. individual (company)
o Jurisdiction of courts, penal procedure, system of sanctioning and enforcement
(look at applicable law)
o How to sanction a company? à fine them, take away business license, freeze
assets, etc.
• Application of civil law: plaintiff (accuser) vs. defendant
o i.e., one company sues another for damages, an employee challenges
termination of their contract, a person is injured using a product and sues
o jurisdiction of courts, in contracts – possibility to replace courts by arbitration
o system of enforcement – can be difficult when dealing internationally
3
PART 1 | European LAW
Law is an objective system of values that confers subjective rights to people.
Objective law à rules governing the relationships of people living in society and sanctioned by
a constraint from the public authority
The prerogative of subjective rights à right or privilege conferred to a person to do or demand
anything, under any rule of law and punished by a constraint from the public authority
Example: Art. 21 of the EU Charter of Fundamental Rights
“Nondiscrimination (1) Any discrimination based on any ground such as sex, race, colour, ethnic
or social origin, genetic features, language, religion, or belief, political or any other opinion,
membership of a national minority, property, birth, disability, age, or sexual orientation shall be
prohibited.”
The subjective right → you may sue or fight against anyone who discriminates you (your right
against theirs)
The objective right →
• Discrimination is arbitrary treatment
• You cannot treat someone arbitrarily based on one of these attributes, then you are
discriminating them
You might have a subjective right, but in practice can you realise that right?
Many cases of discrimination even in countries with developped laws like France
With social media there are even algorithms that are biassed and people don’t even know that
they are being discriminated against
Features of the rule of law
• Law is made by a state or transnational bodies, while the state itself is bound by it
• Law strives to be fair and in the common interest, its application is predictable
• Law has a legitimate source
• Law creates and acknowledges enforceable rights and obligations and limits powers,
guarantees individual freedoms
• Functioning court system and law enforcement bodies – attorneys, police, etc.
• Absence of corruption
Advantages of the rule of law for businesses
1
, Ø Investments are more secure. Property is protected from arbitrary or criminal action.
Ø Contracts are reliable
Ø Higher predictability of business outcomes
Ø Possibility of fair dispute resolution
Ø Lower risk and lower costs of doing business that results in more economic activity
How individual businesses may undermine the rule of law:
• Corruption
• Excessive lobbying
• Systematic tax avoidance and tax evasion
Sources of law
à Legal Fragmentation
• Global perspective – law is fragmented; there is no hierarchy
• On a national level, law is organized hierarchically
à Layers of legal environments
• Local laws • International laws, --these need to
• Regional laws be ratified before becoming law
• National laws (principally addressed to signatory
• Supranational laws (like the states—usually ratified through
European Union) parliamentary votes)
European law has a strong influence on business law in the EU. Main sources are the TREATY ON
EUROPEAN UNION (TEU) and the TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION
(TFEU), as well as European DIRECTIVES, REGULATIONS, commission decisions and case law of
the COURT OF JUSTICE of the EU.
Pyramid of Laws – France (example)
2
, Hierarchy of legal texts in France (pyramid) – an inferior text must be in conformity with the
superior text.
Case law in France?
à No. In France it is not judges who make the law, they simply apply it.
Art. 5 CC forbids judges to render judgments through the creation of applicable rules
à while there is no formal case law, if a court in France like Cour de Cassation decides on a
certain interpretation of a law, all lower courts will follow this example
Non-state law? Can a private organization create authoritative norms?
FIFA as an example
• Possess laws such as rules on the number of team players, their uniform, etc.
• If members don’t comply, they pay a fine to FIFA and can be disqualified from world cup
• They can impose a fine because teams voluntarily submit to them to be able to play
• Cannot send players to prison because they are not a state à individual members
submit to FIFA’s powers but may now exceed the powers it has under Swiss laws
Fairtrade and Facebook are also examples, as well as accounting standards agencies like IFRS,
GAAP, IASB
How does law come into action? Three basic ways that law is applied.
• Application of criminal law: state prosecution v. individual (company)
o Jurisdiction of courts, penal procedure, system of sanctioning and enforcement
(look at applicable law)
o How to sanction a company? à fine them, take away business license, freeze
assets, etc.
• Application of civil law: plaintiff (accuser) vs. defendant
o i.e., one company sues another for damages, an employee challenges
termination of their contract, a person is injured using a product and sues
o jurisdiction of courts, in contracts – possibility to replace courts by arbitration
o system of enforcement – can be difficult when dealing internationally
3
