8 – International Legal Environment

Introduction

There are significant differences between countries in terms of business policies and regulations.

For instance, certain business practices, advertising tactics or legal strategies in some countries may be considered unfair by the laws of other nations.

There are numerous restrictions on the usage of the media in various countries. Radio and television are monopolised or strictly controlled by the state in a handful of countries. On the other hand, the introduction of cable television is causing regulatory issues. Aside from laws that govern investment and associated matters, most countries have a variety of rules that govern corporate activity. These regulations address product standards, packaging, promotion, ethics, environmental factors, etc. The political system and the traits of political parties and politicians heavily influence business policies and regulations. Regulations have been stricter in several nations to protect consumer interests. Environmental regulations that protect the purity of the environment and preserve the ecological balance have become increasingly important in many countries.

Some governments set specific regulations for products (including packaging) that can be advertised in their country, while others outright prohibit marketing particular products. Promotional efforts are subject to various forms of control in most countries. Several European countries have laws banning the use of minors in commercial advertisements. Alcoholic liquor advertising is outlawed in several nations, including India. In India, there are a plethora of regulatory controls on business. Even though controls have been significantly reduced due to liberalisation, several controls remain in place. Many countries now have rules to govern competition in the public interest. The primary goals of these restrictions are the elimination of unfair competition and the dilution of monopolistic power.

8.1 Legal Frameworks

To comprehend and appreciate the diverse legal systems and philosophies across countries, it is necessary to distinguish between the two primary legal systems: common law and statute law.

A common law legal system is mainly based on precedents and norms. Statutes, rather than prior court decisions and views of what specific laws are and should be, drive judges’ choices. As a result, the laws of these countries are based on tradition. The United States, Great Britain, Canada, India, and other British territories have such a system.

Most European countries and Japan have a statute law system known as code or civil law. A statute-based legal system exists in most of the world’s 70 nations. Legislative codes, as the name implies, include the fundamental norms of the law. Every condition is clearly stated to explain what is and is not legal. This system also has a rigid and literal interpretation of the law.

The two systems largely overlap in practice, and their distinction is hazy. Even though US judges rely heavily on earlier judgements and interpretations of other judges, they nonetheless refer to many laws written in statutes or codes. Many laws in statute law countries are formed by courts and are never converted to statutes. As a result, the only significant difference between the systems is the judge’s discretion in interpreting legislation. The ability of judges in common law countries to interpret laws personally provides the judge with a great deal of flexibility to apply the law as it fits the context. On the other hand, a judge in a civil law country has a minor role in utilising personal judgment to make or interpret laws since judges must carefully follow the law.

8.2 Legal Situations

As there are many different political contexts, there are many different legal environments: local, foreign, and international. If laws are not followed correctly, they can prevent a product from being marketed. Most businesspeople regard legislation as an annoyance.

For instance, US immigration law interferes with Club Med’s policy of rotating its international staff every six months, making the process time-consuming and expensive.

Many things are illegally imported into most countries. These include counterfeit money, illegal substances, pornographic materials, dangerous explosives, and espionage equipment. Importing live animals and fresh fruits is prohibited without the necessary medical certificates. Certain products must be adjusted to comply with the regulations of the land. These changes may be technical from an engineering standpoint or cosmetic, as in the case of specific packaging alterations.

The legal environment might impact a company’s production plan. Some countries prohibit the importation of Saturday Night Specials—low-cost, short-barrelled pistols—because they are used in crimes such as sex and violence. As a result, Beretta, an Italian gun manufacturer, can circumvent the import prohibition by establishing a production facility in Maryland, where gun control legislation does not prevent the sale of such low-cost firearms.

Every country has legal restrictions on imports and foreign investors. These laws must be followed for socio-political reasons. The complication can only occur for organisations in multiple nations, where different regulations may require contradicting measures.

8.2.1 Bribery

Bribery is unethical and unlawful. However, it is not as simple as it seems. The most critical questions about corruption are what it is, how it is used, and why. Bribery raises several severe ethical and legal issues.

Bribery, according to the Foreign Corrupt Practices Act (FCPA), is the use of interstate commerce to offer, pay, promise to pay, or authorise the payment of anything of value to influence an act or decision by a foreign government, politician, or political party to assist in obtaining, retaining, or directing business to any person. Bribes are also referred to as “Pay-Off,” “Grease Money,” “Kickback,” “Lubricant,” “Little Envelope,” “Bite” (in Mexico), “Paper Weight,” and “Under the Table Money,” among other terms. Bribes might be cash, gifts, jobs, or free trips. Fodder Swindle, for example, portrays the bribe as a scam.

Fodder Scam is an example:

Laloo Prasad Yadav and the preceding Chief Minister of Bihar, Misra, were at the forefront of affairs in Bihar in the 1990s. They had been extracting funds from the Treasury with the assistance of evil bureaucrats to purchase fodder for the cattle. The total amount they took out for personal use was more than $1 billion, which took almost four years to discover. A CBI investigation had been launched, and arrests had been made. A prima facie case has been formed against two former chief ministers and several bureaucrats who have been charged.

This was dishonest, unethical, and criminal behaviour on their part. This, however, does not fit within the technical confines of bribery, yet it is similar to corruption.

There have been several cases of businesses paying bribes. In 1995, the US government learned of 90 incidents of corporations paying bribes to hinder American firms’ bids to secure $45 billion in international contracts. The key players are Siemens of Germany, Alcatel Alsthom of France, and Airbus Industries. Between 1987 and 1995, Germany discovered 1500 incidents of public officials on the take in Frankfurt, adding 20 to 30 percent to the cost of a building contract. From 1970 through 1975, Lockheed Corporation admitted paying $38 million in bribes, kickbacks, and other questionable payments to foreign officials to accelerate aircraft sales. Sweden provided payments to arms dealers in exchange for the supply of Bofor firearms to the Indian Army. This has caused quite a political turmoil in the country, and the fact that the investigation is still ongoing is an example that cannot be overstated.

Kickbacks from Bofors, for example:

India sought a cannon to clear the Himalayan Himalayas, as the 130 mm Russian gun was deemed insufficient. A few months after India and Sweden inked the Bofors contract, the same assassin who wounded Swedish Prime Minister Olaf Palme as he left a cinema in Stockholm was slain by his wife, who was walking ahead of him. Mr. Palme had guaranteed India that there would be no payoffs and that there would be no middlemen in the Bofors agreement.

Mr. VP Singh, who had served as finance minister and later as defence minister, was fed up with the corruption that had permeated all areas of life, particularly the highest echelons, in 1987. He desired to relaunch his campaign on this issue but stated that his main challenge was a lack of material with which to do it.

The purchase of Bofors led to the demise of the government created by the one party that had commanded the respect of most Indians throughout decades of independence in 1989. Since 1989, India’s democratic experiment has reached an all-time low. Our multitude of weak governments had forgotten India, leading to ambitious, self-seeking, and unscrupulous coalitions.

The Ministry of Defense decided to buy the Bofors weapons despite the Army’s suggestion because it is suspected that several politicians and bureaucrats received kickbacks totalling ’63 crores from the contract. The Bofors gun was good, but it wasn’t the best. It is claimed that the choice of the Bofors gun directly impacted the poverty of good governance in the previous decade, namely 1989–1999. The nexus of negativity has devastated India’s soul, which must be rebuilt, and a more optimistic future for the subcontinent must be secured. The investigation is currently ongoing by the CBI, which the Central Vigilance Commission oversees. Still, no meaningful evidence may be released until the Swedish government receives the original papers. The legalities of this case are being worked out, and the actual perpetrators will be brought to justice.

A bribe is solicited, offered, and accepted for various reasons. One factor is the low remuneration of public officials, and another is basic greed. Public employees’ loyalties and obligations must be with their political parties, family, and friends whom they might ask for favours. That will assist those populations. Another explanation appears to be the growth of bureaucratic regulations. Some businesspeople are willing and happy to offer a bribe for a variety of reasons, including:

• To expedite the required work or processing.
• To obtain a contract.
• To avoid the cancellation of the contract.
• To prevent competitors from getting the contract.

Only national laws differ from one country to the next. When drafting a contract, a buyer and seller stipulate a specific legal system that will take precedence in settling any disagreement. In a conflict, the court must be designated for legal recourse. The corporation must remember that winning a legal victory in a domestic court is one thing, but enforcing a judgment against a foreign entity is quite another. International enforcement is tricky unless the foreign party wishes to continue business in the country where the judgment is obtained.

Often, a case must be filed in the defendant’s home country. To ensure that the foreign court has jurisdiction to hear the case, the contract should include a clause allowing the corporation to file a lawsuit in either the home or host nation. According to Article 17 of the Brussels Convention on Jurisdiction and Enforcement of Judgments, the exclusive forum for disputes concerning real property, the status of a corporate entity, public records, trademarks, copyrights, patents, and the enforcement of judgments is the place where the matter in controversy is located.

The corporation should explore using commercial arbitration instead of court proceedings whenever possible and practical. Arbitration proceedings offer benefits such as an unbiased hearing, a rapid outcome, and a professional decision. Both IBM and Fujitsu appeared pleased with the decision of two arbitrators to resolve a copyright dispute. In contrast, Intel did not want arbitration and was dissatisfied with the pace of its copyright litigation against NEC. After hearing lengthy and time-consuming arguments, a US district judge found that Intel had a legitimate copyright. The situation became more convoluted when higher courts took another year to consider whether the judge should be disqualified. The judge was eventually forced to resign, and the arguments were ordered and rehearsed since he had Intel stock worth $80 through an investing club.

8.3 Organizational Legal Structures

Firms doing business in the United Kingdom have three primary legal forms of organisation to choose from: a British branch, a company, or a partnership. India follows nearly the same organisation in dealing with business firms. If only one company is available, more decisions must be made. A limited company can be either a public limited company (PLC) that can generate money by selling securities to the public or a private corporation that cannot offer shares or debentures to the public. Generally, a public corporation must meet some registration and capital structure standards, subscriptions for shares and profits, and distribution assets.

A business in the United States can choose between the following forms: sole proprietorship, partnership, and corporation. Because of the restricted liability associated with the corporate form, its relatively permanent structure, and its capacity to obtain capital by issuing shares, the corporation is the most typical choice for enterprises participating in international trade. Most significant US corporations have a corporation or Inc. vocabulary as part of their trade name.

Other countries use other terminology to indicate integration. In most British Commonwealth countries, the corporate name includes the words limited or limited company to emphasise that the firm’s responsibility is ‘limited.’ Civil law countries have the following equivalencies: In France, the formal corporation/stock company is known as SA (Societe Anonyme or Sociedad Anonima), and the informal corporation/limited liability company is known as Saral (Soiete a responsibility limited); in Germany and Switzerland, the stock company is known as AG (Aktiengesellschaft), and the limited liability company is known as GAMBH (Gesellschaft Mit Beschrankter Haphung). KK (Kabushikikaisha) is a Swedish AB and a Dutch NV stock company in Japan. To avoid misunderstandings and maintain uniformity, European governments are currently pushing the use of PLC rather than other nomenclatures to signify that a firm is incorporated.

8.3.1 Intellectual Property Rights

“Intellectual property” refers to the creation of the human mind or intelligence and the term “intellectual property.” Copyright, patents, and industrial designs are all covered. The rights of creators of literary, scientific, and creative works are called copyright. Patents grant inventors exclusive rights; nevertheless, inventions can only be patented if they are novel, obvious, and capable of industrial applications. Industrial designs are new or original aesthetic creations that determine the appearance of industrial items. These three rights are only available for a limited time.

The notion of intellectual creation, while there, is less significant in the case of these property rights. However, trademarks and other indicators are protected so that producers can distinguish their products or services from others. Trademarks assist manufacturers in building consumer loyalty. They also help customers make wise decisions based on the producers’ information about the product’s quality. These property rights are described as follows:

• Patents: Patents protect the intellectual property rights of inventors. An invention must be new, innovative, and capable of industrial application to be registered for a patent. According to the World Trade Organization’s TRIPS Agreement, the only products or processes that countries are permitted to exclude are (i) diagnostic, therapeutic, and surgical methods for the treatment of humans or animals, (ii) plants and animals other than microorganisms, and (iii) essentially biological processes for the production of plants and animals other than non-biological and micro-biological processes.
• Copyright and Other Related Rights: Copyright protection extends to works in the literary, scientific, and creative domains, regardless of mode or form of expression. However, a work must be an original production to be copyright-protected. The idea in the work does not have to be novel, but the form in which it is conveyed, whether literary, artistic, or scientific, must be the author’s original innovation. Owners of copyright have the following rights: reproduction rights (copying and reproducing the work); performing rights (performing the work in public, such as a play or concert); recording rights (making a sound recording of the work); motion picture rights (making a motion picture, also known as a cinematography work); broadcasting rights (broadcasting the work by radio or television); and translation and adaptation rights.
• Trade mark: A sign distinguishing the goods (or services, in the case of a service mark) of an industrial or commercial enterprise from those of others. A distinctive sign may have one or more distinct words, letters, names, numerals, figurative components, and colour combinations. Any of the elements listed above may be combined into such a symbol. Because the primary aim of a trade mark is to be identified, most countries’ regulations require that any goods to be marked be unique.
• Industrial layouts include the ornamental elements of the products, such as shapes, lines, motives, and colours. Industrial designs are primarily protected in consumer goods, such as textiles, leather and leather products, and automobiles. To qualify for protection, the designs must be either innovative or original. The owner of the protected designs has exclusive rights to their usage and can even forbid third parties who have not gotten their consent from creating, marketing, or importing items bearing or incorporating a design that is a copy or virtually a duplicate of the protected design.

Integrated Circuit Layout Designs: Unless otherwise specified, the TRIPS Agreement requires governments to safeguard integrated circuit layout designs in conformity with the Washington Treaty on Intellectual Property in Respect of Integrated Circuits (1989). Additional provisions state, among other things, that importing or selling items containing a protected integrated circuit without the right holder’s permission is illegal. Acquisition of an article by someone who does not know it includes an illegally duplicated layout design, on the other hand, does not constitute an unlawful act. Innocent infringers may sell or dispose of stock purchased before learning that using the layout design is illegal. They must, however, pay a reasonable royalty to the rightful holder. Geographic indications are intended to alert consumers that a product has a quality, reputation, or other feature primarily related to its geographic origin. The TRIPS Agreement states that governments must not allow the registration of trademarks that falsely indicate the geographic origin of goods.

The most common example is ‘champagne,’ a term associated with wine produced in a specific region of France. Generally, it is not legal to refer to wine produced elsewhere as “champagne,” even if it is recognised as equal to French champagne in the producing countries.

The same is true for the patenting of Indian basmati rice, which American Co. Ricetech did and gave the name Texmati. As a geographical Himalayan tarai region product, India has the authority to file a case against the patenting of Texmati at the United States Patent and Trademark Office.

8.3.2 Counterfeiting

After obtaining intellectual property protection, a company must deal with the more challenging task of enforcing those rights in the global marketplace. The most severe issue is pirated or counterfeit products, which are trendy items. Both governments and individual enterprises are vested in ending piracy and some grey market behaviours.

Responses of Businesses to Counterfeit Goods

It is difficult to protect intellectual property rights, as anyone who has walked down a city street and been offered counterfeit Gucci bags, pirated cassette tapes, or bogus Levi’s 501 jeans knows. The counterfeit product appears to be a genuine article, but it is a knockoff, capitalising on the original product’s advertising and popularity.

Intellectual property piracy has three repercussions for the genuine owner of a trademark, patent, or copyright. First, it deprives the owner of revenue from the product’s creation because the bootlegger does not pay royalties. Second, suppose the quality of the counterfeit items is poor. In that case, purchasers who thought they were purchasing the genuine article will have a negative impression of the company that controls the intellectual property rights. Finally, bootleg sales deprive legal dealers of sales, jeopardising the distributors’ connections with the right owner.

Of course, suppose a property rights owner discovers someone selling counterfeit goods in any country where the owner has intellectual property rights. In that case, he or she should file a copyright, patent, or trade mark infringement case. Most countries also empower customs officers to seize infringing products upon importation. Some representative provisions in US law allow customs to stop infringing merchandise at the border. The Copyright Act, Section 602

For example, it prohibits the importation of products that violate US copyrights and permits customs to seize any such things (see 17 USC 602).

Similarly, Section 526 of the Tariff Act of 1930 (19 USC 1526) forbids the importation of goods carrying a US-registered trade mark without prior authorization from the trade mark owner and permits customs to seize such goods. Section 337 of the Tariff Act of 1930 (19 USC 1337) offers comparable protection against imports that violate US patents.

Any registered US intellectual property owner who feels an import infringes on that right may petition the International Trade Commission (ITC) for remedies under Section 337 of the Tariff Act of 1930 (19 USC 1337). The ITC has the authority to make orders barring goods from the United States, requiring the cessation of unfair trade practices, and, in some cases, directing the forfeiture of the offending items. The drawback of these solutions for managers is that they only halt items at the border, not at the source. Furthermore, customs is unable to inspect all incoming cargo in search of products that appear legitimate but are not. Customs heavily relies on property owners to notify them of incoming shipments or problems with counterfeit products. As a result, policing intellectual property rights falls primarily on businesses, which must be familiar with their markets and potential trouble spots for their products. Apple Computer, for example, has had great success in monitoring areas where it suspects counterfeiting is occurring and then utilising local police and other officials to seize products before they leave production sites.

Responses of the Government to Counterfeit Goods

In recent years, attention has shifted from individuals to governments in the fight to increase intellectual property protection. The US government, in particular, has become an outspoken advocate for improved intellectual property laws worldwide. It has tried to persuade other countries to change their policies through two key channels: Section 301 of the Trade Act of 1974 and the GATT.

In 1988, a Congress fed up with the lack of protection for intellectual property rights in the United States approved two additional measures revising Section 301 of the Trade Act of 1974. Section 301 is generally a trade retaliation act, mandating the United States to retaliate in some cases by putting more outstanding taxes or restrictions on the US market and authorising retaliation in others. The two 1988 amendments expanded the US government’s authority to retaliate for unfair trade practices and to negotiate to improve intellectual property protection.

One addition, “Super 301,” mandates the US trade representative to identify unfair foreign trade practices that significantly impact the US economy and the nations where those abuses occur. After placing the priority practices and nations, the US trade representative must engage in discussions to end the unfair trade practices. The US must react against the chosen countries if the negotiations fail to produce results.

The second amendment, dubbed “Special 301,” focuses exclusively on intellectual property practices. It mandates the US trade representative to identify nations that deny Americans adequate intellectual property rights protection or restrict US enterprises that rely on intellectual property law market access. Like a Super 301 designation, identification prompts Section 301 investigations and can lead to retaliation.

Although many countries believe the Section 301 rules violate the GATT, they have impacted global trading practices. Japan, which was a target of Super 301, has liberalised its markets in various ways. China committed to upgrading its intellectual property safeguards and joining the Berne Convention in 1992, just before the Special 301 retaliatory deadline.

8.4 Laundering of Funds

During the winter session of Parliament in 2002, the government passed the Indian Money Laundering Act. Money laundering is one of the most severe global threats that affects all governments. Some governments have implemented anti-money laundering measures to stabilise their economies. If this threat is not addressed, a parallel black money economy will emerge, resulting in excessive inflation and poverty.

Although progress has been made, particularly in countries that have implemented anti-money laundering measures, the money laundering problem has not been overcome, according to Ms Patrick Moulette, a senior official of the Organisation for Economic Cooperation and Development (OECD). Ms Moullete, a member of the OECT’s Financial Action Task Force on money laundering (FATF), wrote in the latest issue of the OECT Observer, the official journal of the Paris-based inter-governmental think-tank of 29 rich industrial countries, that the facilities used by money launderers are changing all the time as they try to circumvent the preventive measures put in place by various countries.

She cited an IMF assessment on the scale of money laundering, which showed that the global figure might be between 2 and 5% of GDP. According to statistics from 1996, this equates to $590 billion to $1.5 trillion. Seven industrial nations established the FATF in 1989 to coordinate action.

One of the first objectives assigned to this council, consisting of 26 member countries, two international organisations, and three observers, was to lay out several steps the national government should implement to combat money laundering. The OECD Report is significant in the Indian context, where the Prevention of Money Laundering Bill (PMLB), which was supposed to be passed alongside the Foreign Exchange Management Act (FEMA) as “concurrent legislation” to replace the dreaded Foreign Exchange Regulation Act (FERA), is still stuck in a reference to a Parliamentary Selection Committee. Despite these advances, the OECD official stated that rather than putting illegally obtained wealth into the country’s financial system, launderers send it to other nations where no questions about its origin are addressed.

The offshore financial centre setup appears to have some characteristics, including a series of financial transactions and a global network of all shell businesses. She stated that one of the most significant barriers to detecting, investigating, and prosecuting those accused of money laundering is the inability to collect information about the actual owners of foreign firms with corporate status.

Money laundering also involves professional service providers — accountants, lawyers, and other similar experts – who work in offshore jurisdictions and some FATF member countries. These service providers set up and maintain businesses with corporate status, providing significant expertise and clout to money-laundering machinery. Only a few nations compel professional service providers to report suspicious transactions. Other laundering opportunities are emerging as the available spectrum of financial instruments expands.

Because the audit trail is so easily muddled, Ms Moulette believes that derivatives and security markets are particularly vulnerable to the recycling of organised crime funds. A broker could effortlessly launder money using an utterly legal transaction without even making a fake record. All that is required is to allocate legitimate trading losses to the account where the unlawful funds will be placed. “It is completely legal for a dealer in the financial futures market to maintain two contracts for subsequent offset,” she said.

The dealer might conduct a laundering operation on the loss account without infringing the law by assigning trading wins and losses to two separate accounts, one “regular” and the other to receive the laundered monies. Another option is insurance, namely life, property, and long-term capitalization bonds. Launderers typically pay for insurance with cash and then request early redemption of the policy or make a claim against their property insurance, resulting in payment from the insurance company in bank money.

Once illegal proceeds enter the standard financial system, electronic funds transfers remain the preferred mechanism for stacking them. These revenues are frequently smuggled out of the country, deposited in another, and then wired back to the country of origin.

The latest payment technologies — smart cards, online banking, and electronic cash – can potentially expand laundering opportunities. If an online financial institution is located in an area recognised for high levels of banking secrecy and requires little or no evidence of identity for account opening, the money launderer can shift funds from the comfort of his computer terminal. Certain smart cards and e-cash systems are risky because no transaction restriction is imposed. While most intelligent card systems do not allow direct card-to-card transactions, others are being developed that may be able to do so without a financial intermediary.

These new payment technologies may be vulnerable to money laundering operations without consistent norms and appropriate monitoring by supervisory authorities. As with other high-value commodity markets, the gold market raises concerns about the money-laundering opportunities it provides. The FATF has received allegations of suspicious gold transactions from its members. In some transactions, they appear to influence attempts to avoid high VAT rates by purchasing large quantities of gold in nations with low VAT rates and then exporting the bullion back to the place of origin. The use of gold for money laundering is frequently inherent in transferring money through parallel banking circuits, such as the South Asian Havana/hundi system.

This technique, founded on trust and tight business contacts, transfers gold without physically moving it. This approach is less expensive and bureaucratic than transferring funds through established banking channels. This type of laundering, prevalent throughout the subcontinent, has spread to many other parts of the world. To stop this system, all countries must change their laws.

8.5 Foreign Exchange Management Act of 1999 (FEMA)

Foreign exchange refers to all deposits, credits, and balances payable in any foreign currency, as well as any drafts, traveller’s cheques, letters of credit, and bills of exchange expressed or drawn in Indian currency but payable in any foreign currency; any instrument payable, at the option of the drawee or holder thereof or any other party to it, either in Indian currency or in foreign currency, or partly in one and partly in the other.

According to Section 5 of the Negotiable Instruments Act of 1881, a “bill of exchange” is a written document with a maker’s signature that contains an unconditional order directing a particular person to pay a specific amount of money only to, or to the order of, a person or to the bearer of the instrument. Within the meanings of this section and section 4, a promise or order to pay is not “conditional” because the time for payment of the amount or any part of it is stated to be after a certain amount of time has passed after a specific event that most people would expect to happen, even if they do not know when it will happen. The sum contains future interest, is payable at a stated exchange rate, or is based on the course of exchange, even though the instrument states that if an instalment is not paid on time, the unpaid balance becomes due. Even if he is misnamed or unless the acceptor indicates on the face of the bill that he subscribes for a particular principal, the person to whom it is evident that the directive is given or that payment is to be made may be a “certain person” within the meaning of this section and section 4. The drawee’s standard method of accepting a bill of exchange is to write “accepted” across the front of the bill and then sign his or her name underneath.

According to Section 6 of the Act above, a cheque is a bill of exchange drawn on a specified banker and not expressly stated to be payable other than on demand. A traveller’s cheque is a bill of exchange drawn by the issuing bank on itself, acknowledged by the act of issuance, and it does not have the power to revoke that conventional cheques do. It resembles a bank-issued cashier’s cheque. A letter of credit is an open or sealed letter from a merchant in one place to another, in another place or country, requiring him, if a person named in the letter or the bearer of the letter, to have occasion to buy commodities or want money in any particular or unlimited amount, either to procure the same or to pass his promise, bill, or bond for it, the writer of the letter undertaking to provide him by exchange, or to give him such satisfaction as he shall

The Foreign Exchange Regulation Act of 1947 was initially passed as a temporary measure; Act 39 of 1957 made it permanent. Since then, the Act has been amended multiple times. In light of recent experience, the Directorate of Enforcement and the RBI have suggested. The government has agreed that there is a need to regulate, among other things, the entry of foreign capital in the form of branches and concerns with significant non-resident interest in them, the employment of foreigners in India, and so on. Given the significant changes made to the Indian economy and the liberalisation of industrial and trade policies, it has become necessary to create a better and more conducive environment for increased inflows of foreign investment and capital into the country to accelerate industrial growth and promote trade, particularly exports. When this was passed, some particular limits were imposed on foreign investments and the actions of persons and businesses in India with a non-resident stake. While it is necessary to continue to regulate the activities of foreign companies or branches of such companies, as well as foreign citizens, in India, special restrictions on companies registered in India must be removed, and regulations on foreign investment must be simplified to attract a greater flow of foreign capital and investment. As a result, eliminating superfluous constraints and streamlining the approach has become vital.

The Act of 1947 was abolished in 1973 by the Foreign Exchange Regulation Act of 1973, which has now been repealed and replaced by the Foreign Exchange Management Act of 1999. The Appellate Board established under Section 52(1) of the said Act shall be dissolved.

All offences committed in violation of the repealed Act are still subject to its rules, subject to subsection (3)’s requirements.

(a) Anything done or said to have been done or said to have been done under the Act that is now being revoked, such as any rule, notification, inspection, order, or notice made or issued, or any appointment, confirmation, or declaration made, or any license, permission, authorization, or exemption granted, or any document or instrument signed, or any direction given, shall, as long as it does not go against the provisions of this Act, be thrown out.

(b) Any appeal filed with the Appellate Board under Section 52(2) of the repealed Act but not resolved before the commencement of this Act must be transferred to and decided by the Appellate Tribunal established under this Act.

(c) Any appeal from any decision or order of the Appellate Board under Section 52(3) or 52(4) of the repealed Act shall, if not filed before the commencement of this Act, be filed before the High Court within sixty days of such commencement, provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented from filing the appeal within the said period of sixty days by sufficient cause.