Comparative Law and Business: IT Sector

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Table of Contents

Introduction
Scot’s Law
Law of Contract
Delicit
Intellectual Property
Technological Protection
Dispute Resolution
Conclusion
References

Introduction

Although Scotland is largely known for its whiskey production and excellent golf courses, the country offers a good ground for most Information Technology (IT) businesses around the globe. The country is geographically located to the Northern side of the English border and is well endowed with a resourceful and well educated human resource¹. Scotland is dotted with excellently performing economic sectors and has a long-standing culture of innovation which has spurred information technology to new heights. Information technology is now a key economic sector and many companies seek to expand from its rising applicability in almost every area of operation.

Scotland is strategically located as a gateway to mainland Europe and this has provided many countries with a two-way investment plan that’s mutual for all countries. More specifically, Australia has benefitted from this kind of agreement. Edinburgh is Scotland’s capital city and a major economic center throughout Europe. Glasgow is however the country’s largest city and home to one of the biggest digital media centres throughout the European continent and indeed home to Scotland’s BBC network². The city currently boasts of having the third largest Gross Domestic Product (GDP) in the United Kingdom (UK).

In recent decades, Scotland has not only established itself as a powerful digital economic hub but has also affirmed its position as a viable economic powerhouse in knowledge-driven sectors³. To increase the country’s dominance in these sectors, the Scotland government has taken a steadfast approach in attracting more investors into the country. This has involved a review of the country’s laws to accommodate more investors and improve the overall business environment. This study seeks to explore such existing laws with regard to the Information Technology (IT) sector, in order to analyze the market viability for a local IT company to operate in the country.

Scot’s Law

The Scottish law is distinct in its own way because it finds its parenthesis in a number of foreign laws. The Scottish law was prehistorically of a Celtic nature until domination was observed from the feudal and Canon law⁴. The Anglo-Norman law thereafter prevailed and legal institutions were set up. The Roman law also has its influence in the country, although most of the cases incorporating it are largely social⁵. Comparatively, it is correct to note that Scotland has had a hybrid legal system.

Scotland’s business and contract laws are however largely borrowed from English common law and in fact, it has shared tits legislature with UK since 1707⁶. Nonetheless, the English country has a distinctively different legal system when compared to England and Wales but the Rome treaty has brought an influence of European law into the country.

Even in light of all these intermixes of different laws, there is a clear cut difference in the nature of the Scottish, English, and Northern Ireland laws because their applicability varies, especially with regard to property, crime, trust, inheritance and family disputes⁷. For instance, the legal age in Scotland is 16 years while the legal age in England is 18.

Also, it is conspicuously known that equity does not exist under Scottish law as opposed to existing legislation under the English common law which grants the same. However, there is a significant similarity in the way these laws operate with regard to commercial contracts and taxation matters which directly touch on the core of this study. For instance, the protection of consumers under all types of legislation is the same. This is stipulated under the protection of the Goods act of 1979⁸. The same treatment is also observed in taxation and the treatment of agents and employees alike.

Law of Contract

The Scottish law of contract is set to guide bilateral agreements between the various business of a foreign and local nature. The greatest distinction for the Scottish common law is that under Scottish law, there is no provision for consideration as stipulated by English statutes. Instead, gratuity contracts are enforceable⁹. These types of contracts bear more responsibility on one of the parties in the contract while the other party has senior roles.

In other words, these contracts have no consideration. It is therefore important to note that most declarations made under Scottish law will be enforceable. For instance, declarations of intention cannot be considered as amounting to a promise and therefore not enforceable under Scottish law. However, according to the English common law, a contract or agreement that amounts to a promise has to be approved by a Writ or oath¹⁰.

After the introduction of the requirements for the act of writing, a promise has to be written down especially for contracts that deal with specific land agreements like land transfer, land creation, or the extinction of a contract inland agreement. These provisions, therefore, warrant the IT company to tread carefully especially in contracts that amount to a promise because consideration is rarely given under such type of contracts

Delicit

The principle of delicit under the Scottish law specifically deals with civil contracts where litigation against civil wrongs is outlined. More specifically, this provision outlines the duty of care in civil wrongs that either occurred in a deliberate or accidental manner. This law can be expressly compared to the English law of tort but it is not as specific as it is because its coverage is merely on general issues. To emphasize the difference and similarities between the two, such aspects such as assault and defamations are both covered by the two laws but are technically defined differently¹¹.

Under Delicit, if a party wrongs the other because of acts of negligence, the injured party is bound to be repatriated. More specifically, the law ensures that the injured is reinstated back to the position in which he/she should have been, had the wrong not been committed. However, as opposed to the English common law, the Scottish law does not have penal elements to it. Delicit rule will be important for the IT Company because it governs procurement and pro forma contracts.

Acts of negligence had been established in a landmark case involving Donoghue v. Stevenson. This case was primarily Scottish until it spilled over into encompassing the English common law. Mrs. Donoghue was enjoying ice cream and ginger beer on one Sunday afternoon with a friend at a local restaurant in Paisley.

However, when she opened the beer bottle, out dropped a dead snail. Through the intrigues of the case, it was later established that the ginger beer she bought was not necessarily ginger because within the locality (Paisley), the term Ginger was not precisely used to refer to ginger beer alone. The case later took another interesting turn when the court determined that since the beer was served in an opaque bottle, contention was likely to occur between the two parties but if it was served in a clear bottle, the case would have taken a different angle.

Mrs. Donoghue was later denied compensation because it was assumed that she never had any binding contract with the shopkeeper since it was her friend who bought the beer. In any case, the court determined that she ought to sue the manufacturer and not the shopkeeper. The case later caused a lot of public attention and it was taken to the House of Lords which determined that the manufacturer indeed owed its customer a duty of care. This decision had extensive implications in many countries and it led to the development of the “neighbor principle” in Scottish law but with regards to the case, it was never proven that the snail had entered the bottle at all¹².

This case is important in determining the duty of care the IT Company would have to its customers because under the Scottish law, there are no penalties like the English common law in the UK. This may actually be advantageous to the company but to a far extent, the case shows that manufacturers owe a duty of care to their customers regarding all their products.

Intellectual Property

Most of the laws that will govern the IT Company in terms of their product differentials will be outlined by the intellectual property law in Scotland. This law is primarily governed by a statute. However, the internet is classified as a cable programme in Scotland and the landmark case of Wills vs Zeltnews was the first case to involve the internet in intellectual property law. The internet is still governed under copyright laws but European directives have given this whole concept a new dimension.

The European directive on copyright laws is however very flexible and easy on the details because states can to a far extent exercise a considerable amount of freedom especially on matters to do with transposition¹³. The property rights under intellectual property are very distinct and specifically stipulate the difference between reproduction rights and the rights to reproduce material for communication to the general public. The latter clause is meant to encompass products that are intended to reach a wide audience through the internet.

The Scottish copyright laws under the European derivatives also have their own limitations in that, internet service providers are not liable for the content they transmit on the internet. Sometimes, this rule applies even if such actions infringe on the copyright laws of the land. Most of all the other limitations are optional and companies may choose to be bound by them or not.

Nonetheless all copyright actions undertaken in the state must be in accordance with the Berne three-step test which ensures that the rights of the right holder are not infringed and neither is exploitation of work tolerated¹⁴. This provision is essential for the IT Company especially in ensuring its products are protected from imitation by rival companies because its products are very similar to those of other companies and especially the apple Inc.

Technological Protection

Technological protection under the Scottish law are derived from Article 6 of the European derivatives stipulating that technological devices which are meant to restrict certain acts (which are expected of the right holder) need to be protected by the government under either civil or criminal wrongs (or under a mixture of the two).

However, there is catch before the government can be able to protect specific technological devices of the company because there are provisions stipulating that such devices ought to be in working condition and should have been tested and implemented. This therefore means that the technological devices ought not to just be in working condition but should be effective as well.

Companies which use such circumvention techniques are expected to permit their works to be reproduced which is stipulated under the Limitation to copyright act found under Article 6 subsection 4 of the Scottish copyright laws. The same clause also protects digital rights under article 7. However, most protection of digital rights is established under the Digital Millennium copyrights Act that only allows for a circumvention of access control rights but other clauses of the legislation also allow for the circumnavigation of the copy protection measures; potentially making the law less flexible for technological companies

The IT Company should therefore ensure that it secures special provisions of law which ensures circumvention in access and copy protection is limited, at least in respect of production and distribution of the company’s products. This can be done in the context of InfoSoc directive or any other measure. In this manner, an individual who wants to crack copy protection measures in the pretext of “fair use” cannot do so because such actions will be prohibited. Accomplishment of such restrictions can be best accomplished when the company seeks protection under the InfoSoc directive¹⁵.

Dispute Resolution

Many disputes in Scotland are solved by the Scottish courts. However appeal cases of a civil nature are usually heard by the Supreme Court in United Kingdom¹⁶. Since disputes are likely to arise between the IT Company and a third party under the Scottish law, it is important that the company resort to Arbitration to solve international disputes amicably and without delay. This will be observed under international arbitration laws and will avoid the usual tedious and bureaucratic process of solving disputes in conventional Scotland Courts. In this manner also, the court cannot contravene or infringe on arbitrary agreements¹⁷.

Most of these cases are to be heard in Scotland but this does not necessarily mean that Scottish law ought to be followed in solving the disputes. However, the IT Company and a third party may decide to use the Scottish law in solving disputes but this will entirely be on their own discretion.

Through arbitration, the IT Company can avoid complications brought about by a difference in law between the two countries but such a provision needs to be stipulated when making the contract between the company and the third party. Unlike conventional court proceedings, the arbitration clause will provide a cooperative form of dispute resolution as opposed to the adverse proceedings associated with court proceedings¹⁸. Considering there is a high likelihood of disputes arising from the interpretation of law, arbitration will provide a good mechanism where the company can rely on for law interpretation.

Conclusion

Scotland has a distinctively different legal structure when compared to other European countries but since the country borrows from the Common law and is a member of the European community, still there remains a few legal resemblances with other European countries. In cases where the IT Company seeks to lose from a weakness of the law, the company needs to rely on specific statues that offer it protection like the InfoSoc directive which would offer the company protection against reproduction and distribution of its products.

With regards to the law of contract, the company should seek legal redress regarding penalties to be awarded to third parties who act out of negligence because the Scottish law fails to stipulate legal penalties against such wrongs. With regard to dispute resolution, the company should use arbitration and ensure the laws to be applied are those of the host country or the Scottish, whichever is most appropriate, because arbitration is much flexible than the conventional Scottish courts. In this manner, the company will have a water tight pro forma contract to operate in the country.

References

Akester, P. (2010) Technological Accommodation of Conflicts between Freedom of Expression and DRM: The First Empirical Assessment. Web.

Davidson, F. (2008) Commercial Law in Scotland. Edinburgh: W. Green & Sons.

Dynamic Export (2010) Doing Business In Scotland. Web.

Hugenholtz, B. (2000) Why the Copyright Directive is Unimportant, and Possibly Invalid. European Intellectual Property Review: 501(1), 43.

Office of Public Sector Information (2010) Arbitration (Scotland) Act 2010. Web.

Palmer, V. (2001) Mixed Jurisdictions Worldwide: The Third Legal Family. Oxford: Cambridge University Press.

Robinson, F. (2000) European Legal History, 3rd Edition. London: OUP.

Royal Institution of Chartered Surveyors (2010) Dispute Resolution Rent Review Group. Web.

Timothy H. (2008) Criminal Law. Edinburgh: W.Green.

University of Colorado (2010) Arbitration. Web.

White, R. (2007) The Scottish Legal System. Edinburgh: Tottel Publishing.

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