The legal principles of the United States were originally derived from the English and French legal systems, (Federal Judicial Center). Before that, those European systems were derived from Roman Law, (Federal Judicial Center). However, the system that we see in place in the United States today is derived from the United States Constitution, (Federal Judicial Center). The courts that comprise the federal and state systems are outlined in the Constitution. The Constitution essentially lays out the framework and limitations that the courts of the land can take. It is up to the Congress and the individual states to exercise their discretion on how to outline their own frameworks to exist within the limitations set out by the Constitution, (Federal Judicial Center). In order to ascertain how these courts as outlined by the Constitution relate to the business world that we see today, it is imperative to understand the difference between the federal and state courts and how they operate.
In order to ascertain how the Constitution functions pertaining to the courts, it is essential to see how the federal and state courts are different in the types of cases that they handle. To begin with the federal court system, it is important to understand that Article III of the Constitution invests the judicial power of the United States in the federal court system, (United States Courts). Within Article III, Section I creates the Supreme Court and gives Congress the power to create lower federal courts, (United States Courts). The cases that federal courts typically hear consist of: cases that deal with the constitutionality of a law, cases involving the laws and treaties of the United States, cases involving ambassadors and public ministers, disputes between two or more states, admiralty law, bankruptcy, and habeas corpus issues, (United States Courts). Pertaining to the state courts, the Constitution allows each state to establish their own courts, (United States Courts). It is up to each individual state to handle how they are going to structure the framework of their own individual court system; however, the state decisions can be heard by the Supreme Court, (United States Courts).
The next step to understanding the United States court system and how it applies to the current business environment is to comprehend the complicated legal concept of judicial review. The Supreme Court became the vessel to establish the constitutionality of state laws, (Treanor, W.). For example, if Kentucky passes a law that prohibits African Americans from voting in state elections based on the color of their skin, the Supreme Court has the right to review the court case that challenged the law in order to hold that it is or is not constitutional, (Treanor, W.). Judicial Review is important to not only legislation pertaining to discrimination but also to the flow of commerce. Congress uses the flow of commerce to get a great deal of legislation passed on the states, (Treanor, W.). This is applicable to businesses within the states in the event that Congress overreaches their authority that is beyond the scope of the constitution. Businesses are able to challenge the statute within the state courts until it reaches the Supreme Court for review through certiorari, (Treanor, W.). This creates a unique protection for businesses within the modern world that we are living in.
Even though Judicial Review can be a way for businesses to potentially recover, it is usually a process that is too exhaustive to be viable in the real world of commerce. Costly litigation that takes years to raise to the level of the Supreme Court is not efficient. Another manner of dispute resolution that has evolved for businesses is the concept of “alternative dispute resolution,” (Alternative Dispute Resolution). Alternative Dispute Resolution is commonly mistaken for just arbitration; however, it also includes mediation, (Alternative Dispute Resolution). Both mediation and alternative dispute resolution are commonly written into business contracts in order to avoid the drawn out process that tends to happen when businesses try to litigate in the federal or state courts, (Alternative Dispute Resolution). What makes businesses particularly keen to use alternative dispute resolution is that the judges who preside in these cases are assigned based on their business expertise. Particularly, if a company is conducting business with a company that is from a foreign country, alternative dispute resolution is available all over the world and regulated heavily by various treaties that are signed between many countries, (Alternative Dispute Resolution).
In order to have the best alternative dispute resolution provision drafted into your contract, it is imperative to understand the difference between arbitration and mediation. Mediation is when the parties meet with lawyers negotiating the terms of the contract and there is a goal of trying to form a solution to save the deal, (Alternative Dispute Resolution). Arbitration is a mini-tribunal in a sense that is more specialized where parties can have their case heard in the most efficient manner possible with an internationally recognized reward in many jurisdictions, (Alternative Dispute Resolution).
Where all of these methods apply to businesses is the propensity for corporate white collar crime that is becoming commonplace today. Business officials are scrutinized more than ever before for white collar crimes such as: tax evasion, insider trading, Ponzi schemes, and embezzlement. Regardless of which method your prospective business decides to litigate in the event that you are facing a conflict pertaining to one of these crimes or other charges, it is essential to have a knowledge of how the court system works in the United States in order to ascertain how to structure your pertinent agreements. If you possess knowledge of the legal field in addition to your business knowledge, you will able to be ahead of many of your counterparts in the business world.
Alternate Dispute Resolution (ADR). HG.org
Federal Judicial Center. History of the Federal Judiciary. http://www.fjc.gov/history/home.nsf/page/talking_ej_tp.html/.
Treanor, W. Georgetown Law. Judicial Review Before Marbury. Retrieved from: http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=2040&context=facpub/.
United States Courts. Comparing Federal & State Courts. Retrieved from: http://www.uscourts.gov/about-federal-courts/court-role-and-structure/comparing-federal-state-courts/.