A bill introduced this year in the Georgia General Assembly intended to prevent the use of Sharia law but which is much more broadly written is being closely watched by the international business community. The bill in question is HB242, which is entitled the “American Laws for Georgia Act.” Although aimed at the application of Sharia law, the law would prevent the application of international law generally in certain circumstances if determined to be against Georgia public policy.
Critics of the bill make two main arguments against it. First, there is no need for the legislation because existing law provides protection and the Georgia courts have not applied Sharia law to the detriment of Georgia residents. Second, the bill is directed to international law generally and will be perceived badly by the international business community at a time when Georgia has made great strides in attracting international business investment and Georgia’s economy has benefited greatly from international trade.
Supporters of the bill are undoubtedly patriotic citizens with the best of intentions. However, as an attorney (and a conservative) who works closely with the international business community, the critics have the better side of the argument. First, current law does protect Georgia citizens against the application of foreign law that would violate Georgia public policy. The law is long-established. It has also proven effective. There are no reported instances of the application of Sharia law in Georgia.
Second, the bill will have unintended consequences. One of the unintended consequences will certainly be that it will be negatively perceived by the international business community, including by our best trading partners, such as Canada, the United Kingdom, Germany, Japan, Sweden and other friendly countries. Many international companies and individuals choose to enter into contracts that are governed by the laws of another country, and the freedom to do so is important for fostering international business. Even with carve-outs and exclusions that have been proposed for the bill the perception in the international business community will be negative. And as is so often the case, perception can become reality and here that likely means less international investment and trade and fewer jobs created.
International business, particularly from our primary trading partners, have been locating plants and production facilities in Georgia that employ our citizens. According to the Georgia Department of Economic Development, there are over 3,600 international facilities in Georgia. These range in scope from the Kia plant in West Point and the Mage Solar production facility in Dublin to small sales offices. However, in total, they employ thousands of Georgians directly, and support additional thousands of jobs in supporting industries.
Further, Georgia has become a leading exporter. According to GDED, Georgia is home to 10,080 exporters located in 86 percent of our state’s counties. Georgia currently ranks 12th in the U.S. based on the dollar value of exports, totaling $28.7 billion in 2010.
For obvious reasons, Georgia devotes substantial resources to fostering international economic development and trade with GDED maintaining offices located in Brazil, Canada, Chile, China, Germany, Israel, Japan, Korea, Mexico and the U.K and Ireland. As noted, the state has been successful in attracting substantial investments from international companies.
However, Georgia is competing for such investments with other states, including Alabama, which has attracted major investments from Mercedes-Benz and ThyssenKrupp Steel, Tennessee (Volkswagen) and South Carolina (BMW).
We are competing not only with our neighboring states, but in a global marketplace. Our efforts should be devoted to the creation of a business-friendly environment which will attract international business to Georgia, creating jobs here and providing markets for manufactured goods and agricultural products from our state.
In this election season, many candidates have stressed that we have too many laws and regulations that hamper business. Other laws and regulations create negative perceptions that can be equally damaging. When new legislation is proposed we should all ask — but conservatives should especially ask — the following two questions: First, does the proposed law address a fundamental problem not addressed by current law? Second, will adopting the law have negative consequences unrelated to its stated purpose? If the answer to the first question is “no” or the answer to the second question is “yes,” then the proposed law should be defeated. Although HB242 appears to have been defeated for this year, the international business community must continue to watch this situation carefully.
Mr. Watkins is a partner in the law firm of Barnes & Thornburg LLP. He has advised Canadian, German and other European companies regarding doing business in the U.S for many years. His work in this area includes advising international companies on understanding and minimizing the risks of the U.S. legal system, negotiating and drafting equipment sales agreements, terms and conditions, non-disclosure agreements and other commercial contracts. Mr. Watkins also advises international companies on arbitration and alternative dispute resolution, and, when necessary, represents them in litigation and arbitration.
Mr. Watkins may be reached by email, here.