Question 3(7 marks)

Consider what happens when State X passes a law that makes it compulsory for branches of all of its domestic banks to follow State Xs rules on the regulation of bank deposits. Around the time this law is passed, another law is passed in the parliament of State Y. State Ys lawmakes it mandatory for the local branches of thoselocated in State Y, but whose parent banks are located overseas, to follow State Ys rules regulating bank deposits. Bankers Credit Company, a bank headquartered in State X, and which has a foreign branch in State Y, is confused as to which laws State Xs or State Ys to comply with.

You are the legal counsel for Bankers Credit Company. Advise the bank using relevant international business law principles and applicable cases as to which law its foreign branch in State Y has to comply with. Explain your answer with reference to the relevant international business law principles and applicable cases.

Note - Students should provide an answer in relation to how conflicts between Host and State Regulations are resolved.

(7 marks. Word limit Maximum 400 words)