ICT

Merger Procedure and Shareholders Remedies

1) Boards approve merger 2) Shareholders' meetings 3) Merger deed (combination of two companies) Discussion of breach of directors' fiduciary duties (what is the monetary relief?) Information violations, pursuant to securities laws Dissenting shareholders' appraisal rights

Requirements for Buyer to receive remedies from Seller's breach

1) Give notice of breach to Seller 2) Notice must be SPECIFIC ENOUGH

Types of Takings

1) Intervention (somewhat temporary) 2) Nationalization (political emphasis) 3) Expropriation (economic emphasis) *****(ALL ABOVE REQUIRES COMPENSATION) 4) Confiscation (punitive, no compensation)

Types of Antitrust

1) cartels (fixing prices, limiting output) 2) collusion 3) monopoly --> abuse, exclusive dealing, price discrimination, tying "Mergers control" (when entities w/signif shares combine, might result in a non-competitive structure) "Relevant market" (definition of a market... Soda drinks? How do you define this? Are the goods substitutes? ELASTICITY. The relevant market could be COKE, FANTA, PEPSI)

Dunhill v. Republic of Cuba

ACT OF STATE: Cuban government says, among other things, that the obligation to repay, if any, is a quasi-contract in Cuba and its refusal to honor is an act of state not subject to question in US courts Court distinguishes commercial activity of a sovereign Repudiation of a commercial debt cannot be treated as an act of state, also based on the restrictive approach to sovereign immunity Just like in sovereign immunity, there's a commercial activity exception!

Joint Venture (JVs)

Ambiguous term: generally refers to any business organization with several shareholders (two) and with more-or-less equal powers With local partner, voluntary or mandatory Risk of 50%-50% Shareholders' Agreements very important: 1) Transferability of the shares 2) Governance: voting rights, appointing directors, specific 3) issues (dividends, confidentiality...) 4) Different effects in different jurisdictions

CISG 46

BUYER'S REMEDIES specific performance (more common civil law), often buyer prefers damages [list situations in which specific performance could be preferable --> special goods?] -no specific performance if buyer resorts to inconsistent remedy, e.g. avoidance ONLY APPLICABLE IF FUNDAMENTAL BREACH, not just simple nonconformity (CISG 25)

Branch vs. Subsidiary

Branch: no separate legal entity Subsidiary: separate legal entity, wholly owned, controlled, with minority shareholders (mandatory joint-venture, private or public) Branches and subsidiaries are bound to the local rules, which mandate certain structures (e.g. hydroelectric plant in E. Europe)

Quotas (Non-Tariff Barrier)

Can be global (from all countries), discretionary (from some countries, if MFN allows), or bi- or multi-lateral in a "friendly" treaty (e.g. EU milk) This might create a "market for quotas" among enterprises in exporting nations (sometimes legal, sometimes illegal: fake business just to sell quotas) Sometimes reduced tariff up to a quota, higher tariffs after threshold

Helen Kaminsky v. Marketing Australian

DISTRIBUTION AGREEMENTS: CISG does not apply to distribution agreements, since they do not mention precise ID of goods, quantity, or price Issues re Termination of distributor: Often for not reaching results or other breaches; but it is a delicate issue, foreign state can consider it exploitive Employee in some jurisdictions no employment at will; if independent law might limit or require huge termination fees

Unjust Enrichment (elements)

Defendant enriched at the expense of the claimant Unjust enrichment consists in: 1) mistake of fact or law 2) duress or undue influence 3) failure of consideration other remedies available to the claimant

Standby Letters of Credit (REREAD)

Developing nations governments often require financial assurance that foreign businesses supply goods or perform a service according to the contract Banking regulations in several countries, including the US, preclude or limit the ability of a bank to insure the performance of a contract or performance bonds (activity restriction) One alternative that has developed is to issue standby letters of credit for the benefit of the buyer (again, often a foreign government), payable against a simple writing by a certain high-ranking officer certifying that the seller did not perform correctly. Also called "suicide credit" Breeding ground for fraud?

Trade Related Investment Measures (TRIM)

Effects of Foreign Direct Investment on host country (foreign state being invested): 1) Entry (authorization, national treatment and dispute settlement under Art. 11 NAFTA) 2) During Operations (plant location, education R&D, limitations on imports and exports, performance requirements, such as how much of local materials to use in production, currency controls, management restrictions...) 3) Withdrawal Trend, the less harsh the TRIMs are, the more investment a foreign/host country will receive

Lamb v. Phillip Morris

FCPA and ACT OF STATE: Act of state issues only arise when a court must decide when the outcome of the case turns upon the EFFECT OF OFFICIAL ACTION by a foreign sovereign! FCPA was primarily designed to protect the integrity of American foreign policy and domestic markets. Congress did not intend to permit private rights of action under the FCPA

Inspire Art case

FREEDOM OF ESTABLISHMENT state B cannot impose its minimum capital requirements to corporation duly incorporated in state A

Extraterra re Foreign Subsidiary

Foreign subsidiary not free to ignore US law: Statutes specifically designed to operate extraterritorially, at least in part: title VII US citizens employed abroad by a US-controlled entity, antitrust, foreign corrupt practices act, alien tort act (but no longer?) Statutes that might be applied extraterritorially, even if often courts say only if there is evidence of legislative intent (presumption against extraterritoriality). Important test sometimes used is conduct/effect (see Skiriotes case)

Imports: Non-Tariff Barriers (NTB)

Goals: protect local business, stabilize prices, health, safety, environment, morals, foreign policy: sanctions, embargos... Prohibitions: narcotics; endangered or dangerous animal species; books urging insurrection against the US; goods produced with bonded child labor... Types: Quotas, import licenses, subsidies, dumping, government procurement, technical barriers to trade (TBT)

Hard Currency

Hard currency is a globally traded (= generally accepted everywhere or almost) currency expected to be a reliable store of value; hard status depends on perceived long-term stability of purchasing power, country's political and economic situation, central banks policies, etc. More precisely, hard currency has 3 features: (1) used in settling trade and financial transactions; (2) global reserve; (3) freely converted at market rates. --> UNLIKE SOFT CURRENCY

Dingxi v. Becwood

INCOTERMS/PASSING RISK If inulin was damaged, than to establish if FOB or not, and if it was damaged before loading on ship would have been relevant (from China to U.S.) Tort claims related to CISG contracts? NO! Here, Buyer wasn't able to show damage to the inulin purchased.

Act of State doctrine

Idea is somehow connected with principles of comity and sovereign immunity: not to interfere (= judge) validity of official State acts in State's territory Unlike Sovereign Immunity, AoS is a defense (SI is procedural/jurisdictional)

Tariffs

Indirect tax levied on the import or export of goods or services, it is a consumption tax that tends to be reflected on final price

"Value" in Trade Customs

It is the "base" for the tax! Generally you use the "invoice value": price paid or payable --> Sometimes it might not be easy to determine, e.g. other agreements between buyer-importer and seller-exporter --> Other elements: packaging paid by buyer/importer; selling commissions by buyer; royalties paid by buyer when resells...

Dixon (Brazilian seller) v. Chase Nat'l Bank NY (Issuing Bank)

LETTER OF CREDIT: Buyer from Belgium, unnamed. WWII. It is true that the law requires strict compliance with the terms of the letter of credit, and that many cases say evidence of custom not admissible to contradict unambiguous contracts, however the parties contracting when known usages prevail incorporate them by implication RULE: One, in fact of few cases, that seems to take a more substantive approach than Courtaulds to discrepancies UCC 5-108 seems to reject this substantive approach Key question: can the seller unpaid by the issuing bank go to the buyer? It depends on the contract, but in theory yes (seller will deliver the bill of lading or the other documents that the banks are not accepting and buyer will be entitled to receive the goods)

Courtaulds North America v. North Carolina Nat'l Bank

LETTER OF CREDIT: Discrepancy re the content of the LoC and the invoice In the invoice the description must match the letter of credit, in the remaining documents can be general Retroactivity of documents? Buyer's Bank may ask Buyer to waive the discrepancies of the docx. RULE: Bank's obligations independent of underlying contract and performance, it only deals with documents Bank can (must/should) stick to the "letter of the letter"... Most letters of credits incorporate by reference Uniform Customs and Practice of ICC

Berisford Metals v. S/S Salvador

MISDESCRIPTION: Carrier has extensive liability, once it issues on board bol the seller has performed, no longer risks and can obtain payment. This is necessary to make the bol system work: if the buyer can question the documents, documentary sales do not work S. liable and cannot invoke the limitation to liability S. issued a false bod, and on this basis the buyer had to pay: S. received 100 bundles and put them in containers for its convenience, S. should have at least verified the weight (79k lbs. in excess) RULE: Issuing bol for the carrier implies liability, at least when it should have known nonconformance

Foreign Corrupt Practices Act (FCPA)

Makes it a crime to pay bribes abroad: extraterritorial criminal statute Payors (who pays bribe): Registered reporting issuer, officer, director, agent of issuer or stockholder acting on behalf (78dd-1(a)) Domestic concerns: any form of business with principal place business in the US or organized in US; individuals citizens, nationals or residents (78dd-2(a)) To implement OECD convention in 1988: extended to ANY PERSON other issuers and going concerns and their directors, officers, employees, agents or stockholders acting on behalf while in the territory of the US (78dd-3(a)) Basically, excluded only foreigners for acts committed abroad Payees (note: not only cash!): Foreign officials (78dd-1(f)(1)(A), not only of foreign governments but also of international organizations) FCPA, not OECD convention, includes also: political parties, party officials and candidates (78dd-1(a)(3)) "intermediaries" while "knowing" (78dd-1(a)(3))

National Banking System (Economic Theory)

Monetary policy (supply of M is infinite, can always beat other operators): *Note*: IR is the price of money! Open market operations, purchasing T-bond (a gov't issued bond, to push GDP up): P up, IR down, Money Supply up, Inflation up, Stock Markets up, Investment up, Exchange Rate down! Lender of last resource, interest rate to banks: IR up, Money Supply down, Inflation down, Stock Markets down, Investment down, Exchange Rate up (but depends) Transactions on the currency markets to maintain a certain exchange ratio Regulation of banks: geography/activities/capital requirements/risk management

CISG 67

PASSING OF RISK TO BUYER Buyer has the risk of loss during transportation by carrier, unless the contract provides differently (see Incoterms) In other words, the risk passes to the buyer when the seller delivers the goods to the carrier

Tariffs and War

Result is quite unequivocally that there is a positive correlation between trade (and free trade) and peace. Countries engaging in free trade are less likely to invade or be invaded by other countries "Violence is not good business"

CISG Art. 16

Revocability of a contract Unless it is indicated in the contract that it is not

Misdescription

See Berisford Metals v. S/S Salvador Carrier is not in privity with the contract between the seller and the buyer, it does not have any obligation to deliver conforming goods based on the sale contract, but it must deliver goods that conform with the description in the bill of lading in terms of quantity and quality! How can the carrier know about the packaged goods? However, the carrier may be liable if it knows or should know of a difference between the description in the bol and the actual goods; for example, a very light container indicated as containing tons of merchandise Of course carrier liable for his breaches (e.g. ship goes down for negligence); note that the indorsee who pays has action against the carrier

CISG Art. 17

Termination of a contract Also applies to irrevocable contracts

Enforcement Post-Trial

Two steps: recognition and enforcement money --> enforcement remedies (garnishment, judicial sale...); other judgments --> orders similar effects Must be a final, conclusive and enforceable judgment. Generally "either/or" (courts enforces judgment as is, or does not, no changes). But there are exceptions: e.g. Dutch procedure to "recalculate" damages (e.g. sale of electricity International Agreements supporting enforcement EU: 1968 Brussels Convention automatic recognition of foreign judgments 2005 Hague Choice of Court Convention Somehow similar to 1958 NY Convention on recognition and enforcement of arbitral awards (next time) Three basic rules signatories agree: 1) Chosen court must hear the case 2) Non-chosen courts must in principle decline to hear the case 3) The judgment of the chosen court must be recognized and enforced in all contracting states, except if there is ground for refusal pursuant to Articles 8 and 9

Sumitomo v. Avagliano

U.S. OPERATIONAL LEVEL RESTRICTIONS Problem of sexual discrimination in the workplace, where U.S. corp. (with its parent in Japan) hired only male Jap executives Treaty friendship VIII(1): companies of either party can engage executives of their choice SC: based on the definition of "company" in the Treaty, VIII(1) is no defense in Title VII action, Sumitomo America is not a Japanese corporation So, the female plaintiffs win!

Copyright

Universal Copyright Protection 1952 and Berne Convention 1886: Receive national treatment, with the Berne convention independently from protection in the country of origin and notice Until 1987 US no party to the Berne convention, so US copyright holders acquired Berne benefits by publishing in Canada, a member country

Nissho Iwai v. U.S.

VALUE RE TRADE CUSTOMS: Issue: w/e the statutory transaction value should be based on the price paid by NIC to KHI or on the price set in the Master Contract b/w P and MTA (appraisal of car value)? New York MTA buys from NI American (contract A) The parent of NI American, NI Japan, buys from Kawasaki (contract B) RULING: The contract the caused the importation was A, value for tariff based on price in this contract When several contracts, value based on the one that "caused the importation!"

N.L.R.B. v. Deena Artware

VEIL PIERCING IN THE U.S. US subsidiary of a foreign parent: these doctrines might apply, and if the parent has assets in the US you can enforce it, but enforcement of the judgment in the home jurisdiction of the parent? US parent of a foreign subsidiary: jurisdiction/choice of law (torts: think of GOODYEAR DUNLOP v. BROWN, 131 S.Ct. 2846 (2011))

World Bank and IMF

WB facilitates loans by K-surplus countries. IMF has the goal of facilitating international trade by reducing foreign exchange restrictions (countries with soft-currency might have few hard-currency and impose limits, but sellers want hard-currency) IMF incentives: lower tariffs and NTB; Special drawing rights to a diversity of hard currency loans --> the loaning country receives credit from the IMF Critiques of IMF: voting rights are proportional to funds contributed

Draft (bill of lading)

Written order by the drawer to the drawee to pay the payee at a certain date In this case, the seller orders the buyer to pay, to "honor" the draft; usually the seller endorses both the (negotiable) b.o.l. and draft to the bank that will collect from the buyer

Sales Agents

does not buy the goods, only sells on behalf of foreign business (risk of payment on seller) can be an employee or an independent agent (consider the different power of control) agency law (e.g. actual, apparent and implied authority)

Independent Foreign Distributor

generally buys the goods, risk of not selling/payment on distributor, less ability to control but consignment contract ("sending goods to another party") Less control than with Agent-Employee

Switch (Countertrade)

A trade imbalance with B (imports > exports), and a positive balance with C (exports > imports). A needs to import copper from B, but does not have enough hard currency or acceptable credit. Agrees with C that C will buy the copper from A and exchange it with A

Non-tariff barrier: PUBLIC PROCUREMENT

At the federal level, in the US the Buy American Act of 1933 requires the government to buy American unless: The acquisition is for use outside the US Insufficient quantities of satisfactory quality available in the US Domestic purchase would be inconsistent with the public interest or result in unreasonable costs Domestic bid unreasonable if higher than 6% (custom duties included) or 10% (custom duties excluded) of the foreign bid Exceptions for reasons of national interest: small businesses, areas with substantial unemployment, national security needs GATT/WTO additional rules for Procurement Codes

Edelweiss (USA seller) v. Vengroff (P's lawyer)

BILL OF LADING: sale of frozen poultry; carrier gave Russian buyer goods w/o P having received payment Q: were the 3 BOLs non-negotiable? If yes, carrier had to release the goods to the seller (and P would lose). RULE: With a non-negotiable bol carrier not liable if delivers to buyer also without tendering of the bol This rule and this decision affect one of the functions of the bol, which is to make sure that goods are delivered only after payment

CISG 48

CURING Seller has a right to cure before Buyer claims avoidance of contract Applies even after delivery date

Contractual Issues to Patent License

Disclosure of information by licensor Confidentiality obligations licensee - employees judgment proof Determination of royalty's, accounting and sharing information Payment in $ US in the US (remember Allied Bank v. Banco Cartago) Licensee ensures quality - quality controls - inspections/approval of products Parties competition (gray markets - reimported; export restrictions; antitrust issues) Price maintenance and antitrust issues Only license obsolete technology to countries where low labor costs (governments oppose it) Rights on improvements: mandatory grantbacks to licensor; information to licensor Use of licensor trademark on products Duration and termination Boilerplate: Force majeure Assignment Notice of infringement and infringement actions from licensee to licensor Dispute resolution: jurisdiction or arbitration Choice of law Legislature silent: presumption against extraterra(?)

Sovereign Immunity

Domestic (US Federal and State): government cannot be sued in its courts International (also called "State Immunity"): international law principle that a State cannot be sued in the courts of another State

CISG Art. 14

ELEMENTS OF AN OFFER 1) PROPOSAL for concluding a contract 2) INTENTION to be bound in case of acceptance 3) Sufficiently DEFINITE --> -Description of goods, quantity, price Caselaw restrictive, e.g. no quality of good - no contract More restrictive than UCC on flexible prices? Most common: index, escalator clause (e.g. inflation), set by third party (includes lowest price to others) are acceptable; Open quantity contracts, e.g. requirement or output are ok, but better add a minimum or estimated quantity

Forum non conveniens factors

Elements considered (sometimes b/w private and public): Location of evidence and possibility to access it: witnesses, documents, records, other physical evidence Undue hardship to the defendant Availability of adequate alternative forum for the plaintiff (defendant must show) Applicable substantive law Public policy issues

Ueberseering case

FREEDOM OF ESTABLISHMENT corporation incorporated in state A with real seat in state B can sue in state B and must be recognized even if not incorporated according to B's laws

Sevic case

FREEDOM OF ESTABLISHMENT state B can not deny merger of national corporation with corporation incorporated in state A because its legal system only regulates "domestic" mergers

Non-Tariff Trade Barriers

Import quotas and "Buy-State X" Acts, especially for Government Licensing Safety, environmental, health rules (e.g. EU banned growth-enhancing hormone-treated meat from US and Canada, dispute, lack of scientific evidence) Subsidies to local producers

Clearing Trade Customs

Importer is liable for all duties (might have an agreement with the exporter) and there is a lien of goods for the government claim that takes priority over other creditors, including in bankruptcy Basically the problem is to determine: (a) TYPE OF GOOD; (b) COUNTRY OF ORIGIN (Harmonized Tariff System distinguishes MFN, not MFN, special like NAFTA...); (c) VALUE --> also relevant for embargoes

International Patent Protection

International agreements: 1) 1883 Paris Convention 100 countries, US party, WIPO Geneva National treatment (US granted Canadian patent treated as national Canadian) Right of priority if file within a certain period in other countries after first registration 2) Patent Cooperation Treaty 50 countries including US, greater uniformity Filings in selected countries patent offices (Japan, Sweden, former Soviet Union, US, European Patent offices Munich and The Hague) International search and non-binding opinion Countries free to have their own requirements/remedies, but often the non-binding opinion very relevant to obtain protection especially in less developed countries

Bethlehem Steel v. Dept. Water LA

NON-TARIFF BARRIER (PUBLIC PROCUREMENT): California Act to force contractors to buy U.S. steel instead of foreign steel encroaches upon the federal government's exclusive power over foreign affairs and is undue interference with US conduct of foreign relationships Even if the Constitution does not say so explicitly, the federal government has an inherent (does not depend on explicit Constitutional provision), exclusive (only the Union has external sovereignty) and plenary power over intl relations and trade In foreign relations, US is "one people, one nation, one power" It is not true that state legislation is not preempted if federal government has not enacted conflicting legislation or adopted conflicting international agreements Too important also for good relationships with other nations TAKE AWAY: States cannot encroach on federal power in this area. "Dangerous products" abroad is not a good reason for state's restriction to goods bought domestically.

Earth Island Institute v. Mosbacher

NON-TARIFF BARRIERS: The U.S. uses own standards to prevent the importation of fish (due to killing dolphins) Text and purpose of statute is clear; incentive to comply with standards according to reconsideration. U.S. implementing "dolphin-safe" labelling standards (product vs. process -- is it discriminatory? NOPE) RULING: Mandatory TBT measures can include simply information (labelling) TBT measures must conform with MFN and NT More general question: does the international trade regime constraint environmental policies or, for that matter, other national values?

Goals re U.S. Export Controls

Not as common as import controls Goals: Not draining scarce natural resources and limit inflation when foreign demand for certain goods is very high Further national policy, e.g. no export to countries that boycott friendly nations (Arabs boycott of Israel) Assure national security

Franchise

Practice of leasing for a prescribed period of time the right to use a firm's business model, brand and trademarks; or: the contract by which a franchisee is granted by the franchisor, in exchange for a consideration, the right to market goods and services under particular conditions and using a trademarks The risk of loss is on the franchisee, and generally the franchisor is compensated with royalties on the sales Several important issues with respect to franchise agreements: e.g. no price fixing; for this reason generally no minimum prices (maximum ok), and only "suggested" pricing indications (ANTITRUST MATTERS)

Chicago Prime Packers v. Northam Food Trading

QUESTION OF RISK TRANSFER (sales of ribs, spoiled during transfer) CISG 66: Once the goods reach the carrier, the buyer takes the risk UNLESS S is at fault for the damage due to an act or omission Using UCC as a perusasive gap-filler, Court said that buyer (Plaintiff) has BOP as to w/e the ribs were not spoiled prior to delivery RULE: Risk of loss when delivered pursuant to the contract, transfer to buyer. Burden of proving non-conformity of goods on the buyer as an affirmative defense in an action for price (what if the buyer sues for specific performance arguing non conformity?) Notification in a reasonable time not discussed, but it's one additional possible issue

Banco Nacional de Cuba v. Chase Manhattan Bank

TAKINGS Cuban nationalization of Chase banks "Hull Doctrine" (1938, prevailing US view): "prompt, adequate, and effective"; basically full compensation Other states/UN General Assembly rules use diff standards Consider how you determine international law: look at uses of international community, including single states, etc. Based on this, hard to determine an international standard The question then becomes if the goodwill should be paid? The Court says no because given the economic situation after the Revolution, the prospective earnings are not there! You cannot determine the value based on those no longer realistic expectations, too speculative. An independent third party at arm's length would not pay that much... Basically Banco Nacional wins, and the value of the expropriated businesses is determined based on the net book value

Brancusi v. U.S.

TYPE OF GOOD FOR TRADE CUSTOMS Classification can be tricky, and lead to controversy (such as w/e the sculpture is of a "natural object," like a bird) Especially if the margins of the importer/exporter are small, it might make the difference between profit and loss

Patent

The territorial grant of an exclusive right, limited in time, to make, use or sell the patented invention (product or process) without permission of patentee Temporary monopoly on the technology, not necessarily on the industry (e.g. Xerox not all photocopy machines) Quite international: 50% of US patents are registered by foreign residents Requirements: Lawful (not against public policy etc.) Novel Non obvious Useful Some countries require that the patent be used within a certain period

Import Licenses (Non-Tariff Barrier)

WTO Uruguay Round introduced an Agreement to simplify and harmonize licensing US President can sell licenses at public auctions (good to maximize revenues), however rarely used also to avoid concentration of licenses

Consideration for International Business Litigation

A. Choice of Forum 1. perceived impartiality, length and costs of litigation; procedural jury, jurisdiction (forum non conveniens), provisional measures and remedies, collecting evidence/discovery, enforcement B. Choice of Law 1. "Best" substantive rules 2. If forum =/= applicable law, mandatory rules? 3. If forum =/= applicable law, how easy to prove foreign law?

Magellan Int'l Corp. (buyer) v. Salzgitter Handel GmbH (seller)

ACCEPTANCE AND MIRROR IMAGE RULE Compare art. 14+18 CISG; and rules on terms in art. 19. The former establish that a contract is formed when an offer indicating the basic elements (goods, quantity, price) is accepted (also through conduct); the latter says that an acceptance forms a contract only if it does not materially alters the terms (broad: price, payment, quantity, quality, delivery, liability, disputes resolutions) How to reconcile: you can have an acceptance before additional or different terms are proposed by a party, like in Magellan and, to some extent, in Chateau des Charmes... ...or, if acceptance includes additional or different elements, becomes a counter offer that needs to be accepted Key question is to IDENTIFY ACCEPTANCE

CISG Art. 18

ACCEPTANCE: Statement or other conduct indicating assent is an acceptance; OCCURS WHEN ACCEPTANCE REACHES THE OFFEROR, but offeror cannot revoke after the acceptance is dispatched (Mailbox Rule doesn't apply) Silence or inactivity is not acceptance, but SILENCE WITH CONDUCT can be Starting performance can be acceptance (Filanto v. Chilewich)

Allied Bank Intl v. Banco Cartago

ACT OF STATE Act of State doctrine: confers presumptive validity on certain acts of foreign sovereigns by rendering non-justiciable claims that challenge such acts. Every sovereign must respect the indep. of another sovereign. Doctrine only applicable if the act takes place completely within foreign territory! (HERE, HOWEVER, the trade was between Costa Rica and the U.S.! This is an extraterritorial act by the state!) Act of State applies to gov't regulations. EXCEPTION: can sue for a taking if there is a treaty/unambig agreement In case of doubt, include in the contract a provision on payment in the U.S. to avoid application of act of state doctrine, not payment at office of U.S. party in foreign nation (TRICKY TRICKY!)

post- Banco National Cuba v. Sabbatino

ACT OF STATE Federal courts cannot decline determination on the merits based on act of state doctrine when right to property infringed by taking in violation of principles of international law including compensation (can sue state due to its acts of expropriation???) This does not apply if President files a suggestion for act of state for the policy interests of the US Based on this, on remand Sabbatino was reversed, Cuba found to violate international law Act of State prevents from deciding validity of a taking by a State in its territory BUT: doctrine not applied when the claim is that there was a violation of international law

Kiobel v. Royal Dutch Petroleum

ALIEN TORT STATUTE FOR ABROAD CONDUCT Nigeria oil crisis, massive violence Presumption against extraterritoriality: to rebut text, history and purpose Here reference to 3 offenses: safe conducts, ambassadors, piracy Pirates on the high seas, extraterritorial, but different if in territory of a sovereign (and pirates fair game wherever found) XVIII century Congress embarrassed by inability judicial relief for foreign officials injured in the US (think to two anecdotes NY and Philli), not making the new Republic custos morum of the world Objections by other countries (comity?) Even if contacts with the US, contacts must be sufficient to displace presumption TAKE AWAY: ATS no to violations of international law abroad, at least in another jurisdiction Court does not answer the question if corporation can violate international law, or only states and individuals. If corporation try go to 2nd Circuit (corp friendly); if plaintiff 7th, 11th or DC (against corp) BUT In any case, if you are a corporation and the violation has sufficient "contacts" (conducts/effects) with the US, foreign plaintiff might be able to sue

Medical Marketing Intl v. Internazionale Medico Scientifica

ARBITRATION FAA: 4 situations where award may be overruled 1) Fraud 2) Evidence of partiality/corruption among arbs 3) Arb misconduct 4) Excess of power/manifest disregard of the law D, the seller, cited CISG 35: A seller is generally not obligated to supply goods that conform to the law of the buyer's place of business RULE: Rule concerning conformity with local laws & rules Limited ground to review arbitral award (especially on public policy grounds); if court had to decide on the merits might have reasoned differently Relevance of foreign decision in interpreting and applying CISG!!!

Southern Int'l Sales v. Potter & Brumfield

AT WILL TERMINATION: RULE: Chosen law applies unless contrary to fundamental policy of a state which has a materially greater interest and would be the jurisdiction of the applicable law absent parties' choice Court says this is exactly the case, so agrees that Puerto Rico law (most significant contacts) applies on this issue and that JUST CAUSE is necessary to terminate Reasonable relation of defendant-company vs. Most significant contacts of the plaintiff-employee! Judgment contrary to public policy generally not enforceable Seller's take away: Check if there are similar provisions, and maybe try to get a shorter contract that must be renewed. However there can be minimum length in the dealer's country, and also dealers might not accept because they make an investment and want to be able to get the return

Foreign Sovereign Immunity Act (FSIA)

Adopts the restrictive theory, no immunity for commercial activity Who are Sovereigns? Non-recognized governments? Governments in exile? Includes political subdivisions of a foreign state or agencies or instrumentalities of foreign state (cities, for example) Political parties? (usually no.) Jurisdiction: Statute based on presumption of immunity, to which there are exceptions (basically, waiver, commercial activity, and expropriation - but expropriations often protected by act of state, and difficult to determine if and when violation of international law) If, in addition, service of process made pursuant to 1608 and constitutional due process requirements are met in personal jurisdiction Waiver: State not immune if waived explicitly or by implication Implied waivers are difficult and in fact some systems do not recognize them (e.g. UK State Immunity Act) General appearance/failure to appear might be considered waivers; failure to timely answer or file motions generally no waiver Entering a contract is not, per se, a waiver (there might be commercial activity exception) Agreement to arbitrate is considered a waiver (in US, other systems more doubts) Commercial activity exception: purpose (more subjective) or nature (more objective)? FSIA nature: c.a. = "either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature or course of conduct or particular transaction or act, rather than by reference to its purpose." (NO SUBJECTIVE PURPOSE ANALYSIS) Legislative history suggests c.a. is one that could normally be engaged by a private party for profit Not as clear as it might look: police activities by contractors? Legal monopoly, e.g. gambling or natural monopoly on electricity? FSIA 3 classes of activities DENY immunity: 1) Foreign State action based on commercial activity in the US 2) Foreign State act performed in the US in connection with commercial activity elsewhere 3) Foreign State act outside the US in connection commercial activity elsewhere causes effects in the US

CISG 19

BATTLE OF THE FORMS 19(1): If buyer's and seller's forms differ as to MATERIAL TERMS, there is no offer and acceptance; rather, there is an offer rejected and a counter offer BUT 19(2): reply to an offer which purports to be an acceptance and has additional or different terms THAT DO NOT MATERIALLY ALTER the terms is an acceptance (offeror can object without undue delay) 19(3): MATERIAL TERMS: price, payment, quality and quantity, place and time of delivery, extent of liability and disputes settlements, forum selection (see Chateau case)

Hual v. Expert Concrete (COMPLICATED FACTS)

BILL OF LADING: Under UCC, Fed. Bills of Lading Act and COGSA carrier who misdelivers without obtaining bol is absolutely liable But by paying the seller and obtaining the bol, the carrier is subrogated to the rights of seller Expert never had bol, and the different documents it had obtained representing that they were necessary for financing never made it the rightful owner of the unpaid pump Expert not entitled to set off repairs on the pump, because he never legally had possession or ownership of it Hual prevails also against Wells Fargo, because under UCC 9-203(1)(c) no valid security interest arises when debtor does not enjoy ownership rights on the collateral Hual wins RULE: Carrier liable to seller for misdelivery based on the bol can surrogate in the rights of the seller having the bol Whoever is the rightful holder of bol prevails also on other creditors of who has the unlawful possession of the goods

Adel v. Grand Trunk (CARRIER)

BILL OF LADING: accidentally sending a BOL to the buyer Under the Federal Bill of Lading Act, the carrier must deliver if: (a) offer good faith satisfy the lien; (b) possession of order bill of lading properly indorsed; (c) willingness to sign that goods have been delivered. In addition, carrier justified in delivering to: (a) person lawfully entitled to possession of goods, or (b) consignee named in a straight bill; (c) person in possession of order bill goods deliverable to him or indorsed or in blank However, if the signature is not authorized, the carrier may not give the BOL to the buyer. RATIFICATION: Did Adel permit the error in the BOL? Here, NO. P was also not at fault for not notifying the carrier, since D could not use the BOL w/o a proper endorsement. RULE: Quite STRICT LIABILITY OF CARRIER, as we saw in the example the idea is that if he delivers without properly indorsed BOL (or other defects) he is liable to seller-shipper, then he can (try to) recover from buyer (in this case, apparently, the wrongdoer). In theory, the wrongdoer ends up paying.

CISG 53

BUYER'S OBLIGATIONS Pay the price, and take delivery. Where? Place where goods handed over, or the seller's place of business Open Price: index, or price when contract formed Delivery: take ENABLING STEPS

CISG 49

BUYER'S REMEDIES AVOIDANCE (similar to UCC's cancellation) ONLY APPLICABLE IF FUNDAMENTAL BREACH, not just simple nonconformity (CISG 25)

CISG 47 & 49

BUYER'S REMEDIES Buyer cannot avoid a contract just b/c Seller failed to deliver. Failure to deliver is NOT a fundamental breach.

CISG 74

BUYER'S REMEDIES Damages (more common law), also for simple nonconformity; includes loss of profit, but only damages foresaw or ought to be foreseen at the conclusion of the contract; buyer must mitigate! Damages available also if contract avoided or seller has cured. Buyer must not prove Seller at fault. SELLER'S REMEDIES Same as Buyer. Measure: (a) if goods resold, difference between the contract price and (lower) selling price; (b) if not resold, difference between the contract price and the market price at time of avoidance

CISG 50

BUYER'S REMEDIES SELF HELP reducing price for nonconformity, but unclear how much and if also for quality or only for quantity

Fraud Exception to all Letters of Credit UCC 5-109

Banks paying against documents in good faith and without notice of any defense or defect are entitled to reimbursement, despite fraud of the beneficiary Even if notified of forgery or fraud, the bank may still pay if it's in good faith: banks are paid to handle documents, not to act as judges, especially without due process (and they do not want to be seen as unreliable) The account party can obtain court order against payment if can prove forgery or fraud, but rarely account party has been successful Limitations to the fraud exception: Fraud "material" (but not defined) Produce sufficient evidence, not merely allegations Procedural requirements for injunctive or other relief (likely to prevail on fraud/forgery) Relief only if third parties adequately protected Only if fraud by beneficiary, not by third party such as the carrier English and Canadian courts, based on persuasive US precedents, have adopted this approach but they also require "scienter" by the beneficary which is an element of common law fraud

Seller's obligations re Delivery under the CISG

CISG 31: Deliver the goods, hand over related documents, transfer the property as required by the contract and the Convention Delivery: a) delivery contracts: seller must deliver at a certain location; b) shipment contracts: carriage by a third party, seller must hand over to the first carrier; c) no transportation contracts: at place where goods are or at seller's place of business ***Art. 31: if no other place in the contract: FIRST CARRIER; if not and parties knew where specific goods were, at that place; if not, seller's place of business*** Note 1: Transfer of property not governed by CISG, applicable domestic law; it could be at conclusion of contract, upon delivery, or later; domestic law also determines if seller may retain title as security for the price; Note 2: Like the UCC, not one single event for physical delivery, passing of risk of loss, etc. CISG 35: Deliver goods of the quantity, quality and description required by the contract, contained or packaged as required by the contract!

Offsets

COUNTERTRADE: Often used in the aerospace or defense industries In producing the seller must use a certain % of goods and services produced locally, often with a joint venture (effect on the economy, but also for know-how, technology transfers...) NAFTA prohibits but exceptions e.g. for defense procurement contracts

Compensation/Buyback

COUNTERTRADE: Seller sells plant, machines or similar and is paid (at least in part) with goods produced with those instruments over the years Often seller is more familiar with the goods b/c operates in a related or the same market E.g.: 2008 China supplying $9 billion in technology and equipment for copper mine in Congo, and Congo will pay with exports of copper and cobalt to China

Counterpurchase

COUNTERTRADE: X sells goods to Y, Y pays but the currency must be used to buy goods from Y's country, also goods unrelated to seller's industry that it would need to sell The obligation to buy goods can be for 100% of the selling price, but also for less or more (in this case seller acts as a sort of forced agent for the goods) Risks on quality and value of the goods

Anheuser-Bush Brewing v. U.S.

COUNTRY OF ORIGIN RE TRADE CUSTOMS: Case on modified wine corks, originally came from Spain Issue: Entitled to "drawback" (= import duties of materials used in a manufactured product in the US, entitled to repayment when final product exported)? Drawbacks allowed if the goods were "substantially transformed!" Here, however, the corks didn't alter the final product exported, which was BEER! There must be a transformation for a manufacture; a new or diff article must emerge, "having a distinctive name, character, or use" Here, a cork is still a cork.

Trademark

Distinguishes products and services; difference with "certification marks:" qualities, origin, e.g. DOC - DOCG; and "collective marks" Registered (XTM and X®): exclusive use for a period of time, but can be renewed generally in perpetuity (difference with patents/copyright) Requirements to register (in most jurisdictions and in most international agreements): 1) "Legal:" not against public policy; e.g. in China cannot offend socialist morality 2) "New:" different from another registered TM (and sometimes also non-registered might have some protections) 3) "Distinctiveness:" "shoe" for shoes genericized: Nylon, Aspirin, Biro (British English), Nutella story ...but possible to acquire distinctiveness with secondary meaning, some systems require registered for a minimum period 4) "Not deceptive:" not create false expectations in consumers, false designation of origin National legis tends to have no extraterritorial application Sometimes national trademark law accompanies intl licensing (1946 Lanham and Sherman Acts have extraterritorial application)

CISG 79

EXCUSED PERFORMANCE party not liable for failure to perform if proves due to an impediment BEYOND HIS CONTROL and could not reasonably be expected to be taken into account at the conclusion of the contract or to have avoided or overcome it or its consequences Elements: 1) Impediment beyond party's control 2) Could not have reasonably be expected to have taken it into account when contract made 3) Excuse available only as long as the impediment continues 4) Must NOTIFY the other party of the impediment and its effects on performance Excuse only for the damages, NOT THE CONTRACT

Skiriotes v. Florida

EXTRATERRA APPLICATION OF US LAWS A State (and the US) can enact laws that govern the conducts of their citizens on the high seas or even in foreign countries when the rights of other nations or their nationals not infringed (see also Scotch Whisky) US law, including criminal law, can apply extraterritorially (better, to conducts abroad)

Stealing and Misdelivery (Bill of Lading)

Each party who takes the b.o.l. should "know her endorser"; if goods are misdelivered the party most easy to find is the one who received the goods (B). He is liable, but has a warranty action against its transferor, and so on. The hope is that through this chain you can get to the thief/forgerer

Foreign Direct Investment

Establishing a (more or less) stable organization in a foreign country. Basically, MNEs (Multinational Enterprise): 1) Branch 2) Subsidiary (joint ventures such as corps or 2+ partnerships) Why? Mandated by the local government (especially to exploit natural resources), often also with a joint venture and local equity (either by government or private parties) Voluntary because: Easier to enter market Cheaper to produce, especially labor Tax Other legal (e.g. limiting liability) Trade Related Investment Measures (TRIMs): WTO/GATT aim at reducing limits of Foreign Direct Investments, and so do developed nations; developing nations are more protective Labor intensive vs. capital intensive: the curse of raw materials (bad labor conditions --> LABOR INTENSIVE) (those w/ much oil and metals attract investments but not necessarily possess high standard of living --> CAPITAL INTENSIVE)

U.S. v. Liebo

FOREIGN CORRUPT PRACTICES ACT: Liebo: no evidence that tickets "given to obtain or retain business;" and that gift was done "corruptly" Standard review: reasonably minded jury must have entertained a reasonable doubt as government proof of one of the essential elements of the offense Sufficient evidence that tickets given to obtain and retain business Tiemogo essential to secure the contract Tiemogo and Barke cousins and best friends Contract after tickets Corruptly broad interpretation, accounting as "commission payments" TAKE AWAY: concept of payment to obtain or retain business quite broad, inference ok "corruptly," as we discussed, not particularly relevant in narrowing FCPA

Argentina v. Weltover

FOREIGN SOVEREIGNTY IMMUNITY ACT Issuing bonds is a commercial activity (quite broad!) under FSIA Why? "A contract to buy army boots or even bullets is a "commercial" activity b/c private companies can similarly use sales contracts to acquire goods." (compare act to that of a private party) An effect is "direct" if it follows "as an immediate consequence of the defendant's . . . activity." (HERE, THERE WAS A DIRECT EFFECT ON THE U.S. --> place of performance was in NY) Unilateral rescheduling of payment has direct effects in the US, place of performance, even if bondholders are foreigners Argentina's issuance of bonds denominated in US $, payable in NY, and appointment of financial agent in NY sufficient for due process minimum contact requirement (see above) Argentina loses! Commercial Activity: 1) Commercial Activity in the U.S. 2) Commercial activity abroad, but act in the U.S. 3) Commercial activity abroad, act abroad, but effects of act in the U.S.

In re Union Carbide Corp. Gas Disaster

FORUM NON CONVENIENS Foreign judgment enforceable in NY if impartial tribunals and procedure compatible with due process and foreign court had personal jurisdiction Indian courts no due process (example of freezing assets) UC request that US court "supervise" Indian procedures is bizarre theory bordering on frivolous But condition to satisfy "minimal due process" is too low, interpret it as "due process" Discovery should be equal, condition delated without prejudice that parties may accept equal US-style discovery and Indian court ok (consider also UOI is both defendant and plaintiff)

Piercing the Corporate Veil Doctrine

Factors: U --> Undercapitalization C --> Commingling of funds F --> (lack of) formalities M --> Misstating status of corporation (catch-all; for fraud, etc.) Can pierce via the alter ego/single enterprise/agency doctrines Totality of the circumstances: low number of shareholders, higher chance of corp. veil piercing Civil law systems with minimum legal capital, more difficult; however statutory provisions, e.g. Italian Civil Code Article 2497; German Konzernrecht... Which law applies? Generally, the one that governs the internal affairs of the subsidiary... ...but beware of special rules on jurisdiction, e.g. we will discuss the Alien Torts Act...

Asahi v. Superior Court

IN PERSONAM JURIS/STREAM OF COMMERCE (pre-trial) Issue: does mere awareness of foreign defendant that components manufactured, sold and delivered outside the US would reach the forum in the stream of commerce constitute "minimum contact" so that exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice"? Minimum contacts: some act by which defendant purposefully avails privilege of conducting activities in the State and invokes benefits of its laws; actions of defendant creating substantial connection with the forum In World-Wide Volkswagen held that unilateral act of consumer of bringing product into forum State not sufficient for personal jurisdiction over producer, foreseeability that car can be driven there is not sufficient Split: for some courts sufficient to put product in the stream of commerce, others required something more intentional SC embraces the second view (= CA CoA): minimum contact requires an action of defendant purposefully directed toward the forum State Burden on a defendant to litigate abroad must have a weight in determining the reasonableness of stretching long arm of personal jurisdiction over national borders Cheng Shin not demonstrated that it is more convenient for it to litigate in CA rather than in Taiwan or Japan (plaintiff not CA resident, CA interest in the dispute diminished) Concurrence: Does not agree that the "placement in the stream of commerce" is not sufficient to establish jurisdiction; but agrees that exercise of jurisdiction would not comport with "fair play and substantial justice"

Centros case

INCORPORATION AND REAL SEAT IN EUROPE: A family with a company in the real seat of Denmark wanted to establish branch in Germany, where there was lower minimum capital ***Corporation incorporated in state A with real seat in state B can establish branch in state B*** (supports the real seat) FREEDOM OF ESTABLISHMENT IN THE EU: You can establish a subsidiary in one country, e.g. UK, and open branches in other EU Member States even if the subsidiary does not carry on business directly in the UK Foster competition among states In civil law countries, the law of the real seat is PREFERABLE (but this has been attacked by the ECJ

Incorporation vs. Real Seat

INCORPORATION: articles of incorporation (file with Secretary of State, pay fee, thus become incorporated in that State) --> remember these are state lvl regulations --> based on relationships b/w corporate bodies, shareholders, etc. REAL SEAT: Physical connections in that jurisdiction Piercing the Corporate veil? Usually, apply law of state of incorporation. Corporate choice of law? State of incorp. law will differ from law re issued bonds

Issues regarding Branch/Subsidiary

If subsidiary, what type? Corporation, LLC, partnership... Business/organizational issues: costs, coordination, conditions to raise capital, transfer pricing... Tax issues: transfer pricing, attention to business form LLC in some systems might be considered partnership US with dire consequences Bankruptcy: often not think up-front, but should be considered (Center Of Main Interest...) --> laws of state of main interest: zone of insolvency [some nations have friendly bankruptcy laws] Liability parent for obligations of subsidiary

Letter of Credit

It is the promise by a bank, usually the buyer's bank in its country (but can also be the seller's bank if it accepts it), that it will pay to the seller ("honor the drafts drawn on bank by seller") the price contracted when the seller will present evidence that the goods have been shipped/that it has performed (bill of lading).

Choice of Law

Limits to party's freedom: Generally courts are quite deferential, especially in contract and if there is some connection between the jurisdiction chosen (rarely parties pick a completely unrelated jurisdiction) The choice of the parties can be expressed or also implied (based on elements such as the fact that the contract would only be valid in one jurisdiction, language, reference to legal terms of one particular system...) There might be cases in which, based on the applicable conflict of laws rules, it is mandatory to apply the law of a given jurisdiction, but especially in our area it is not very common There might be some specific mandatory provisions of a different jurisdiction (often the one of the forum) that would apply notwithstanding a different choice of the parties: we saw examples on termination to protect distributors Contracts with consumers might have more protective choice of law rules In the absence of parties' choice, or if for some reason the provision is invalid, the court will apply its choice of law rules that will aim at one jurisdiction In the absence of more specific statutory provisions, general criteria is the law that has the strongest connection, looking at elements such as where the parties are located, where the contract is executed or must be performed (most relevant performance), language, currency used, etc.

Key Principles of WTO

Non-discrimination (cornerstones of trade law): (1A)Most Favored Nation (MFN): in short, in goods, services, IP a member state must apply to all others the same conditions it applies to the most favored nation [art. 3 GATT 1944 and incorporated in other agreements] --> violations of MFN only if there is a discrimination based on national origins of the party or the products (DISCRIMINATORY ON ITS FACE --> ILLEGAL) (1B) Nationality treatment (NT): once goods entered the market, treated as national goods, no internal discriminatory taxes or non-tariff barriers (e.g. technical standards, safety standards, etc.) Note 1: NT sometimes conflicts with "minimum standards" and "due process:" a state can deprive foreigners of rights in the same fashion it can deprive its own citizens, e.g. with expropriation. This sometimes creates a tension between developed countries (claiming minimum standards) and developing countries (sustaining expropriations based on NT) Note 2: often MFN and NT also in other bilateral agreements, and also in private contracts. Both principles have numerous exceptions Reciprocity Transparency of tariffs Exceptions, allowed to restrict trade: public health, environment, also to MFN for helping developing countries, regional free trade/custom unions, and other to protect economy

Chateau des Charmes v. Sabate

ORAL AGREEMENT Tainted corks case Forum selection clause in FRA There was an oral agreement, the parties can modify it, but it is necessarily an acceptance P only performed the oral contract, there is no indication they accepted the additional new terms, and failure to object to a unilateral attempt to modify a contract is not an acceptance See CISG 11: "A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form." Add'l terms alter the terms of the offer MATERIALLY No indication that P conducted itself in a manner that evidenced any affirmative assent to the forum selection clause in the invoices. (no conduct to show that P "agreed")

Microsoft v. AT&T

PATENTS: Generally, no extraterritorial protection: no infringement when a patented product is made and sold in another country But Section 271(f) of Patent Act: infringement if "components" of a patented invention are supplied from the US for "combination" abroad Court: The software "components" were the copies of Windows made abroad, not supplied from the US TAKE AWAY: National patent laws do not protect internationally HOWEVER, sending components abroad for assembly resulting in infringing product is ILLEGAL

Trade-Off for Quality Controls

POSITIVE: keep quality goods, coordinate advertising/pricing, check on accounting to calculate revenues NEGATIVE: if there is too much control, an agency relationship might lead to the franchisor (the principal) getting sued for the tortious acts of the franchisee

Goodyear v. Brown

PRE-TRIAL JURISDICTION General jurisdiction: affiliation with the State are so "continuous and systematic" to render the foreign corporation essentially at home in the forum State (citizenship?); Specific jurisdiction: affiliation between the forum and the underlying controversy; activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation Even if some tires put in the "stream of commerce" reached North Carolina, according to the Court there is: a) No specific because accident abroad, manufacturing and selling abroad b) No general jurisdiction because contacts are insufficient

1789 Judiciary Act (human rights violations?)

Part of the 1789 Judiciary Act: "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." From 1980, after leading case Filigarta v. Pena-Irala, courts have used it often interpreting it as allowing foreign citizens to seek remedies in U.S. courts for human rights violations for conduct committed outside the United States, often against MNEs Alien Tort Statute (ATS)

U.S. Restrictions to Entry

President can investigate and suspend or prohibit transactions leading to foreign control of US firms based on national-security concerns Possible defenses: Exon-Florio states President's findings not subject to judicial review But is questionable that they could not be scrutinized under 3 theories: V amendment due process and balancing test; just compensation for taking; conflicts with bilateral treaties (but national security is generally an exception to these treaties) Few industry specific restrictions: Nuclear Power Maritime Industries

Scope of the Foreign Corrupt Practices Act (FCPA)

Prohibited Conducts (wilful): 1) use mail/instrumentalities interstate commerce "CORRUPTLY" in furtherance of: 2) offer, payment, promise to pay, authorization to pay (money or gifts, basically any utility) to: a) foreign officers for purpose of: i.) influencing act, do or omit violation duty, secure improper advantage, influence government to obtain or retain business b) any person while knowing that portion money or things of value to foreign officials or politicians Knowing: Aware conduct, circumstance exists, or that result substantially certain to occur Firm belief circumstance exists, or results substantially certain to occur Aware of high probability Note: jurisdiction based on mail/interstate commerce as securities laws, but now for issuers and domestic concerns expanded to cover conduct abroad; "corruptly" unnecessary Defenses/exceptions: Routine government actions Lawful under the written laws of foreign country (rare, could be campaign contributions) Reasonable bona fide expenditures (travel, lodging) to promote pds/services or perform contract To prevent possibility of scapegoats, add such a provision: "However you should have a provision in your employment contract that not compelled to make unlawful payments" Hypo: minor payments are excluded under FCPA scope no violation of FCPA if Person X is not living in the U.S. or if he is not a citizen of the U.S. (territorial req.)

Kirkpatrick v. Envir Tectonics

RICO AND ACT OF STATE: Act of state doctrine used to be based on international comity and expediency, not more as expression of separation of powers: judicial judging foreign sovereign act might interfere with government's foreign policy (Banco National Cuba v. Sabbatino) Not for commercial acts (Dunhill of London v. Republic of Cuba) In this case Court does not need to declare invalid the official act of the Nigerian government and of the contract Court concludes that the act of state doctrine only bars courts in the US from deciding the VALIDITY OF ACTS of foreign governments in their jurisdictions TAKE AWAYS: Private parties can have a private cause of action for damages under RICO and similar legislation (we will go back to see if also under FCPA) Act of state doctrine no defense to find FCPA violation, limited to validity of the sovereign act abroad (invalidity might be a consequence of the finding, but irrelevant) One side question: is it a good idea that contracts obtained bribing should be invalid? In many ways yes (protection of competitors, of the public since it is likely that was not the best option...), but on the other hand might discourage disclosure especially when the private party is "forced" to pay

Dynamics Corp. of America v. Citizens Nat'l Bank (P's bank) Seller from U.S. Buyer is the Indian Gov't

STANDBY LETTER OF CREDIT: Sale of defense-communication equipment If, however, the docxs sent to buyer are fraudulent and seller demands payment from the bank, the bank has the discretion of honoring the demand. Certification by buyer that triggers the payment: can/must the bank consider its truthfulness? Not really, but if fraudulent because no basis of fact, than bank can/must consider it RULE: If the beneficiary (seller) has strictly complied w/ the terms of the LoC, the bank must honor his demand for payment, regardless of w/e the goods or docx conform to the underlying contract of sale b/w beneficiary and buyer.

Seller's Obligations re Goods under the CISG

Seller must deliver goods of quality, quantity, description and packaging required by contract. CISG 35(2): In no different agreement in contract, goods are not conforming unless they: a) Are fit for the purposes for which goods of the same description would ordinarily be used b) Are fit for particular purpose expressly or impliedly made known to seller at conclusion of contract [often litigated, make clear in contract] c) Possess the qualities which seller held out to buyer as sample or model d) Packed in usual or adequate manner Seller must deliver goods free from third parties rights/claims, including IP if could not have been unaware; note: if contract indicates a country in which goods resold or used, in that country; if silent, where buyer has place of business BUT seller not liable if lack of conformity under 35(2) a - d known to buyer or buyer could not have been unaware at the conclusion of the contract CISG 35: Seller needs not to deliver goods that conform to laws/regulations of buyer's state, EXCEPT WHEN 1) S and B are in Seller's state 2) Buyer has informed the Seller; OR 3) Seller SHOULD'VE KNOWN due to circumstances (e.g. had a branch office in Seller's state

International Perspective to Franchise Agreements

Sherman Act can apply extraterritorially so foreign franchisee could sue your franchisor-client in the US for tying (and obviously vice-versa for foreign franchisor opening stores in the US) Better to avoid revenues based on sales of goods, use ROYALTIES; in addition, try to establish that the use of certain goods is essential part of the quality, identity, etc. of the franchisor and that to do otherwise might mislead customers!

Filartiga v. Pena-Irala

TORTURE SC says torture is a violation of the law of nations Discussion on how to establish the law of nations: many specific sources in agreements, and when not customs and usages of civilized nations, works of jurists The fact that the tort occurred abroad does not deny jurisdiction Pena argues bar for act of state. BUT this is action of state official in violation of Paraguay Constitution and law, under color of government authority, and is a violation of law of nations Jurisdiction in the US

Scotch Whisky Ass'n v. Barton Distilling

TRADEMARKS: U.S. sending House of Stuart (Scotland) wines to Panama for processing, still holding the House of Stuart label; violation of Lanham Act [question of juris]? YES (PRO-P) Lanham Act: affixing or using false designation of origin and causing goods to enter into commerce determines liability to the businesses in the locality falsely indicated Court: international law does not bar US from regulating the conduct of its citizens on the high seas or abroad if rights of other nations/nationals not infringed Lanham Act has extraterr application The more conducts and effects in the US, the more likely to apply (goods come back to the US) More precisely, pursuant to Second Circuit Vanity Fair v. Eaton, three-factor test for the extraterritorial application of the Lanham Act: 1) the defendant's conduct must have a substantial effect on U.S. commerce; 2) the defendant must be a U.S. citizen; and 3) there must be no conflict with trademark rights under the foreign law.

CISG 38 & 39

TRANSFER OF RISK AND BUYER'S EXAMINATION ***38 and 39 apply IF HARM TO GOODS OCCURS BEFORE REACHING CARRIER*** Buyer must examine the goods within as short period as practicable; if contract involves carriage, examination deferred until the goods at destination; Buyer loses the right to rely on lack of conformity if no notice to the seller of the nature of the defect within reasonable time after discovery, or 2 years from delivery of the goods

Siegel v. Chicken Delight

TYING: unlawful imposition to purchase non-essential product or service (tied item) to obtain the one that is necessary (tying item) Facts: CD does not apply royalties, but requires franchisees purchase cooking equipment, dry-mix food, and TM packaging from them (at a price higher than market) to obtain the trade mark license ELEMENTS OF UNLAWFUL TYING: 1) Two DISTINCT items, tying product not obtained if the tied one is not also purchased 2) The tying product must have enough economic power to restrain competition in the market of the tied product 3) A substantial amount of commerce in the tied product market is affected Court sees that the franchise license is distinct from the cooking equipment (since the license reflects goodwill/quality of the firm) Even if there is much competition, a franchisor with a license is presumed to have "sufficient power"

Comparative Advantage

The idea of c.a. is that it makes sense for a country to "specialize" in the production of the goods for which it is more efficient (cheaper), and trade those for other products See England/Portugal table of goods (wine and cloth) Factors influencing CA: the "exchange ratio" (the relative price) of the goods that one country is particularly efficient at producing might not be favorable: goods that consumers (no longer) want the costs of trade are not 0! e.g. transportation costs for a country it might be "dangerous" to focus only on certain goods, not to diversify; e.g. war with the producer of a vital good genuine desire to limit certain products considered dangerous, immoral... desire to produce goods with more technology for their positive externalities lobbies and industries might push for certain protections State might need revenues retaliations against other nations/punitive embargoes... tariffs need to be enforced, and this can be expensive (smuggling)

Fortino v. Quasar

U.S. OPERATIONAL LEVEL RESTRICTIONS: Different treatment based on citizenship, not on national origin, and only the latter is contrary to Title VII (e.g. Americans of Japanese descent not favored) Distinguished from Sumitomo b/c here directive from parent Matsushita (in Sumitomo this was not discussed and Court left open); subsidiary can assert the parent's rights under the Treaty, otherwise the Treaty would be empty Posner's policy argument on reciprocity: US wanted this provision also to protect US jobs in Japan, if Fortino wins US jobs in Japan might be in jeopardy So, D (Japan) wins! TAKE AWAY: Is distinction national origin/citizenship convincing? If Japanese citizen is also (as it is likely) of Japanese national origin? Is the argument concerning the parent's directive convincing? Is it easy to prove? Is it sufficient to make decisions look as dictated by the parent? Treaty can prevail on local statute, if nothing else as a "special provision" derogating from the more general one (is it relevant if adopted after the statute?) Foreign business treated "better" than national business

Trade Secrets

Uniform Trade Secrets Act (UTSA) 1979, adopted by some 47 states, D.C., Puerto Rico... UTSA 1.4: "Trade secret" (such as recipes or cooking techs.) means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: 1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and 2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (esp. in intl franchise agreements --> confidentiality agreements) Very first class: confidentiality agreement useful to argue "2" for trade secret purposes UTSA prohibits and provides remedies for "misappropriation" with "improper means" Some international agreements extend, e.g. NAFTA; some countries do not have Trade Secrets protection, but often you can reach similar results with "unfair competition" rules (misappropriating a trade secret is unfair competition, however often this only applies to competitors)