Midterm BUL
Establishing customary practice as customary law
*Both elements must be present! 1 - USUS (behavioral) 2 - Opinio juris sive necessitatis (psychological)
Forum non conveniens doctrine
- "Inconvenient forum" / allows for case to be dismissed or moved to another forum - Can be applied to any case if the court determines that there is another more convenient forum to hear the case - Employed when the court chosen by the plaintiff is inconvenient for witnesses or poses an undue hardship on the defendants
Ad valorem duties
- "according to value" - Any charge, duty, or tax that is applied as a percentage of value
Organisation for Economic Co-operation and Development (OECD)
- 30 industrial nations adopted voluntary recommendations for MNCs
UN Global Compact
- 3800 members representing MNCs, public interest groups, and UN agencies - Promotes basic principles of environmentalism and corporate social responsibility
Joint venture
- A contract that creates a partnership for the purpose of performing some kind of business operation; generally established for a specific objective and sometimes for a fixed duration - Common method for int'l business investment where foreign company seeks out domestic company in order to enter host country's market - losses and profits of the business pass through directly to the partners for purposes of taxation
Act of state doctrine
- A nation is sovereign over its own territory and its official domestic actions may not be questioned by the judicial bodies of another country - Potential defense to suits
Kern v. Dynalectron Corp.
- A written employment contract in this case helped limit the employer's liability because it expressly stated the business necessity for conversion to Islam - extraterritorial application of U.S. employment laws - the Bona Fide Occupational Qualification (BFOQ) as a defense to an employment discrimination claim - religion can be a BFOQ in some international business situations
Agreement on Customs Valuation
- Adopted during Uruguay Round of GATT; currently only a framework agreement - Establishes fair valuation as an internationally recognizable principle - Makes transaction value the internationally preferred means of calculating dutiable value
Origin Agreement of GATT
- Adopts the change in tariff classification as the primary method to determine country of origin - Emphasizes transparency by WTO countries regarding their country of origin rules
Deductive value
- Alternative method for customs valuation - Price that the goods being imported are ultimately sold at in the U.S, with allowable deductions for costs such as international freight, duties, and certain commissions
Conciliation
- An impartial conciliator seeks to help the parties resolve the dispute on their own - Advantages: ensures party autonomy; ensures the expertise of decision-maker; time- and cost-efficient process
Tennessee Imports, Inc. v. Pier Paulo Filippi and Prix Italia S.R.L.
- Arbitration clauses that state the place for arbitration also serve as forum selection clauses. - In a case involving a "narrow" arbitration clause, the court will determine if issues fall within the scope of an arbitration clause before referring them to arbitration. - In case of "broad" arbitration clauses, the arbitrators will generally determine the arbitrability of an issue. - Courts may issue a preliminary injunction if it deems preliminary injunctive relief necessary to ensure that the arbitration process remains a meaningful one. - Courts are not receptive to attacks on the enforceability of an arbitration clause on ground of unconscionability, especially when both parties are merchants.
Impediment
- Basis to excuse breaching party for non-performance - Must not have been reasonably expected - Must be beyond control of the non-performing party
State-owned enterprises (SOEs)
- Companies in which a majority of ownership control is held by the government - Continue to dominate major parts of China's economy today despite loosening of government subsidies
Promissory estoppel
- Detrimental reliance - May be used to extend contractual liability to protect someone who reasonably relied upon the belief that the parties would conclude a final agreement (i.e., damages even though no formal contract has been formed) - Factors to determine whether the parties intended to be bound before entering into a formal written contract: whether one party reserved the right to be bound prior to a formal agreement; whether there has been a partial performance; whether there were still outstanding issues; the complexity of the agreement.
Letters rogatory
- Documents making a request through a foreign court for the obtaining of information or evidence from a specified person within the jurisdiction of that court - Safest but slowest approach to foreign service of process
Dharma (in Hindu law)
- Duty or propriety - What is considered appropriate behavior, duties, rights, laws, conduct, virtues, and the right way of living
Firm offer rule
- Governs ability of offeror to revoke the offer - Under U.S. law, offeror must expressly state that offer will remain open for fixed period of time
Wa (in Japanese culture)
- Harmony - In contract negotiation, wa refers to the Japanese approach of developing a trusting business relationship rather than just the simple formation of a contract
National Foreign Trade Council v. Baker
- Highlights foreign affairs doctrine (see separate card) - A state law that prohibits the procurement of goods from a particular country is an unconstitutional intrusion of federal government powers.
Country of origin (as to importing goods)
- Important in order to determine tariff rate - could be WTO most-favored-nation, NAFTA rate, or generalized system of preferences (GSP) rate - Determination can be difficult: (1) rules generally come from national import laws which will vary by country; (2) global manufacturing - products are made in different stages in different countries & their component parts may come from different countries
Samsonite Corp. v. United States
- In order to obtain the duty exemption for offshore assembly found in Section 9802, the exported items must be ready for assembly without further fabrication. - The "bending process" to which the strips were subjected to in Samsonite "did more than 'adjust' the article" and thereby constituted further fabrication.
Magna Carta (1215)
- Landmark event in development of English law - Recognized limitations of king's power
Statute of Westminster (1285)
- Landmark event in development of English law - Recognized the writ system and ability to appeal from the local courts to royal courts - Writ: Order from a court to proceed with an action
Bureau of Customs and Border Protection (CBP)
- Largest federal law enforcement agency of DHS - Regulates and facilitates international trade - General rule-making authority in customs classification and assessment of duties in the United States is vested in the CBP; courts typically will defer to CBP authority
Mutatis mutandis
- Latin for "the necessary changes having been made" - In terms of HTS interpretation, means that when determining the appropriate subheadings, the same rules used to determine headings shall be used to determine the appropriate subheading, but only between subheadings under the same heading, but not in trying to compare subheadings under different headings.
Purpose clause
- Maps the scope and goals of the business enterprise; crucial for maintaining the long-term viability of the joint venture arrangement - Scope should be defined along three parameters: geography, products and services, and duration
Privileged foreign status
- Merchandise is classified and appraised, and duties and taxes are determined as of the date the application for PFS is filed - Beneficial if tariff rate may be increased in the future
Cooperation agreement
- Opening statements of cooperation between two countries that do not have a tradition of trade between them - More preliminary and less detailed in nature than BITs
Alien Tort Claims Act (ATCA)
- Provides standing to sue in US courts to foreign parties and for torts committed outside the US in certain situations - Current circuit split/controversy regarding scope of claims that can be filed under ATCA and relief allowed, particularly in the area of human rights - leading to increased targeting of US companies in lawsuits for events that have no relation to company's primary business activities nor to US (see Kiobel case, Ch 4 - Supreme Court case that likely will reduce human rights litigation in US)
The Institutions of the Law of Scotland
- Published by Viscount Stair in 1681 - Organized the different sources of Scottish law (customary, feudal, and Roman or canon law) into a coherent system of law
Merger clause
- Purpose: prevent the use of extrinsic evidence to contradict a term in the contract - States that the document into which it is incorporated is a final integration of the parties' agreement and supersedes all other statements, writings, or correspondences
Bali Package (2013, WTO)
- Reduction of import tariffs and agricultural subsidies, with the goal of making it easier for developing countries to trade in global markets - Reform of customs bureaucracies and formalities to facilitate trade
Long arm statute
- Refers to the jurisdiction a court has over out-of-state defendant corporations. - International Shoe v. Washington was a landmark case that set precedent for establishing the right for government to use the long arm statute to bring an action against a defendant corporation - Factors required in order to use long arm statute: 1) closeness of the relationship between the claim and the contact; 2) convenience of bringing the defendant to the forum state; 3) interest of state in protecting rights of its citizens - Assertion of jurisdiction must "not offend traditional notions of fair play and substantial justice"
Essential character rule
- Secondary interpretation rule for the HTS; use this if no potential description is more specific than another - Requires the use of the heading for the material, component, or function that represents the principal use of the good
U.S. Tariff Act of 1930
- Section 337 of the Act authorizes unilateral action for unfair trade practices in the area of infringement on American intellectual property rights - Sole remedy = exclusion of goods from US (no damages)
Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) - WTO
- Sets out the basic rules for food safety and animal and plant health standards - Purpose: Maintain the sovereign right of any government to provide the level of health protection it deems appropriate, but ensure that these sovereign rights are not misused for protectionist purposes and do not result in unnecessary barriers to international trade - SPS standard should be applied only to the extent necessary to protect human, animal, or plant life or health - Use of international standards encouraged - All standards must be justified by scientific evidence of potential health risks
WTO Dispute Settlement Body
- Sole authority for appointing panel of experts to decide cases - Issues measures of retaliation in cases of non-compliance with rulings
Liquidated damages clauses
- State in advance the damages that the parties agree to voluntarily pay upon breaching the contract - Not uniformly enforced under all national legal systems
Orbisphere Corp. v. United States
- Terms such as profits and expenses occurring within the United States relating to imported goods should be subtracted when using the deductive method of calculating value for purposes of duty assessment. - Other items that may be deducted from the value of imported goods include the cost of legal services, travel expenses, and accounting costs. - The importer of goods must show the connection between the items being deducted and the U.S. sale of the imported goods.
Hindu legal tradition
- The code of laws applied to Hindus, Buddhists, Jains and Sikhs in British India - In recent years, India has adopted the British common law tradition
Genuineness of assent
- The requirement that a party's assent to a contract be genuine - Voiding circumstances: mistake as to facts or law (unilateral mistake); mutual mistake; fraud; threats (duress); unfair advantage (undue influence); unfair terms.
Analogical reasoning
- Used when there is no authority, principle, or rule that directly addresses an issue - Common law application: Judge looks to precedent with similar fact patterns - Civil law application: Judge looks to other code provisions
ISO 14000 (Environmental Management)
- a series of international, voluntary environmental management standards - requires a company to establish an environmental management system (EMS). An EMS enables an organization of any size or type to control the impact of its activities, products, or services on the natural environment. - Organization- and product-oriented standards
Alternative dispute resolution (ADR) methods
- arbitration - mediation - conciliation
CE mark (EU)
- asserts that the product meets mandatory health, safety, and environmental requirements of the EU - provides guaranteed access to all EU member markets
International law covers:
- common law (cases) - civil law (statutory) - substantive & procedural law and remedies
Kantian ethics
- deontological approach - absolute duties (or rights) exist that cannot be changed despite the consequences created by such a duty - decision-making based on preexisting (a priori) moral rules
Social Accountability Standard (SA 8000)
- ensures that a company and its suppliers provide an equitable and safe workplace for their employees - requires a company to restrict the use of child or forced labor, to respect the right of workers to unionize, to limit the workweek to 48 hours, to provide a safe working environment, and to pay a living wage that meets the basic needs of the workers
ISO 26000 (Social Responsibility)
- use social responsibility to improve lives of workers, natural environments, and communities - 7 principles: accountability; transparency; ethical behavior; respect and consideration for all stakeholders; respect for rule of law; respect for international norms of behavior; and respect for human rights
Ethics of care
-focuses on the importance of preserving a web of relationships -recognizes that we owe an obligation to some more than others
Caux Round Table Principles for International Business
1) go beyond shareholders toward stakeholders 2) social and economic impact of business should be directed at advancing innovation, justice, and world community 3) not always appropriate for a company to enforce its rights strictly under the law (move away from "letter of the law" to a "spirit of trust" 4) respect for the environment is a moral minimum 5) avoid illicit operations
Kinds of relationships in international law
1. Public International Law (states) 2. Quasi-Public International Law (states and persons) 3. Private International law (person to person)
Specific performance
A legal action to compel a party to carry out the terms of a contract.
International agreements
Agreements concluded between states in written form and governed by international laws, whether embodied in a single instrument or two or more related instruments; generally binding but may lapse
Central America-Dominican Republic FTA (CAFTA-DR)
An example of an agreement among countries at different stages of economic development; contains safeguard provisions
Triple transformation
Certain textile products must undergo this in order to obtain regional goods status
Regiam Majestatem
Earliest surviving work on Scottish law
Expropriation
Government seizure of foreign businesses and assets (not an entire industry); usually compensation is provided but typically not sufficient to recoup entire loss
Binding commitments
In the area of tariffs, bindings amount to placing ceilings upon tariff rates. Countries may reduce their tariff rates below the bound rates but may not exceed the bound rates.
ex aequo et bono
In the context of arbitration, it refers to the power of arbitrators to dispense with consideration of the law but consider solely what they consider to be fair and equitable in the case at hand.
Integrative ethics approach
Incorporates the best insights of each of the different ethical approaches to business decision-making; often used in codes of conduct (see separate card)
Counter-indemnity clause
Joint venture partners agree to be responsible on multiple-party guarantees to the proportion of their shareholdings
Multilateral agreements
Open to all nations
Concession Agreement
Outlining the duties of the foreign government and the rights of the company. -level of tariffs to be charged -the right of the company to repatriate profits -the host country's commitment to intellectual property protection -the applicable level of taxation -the government's transfer pricing policy -use of mediation and arbitration in case of a dispute
USUS (part of customary practice elements)
Requires consistent and recurring action (or lack thereof) by states. Evidence can be found in the statement of governments, including diplomatic correspondence, policy statements, press releases
Protocols
The etiquette of diplomacy and affairs of state
Trade Facilitation Agreement (TFA)
a World Trade Organization agreement that aims to cut customs-related red tape and ease the flow of trade between countries
Trade Barriers
government-imposed regulations that increase the cost and restrict the number of imported goods; categories include: 1) import policies including tariffs and other import charges, quantitative restrictions (quotas and embargoes), and import licensing; 2) standards, labeling, testing, and certification; 3) government procurement restrictions; 4) export subsidies; 5) lack of intellectual property protection; 6) service barriers; 7) investment barriers.
North American Free Trade Agreement (NAFTA)
Agreement signed by the United States, Canada, and Mexico in 1994 to form the largest free trade zone in the world.
Open terms
Terms to be agreed on in future negotiations
Standard terms (in contracts)
Terms which are formulated in advance for repeated use by a party and which are not negotiated with the other party when concluding the contract
Attorney General Opinion
The Attorney General, after consultation with appropriate departments and agencies of the United States and after obtaining the views of all interested persons through public notice and comment procedures, shall establish a procedure to provide responses to inquiries concerning conformance of an action with the Department of Justice's enforcement policy regarding the FCPA. The Attorney General is required to issue an opinion within 30 days after receiving a request.
Investigating Authority
The competent authority in each nation that issues final determinations relating to anti-dumping and countervailing duties; in U.S., this is the Int'l Trade Adminstration of Dept of Commerce
Corporate codes of conduct.
The concerns of individuals (rights) and society (utilitarian) are considered both impartially (justice) and preferentially (care)
Cumulative effect
The consideration of dumped imports from more than one country on a combined basis in assessing whether dumped imports cause injury to the domestic industry
Home Country
The country in which the business has its headquarters
Preliminary determination of dumping
The first point at which a remedy (sometimes referred to as "provisional measures") may be provided
Royalties clause (franchise fee)
The franchise agreement commonly requires that an initial fee be paid for the right to obtain a franchise and then payment of royalties based upon a percentage of gross or net sales. The agreement should provide a commencement date and expiration date.
Ultimate purchaser
The last person in the country of import who receives the article in the form in which it was imported
Roman law
The law code of the ancient Romans, which forms the basis of civil law in many countries today; divided into Franco and Germanic legal families
Transfer pricing
one subsidiary of an enterprise charges another for goods or services. Companies manipulate these transfer prices in order to move profits to countries with lower tax rates.
Normal value
The price charged for a particular product in the exporter's home market
Problem of subordinate responsibility
The problem is the fragmentation of responsibility in large organizations. An unethical action may be produced by many loosely connected actors. Some may simply be following organizational rules and may be unaware of the outcome of their contribution to the process; their ignorance may absolve them of moral responsibility.
Ratio Decidendi
The reason for a decision (the binding part of a decision)
Perfect tender rule
The requirement that the goods delivered exactly meet the contractual specifications
Legal transplantation
The taking of legal rules and codes from one legal system and transplanted to another national legal system
Currency Rate Fluctuation
Type of currency risk; Exchange rates flux
Due diligence
Under the U.S. Federal Sentencing Guidelines for Organizations, demonstration of due diligence in attempting to prevent misconduct results in mitigation of fines
Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters
Used by EU members to enforce judgments internationally
Lugano Convention
Used by member countries of European Free Trade Area to enforce judgments internationally
Franchisee review clause
Used to combat future claims of misrepresentation or overbearing by the franchisor
Secondment agreements
Used to require the "lending" of employees of the joint venture partners to the joint venture
Intellectual property transfer
Used when one of the joint venture partners has know-how of intellectual property rights; should be independently negotiated; deals with withdrawal of licensor-partner
General Agreement on Trade in Services (GATS)
WTO agreement governing the international trade of services; prohibits the use of qualification and licensing requirements as barriers to the establishment of a business or the practicing of a profession by a foreign party
Subsidy
When a government grants a domestic industry some benefit not granted a foreign industry
Indirect representation
When a third party is unaware that the agent is acting as an agent
Direct representation
When the agent acts in the name of the principal
Country of Origin Rules (WTO)
Work on developing uniform rules in this area is ongoing
Countertrade
a form of trade in which all or part of the payment for goods or services is in the form of other goods or services
Hedging
protecting against cost increases with contracts that allow a company to buy supplies in the future at designated prices
Categorical imperatives
absolute moral duties or laws
Futures Contract
an agreement to buy or sell at a specific date in the future at a predetermined price
Incommensurability
an inability to compare or judge between rival beliefs or propositions, because of the absence of common features (e.g., each person values life, equality, etc. differently)
Conflict of cultural traditions
an unethical practice in a home country is considered ethically proper in the host country.
Comparative advertising
any advertising, which explicitly or by implication identifies a competitor or goods or services offered by a competitor.
Tribunal
any person or institution with authority to adjudicate
Overseas Private Investment Corporation (OPIC)
assists U.S. private investments in developing countries by providing loans, loan guarantees, investment services, and insurance against political risks. The OPIC provides low-cost expropriation insurance to U.S. companies
Benefit-cost analysis
attempts to monetize the ethical determination by placing a dollar value on the benefits and costs of an action from the narrow perspective of the decision-maker
You are in charge of preparing a budget report for a project that will be presented to the board of directors. Just before the board meeting, the president of the company asks you to leave something negative out of the report and just add it to the next report as a favor. What do you do? a Yes, since holding the information to the next meeting shouldn't do any harm. b Yes, but only if the president agrees to return the favor in your year-end bonus. c No, because one exception to the rule may lead to future exceptions.
c No, because one exception to the rule may lead to future exceptions.
Consent by State to international laws
found in State practice - the conducts of States in their dealings with one another -Declarations of its government -Domestic legislation -Its court decisions -Treaties to which it is a party
Foreign subsidiary
generally established under the laws of the foreign country and pays taxes on the profits it earns in the foreign country, but the parent company's income will not be subject to host country taxation
EU Ecolabel
indicates that company's products are less harmful to the environment than competing products
Amendments of 1988 (FCPA)
provided more detailed definitions of some of the crucial terms of the FCPA
Transfer Pricing
is the price that an affiliated company, such as a subsidiary, charges another affiliated company
International Centre for Settlement of Investment Disputes (ICSID)
provides for alternative dispute resolution by way of arbitration
Competition law
law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies (i.e., antitrust)
Evergreen Laws
limit the ability of a principal or employer to discharge an employee or agent
Article 38 of the Statute of the International Court of Justice
lists the sources of international law. In order of superiority they are: (1) international conventions and treaties, (2) international custom or general practice, (3) general principles of law recognized by civilized nations, and (4) judicial decisions and scholarly writings.
International Labour Organization
nongovernmental agency that publishes standards for the workplace
Nontariff Barriers
nontax methods of increasing the cost or reducing the volume of imported goods
Moral minimum
obeying laws
Shastra (in Hindu law)
"Rules"; refers to Hindu treatises
Final determination (as to NAFTA)
(1) an order of the Canadian International Trade Tribunal, (2) affirmative determination by the International Trade Administration of the United States Department of Commerce or by the United States International Trade Commission, or (3) a final resolution regarding anti-dumping or countervailing duties investigations by the Secretaría de Economía, pursuant to the Mexican Foreign Trade Ac
Free Trade Agreement (FTA)
*Most important for int'l trade after WTO agreements* Multinational agreement according to international law to form a free-trade area between the cooperating states. Countries agree on certain obligations that affect trade as well as protections for investors and IPR. FTAs treated as single country by WTO.
Customary law system
- Based upon customs of a community - Common attributes: 1) oral tradition, 2) organized set of rules regulating social relations, 3) community members approval of rules and customs
Bürgerliches Gesetzbuch
- German Civil Code in place from 1900-2002 - Seen as a highly rational law
Capital Currency Exchange v. National Westminster Bank
- In order for a court to dismiss a case under the forum non conveniens doctrine, it must determine that an adequate alternative forum exists. - The unavailability of certain remedies under the laws of the alternative forum does not render that forum inadequate.
TARIC Code
- Integrated Tariff of the European Communities is designed to show the various rules applying to specific products when imported into the EU. This includes the provisions of the HTS, but also additional provisions specified in EU law, such as tariff suspensions, tariff quotas, and tariff preferences. - Provides rules for determining whether an import license is required for a particular good
Torts categories
- Intentional: torts against the person (e.g., assault, battery, false imprisonment, intentional infliction of mental suffering, malicious prosecution, libel and slander, and fraud) - Property: trespass to property, trespass to chattels and conversion - Negligence: covers the full scope of human activity (e.g., product liability, "slip and fall," negligent misrepresentation, professional negligence, etc.) - Strict liability: nuisance
Customs Modernization Act
- Legal responsibility for classifying and valuing imported products lies with the importer. Importer has a duty of reasonable care in ensuring correct classification & valuation. - Importer must maintain adequate records that substantiate their customs declarations
Enterprise liability
- Looks at affiliated companies as an enterprise to be held liable individually or as a whole. Thus, a parent company may be held liable for the acts of its subsidiaries, or a franchisor may be held liable for the acts of its franchisees. - Generally rejected in US but recognized by some foreign courts
Sources of contract law in int'l transactions
- National laws of each party to the contract - Int'l contract law - Lex mercatoria (i.e., customary int'l law) Note that there is some degree of harmonization through int'l conventions
WTO panels (part of DSS)
- Similar to tribunals; consist of 3-5 experts - Activities are confidential
Limited partnership
- couples the pass-through feature of a general partnership with the concept of limited liability found in a corporation - limited liability due to general and limited partners; unlike general, limited partners liable for debts only up to amount of capital contribution - limited partner must be silent/passive investor, or converts to general partner
ISO 19600 (Compliance Management)
- deals with both mandatory requirements (court judgments, laws, permits) and voluntary principles (environmental commitments, industry standards) - Leadership can support compliance management by: (1) establishing and upholding organizational values, (2) ensuring that the compliance management system is consistent with the organization's strategy, (3) ensuring that adequate resources are allocated and assigned appropriately, and (4) clearly communicating the compliance management system to all stakeholders.
Hague Service Convention
- provides a government means to ensure effective and recognizable service of process - signatory countries required to establish a Central Authority for processing foreign plaintiffs' service of process requests
Licensing
the legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge
Virtue ethics
-focuses on the moral character or motivation of the actor -separates motives into virtues and vices
Generalized system of preferences (GSP)
A framework under which developed countries give preferential tariff treatment to manufactured goods imported from developing countries
Quota
A limit placed on the quantities of a product that can be imported
Constructed-value basis
A method to determine normal value based on the cost of manufacture, selling general and administrative expenses, and profit
Joint Venture
A partnership in which two or more companies (often from different countries) join to undertake a major project.
Offer
A promise or commitment to perform or refrain from performing some specified act in the future
Islamic banking
A religious-motivated system of banking based on profit and loss sharing that does not involve interest
United Nations Declaration of Human Rights
A statement of 30 human rights adopted by the UN in 1948; adopts a basic rights approach to international human rights concerns
Custom
A usage or practice common to many or to a particular place or class OR habitual with an individual
International Court of Justice (ICJ)
AKA, World Court. Located in the Hague (Netherlands). Its statue is part of the UN Charter, and dictates its jurisdiction and powers.
Breach of confidentiality
Affirmative duty not to disclose confidential information obtained in the course of negotiations
Snapback provisions
Allow for the reinstitution of previous tariff levels at times in order to alleviate short-term negative impacts on domestic industries and businesses
Trans-Pacific Partnership (TPP)
An Asia-Pacific FTA signed in 2016 among 12 countries (incl US) that represent 40% of global GDP
International Trade Administration (ITA)
An agency within the U.S. Department of Commerce whose mission is to foster economic growth and prosperity through global trade. ITA provides practical information to help you select your markets and products, ensures that you have access to international markets as required by our trade agreements, and safeguards you from unfair competition such as dumped and subsidized imports.
Transatlantic Trade and Investment Partnership (T-TIP)
An ambitious, comprehensive, and high-standard trade and investment agreement being negotiated between the U.S. and the EU
Foreign Credit Insurance Association (FCIA)
An association of about 50 U.S. insurance companies which, in conjunction with Eximbank, provide credit insurance for U.S. exports.
British Commonwealth of Nations
An association of nations acknowledging the British monarch as their symbolic head
Penalty (in contract)
An inflated amount aimed at punishing the breaching party
European Union (EU)
An international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members
Anti-suit injunction
An order issued by a court or arbitral tribunal that prevents an opposing party from commencing or continuing a proceeding in another jurisdiction or forum
Common core approach to comparative law
Analyzes commonalities among legal systems
Domestic status (as to US in a FTZ)
Available for merchandise that is (1) grown, produced, or manufactured in the U.S. on which all internal revenue taxes, if applicable, have been paid; (2) previously imported merchandise on which all internal revenue taxes have been paid; or (3) merchandise previously admitted free of duty
Agreement on Import Licensing Procedures (WTO)
Based upon the principle that application procedures should be made as simple as possible
Legal system
Body of rules that regulates a given country
Harmonized tariff schedule (HTS)
Classification scheme used by WTO member countries to determine tariffs on imported goods
CIF (Cost, Insurance, and Freight)
Costs of transport and insurance to place of destination need to be incorporated into the price
Country Group List
Countries being boycotted by U.S. government
Council of Europe
Created in 1949 to promote democracy and human rights
Nullification and impairment
Damage to a country's benefits and expectations from its WTO membership through another country's change in its trade regime or failure to carry out its WTO obligations
Site selection clause
Delineates the franchisor's responsibilities in the site selection process. Such clauses range from placing an affirmative duty on the franchisor to find an appropriate site to simply requiring the franchisor's approval. An approval clause should state the criteria for the franchisor's disapproval of a site.
Hindu Code
Developed by India upon its independence in 1949; retained most of English law
Basket of Risks
Different for international vs domestic transactions; constantly fluctuating depending on several factors: 1) type of business entity 2) type of good or service being sold 3) country of the other party 4) country of performance 5) means of transportation 6) type of transaction (sale of goods/exporting & importing; sale of services; licensing; foreign direct investment)
Specific duties
Duties assessed based on weight or quantity
Restatement (Second) of Contracts
General summary of the common law of contracts
Renewal clause
Generally provides an absolute right of the franchisor not to renew
Hiba (in Islamic law)
Gift
Territorial clause
Grants the franchisee an exclusive territory within which the franchisor is barred from competing
Disagio
uncertainty of the countertrade arrangement may warrant the granting of a disagio (discount) of the amount of goods to be purchased to fulfill the countertrade commitment
Principle of comity
In situations where two nations share common policy and ideas, one of the nations submits to the laws and judicial decrees of the other
Material injury
Injury that is not inconsequential, immaterial, or unimportant
Barter Transaction
Involves an exchange of goods or services; may separate documentary sales and letters of credit (i.e., not necessarily a simple transaction)
Foreign affairs doctrine
It is the exclusive domain of the federal government to enact laws regulating international trade
Conventions
Legally binding agreements between states sponsored by organizations such as the UN
Treaties
Legally binding agreements between two or more states
Trade in Goods
Measure of globalization; in recent years, there has been tremendous growth in this area
NAFTA Free-Trade Commission
National trade ministers
Principle of good faith
Negotiations and contractual relations should be characterized by honesty and fairness, by the intention to carry out contractual obligations, and with no intention to seek an unfair advantage or purposefully act to the detriment of the other party
Coalition for Environmentally Responsible Economies (CERES)
Network of US companies and environmental groups committed to following the CERES Principles
Offset Agreement
Offsets constitute an agreement by the foreign seller to include as part of the sale in the foreign nation the use of parts or services from local suppliers.
Shareholders' council
Possesses most of the powers that are delegated to the board of directors under U.S. corporate law.
Agency relationship
Principal hires an agent to represent his/her interests, e.g., hiring a foreign sales rep or distributor
Arbitration pros and cons
Pros - Parties can specify choice of arbitrator - Flexible system - Can be judicially enforced Cons - High cost - Complex procedure - Availability
NAFTA scientific review boards
Provide a written report on factual issues relating to environmental, health, safety, or other scientific matters to assist panels in rendering their decisions
Asia-Pacific Economic Cooperation (APEC)
Purpose: Increase negotiations between all member nations concerning common trade issues
Written modification clause
Requires a writing to make any changes to the contract
Agreement on Preshipment Inspection (WTO)
Right to pre-inspect goods in exporting country for quality, quantity, and value afforded only to developing countries due to their limited resources
U.S. Tariff Act of 1974
Section 301 authorizes unilateral action to counter a broad range of unfair foreign trade practices, including discriminatory rules of origin, discriminatory government procurement, licensing systems, quotas, exchange controls, restrictive business practices, discriminatory bilateral agreements, taxes that discriminate against U.S. products, and discriminatory product standards
Enforcement of foreign judgments (generally)
Section 482 of Restatement of Foreign Relations states that foreign judgments are conclusive unless: 1) insufficient procedural due process in foreign legal system; 2) insufficient personal jurisdiction; 3) no subject matter jurisdiction; 4) insufficient notice; 5) fraud.
Distributive justice
weighing the effects of an action from the perspective of individual rights and entitlements
Law of precedent (stare decisis)
- Core characteristic of common law system; "let the decision stand" - Requires lower courts to follow the rulings (of law) handed down by higher courts
Code on Subsidies and Countervailing Duties (WTO)
Allows an importing country to impose duties when it can prove that a foreign subsidy would cause injury to a domestic industry
Sunset rview
Carried out every 5 years to determine if an anti-dumping duty is still justified
Technical Committee on Rules of Origin
Established to interpret Origin Agreement-related rules
Minimum contact rule
Establishes that so long as a corporation had a degree of contact within the state bringing suit, they are subject to the laws of the state and can be sued by and within the forum state in court
Suspension (as to WTO DSS process)
Imposition of trade sanctions against the losing country that has failed to abide by DSS/DSB decision
American Arbitration Association (AAA)
The major organization offering arbitration services in the United States; provides standard rules for arbitration
Currency Option
right, or option, to exchange a specified amount of a currency on a specified date at a specified rate
Hedonism
rightness of an action is based on whether it produces more good than bad effects for the individual decision-maker.
Crowdfunding
Raising money for a project or venture by obtaining many small amounts of money from many people
Med-arb (multistep) clause
Allows for various methods of alternative dispute resolutions (mediation/conciliation, mini-trials, arbitration) to be utilized
Capacity building
Recognizes that the countries of the TPP are at different stages of development and will need the assistance of the more developed countries, as well as protections and safeguards in transitioning to higher environmental and labor standards
Precontractual liability
Liability imposed on a party for losses caused to the other party during negotiations that fail to ripen into a binding contract
Master franchise arrangement
The franchisor enters into an agreement with a sub-franchisor or master franchisee in order to develop an entire franchise territory
Abus de droit
The rule that unfair or unconscionable contracts and clauses should not be enforced
Nationalization
The seizure of all businesses, foreign and domestic, in a particular industry by that country's government; usually compensation is provided but typically not sufficient to recoup entire loss
Lex Mercatoria
- "Merchant law": business usage, customs, and practices - Originally the body of commercial law used by merchants throughout Europe during the medieval period - In modern international commercial disputes, arbitrators often apply lex mercatoria principles - Characteristics: 1) general principles of law, derived from a comparative analysis of the common core of domestic legal systems; (2) the usages and customs of the international business community as expressed in standard form contracts, model clauses, and trade manuals (industry standards); and (3) decisions of international commercial arbitration panels
Pacta sunt servanda
- "agreements must be kept" / sanctity of contract - Contracts should prima facie be enforced according to their terms
Acquis or acquis communautaire
- "that which has been acquired or obtained" and "of the community" - The accumulated legislation, legal acts, and court decisions which constitute a body of EU law
Shari'a law
- "the path" - Basis of the Islamic legal system, derived from the Quran and Hadith
Free trade zone (FTZ)
- A duty-free and tax-exempt industrial park created to attract foreign corporations and create industrial jobs - Defined in regulation as a "restricted-access area, in or adjacent to a Customs port of entry"
General partnership
- All partners jointly and severally liable for debts - Generally long-term and ongoing; not limited to specific project - losses and profits of the business pass through directly to the partners for purposes of taxation
Supervisory board
- Elected 50/50 by employees and shareholders to oversee the management board - Approves financial statements & major corporate decisions
Lamb v. Philip Morris, Inc.
- The main statutory purpose of the FCPA is pre-violation compliance and not post-violation persecution. - There is no implied private cause of action permitted under the FCPA. - The Justice Department and the SEC are solely responsible for the enforcement of the FCPA.
Customs Broker
-assist importers with the entry of goods into foreign countries, their classification and valuation, and the payment of duties -provide variety of vital services including advising the importer on the formalities, regulations, and tariff (taxes or duties) fees for the specific country of import
Global Supply Chain
-the firm's integrated network of sourcing, production, and distribution, organized on a worldwide scale and located in countries where competitive advantage can be maximized -fragmentation of manufacturing process across different countries
WTO Agreements
-trade without discrimination -increasingly freer trade -predictability of trading relationships -promotion of fair competition -encouragement of economic reforms in developing countries
Memorandum
A document which describes a bilateral or multilateral agreement. A document that expresses a convergence of will between nations which indicates a common intended action in a situation with no legal commitment implied.
Drawback
A form of tax relief in which a lawfully collected customs duty is refunded or remitted wholly or in part because of the particular use made of the commodity on which the duty was collected
Doctrine of unconscionability
Allows courts to void or change contract terms that are unusually harsh and that "shock the conscience," meaning they are so grossly unfair (substantive unconscionability) that they could only have been possible through the abusive use of one-sided bargaining power (procedural unconscionability)
Exceptions clause
Allows for adjustments to the purpose clause along prescribed parameters.
Better rules approach to comparative law
Analyzes differences among legal systems; seeks best solutions to legal problems among laws of different jurisdictions for incorporation into domestic law
Korea-U.S. FTA (KORUS FTA)
Between two advanced economies so no safeguard provisions; however, contains transitional or phased-in obligations to protect specific industries in the member countries
Consideration
Both sides receive something of value as part of the contract; required under common law for a valid contract (but not in civil law)
International Trade Commission (U.S.)
Conducts investigations into whether industries have been injured
Rules of Origin (ROO)
Contained within each FTA; describe how exported goods shipped to a country or a region may qualify for duty-free or reduced-duty benefits
Self-executing treaty
Contains a provision that the treaty will apply to the parties without their having to adopt any domestic enabling legislation
Counter-Purchase
Economic transaction in which one party (country) sells goods to the second party and, in return, the first party agrees to purchase goods from the second party so as to achieve an agreed balance of trade ratio
Multilateral Investment Guarantee Agency (MIGA)
Established in 1988 as part of the World Bank, MIGA encourages investment in developing countries through the mitigation of noncommercial investment barriers. It provides insurance against expropriation, war, and other noncommercial risks and offers investment guarantees for foreign direct investments, as well as licensing, franchising, and transfers of technology
Branch office
Foreign office set up by international or multinational firm; considered an extension of parent company, which is liable for its debts (i.e., not an independent legal entity from parent company)
Draft Chinese Civil Code
Objectives include: creating a "supreme document" codifying all private laws; the grounds of all civil responsibility; establishing a clear set of civil judicial standards; and to protect the rights of citizens by ensuring the fair operation of the civil justice system
Bilateral agreements
Private; between 2 nations
Binational review panels
Provide an alternative to judicial review by domestic courts of "final determinations" (rulings) in the areas of anti-dumping duties and countervailing duties.
Safeguard provisions (in an FTA)
Provide assistance, exceptions, and delayed implementation of FTA obligations for the lesser-developed countries
Export Administration Regulations (EAR)
Provide general overview of U.S. export restrictions; published by Bureau of Export Administration (BXA)
Operational standards clause
Provides a detailed description of quality standards and operational goals. It generally refers to an operating manual provided by the franchisor.
Theory of Relative Development
Questions the appropriateness of applying standards from the home country of a multinational company to a lesser-developed country. Instead, it suggests considering whether the practice or standard would have been acceptable at the time the home country was at a similar stage of development
High-context cultures
Seek to establish long-term business relationships based on interpersonal trust. Most of the non-English speaking world operates this way.
Privatization of lawmaking
Seen in: 1) the non-legislative codifications of general principles of law - example = UNIDROIT Principles of International Commercial Contracts (PICC); 2) private codifications of trade usage and commercial custom promulgated by non-state actors - examples = International Commercial Chamber's INCOTERMS (trade terms) and Uniform Customs and Practice for Documentary Credits (UCP)
Commodity Control List
Sensitive products whose export is restricted or regulated
Precautionary principle
When scientific evidence can neither prove nor disprove that an activity or substance is environmentally damaging, the activity should not progress and conclusively the substance should not be released into the environment. If used correctly, the principle assigns the burden of proof to the potentially polluting industries or countries.
Foreign affiliate
a business enterprise located in one country that is directly or indirectly owned or controlled by a company located in another country. Ownership of 10 percent of its voting securities is generally considered "control."
Technical Barriers
a category of nontariff barriers to trade, are the widely divergent measures that countries use to regulate markets, protect their consumers, or preserve their natural resources (among other objectives), but they also can be used (or perceived by foreign countries) to discriminate against imports in order to protect domestic industries.
Export Management Company (EMC)
acts as the export department for one or several producers of goods or services. develop personalized services promoting their client's products to international buyers and distributors. The main reason for a manufacturer using an EMC is that an EMC can provide immediate access to foreign markets. The process of directly developing a relationship with foreign buyers can be lengthy and costly
You have been asked to work with the publications team on a press release for a new product that you worked to develop. However, the product did not turn out as well as promised in earlier press releases. How much do you reveal in the press release? a You do not reveal the new information, in order to protect the image of your company. b You write a more mildly enthusiastic, but honest, press release. c You write a brutally honest press release thinking it will earn the respect of your customers.
b You write a more mildly enthusiastic, but honest, press release.
You are an office manager, and one upper-level manager has repeatedly used the company credit card for personal expenses. How do you handle the situation? a You do nothing because the person is higher up in the organization. b You confront the person and hope that it will not affect your job. c You confront the person and report your finding to a higher-level manager in human resources.
c You confront the person and report your finding to a higher-level manager in human resources.
Forward Contract
contract that requires the exchange of an agreed-on amount of a currency on an agreed-on date at a specified exchange rate
Repatriation
converting any foreign currency into one's local currency
Jurisdiction, Subject Matter
court's jurisdiction over the law and facts involved in the suit
Jurisdiction, Personal
court's jurisdiction over the parties to a lawsuit
U.S. Commercial Service (CS)
provides numerous practical services including locating and evaluating overseas buyers and representatives, distributors, resellers, and partners; international trade opportunities; foreign markets for U.S. products and services; export financing; export documentation requirements;
Export Trading Company (ETC)
takes title to the product and exports for its own account. For the manufacturer the transaction is essentially a domestic sale. independent distributor. The ETC determines what U.S. products are desired in a given market and then works with U.S. producers to satisfy the demand
Dominant considerations
those that outweigh the other factors in the benefit-cost equation (e.g., human life); certain things are sacrosanct
U.S. Trade and Development Agency (USTDA)
works directly with individual companies and manufacturing and service associations to identify trade opportunities and obstacles by product or service, industry sector, and market
Benefit corporation
A type of for-profit corporate entity, legislated in a majority of American states, that includes positive impact on society and the environment in addition to profit-making as its legally defined goals
Bureau of Export Administration (BXA)
- Consists of Export Administration and Export Enforcement - Admin implements and administers the export controls as detailed in the EAR and provides assistance to exporters and re-exporters - Enforcement handles Restrictive Trade Practices and Boycotts restrictions enacted under U.S. law
Choice of law clause
- Parties to a contract expressly state the law that will govern any disputes - Absent this clause, the law of the country most closely connected to the agreement will govern - Modern judicial trend is to give great deference to this type of clause
Tort law
- Civil wrong other than breach of contract - Defines what constitutes a legal injury and establishes the circumstances under which a person may be held responsible (i.e. liable) for another's injuries
Mixed jurisdiction
- Combines multiple legal traditions - Examples: Louisiana, Quebec, Scotland, South Africa (mixed civil and common law)
Principle of transparency
- 1 of 3 key GATT/WTO principles - Requires WTO countries to make their import and custom laws accessible, stable, and clear to importing parties - Changes to such laws require notification to WTO - Purpose: Eliminate disguised barriers such as unsubstantiated quality or health restrictions
National treatment principle
- 1 of 3 key GATT/WTO principles - Prohibits discrimination between imported goods and domestically produced goods - Imported goods cannot be subjected to direct or indirect taxes or charges in excess to those charged on domestic products - Applies when goods enter the foreign market; charging customs duties on imported goods is not a violation
Most-favored-nation principle
- 1 of 3 key GATT/WTO principles - When a country lowers a trade barrier or opens up a domestic market, it has to do so for all its trading partners; a product made in one member country may be treated no less favorably than a "like" (very similar) product that originates in any other country - Exception: free trade agreement (FTA) - countries operating under an FTA treated as a single entity for purposes of complying with this principle, so FTA members can charge lower tariffs to each other without violating WTO rules
General Agreement on Tariffs and Trade (GATT)
- 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions - Purpose: Expand free trade through reduction of tariffs worldwide -Greatest success: Reducing tariffs on imported goods - Ad hoc nature (i.e., negotiation through rounds) replaced by permanent org (WTO) - Agreements remain in force unless amended - Principles: (1) most-favored-nation principle, (2) national treatment principle, and (3) the principle of transparency / overall, advancing nondiscrimination among foreign trading partners
Erie doctrine
- A Federal court cannot create Federal common law in cases involving parties from two different states (diversity jurisdiction) - Thus, in the private law areas (contract, tort, real property) there are 53 American common laws (50 states, Puerto Rico, U.S. Virgin Islands, and Washington, D.C.)
Host Country
A country (other than the parent country) in which an organization operates a facility
Foreign Distributor
A foreign market-based intermediary that works under contract for an exporter, takes title to, and distributes the exporter's products in a national market or territory, often performing marketing functions such as sales, promotion, and after-sales service
Countervailing duty
A special duty imposed on imported merchandise to protect a domestic industry from injury caused by illegally subsidized imports being sold at below market prices
Buying Agent
Agents who find foreign firms that want to purchase a company's products. Such agents seek to obtain the desired items at the lowest possible price and are paid a commission by their foreign clients. In some cases, the agents may be representing foreign government agencies or quasi-governmental firms empowered to locate and purchase desired goods.
Immigration and Customs Enforcement (ICE)
DHS agency charged with enforcing immigration law
Third-party bribery
Exists when a company hires another and has "reason to know" that a portion of money would be used to bribe. A third party may be a joint venture partner or an agent.
Routine government expenditures
Fees paid to an official for an action "ordinarily" done in the performance of his official duties are exempted. These include obtaining permits, licenses, or other official documents to qualify a person to do business in a foreign country; processing governmental papers, such as visas and work orders; providing police protection, mail pickup and delivery, or scheduling inspections associated with contract performance or inspections related to transit of goods across the country; providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products or commodities from deterioration; or actions of a similar nature.
Remarketer
Export agents or remarketers purchase products directly from the manufacturer, packing and marking the products according to their own specifications. The remarketers then sell overseas through their contacts in their own names and assume all account risks.
Exporting-Importing
International trade traditionally consisting of selling and transporting finished goods from one country to another. in modern times these transborder movements include the transformation of raw materials and the assembly of component parts as the products moved across national borders (i.e., global supply chain)
Myth of the amoral businessperson
It asserts that good ethics is consistent with the pursuit of profits. Moreover, this school of business argues that good ethical business practices are necessary for long-run profitability.
United Nations Commission on International Trade Law (UNCITRAL)
It publishes a Legal Guide on International Countertrade Transactions that provides information on how best to structure a countertrade transaction. It also discusses the types of clauses generally found in countertrade contracts. The clauses discussed in the Guide include: type, quality, and quantity of goods; pricing of goods; participation of third parties; payment; restrictions on resale; liquidated damages; security for performance; failure to perform; choice of law; and settlement of disputes.
Jus Cogens
Legal norms that override a state's sovereignty because they are so basic (first embodied in 1969 Vienna Convention on the Law of Treaties)
Business review letter
Obtained from DOJ; helpful when significant federal antitrust issues are raised by a proposed international joint venture
Export trade certificate of review
Obtained from Dept of Commerce; a certificate which provides federal antitrust protection to U.S firms that are interested in participation in export activities, resulting in reduction of shipping costs.
Commission Agent
One who sells on behalf of a principal to third parties and receives compensation through commissions
Block exemption (EU)
Provides a general exemption from the ban on cartels for franchise arrangements
Limited liability company (LLC)
Provides limited liability without the formalism of the corporation
Anglo-American law
Refers to the 2 most influential common law systems - English and American
Law Commissions (English & Scottish law)
Reforms to English and Scottish law are coordinated by these; separate commissions for each country
Price reduction
Remedy found in PECL & CISG that allows the buyer to reduce unilaterally the price paid for the goods based on the diminution of value due to the nonconformity
Insurance clause
Requires the franchisee to maintain certain types and amounts of insurance
Moral duty
Responsibility to not interfere in others' exercise of their moral rights
Opinio Juris Sive Necessitatis (part of customary practice elements)
States observing the custom must regard it as binding
Government procurement
The purchasing of goods and services on behalf of a public authority, such as a government agency
Social entrepreneurship
The pursuit of social goals while creating a profitable business
Moral right
The responsibility of people to behave in a moral way towards others.
Buy-Back
Type of countertrade Where a private firm sells equipment, technology, or even an entire plant to a sovereign nation and agrees to purchase a portion of the output produced from the use of the equipment or technology
Arbitrage
the simultaneous buying and selling of the same foreign exchange in two or more markets in order to take advantage of price differentials
Qing Code
Most comprehensive Chinese criminal law code
Hardship
Where the occurrence of events fundamentally alters the equilibrium of the contract
Mailbox rule
In common law, a contract is formed when acceptance is dispatched
Convertibility
Issue of whether one currency is convertible into another currency
Foreign Direct Investment (FDI)
Capital investment made by a foreign company in the economy of another country (e.g., purchase of real estate or foreign business)
Sale of Services
Category of transactions; includes consulting, distribution, transportation, marketing, sales
Sectoral (industry) exceptions
Certain industries may be excluded from national and most-favored-nation treatment
Deng Xiaoping
Chinese President (1978) who instituted an ambitious program of economic and legal reforms to transition China from a planned Communist economy to a market economy
Embargo
Complete prohibition of the importation of all goods from a certain country for political reasons
Estonia-U.S. Bilateral Investment Treaty
Established in 1997; focuses on foreign direct investment, specifically protection of US investments in Estonia by requiring national and most-favored-nation treatment
Eximbank
Eximbank provides financing assistance to U.S. exporters and through the Foreign Credit Insurance Association (FCIA) provides different types of insurance coverage
Trade secret
Information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) 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 (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy
Riba (in Islamic law)
Interest; Quran prohibits charging of interest
Court of International Trade (U.S.)
Has jurisdiction over any civil matters against the U.S. arising out of federal laws governing import transactions. The court hears cases dealing with anti- dumping, product classification, valuation, and countervailing duty matters.
Special Import Measures Act (SIMA) (Canada)
Helps to protect Canadian industry from injury caused by the dumping and subsidizing of imported goods.
Tang Code
Most influential Chinese criminal law code
Distribution agreement
In a joint venture, additional agreement between partner with expertise in its country's distribution of goods and services and other partner(s); termination provisions should be tied to those in the joint venture agreement
Consignment
Involves delivery of merchandise to a foreign party, whereby the exporter retains title to the goods that it transfers only when the consignment company sells the goods. The consignee gets paid a commission upon the sale of the goods and the remittance of payment to the exporter. Benefit - Exporter is protected by retaining title Risk - Exporter may be on the hook for nonpayment and/or unsold goods returned
Indirect Exporting
Involves the use of an intermediary firm to facilitate the exporting of a company's goods. The principal advantage of indirect exporting for a smaller company is that it provides a way to penetrate foreign markets without the complexities, costs, and risks of direct exporting
Contractual joint venture
Parties agree to perform certain tasks without forming a new entity
Equity joint venture
Partnership formed by establishing a corp or LLC in which each party owns part of the equity
Consumer protection laws
Statutes and regulations that promote product safety and prohibit abusive, unfair, and deceptive practices.
Requirement of reciprocity (in BITs)
Reciprocity provisions deny both national and most- favored-nation treatment in these areas to countries that do not provide access to American companies to their respective markets
Automated Export System (AES)
Require electronic system for filing Shipper's Export Declarations (SEDs)
Privatization
To change from government or public ownership or control to private ownership or control.
Cease and desist order
Under Section 337 of Tariff Act of 1930, prohibits future imports by the accused importer or distributor
Foreign Sales Representative
an agent who distributes, represents, or sells goods on behalf of a foreign seller, usually in return for the payment of a commission
Freight Forwarder
arranges all documentation needed to move a shipment from origin to destination and assembles documents for presentation to the bank in the exporter's name. The forwarder arranges for cargo insurance, notifies the buyer of the shipment, and advises the shipper of marking and labeling requirements. In exchange, the forwarder is paid a fee by the exporter and may receive a percentage of the freight charge from the common carrier.
You are on the hiring committee for a key position at your company. A woman interviews for the job and, although you do not ask, it comes out that she wants to start a family. Can you factor in that there is a likelihood she may leave or take a maternity leave in the near future? a Yes, you can factor the information into the hiring decision because she volunteered the information. b No, it is discrimination if you do not hire her based on that information. c If another candidate has the same record, you can use the information to "break the tie."
b No, it is discrimination if you do not hire her based on that information.
You are a middle-level manager with no account- ing experience, and a new company policy requires you to sign the balance sheet and tax information for your department. What do you do? a You sign it because it is required and you are not expected to know whether it is accurate. b You ask someone more knowledgeable to review the material with you. c You sign it with the hope of taking an accounting course for future purposes.
b You ask someone more knowledgeable to review the material with you.
Ninth Ministerial Conference (WTO)
focused on improving market access for LDCs (least developed countries), facilitation of trade, and new rules for the exporting of agricultural goods. Result: Trade Facilitation Agreement (TFA) that aims to reduce, mostly bureaucratic barriers, to the flow of products through global supply chains. The TFA aims at streamlining customs and border procedures and infrastructure communications.
Discovery
- the process of gathering evidence from one's adversary and other third parties - often most difficult and costly part of litigation
Hague Convention on International Jurisdiction and Foreign Judgments in Civil and Commercial Matter
- Only true "international" convention on foreign judgments - Not been widely accepted and has failed to be effective in facilitating the enforcement of foreign judgments
Justinian Code (Corpus Juris Civilis)
- "Body of Civil Law" - Produced by Byzantium (Eastern Roman Empire) - Organized Roman law into a coherent document - Foundation for modern civil law
Principles of European Contract Law (PECL)
- A "restatement" of general principles taken from the underlying national contract law systems - Applies to contract disputes when: 1) parties select PECL as their choice of law; 2) contract is to be governed by general principles/lex mercatoria - Very similar to US contract law; however, there are some major differences: 1) contract not required to be in writing & can be proved by any means; 2) rejection of provisions that reduce admissibility of evidence - written modification clause = presumption only, merger clause = presumption only unless individually negotiated; 3) notice plays larger role in negotiations; 4) broader definitions of offer and acceptance; 5) recognition of precontractual liability and duty of good faith; 6) price reduction remedy and specific performance not considered an extraordinary remedy
Corporation
- A business owned by stockholders who share in its profits but are not personally responsible for its debts - Investor liability generally limited to the amount paid for the shares of stock - Created when shareholders file a certificate of incorporation with one of the 50 Secretaries of State - Generally no differentiation between resident-owned and foreign national-owned
Uniform Commercial Code (UCC)
- A comprehensive set of laws governing commercial transactions in the United States; has been universally adopted - Standard of review for interpretation of contracts = reasonable person approach, which rests on "reason to know" and/or "should know" - Reason to know exists if a person "has information from which a person of similar intelligence would infer that the fact in question does or will exist." - Should know is associated with a legal duty to know
United States v. India - WTO Decision on Imports of Poultry and Other Agricultural Products
- A country's product, health, and safety standards should not be used as disguised trade barriers. - National regulatory agencies need to balance potential health, safety, and environmental concerns with the nation's obligations under the WTO Agreements. - WTO's SPS Agreement requires that health, environmental, and safety standards are based on scientific evidence, that they are made transparent to foreign importers, and that they not be any broader than necessary.
World Customs Organization (WCO)
- A global organization whose purpose is to improve the operations and efficiency of customs services - Publishes the harmonized tariff schedule (HTS)
Central Bank of the Philippines v. Ferdinand E. Marcos
- A grant of diplomatic immunity is considered a discretionary decision of the executive branch through certification by the Department of State. - Foreign sovereign immunity, as provided for under the FSIA, is reserved for foreign states and the agencies or instrumentalities of a foreign state. - Head-of-state immunity is limited to top-level officials and does not apply to all foreign government officials or employees.
Civil law tradition
- A legal system based on a detailed comprehensive legal code, usually created by the legislature - Other features: 1) judge-controlled investigative form of procedure; 2) rejection of judicial cases as lawmaking; 3) importance of legal academics to enact new statutes or interpret existing ones - Each court directly interprets the code or statute without citing other court decisions
Common law tradition
- A legal system in which the decisions of judges become part of the legal tradition and those precedents have the standing of law - Statutes do preempt common law, but courts will rely heavily on other court decisions in interpreting the relevant statute rather than the statute itself
Maquiladora
- A manufacturing operation in a free trade zone (FTZ), where companies import material and equipment on a duty- and tariff-free basis for assembly, processing, or manufacturing. The assembled, processed, or manufactured products are then usually exported back to the country of origin. - Specifically in U.S., there are a number of assembly plants (maquiladoras) along US/Mexican border
Notice
- A notification or communication of a fact, claim, demand, or proceeding - Awareness of such a fact, claim, demand, or proceeding
Special 301
- A part of U.S. trade law requiring the United States Trade Representative to monitor property rights enforcement around the globe - Allows USTR to create "priority watch lists" to designate countries that should be monitored for unfair trade practices
World Trade Organization (WTO)
- A permanent international trade organization that formed out of and enforces the General Agreement on Tariffs and Trade (GATT) provisions - Purposes: (1) focal point for the negotiation of binding agreements to reduce trade barriers and agree on disciplines for policies affecting international trade; (2) provide a mechanism through which WTO Members can enforce these negotiated commitments - Single undertaking tariffs = only permissible form of protection - Wins: lowering tariffs and nontariff barriers to trade; almost complete removal of the threat of expropriation and the proliferation of free trade agreements (FTAs) that have further opened foreign markets.
Representative office
-Established in host country for limited purposes (e.g., market analysis and product promotion) and not considered to be doing business in that country -Host country laws dictate what activities can be undertaken
Uniform Customs and Practices for Documentary Credits (UCP)
- A set of rules on the issuance and use of letters of credit agreed on by the Int'l Chamber of Commerce - Rules apply to finance institutions who issue letters of credit (financial instruments to assist companies with financing trade)
English Unfair Contract Terms Act of 1977
- Adopts a presumption of unreasonableness for indemnity or exculpatory clauses that "by reference to any contract term a party is made to indemnify another party in respect of liability for negligence or breach of contract." - Voids any choice of law clause whose purpose is avoidance of the Act
Agreement on Technical Barriers to Trade (TBT) - WTO
- Aims to ensure that technical regulations, standards*, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade - *Standard: a technical specification contained in a document that specifies the characteristics of a product - Recognizes WTO members' right to implement measures to achieve legitimate policy objectives (e.g., protection of the environment) - Much broader than SPS Agreement - Use of international standards encouraged
Value-added test
- Alternative method to determine country of origin; adopted by NAFTA for goods transported within the area - Based upon the use of percentages, either of the value added or percentage of component parts coming from imported materials, to determine the country of origin
Specified processes test
- Alternative method to determine country of origin; has been used piecemeal to target certain products (not universally adopted) - Expressly lists the types of processes or operations that are considered to confer country of origin status.
Change in tariff classification test
- Alternative method to determine country of origin; used under GATT - Bases country of origin status upon any change in a product that results in a change in its tariff classification
Statement by Ultimate Consignee and Purchaser
- An assurance from the purchaser that the goods will not be resold or disposed of contrary to the requirements of the export license - Necessary to expedite application process for validated license
Arbitration
- An extrajudicial procedure where the dispute is heard (arbitrated) by an impartial person or body - No or very limited judicial review - Must be agreed to by contract or sometimes after the dispute arises
Delverde USA, Inc. v. United States
- An illegal subsidy given by a foreign government can be attributed to the purchaser of the company that had received the subsidy. A pro rata portion of those subsidies can be assessed based upon the remaining useful life of the equipment and assets when purchased by the second company. - The DOC cannot assume that when a company sells "productive assets" during "the average useful life," a pro rata portion of the subsidy used to purchase those assets "passes through" to the purchaser at the time of the sale. - The DOC must show that an illegal subsidy was given and that the purchaser of the company at least indirectly benefited from the earlier subsidy before assessing a countervailing duty.
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
- An international legal agreement between all WTO members - Establishes minimum standards for the regulation by national governments of different forms of intellectual property (IP) as applied to nationals of other WTO member nations
Social enterprise company
- Applies commercial strategies to maximize improvements in human and environmental well-being, as well as making profits for its owners - Profit considered secondary
Management board
- Appointed by supervisory board - Carries out the strategic objectives established by the supervisory board and makes the day- to-day decisions in managing the company
Acceptance
- Assent to the terms of the offer - Common law: mailbox rule (dispatch of acceptance sufficient) - Civil law: receipt rule (acceptance must be received to be valid)
Conflict of law rules
- Assist courts in making choice of law decisions by utilizing factors to determine country with closest connection to case - Restatement 2nd: Law of the jurisdiction with the "most significant contacts" governs both tort and contract claims
Customs Valuation Code (WTO)
- Attempts to standardize country challenges to the valuations placed on goods being imported - Burden of proof on importer to provide additional evidence of valuation, but importer must be given adequate opportunity to respond
Guanxi
- Business transactions are regulated by informal social and status-based relational norms - Places heavy importance on respect and reputation vs formalized contractual rights
Economic duress
- Considered as unfair advantage (undue influence) - Party that was in economic distress at time of contracting may avoid the contract using this concept
U.S. Trade Representative (USTR)
- Coordinates the development of U.S. trade policy, negotiates international trade regulations on behalf of the U.S., and seeks to expand U.S. exports by promoting the removal of foreign trade barriers and the opening of foreign markets - Authorized by statute to retaliate against activities of other countries that are deemed to violate U.S. rights under international trade agreements
Confucianism (influence on Chinese culture and laws)
- Cultural norms play a greater role in business relationships than formalized private law - Disfavors using courts for dispute resolution - See guanxi as example of this influence
Theory of comparative advantage
- David Ricardo, 1817 - Economic growth can be obtained by allowing people to do the things they are best at doing and then trading or buying goods and services that are provided by other specialists - Free trade or the removal of artificial obstacles (tariffs and quotas) to trade between nations will lead to overall economic growth to the benefit all nations
United States v. Haggar Apparel Company
- Permapressing clothes are not assembly under Section 9802 or an "operation incidental to the assembly process." - Merely because a process, operation, or treatment fails to produce a substantial transformation does not automatically result in it being able to obtain a duty exemption under Section 9802. - Courts must give deference to the regulations published by the Customs Service (CBP).
United Nations Convention on Contracts for The International Sale of Goods (CISG)
- Developed a global set of rules for contracts in order to promote int'l trade, i.e., provide supranational harmonization of contract law - Compromise among common law, civil law, and socialist law systems - Used as a comparative law instrument in modernization of national laws - States that written agreements are not required and a contract may be proved by "any means including witness testimony"
Commission Decision of 17/11/1999
- Directorate IV of the European Commission is responsible for the enforcement of EU Competition Law. - Before acquiring a European company, a foreign investor should notify (consult) with Directorate IV. - Factors used to determine whether an acquisition or merger will create a dominant position (monopoly) subject to abuse include whether the acquisition has a community dimension, the relevant product markets, the geographic scope of the market, and the market shares of the companies.
EU Regulations of Franchise Agreements
- EU places limits on franchises in order for them to conform to its competition law - Industrial franchises that generally include the manufacture of products through the transfer of IPR expressly exempted from coverage
SA Pasquasy v. Cosmair, Inc.
- Elements that favor an award in culpa in contrahendo include the suddenness of the termination, the finality of the negotiations, and knowingly allowing the other party to incur expenses. - The nonterminating party is entitled to expenses and investments incurred in preparing to perform the contract, along with damages related to lost opportunity or profits. - The nonterminating party's claims for damages are limited to losses that are provable with certainty and by its duty to mitigate.
EU Charter of Fundamental Rights
- Enacted in 2009 - Dignity, Freedoms, Equality, Solidarity, Citizen's Rights, Justice - Broadens scope of human rights from UN Universal Declaration of Human Rights
Courts of Chancery
- Equity courts - A court that applies the principles of equity (as opposed to common law) to cases presented to it - In US (exc for Delaware) and Canada, chancery and common law courts have been merged
WTO Dispute Settlement System (DSS)
- Established by Dispute Settlement Understanding; WTO members agree to utilize the DSS to settle disputes, rather than taking unilateral action against another nation (although in some circumstances unilateral action may be taken) - Includes a 3-tier system: dispute resolution panels > Appellate Body (AB) > Dispute Settlement Body (DSB) - Can authorize retaliatory action (sanctions) for non-compliance with findings - Target max timeframe for dispute resolution = 15 months (but in practice often takes much longer)
Chevron Doctrine
- Established by Supreme Court ruling in Chevron USA v. Natural Resources Defense Council - Decisions and regulations of Federal government agencies are to be given deference as long as the agency's interpretation is "permissible" under the Statute that it is interpreting. A party challenging an agency decision or regulation has a heavy burden of proof to show that the agency's interpretation was unreasonable.
International Organization for Standardization (ISO)
- Established in 1947; has 165 member countries - Companies who want to be ISO-certified voluntarily apply their standards, and some countries have adopted ISO standards as national law.
Napoleonic Code
- Established under Napoleon I in 1804 - Drawn from Roman law, specifically Justinian Code (Corpus Juris Civilis) - Forbade privileges based on birth, allowed freedom of religion, and specified that government appointments should go to the most qualified
Recommendations for int'l contract drafting
- Everything in writing even if not legally required - Include choice of law clause - Include force majeure clause - Expressly allocate risk of currency exchange rate fluctuations - Include detailed price escalation clause for long-term contracts - Assure payment and performance through 3rd party devices (e.g., confirmed letters of credit) - Get expert advice (lawyers, int'l bankers, customs brokers, govt agencies)
Russian Civil Code
- Example of a transitional economy enacting Western-style codes compatible with an emerging market economy - Displays many of the principles and concepts found in U.S. contract law - Differences: 1) Some contracts must be written and failure to do so voids them; 2) some types of contracts must be notarized and/or registered with a gov't agency; 3) recognition of preliminary contract; 4) excuse for material change of circumstances; 5) broader selection of remedies for breach of warranty claims
Chinese Contract Law (CCL)
- Example of an economy in transition to an emerging market economy - Western-style law primarily negotiated between civil and common law representatives; understandable to any Western-style lawyer - Unified China's contract laws for domestic and int'l transactions, which previously were governed under separate laws - Differences from common law: 1) principle of fairness; 2) obligation to negotiate in good faith; 3) contract formed when acceptance received (civil law concept) vs dispatched; 4) enforcement of penalty clause unless excessive
United States v. Donald Shetterly
- Export licenses are required for exporting certain commodities under the Export Administration Act. - A general license requires merely that the commodity meets certain standards—no license application is necessary and no license document is issued. - A good that is on the Department of Commerce's Commodity Control List requires a validated license. - Knowingly exporting or attempting to export a controlled commodity without a license is a crime.
Destination Control Statement
- Exporters required to place the statement on commercial invoices and bills of lading - Alert foreign buyers of goods and documents that diversion contrary to U.S. law is prohibited
Uniform Foreign Money Claims Act
- Facilitates uniform judicial determination of claims expressed in the money of foreign countries - Requires judgments and arbitration awards in these cases to be entered in the foreign money rather than in United States dollars
Uniform Foreign Money Judgments Recognition Act (UFMJRA)
- Followed by 28 US states - Simplifies international business by recognizing money judgments obtained in other nations
Rule of specificity
- Primary interpretation rule for the HTS - Requires the use of a heading and subheading that provides a more specific description of the good over one that gives a more general description
Samantar v. Yousuf
- Foreign Sovereign Immunities Act (FSIA) provides immunity from litigation against foreign countries in American courts. - The FSIA restricted the immunity to suits involving the foreign sovereign's "public acts" and transferred the power to grant the immunity from the U.S. State Department to the courts. - The immunity does not automatically attach to foreign government officials. It does not apply in this case because the former official is being sued in his personal capacity and the plaintiff is seeking damages from the official and not the foreign government. - The FSIA does not apply to a foreign government official acting beyond the scope of his official authority in violation of international law.
Culpa in contrahendo
- Form of precontractual liability found in civil law only (no counterpart in common law) - Premised on the implied duty of the parties to act in good faith during the negotiations of a contract (note that in U.S., good faith applies only to performance and enforcement) - Court has authority to grant full contract damages, including lost profits
Doctrine of arrhes
- Found in Section 1590 of French Civil Code - Allows for the use of deposits as a way of fixing damages unrelated to actual damages - A deposit is forfeited when the deposit giver cancels a contract. If the deposit holder cancels the contract, then that party must refund twice the amount of the deposit.
U.S. marking requirements
- Found in Section 304(a) of the Tariff Act of 1930 - States "every article of foreign origin imported into the United States shall be marked in a conspicuous place in such manner as to indicate to an ultimate purchaser the English name of the country of origin"
Comfort instruments
- Generally given to encourage another party to enter into a contractual obligation - Examples: letters of intent, letters of support, letters of assurance - Potential for precontractual liability due to internal inconsistency of many types of these instruments - they try to offer assurance without liability
Piercing the corporate veil
- Generally: If the corporate form is considered a sham, U.S. courts may allow the shareholders to be sued personally for the debts of the disregarded corporation - Elements: 1) owners must exercise complete domination of the corporation in respect to the transaction being attacked; 2) such domination is used to commit a fraud or wrong against the plaintiff
OECD Convention on Combating Bribery
- Goals: 1) achieve highest sustainable economic growth in member countries; 2) contribute to sound economic expansion; 3) contribute to expansion of world trade - Main purpose: Require countries to prohibit the bribery of foreign public officials in the same way that countries prohibit the bribery of their domestic officials - Requires countries to enact national laws criminalizing the bribery of foreign public officials with the focus on the supplier of funds (i.e., person who gives the bribe rather than receiver)
Illegal (countervailing) subsidies
- Government payments or other financially quantifiable benefits provided to domestic producers or exporters contingent on the export of their goods and services - Result in the lowering of import pricing, which gives the importer a competitive advantage over domestically produced products
Safeguards
- Granting of exemptions for the violation of GATT principles - Country of import must prove a causal link between the increase of imports of the product in question and a serious injury to a domestic industry - Duration limited to 4 years with possibility of 4-year renewal
Validated license
- Grants authority to a specific exporter to export specific products - Requirement for this license is based on whether: (1) country of import is on Country Group List; (2) exported product is on Commodity Control List; (3) any special restrictions apply - Formal application required to obtain license
R.G. Group, Inc. v. Bojangles' of America, Inc.
- If parties do not intend to be bound by an agreement until it is in writing and signed, then there is no contract until that event occurs. - An informal agreement can be binding even though the parties contemplate memorializing their contract in a formal document. - It is good business practice to place an agreement in writing because the writing will frequently reveal points of disagreement, ambiguity, or omission that should be worked out before entering a contract. - A court will weigh a number of factors to determine whether the parties intended to be bound before entering into a formal written contract, including whether one party reserved the right to be bound prior to a formal agreement, whether there has been a partial performance, whether there were still outstanding issues, and the complexity of the agreement. - The statute of frauds requires any contract that cannot be performed within one year to be in a signed writing. - Promissory estoppel is not available to recover expenses incurred before the making of a promise.
United States v. European Community - Genetically Modified Organisms in Foods Case (DS 291, 292 and 293)
- If substantial differences exist over health or safety standards between countries, the WTO Dispute Settlement System may take a half dozen years to conclude with an acceptable resolution. Why so long? (1) the complexity of the health issues and the supporting or non-supporting scientific evidence. (2) losing countries may not fully comply with the WTO ruling, which leads to further negotiations and proceedings to obtain approval from the WTO to implement retaliatory sanctions against the non- complying party. - In order to justify the EU's general moratorium against the importation of GMO products, the SPS Agreement mandates that two requirements must be met: (1) unbiased risk assessment and (2) a finding of sufficient scientific evidence to support the imposition of the standard. The WTO found that the EU did not perform the required risk assessment to determine if scientific evidence existed to support its health standard. - The WTO also ruled that the health standards directed at specific products were not supported by sufficient scientific evidence. - The WTO SPS Agreement does not adopt the precautionary principle found in environmental law.
International Chamber of Commerce (ICC)
- Illustrates the evolution of the lex mercatoria. - A nongovernmental organization that works to promote world trade, harmonize trade practices, and provide practical services to businesspersons, such as the International Court of Arbitration - Handles majority of international arbitrations since it is usually acceptable to all parties due to non-affiliation with any single country
Dual service of process
- recommended for non-signatories to Hague Service Convention - aims to satisfy the service requirements of the country of the forum court and the country of the defendant in order to enhance the enforceability of any future judgment
NAFTA Review Panel: Certain Hot-Rolled Carbon Steel Originating in Mexico
- In order to win a dumping-of-goods claim, it must be proven that the alleged dumping caused or threatened to cause injury to a domestic industry in the importing country. Alternatively stated, there has to be a causal connection between the price of the imported goods and a material injury caused to a domestic industry. - Dumping charges may be brought against more than one country (in this case, China, Mexico, South Africa, and Russia), and the cumulative impact of the imports from all the countries may be used in making the "injury to domestic industry" determination. - Because of the cumulative impact of the dumping of the same type of goods by companies from different countries, Mexico need not be treated separately from other countries simply because it is a NAFTA country.
UNIDROIT Principles of International Commercial Contracts (PICC)
- Intended only to provide neutral principles for guidance across different legal systems (cannot be adopted as domestic law) - Key principles: 1) no writing requirement for contract formation; 2) int'l trade usage recognized; 3) duty of confidentiality; 4) "surprising" terms not enforced - terms a party reasonably could not have expected
Customary International Law
- International law that usually develops slowly, over time, as states recognize practices as appropriate and correct - Recently, growth in this area as to business law has been seen in almost universal adoption of ICC's INCOTERMS (standards regarding trade terms) and letters of credit (UCP - Uniform Customs and Practices for Documentary Credits)
Alpine View Co., Ltd. v. Atlas Copco AB
- International litigation is often complex due to the diversity of the parties. - The due process clause of the U.S. Constitution requires that personal jurisdiction over a defendant must be based on either "minimum contacts" for purposes of gaining specific jurisdiction or "substantial, continuous, and systematic" contacts for purposes of gaining general jurisdiction. - Specific jurisdiction requires a nexus between the minimum contacts and the injuries claimed, while general jurisdiction allows for lawsuits on even unrelated claims. - The "stream-of-commerce" theory is only applicable if the defendant delivers a product into the stream of commerce with the expectation that it would be purchased in the forum state. - A foreign parent company does not become subject to the jurisdiction of a foreign court simply because its subsidiary is amenable to that state's jurisdiction. - "Alter ego-theory" allows for jurisdiction over a parent company if the parent company "dominates" the activities of a subsidiary that has sufficient contacts with the forum court.
Talmudic legal tradition
- Law derived from the Talmud (Jewish traditions) - Israeli secular law now primarily civil law with some common law influences
Computed value
- Least preferred alternative method for customs valuation - Determined by adding the manufacturer's actual labor and material costs, along with an estimate of its general expenses and profits
Management agreements
- May allow foreign exporter to exert substantial control over its agents - Do not establish the foreign exporter for purposes of tax liability; the tax liability of the foreign company is generally restricted to the income of any expatriates assigned to the representative office
New York Convention (UN)
- Most important international agreement on commercial arbitration - Responsible for much of explosive growth of arbitration in international business disputes - Generally arbitral awards rendered in countries party to the New York Convention are readily enforceable in all other signatory countries (160+) - Outlines narrow set of grounds for non-enforcement of arbitral clauses (e.g., corruption; fraud; partiality, misconduct, or exceeding powers by arbitrators; miscalculation; award on a matter not submitted)
Transaction value
- Most preferred basis for customs valuation - Value determined on a commercially realistic basis, i.e., goods must be priced at a value that would be the result of a sale between two unrelated parties in the ordinary course of business - Best interest of importer to keep transaction value as low as possible
European Union Directive on Unfair Terms
- Narrower in scope than adhesion contract concept - Invalidates only certain types of exculpatory clauses (those that insulate one of the parties from liability due to its own negligent acts)
International contract law generally
- Nationality plays no role in application of law; all parties on equal footing - Interpretation based on what a reasonable person would consider fair and appropriate under the circumstances - Private int'l law, i.e., person to person - Rules may vary greatly among various legal systems; example - common law requires consideration to form valid contract, while civil law does not
Uruguay Round
- Negotiation conducted under the General Agreement on Tariffs and Trade (GATT) that created the WTO - Included a package of agreements expanding for the first time into nontariff areas such as illegal government subsidies of domestic industries, obstacles to sales of services, and infringement of intellectual property rights
Raymond Dayan v. McDonald's Corp.
- Note the length and complexity, and ultimately the costs, of the litigation pertaining to this termination of a franchise agreement. - A master license agreement (MLA) is often used to develop an entire territory, while each franchise location is also governed by individual operating license agreements (OLA). - Under U.S. law, the franchisor's right to terminate a franchise is limited by the duty of good faith and fair dealing, along with individual state statutes. - Standards relating to quality, safety, and cleanliness (QSC) are vital to maintaining the integrity and reputation of the franchise system as a whole.
Germanic Legal Family
- One of the divisions of the civil law tradition - Refers to those systems influenced by the German civil code (Bürgerliches Gesetzbuch)
Franco Legal Family
- One of the divisions of the civil law tradition - Refers to those systems influenced by the Napoleonic Code
Substantial transformation test
- Primary test in country of origin determinations; adopted by U.S. law - Country of origin = last country in which a good or product was substantially transformed - "Substantial transformation" occurs when a product is changed into a new or different product, having a distinctive name, character, or use from that of the original product - Factors to apply rule: (1) whether good went through tariff classification change; (2) amount of value added due to transformation; (3) complexity of processing operation
Doctrine of Sovereign Immunity
- Principle that a nation is immune from suit in the courts of another country (although state may consent to suit in certain circumstances) - U.S. Foreign Sovereign Immunities Act (FSIA) of 1976: Determines whether a foreign state is entitled to sovereign immunity. Recognizes "commercial activities" exception - foreign sovereign immunity does not extend to foreign governments immunity when they engage in commercial activities, such as procuring goods and services from private companies (see Samantar v Yousuf, Ch 4)
Nimrod Marketing Ltd. v. Texas Energy Investment Corp.
- Promissory estoppel, a creation of the common law, allows recovery of out-of-pocket expenses (reliance damages), but not for loss profits, which would be the case under a breach of contract theory (expectation damages) since there is no formal contract to enforce. - Section 90 of the American Restatement of Contracts provides three requirements, which must be proved in order to collect under promissory estoppel: (1) an assurance or promise, (2) the other party's reasonable reliance on that assurance (incurs expenses), and (3) an injustice would be done unless the court provides some sort of remedy (reliance damages). - The party causing the harm should not benefit from the good faith of others such as the willingness of Nimrod's suppliers to delay demand of cancellation charges related to Nimrod's orders until the conclusion of the litigation. - Promissory estoppel focus is not on the person giving the promise, but on the actions or expectations of the party receiving the promise. - Preliminary agreements or comfort letters generally are not sufficient to form a contract, but they may be the basis for a promissory estoppel claim. - In order to succeed on a promissory estoppel claim the plaintiff must show that it reasonably relied on the defendant's promise or assurance to its detriment. - The damages awarded in promissory estoppel are limited to the out-of-pocket or reliance damages of the relying party. A party may not recover lost profits under promissory estoppel. - In calculating damages an important factor for the court is deciding the applicable currency and exchange rates, as well as the appropriate time when the conversion is to be made.
Sources of law for int'l contract interpretation
- Public International Law: Vienna Convention Law of Treaties - Uniform Laws: COGSA, CISG - General Principles of Contract Law, e.g., pacta sunt servanda (the notion of the sanctity of the contract) - Rules of International Organizations: UN, OECD, UNIDROIT - these are non- binding but persuasive on the courts. - Custom and Usage: arising out of customary international law - Standard Form Contracts, such as those of the ICC - Arbitral Decisions: very useful resource for interpretative purposes, but not often widely reported.
Hague Evidence Convention
- Purpose: facilitate the discovery of foreign parties - Provides for the use of Letters of Request that require foreign courts to perform the discovery process - Limited effectiveness: 1) few countries outside of US and western Europe have adopted; 2) foreign court may reject letter of request if deemed to be in violation of its national laws
Nachfrist notice
- Requests for additional time to perform are automatically granted if the receiving party fails to: 1) respond; or 2) give a commercially viable reason for denying the request - NOT found in common law - Adopted by CISG
U.S. Trade and Tariff Act of 1984
- Revised and expanded drawbacks - Main drawbacks: (1) articles manufactured in the U.S. using imported merchandise that are then exported - duties paid on the imported merch can be refunded; (2) imported and domestic merch of the same kind used to manufacture exported articles - duties paid on imported merch can be refunded (even if merch was. not used in exported articles); (3) foreign imports are either exported or destroyed under CBP supervision within 3 years of importation in the same condition and without being used - duties on imports can be refunded
Consumer contract law
- Separate body of contract law that covers contracts between businesses and consumers - Generally not found in common law systems; general contract law applies to all types of contracts
Kiobel v. Royal Dutch Petroleum Co.
- The Alien Torts Claim Act (ATCA) does not extend jurisdiction to foreign parties wanting to bring suit against a foreign corporation unless there is a close connection to American territory. - This decision of the Supreme Court is interesting because it was a unanimous decision, but the reasons for the decision were varied among the majority opinion and three concurring opinions. - The majority opinion rested on the presumption against the extraterritorial application of American law. The concurring opinion of four justices rejected the presumption argument. Instead, it argued the closeness of the claim to American territory should not prevent jurisdiction to bring suit against "a torturer or other common enemy of mankind."
Iran Aircraft Industries v. Avco Corporation
- The New York Convention requires U.S. courts to enforce foreign arbitration awards. - Enforcement of an arbitration award may be withheld if the losing party was denied due process. - Due process requires the defendant be given proper notice and an opportunity to be heard.
Made in the USA Foundation v. United States of America
- The Treaty Clause of the U.S. Constitution grants the President the power to make treaties by and with the advice and consent of the Senate. - NAFTA is considered a treaty according to international law. - Congress may also delegate additional powers to negotiate international agreements to the President, as it did under its "fast-track" legislation.
Broussard v. Meineke Discount Muffler Shops
- The franchise arrangement is contractual in nature, however, U.S. regulations require certain disclosures through a Uniform Franchise Offering Circular (UFOC). - Because of the contractual nature of the franchise arrangement, the franchisor does not owe a fiduciary duty to its franchisees. - Note the size of the punitive damages component of the jury award. Punitive damages are unique to American law and are not found in foreign legal systems. - Note also that the corporate veil will only be pierced to hold shareholders or a parent corporation vicariously liable when the shareholders or parent exercises complete domination over the corporation or its subsidiary, or if they fail to observe corporate formalities.
Grifoni v. Euratom
- The incurring of damages in relationship to negotiating a contract does not automatically lead to precontractual liability. - The precontractual agreement shielded the owner from any liability relating to accidents and was enforceable against a claim for personal injuries.
Zeroing
- The practice of assigning a value of zero anytime a foreign producer's export price to the U.S. is above that producer's "normal value" (i.e., home market price). - Inflates the amount of duty collected and increases the dumping margin rates
Plas v. Valburg, Hoge Road
- The preliminary or initial stage of negotiations result in no legal liability. - Bad faith termination during the second or continuing stage of negotiations results in a claim for out-of- pocket expenses or what in U.S. contract law are referred to as reliance damages. - The parties are prohibited from terminating negotiations during the third or final stage of negotiations without being liable for full contract damages, known under U.S. law as expectancy damages.
Finnish Fur Sales Co., Ltd. v. Juliette Shulof
- There is a strong public policy in U.S. corporate law against imposing personal liability on corporate officers for actions performed on behalf of the corporation. - It is customary under Finnish law for an agent to be held personally liable as a surety for goods purchased at an auction. - A corporate officer who signs a bill of exchange or draft must state she signs only in a representative capacity in order to avoid personal liability. - The public policy underlying negotiable instrument law is that a holder in due course may collect against the signer of the instrument. - A choice of law clause in a contract will be enforced if there is a reasonable connection between the choice and the transaction, unless a strong public policy of the forum court is threatened. - Owners at an auction have the right to prescribe the manner, conditions, and terms of sale.
United States v. Liebo
- Third-party bribery under the FCPA includes the use of agents to make payments to government officials and indirect payments to persons associated with a government official. - Merely classifying something as a gift (as in United States v. Liebo) or a donation (as in Lamb v. Philip Morris, Inc.) is not conclusive in assessing whether it constitutes a bribe. - Direct evidence of actual intent to give a bribe is not required under the FCPA. (Intent may be inferred from circumstantial evidence.) - Despite the multimillion-dollar size of the government contracts, two airline tickets satisfy the "anything of value" requirement and is not considered a "minor expense."
Islamic legal tradition
- Traces its origins to era of Prophet Muhammad (early 7th cent CE) - Sources of Islamic law: (1) Quran (holy book) and Hadith (sayings of the Prophet) (2) Sunna: social and legal customs and practices (3) Ijma: consensus of Islamic scholars (4) analogical reasoning
Final Determination: Dumping Made by Minister of National Revenue-Customs regarding Gypsum Board Originating from USA
- Under the Canadian-American FTA, as with the NAFTA, private parties may file complaints with the appropriate government agency to investigate alleged cases of dumping or illegal subsidies. - Following a substantive complaint, the first step in the dispute resolution process is determining the "period of investigation." This will be the period of time that the government agency will review the import transactions subject to the compliant. The government agency (Revenue Canada) conducting this investigation has discretion in setting the POI. The exporting party may challenge the selected period, but courts will generally defer to the agency's discretionary power - Under the Special Import Measures Act (SIMA), the next step is to determine the "normal value" or price of the goods to be compared to the actual price charged for the exported goods. - The common ways for determining the price include the price charged in the exporter's domestic market or by calculating the "costs of production" including reasonable overhead expenses and profits. - The third step requires the government agency to determine if the dumping or illegal subsidy "has caused, is causing or is likely to cause material injury" to domestic industries or businesses. - In determining normal value, "all costs" of doing business must be factored into the calculation. In this case, the Binational Review Panel held that Revenue Canada had failed to factor in a pro rata share of the interest costs paid by the exporting company on its general business loans ("aliquot portion of general corporate costs").
Avoiding international liability under ATCA
- Use strategic contract language, even in contracts with foreign contractors - Specifically, include language that: expressly defines the duties of each party; puts in place limitations on liability, and, where appropriate, states that the US company has no authority to direct, supervise or otherwise control any actions of any foreign government employee; and mandates that all parties shall comply with all applicable domestic and international laws
Totality of the circumstances analysis
- Used for determination of whether a party had reason to know - Takes into account all the circumstances of the contract, including the contract itself, prior dealings between the parties, how the parties performed the contract, subsequent modification to the contract, and relevant business customs and trade usage
Mediation
- Uses an impartial mediator who listens to the arguments and offers a solution, but it is not binding upon the parties. - Advantages: rapid settlements; mutually satisfactory outcomes; high rate of compliance; comprehensive, customized agreements; greater degree of control and predictability of outcomes
Utilitarianism
- teleological approach to ethics - looks to the consequences of a decision or an action to determine if it was ethically appropriate
Service of process
- the formal notification for a defendant to defend himself in court - proper SOP necessary for a court to have IPJ over defendant and for enforceability of any default judgment - should meet both US and foreign country requirements (see Hague Service Convention, dual service)
George E. Warren Corp. v. U.S. Environmental Protection Agency
- WTO's national treatment principle requires that individuals and firms of foreign countries are given the same competitive opportunities, including market access, as are available to domestic parties. - International agreements prevail over conflicting national statutory mandates. - Federal regulatory agencies may weigh different factors (such as international commitments) when rendering a decision or applying a regulation to a situation with international ramifications as opposed to a purely domestic one.
Penal (penalty) clauses
- What U.S. legal practitioners call liquidated damages clauses - At common law, penalty clauses are unenforceable
Dumping
- When a foreign company exports and sells goods at below-market prices - Proved by evidence that the goods are sold below cost or at a price that is lower than the price the goods are sold at in the exporter's home country - Considered an actionable trade practice when it disrupts markets and injures producers of competitive products in the importing country
Contract of adhesion
- Where a party signs the contract form provided by the other party on a take-it-or-leave-it basis - Adhering party has a right to demand dissolution; term may be voided if it deprives the adhering party of the rights "usually granted under contracts of that type, or excludes or limits the responsibility of the other party." - Adhering party cannot demand dissolution if he "knew or should have known on what conditions the contract is concluded."
Rule of reciprocity
- a country will not enforce judgments rendered in a foreign country that does not likewise enforce its judgments - rarely used in US as a defense to foreign judgment enforcement
Transparency International
- a nongovernmental group of business leaders and former government officials - dedicated to promoting international business ethics and the elimination of corruption - primary concern is the damage that bribery causes to the economic and democratic development of developing countries.
Ethical or cultural relativism
- because different countries or cultures have different ethical belief systems, there is no supranational way of determining whether an action is right or wrong - the correctness of an action is to be measured by whatever a majority within a society believes is morally correct
Bernina Distributors, Inc. v. Bernina Sewing Mach.
- common practice of entering into long-term supply contracts - use of open price or price escalation clauses to adjust the contract price over the term of the contract - a determination that a risk has been allocated to one of the parties defeats a demand for a contract adjustment - Contract law allows for an excuse from not fulfilling a contract. In the sale of goods the Uniform Commercial Code § 2-615 grants an excuse for commercial impracticability. The law also allows the parties to write an express excuse or force majeure clause. - An excuse for commercial impracticability will not be granted if the risk was foreseeable or where the burden on a party is not unduly severe. - Since currency fluctuations are foreseeable, courts are likely to view them as allocated risks and are unlikely to grant an excuse. - It is important to write clear and detailed clauses, especially in long-term contracts. The Court suggested the use of a "cost-plus" formula in the open price term.
U.S. Federal Sentencing Guidelines for Organizations
- corporate or organizational entity can be held vicariously liable for the criminal acts of its employees - aggravating factors: (1) the involvement in or tolerance of criminal activity, (2) prior history of the organization, (3) violation of an order, and (4) obstruction of justice - mitigating factors: (1) existence of an effective compliance and ethics program and (2) self-reporting, cooperation, or acceptance of responsibility
Sustainable Development Goals (SDGs)
- established by UN - universally shared common global vision of progress toward a safe, just, and sustainable space for all human beings to thrive on the planet - reflect the moral principle that every country should be regarded as having a common responsibility for playing their part
UN Declaration on the Right to Development
- every person has a basic human right to development - places responsibility on individual nations and the international community to ensure that everyone shares in the benefits of development
ISO 9000 (Quality Management)
- facilitates international commerce by providing a single set of quality standards that people everywhere recognize and respect - provides guidelines for developing a quality management system
Falcoal, Inc. v. Kurumu
- importance of the forum selection clause in international contracts - use of letters of credit and performance bonds to secure payments and performances - defense of sovereign immunity, along with the waiver and "commercial activity" exceptions - determining if a court has personal jurisdiction over the defendant through the "minimum contacts" or "direct effects" standards - importance of determining the appropriate law to be applied - importance of selecting the language that controls when more than one language contract is executed
Rio Principles (2012 UN Resolution)
- poverty eradication - sustainable agriculture - water and sanitation - energy - sustainable tourism - sustainable transport - sustainable cities - health and population - promoting full and productive and decent employment - ocean and seas - climate change - forests - biodiversity - chemicals and waste - gender equality
U.S. Foreign Corrupt Practices Act (FCPA)
- prohibits U.S. individuals, companies, and direct foreign subsidiaries of U.S. companies from offering, promising, or paying anything of value to any foreign government official in order to obtain or retain business; sweeping law with widespread implications that can result in large fines and jail time - applies extraterritorially to foreign activities of U.S. citizens, companies, and foreign entities controlled by them - U.S. companies are liable for bribes made by their foreign agents. Actual knowledge of the bribery is not required. Prosecutors need only prove that the firm should have been aware of a high probability that bribing would occur. - Accounting provisions require that accurate records are kept and that an adequate system of internal controls is established and maintained - Enforced by DOJ and SEC
Factors for discarding forum selection clause
- public policy - inconvenience (see Forum non conveniens doctrine) - inequality of bargaining position (unconscionable?) - changed circumstances (e.g., hostilities)
Organizational ethics
-The moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and with people outside the organization. -The traditional view is that those who knowingly partake in unethical actions should be held accountable.
Statute of frauds
A common law concept that requires written contracts for certain agreements to be binding; in U.S., found in Article 2 of the UCC
Option Contract
A contract under which the offeror cannot revoke the offer for a stipulated time period (because the offeree has given consideration for the offer to remain open). As to currency option: gives a party a right, but not the obligation, to buy or sell a currency at a fixed rate in the future; a purchaser and a seller of foreign currencies agree on a specific rate of exchange at a future date
Franchising
A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.
Extraordinary Challenge Committee (ECC)
A government to a dispute may challenge a panel's decision under the ECC procedure on three grounds: (1) belief that a decision has been materially affected by a panel member having a serious conflict of interest, (2) belief that the panel departed from a fundamental rule of procedure, or (3) belief that the panel exceeded its authority under NAFTA.
General license
A grant of authority to all exporters; sufficient for most of the goods exported from the U.S. No application for exportation or government approval is needed when exporting under a general license, just a filing of a SED. Note - no actual license is provided.
Legal family
A group of national legal systems that are part of the same legal tradition (e.g., Napoleonic family)
Legal tradition
A product of the historical evolution of ways of looking at law and its role in society. Each legal tradition has distinctive characteristics on how law is formulated, applied, and interpreted.
Bonded warehouse
A warehouse authorized by customs authorities for storage or manufacturing of goods on which payment of duties is deferred until the goods are removed
Bilateral Investment Treaty (BIT)
An agreement between two countries about the conditions for private investment across borders; provide basic legal framework. Generally address issues of convertibility of currency, repatriation of profits, compensation for expropriation, protection of intellectual property, and nondiscriminatory treatment of foreign investors
Transnational law
Any law that regulates actions or events that transcend national boundaries
Inter-American Convention on the Extraterritorial Validity of Foreign Judgments
Applies to members of Organization of American States
Conflict of law factors
As to contracts: - nationality of contracting parties - negotiation location - contract execution location - performance location - breach location - national law to be applied As to torts: - nationality of parties - place of accident - location of victims - country with greatest interest
Objective Territoriality
If foreign companies act in ways that directly affect a state other than their own, they may be accountable by the other state
Shipper's Export Declaration (SED)
Must be submitted to Dept of Commerce in order to obtain a general license to export
Doctrine of renvoi
Recognizes that when the parties choose a national law, that country's conflict of law rules apply to the dispute. In some instances, those conflict of law rules may lead a court or arbitral tribunal to the law of another country than the one selected in the choice of law clause.
Regional or qualified goods
Reduction or elimination of tariffs for goods originating from another FTA member country or that passed substantial transformation test
Battle of forms
Refers to the situation in which one business firm makes an offer in the form of a preprinted form contract and the offeree responds with its own form contract
Performance requirements
Restricted by BITs; refers to local content rules, export quotas, etc.
Plurilateral agreements
Restricted number of nations
Low-context cultures
Rule of law predominates. A deal is made based on the contract, often with the lowest bidder. The system is based on a high degree of institutionalization, not interpersonal trust.
Joint stock company
Russian form of corporation that may be open or closed. The closed version is limited to no more than 50 shareholders who can maintain their ownership interests through a preemptive right to purchase a pro rata share of any subsequent issuance of stock.
Dicta
Statements made in a judicial opinion that are not essential to the decision of the case
Export-processing zones (EPZs)
small areas within which especially favorable investment and trading conditions are created by governments in order to attract export-oriented industries
ATA Carnet
standardized international customs document used to obtain duty-free temporary admission of certain goods
