International Buisness Law Final

  1. Treaty of Rome
    • 1. 6 member states
    • 2. founded the European Community
    • 3. Free trade area with reduced barriers
  2. Maastricht Treaty
    • Integrates all the economies
    • EU citizenship- one can get a great pension from Great Britain, then move to Spain with great healthcare
    • European central bank- like federal reserve; controls monetary policy
  3. European Parliament
    • Legal body that represents the EU's citizens and directly elected by them
    • citizens that are basically ungovernable
    • representatives from member states based on population (max at 96)
  4. European Council
    • Heads of state or government of the EU member states
    • president acts as EU's representative on issues like foreign policy, security (works to secure consensus)
  5. Council of Ministers
    • one representative of each nation-state
    • guides modern policy
  6. European Commission
    Represents the interests of the EU as a whole as regulatory agencies working in specialized areas
  7. ECJ
    • functions as the Final Arbiter of EU Law
    • hear appeals from European trials court, the general court
    • EU court basically follows civil law tradition
    • also has jurisdiction to compel member states to comply with their treaty obligations or by member states against Eu institutions overstepping
  8. Four Freedoms of EU
    • Free movement of goods
    • Free movement of capital
    • Free movement of people
    • Free movement of service
  9. Regulations v. Directives
    • instances of the EU to harmonize the system
    • regulations are binding
    • directives are binding to the result they wish to achieve but left to the nation on how it wants to be implemented.
  10. agent
    performs a variety of functions on behalf or on the direction of another
  11. independent contractors
    • called independent agents outside the original country
    • are not subject to working out details of the agent's work organization
    • the agent works for many clients
  12. Evergreen contract
    A contract continued after the stated terms of the contracts, parties may terminate only by a three-month written notice once the relationship has lasted for three years or more
  13. Just cause:
    A statue that countries include which supersedes the agency relationship -- says that even if there are terms for termination, it cannot happen without “just cause”, which is very difficult to establish. Used as a way to ‘level the playing field’ for local small businesses vs. large multinational corps.
  14. Economic conditions alarm
    • EU aggressively protects local agents, requires through a directive for member states to pass national laws on representatives with a few mandatory provisions, including this
    • Principal must notify agent if it expects that the reps volume of business--and thus the agents commission-- will be ‘significantly lower’ than what the agent ‘normally’ expects
  15. Commission override
    • Principal must pay rep a commission if a sale is made in the sector reserved for the rep, even if the rep didn’t participate.
    • Also part of the EU rep directive -- commissions accrue when the customer is one that the rep acquired, and even when the principal did his part and the deal isn’t closed
  16. Dependent agent
    • An employee of a company in a foreign host country, company is liable for that person, has rights under the foreign country
    • US investor has much more quality control, but also more local legal costs/risks
  17. Independent agent
    • An agent not economically or legally tied to the principal, more flexibility/discretion, less liability
    • Continuing authority to negotiate the sale/purchase of goods, serve more than one principal, often paid solely off commission
  18. Permanent establishment
    Principal’s office in a foreign host country that has hired a dependent agent to carry out contract negotiations and such

    Transactions subject to host country’s corporate tax law
  19. Product liability
    Responsibility to consumers for defects in one’s product, liability has nothing to do with agency relationship
  20. Caveat emptor
    “Let the buyer beware”, idea that government should not interfere in commercial relations, buyers should investigate seller’s claims and it’s the fault of the buyer if the seller’s claims turn out to be false
  21. Puffing
    Vague exaggeration of what a product does, allowed based on the culture of different countries
  22. Foreign Direct Investment
    a business making investments that will allow it to carry on some significant portions of its physical operations in a host country
  23. Fluctuation risk
    currency will devalue against the dollar
  24. Inconvertibility risk
    “soft currency” (not freely exchangeable for currencies of other nations) will hinder the trading country
  25. Arrangements with the soft-currency country-
    obtainning access to hard currency, since it is in limited supply, creating currency exchange rights
  26. Currency swaps-
    financial contracts used to hedge against
  27. Profit margin preservation-
    payment to foreign investor will be adjusted periodically to maintain the same profit margin
  28. Unitary index adjustment-
    when the parties provide for an adjustment of payment terms based on an accepted unitary index
  29. Hard-currency obligations and revenues-
    structuring transactions so as to conserve dollars by avoiding obligations denominated in currencies outside of the investment site and by conserving hard currency earned by the venture (aka borrow or trade in the host country currency)
  30. Countertrade-
    (dealing with currency inconvertibility)- local currency is used to purchase local products, which are then exported to a hard-currency country.
  31. Counterpurchase-
    type of countertrade- sale of goods to a buyer on the condition that the seller buy other goods produced in that country
  32. Barter-
    goods for goods
  33. Buy-back-
    provider of equipment used to manufactured will get a portion of the goods.
  34. Parallel exchange-
    forming an association of businesses as to trade in local soft currency
  35. Inconvertibility insurance-
    insure against hard blockages (when the foreign government passes a law that prevents conversion or transfer.
  36. Political risk analysis-
    the enterprise reains a firm or its own personnel to analyze a host country’s risk of nationalization/expropriation, as it would study any other business problem.

    U.S. investors in countries that once held sovereign rights theory
  37. Political risk insurance-
    entrepreneurs who are unwilling to hazard the risk of a foreign government taking will pay a premium to a public or private insurance.
  38. OPIC-Overseas Private Investment Corporation:
    insuring domestic firms that do business abroad against expropriation, nationalization, revolution, insurrections, and currency inconvertibility.

    Can operate only in a country with which the United States has concluded a bilateral investment agreement.
  39. Multilateral Investment Guarantee Agency-
    issues insurance guarantees to protect foreign investors from losses relating to currency transfer restriction.

    Guarantees are granted for a 15-year term
  40. calvo doctrine
    the sovereign is ahead of the investor and should be free to determine compensation for a taking in accordance with its own domestic law. Foreign investor should not be able to take greater than domestic investor
  41. Expropriation-
    taking a single country
  42. Creeping expropriation-
    the effect of laws and regulations that subject the investor to discriminatory taxes, legislative controls over management of the firm, price controls, forced employment of nationals, license cancellation, and restrictions on currency convertibility. Creeping expropriation requires a careful fact-based determination to ascertain whether th sovereign has gone beyond the right to regulate industry.
  43. Nationalization-
    taking an entire industry
  44. Level of compensation for nationalization
    They often disavow the obligation to provide compensation at fair market value. (the state already owns the resource, denying the value of the foreigner’s land title, so it need pay only for the foreign owner’s improvement
  45. Privatization-
    assets are transferred to new entity, run as private entity during transition
  46. utility patent
    • Subject of the patent is invented for solving some problem
    • It is useful, not obvious -- can’t invent putting salt on chips and calling it salted chips
  47. Design patent
    • A keyboard, for example, is patented in terms of its design
    • Or a women’s handbag -- a satchel can’t be patented, but if the style is changed by branding the specifics can be patented
  48. Plant patent
    A specific seed that grows in a certain way(ie robustly without much water), people want to protect that and can do so with plant patents
  49. Provisional patent
    • Allows someone to have a neat product, and not file the particulars so that anybody can reverse-engineer it
    • Gives one year to go out into the market and secure the financing
  50. Paris convention
    • International agreement in 1800s about action regarding patents
    • Foreign applicants for patents will get national treatment so that everybody can market their patents around the world safely

    • Two main problems with Paris convention
    • 1. No enforcement provision, so countries like China can steal patents and not be reprimanded -- you could violate patents and there was no harm until 1990 when TRIPS occurred
    • 2. Nation states can deny patent protection to certain industries/patents by declaring that they are immoral -- ex. AIDS vaccine in Africa
  51. PCT(1970s, Paris Cooperation Treaty)
    When you file in one of the states, you get priority in all signatory countries

    • With a priority claim, you have 30 months after filing to basically start processing it in all the countries in the world where you want protection
    • 1. Have to file patents in each country
    • 2. Allows applicant to lock in a date while giving it time to raise capital
    • A patentee can obtain protection in all EU countries by filing a single application under the European Patent Convention
    • Patent infringement makes you pay for all the lost profits, damages, and attorney fees
  52. Trademarks
    • Trademarks are 6 months, patents under priority claims are within 30 months
    • Trademarks only valid for 10 years
    • 1. Can be renewed for an unlimited number of 10 year periods as long as it can be proven that it is being used
    • Any idea has to be trademarked -- a symbol/image/graphic with an association, distinguishes one’s goods or products from others
    • 1. Can be protected, that value is continued patronage
    • 2. Must be distinctive or have acquired a secondary meaning(brand name that has evolved from an ordinary term), and must be used in commerce(used in the sale/trade of goods, can’t just lock up names)
    • Other types of trademarks:
    • 1. Trade dress -- distinctive decor, menu, style, or type of service
    • 2. Certification marks
    • 3. Collective marks -- nfl, nba, etc.
  53. can't trademark
    • Flags, state, municipality, etc.
    • Generic names/names that have become generic
    • immoral/scandalous marks
    • Geographic names standing alone
    • Any mark resembling a mark already registered
  54. Madrid Protocol:
    centralized filing for trademarks, WIPO enforced, U.S. has not signed since the enforcement is very weak
  55. Lanham Act
    provides federal protection to trademarks, and state laws can provide additional protections
  56. Berne Convention
    • National treatment -- have to give foreigners same treatment as citizens
    • All author has to do is put the symbol, check book for more detail
    • Federal system, not state
  57. Fair use doctrine
    Permits use of copyrighted material without consent for limited uses(news, satire, parody, etc.)
  58. TRIPS
  59. Prior-Approval Schemes
  60. Gray Market
    • NOT counterfeit goods
    • Produce something for domestic/export use, and works in the opposite way
    • 1. Buying goods that aren’t supposed to be sold in your country
  61. Foreign sovereign immunities act
    • State is immune from suit
    • Exceptions- waiver, commercial activity and noncommercial torts
    • Congress amended the FSIA to allow U.S. citizens to bring suit against the sovereign for state sponsored acts of terrorism.
    • Commercial activity exception- state does business as a private commercial party
    • Act of state doctrine prevents court from passing on validity on the action of a foreign government
    • 1. State-sponsor of terrorism exception- waives FSIA
  62. Sherman antitrust act,
    US was first country in the world to enact antitrust laws

    • Monopolies, specifically made the abuse of monopolistic power illegal not the existence of monopolies
    • Concerned that manufacturer owns all the retailers/wholesalers
    • Also covers horizontal competition -- companies buy their competitors
  63. restraint of trade
    (Sherman antitrust act)

    competition permitted but regulated, means patent licensing(ie. Allowing some companies to use the patent license but not others)
  64. Commission on competition
    • EU's Concerned most about having multiple small companies instead of fewer big ones
    • Ie. they try to help smaller retailers/manufacturers trying to succeed
  65. Impediments to Dismissal
    US: at will employment: The US doesn’t believe that a job is a property right, rather see it as a work relationship benefitting both sides -- nobody is entitled to a job

    • Europe: more socialist/government controlled economies believe that jobs are fundamental rights, right to be employed should be respected/not interfered with
    • Difficult to discharge employees, requires just cause termination, with employee representation on boards
  66. Kochi Hoso(Broadcasting Co),
    Japanese Supreme Court ordered the plaintiff reinstated, even though he had technically violated the company’s policy of tardiness -- clear stated rules that tardiness = termination, no exceptions in rules/contract
  67. Assumption of Employment Agreements
    • Taking over a company in another country means one must assume the contracts between company/workers
    • Meanwhile, in US if one buys stock of a company one “steps into the shoes” of that company -- any problems are inherited.
    • Therefore, companies will buy the assets of another company, dismiss all of the employees, and then potentially rehire them but under new contracts, employment agreement assumptions are on the seller
  68. Extraterritorial Application of US Employment Discrimination Law
    • 1991 Civil Rights Act -- To AMERICAN employers, all over the world, Title VII(anti-discrimination law) applies. Doesn’t matter where the company operates, as long as it is under managerial control of a US firm and the employee is American
    • 1. 1991 civil rights act caused by EEOC v. Arabian American Oil Co., where the petitioner’s case for Title VII was dismissed because the company was in Saudi Arabia, Congress afterwards passed the 1991 civil rights act
  69. Defenses to US Employment Law when Applied Extraterritorially
    • Decision is made by “foreign person not controlled by an American employer”
    • Foreign compulsion: The US Equal Employment law conflicts with host country’s laws so employer faces foreign compulsion
    • Have to comply with foreign laws if one wants a foreign deal
  70. Antidiscrimination Laws Outside the US
    EU directives prohibit discrimination based on religion, race, belief, disability, age, ethnicity, or sexual orientation

    US doesn’t federally protect sexual orientation, only federal employees and the rest is based on the states
  71. Friendship, Commerce, and Navigation treaties
    As a foreign employer, one can appoint executives from their country to run operations in the host nation, if the nation is signatory to such treaties
  72. US competition law
    focused on horizontal and vertical competition
  73. Monopolists
    entity that can reduce its own production in such a way that doesn’t affect the marketplace(because there are no substitute products)

    It is permissible/lawful to be a monopolist: it’s the misuse of monopolistic power that causes trouble: ex. Microsoft gave away the internet for free as part of their package. Netscape argued that Microsoft had such a stranglehold over the market that it could give something away for free to kill competition.
  74. American Restraint of Trade
    • Federal
    • sherman act regulated FTC 
    • How to restrain trade: price fix, eliminate/dampen competition by splitting up the market, and other agreements among competitors -- ie. Tesla doesn’t want to sell its batteries to all other car companies
    • Price fix: changing the price of an item based on where it is being sold, ie. the big mac rule -- lawyers charge based on how much a big mac costs
    • Sherman Act includes criminal charges


    States can enact their own antitrust laws, can be violated if, for example, a business continually hosts “going out of business sales”  but just sells cheap liquidated products

    • private parties
    • Can bring suits to enforce antitrust laws for violations of the sherman or clayton act, can seek damages
    • 1. Most of these cases are solved out of court, and are quite expensive
    • Can sue for treble damages and attorneys fees US laws may impose criminal liability, which is not possible under EU law
    • EU pushing to enhance private causes of action(non-governmental), for people not to sue
  75. Extraterritoriality of American antitrust laws overseas
    • jurisdictional rule of reason
    • 1. whether the action had some effect on U.S. commerce
    • 2. whether the restraint was of a type and magnitude to be considered a violation of the U.S. antitrust laws
    • 3. the goodwill interest of the foreign nation against the interest of the United States in antitrust enforcement
  76. Mergers and acquisitions: US
    • Closest US equivalent is the Hart-Scott-Rodino Act
    • 1. Checks if the merger decreases competition
    • 2. DOJ can later bring litigation to the company, even if it gave approval
    • If facing scrutiny, companies often enter into pre litigation settlements with the FTC to secure more comfort and safety from an injunction
    • Either way, companies can be sued by private parties no matter what
  77. Mergers and Acquisitions: EU
    • Amended merger regulations recently: deals are notified to the European Commission on competition, render a “phase 1” decision
    • Phase 1: is something important enough for the EU to care about -- over 5 billion euros
    • Even if either of these tests is satisfied, there is no community dimension if more than ⅔ of the aggregate community-wide sales are in one member state
    • “Community dimension” = affects multiple member states
    • 1. Member states can’t interfere with/contradict the commission’s findings
    • What if it only impedes competition in a single country? The EU doesn’t care.
Card Set
International Buisness Law Final