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Transcript of 44884598-IBT-Outline-F09-1
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INTERNATIONALBUSINESSTRANSACTIONSProf. Frank Garcia
Fall 2009
INTRODUCTION...............................................................................................3
A. International Trade and Business Issues .............................................................3Incoterms as Trade Usage..................................................................................3
Commercial Terms..............................................................................................3 Asolute!Com"arati#e Ad#antages.....................................................................$ %et&ods of Protectionism...................................................................................$
B. 'egal and (egulator) *)stems ............................................................................+Customar) International 'a,..............................................................................+
Treaties..............................................................................................................+ 'e- %ercatoria....................................................................................................+
C. International conomic 'a, /rganiations ..........................................................1Ta-onom) of Tariff *tructures............................................................................1 General Agreement on Tariffs and Trade GATT Treat).....................................1 4orld Trade /rganiation 4T/........................................................................5
uro"ean Union U..........................................................................................5 6ort& American Free Trade Agreement 6AFTA................................................7
THEDOCUMENTARYSALEOFGOODS......................................................................9A. Contract Formation .............................................................................................9
T&e Basic Transaction.........................................................................................9 Concerns in t&e Contract Formation...................................................................9 Prolem $.8 Insulation to German)................................................................80 Prolem:*ol#ing A""roac& to Contract Issues ) Prof. Frank Garcia.................80
B. C&oice of 'a, United *tates ...........................................................................82(estatement 2d ; 875 'a, of t&e *tate C&osen B) t&e Parties......................82
(estatement 2d ; 877 'a, Go#erning In Asence of ffecti#e C&oice B) t&eParties................................................................................................................83
(estatement 2d ; 1 C&oice of 'a, Princi"les.................................................8$ Use of t&e Forum
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Prolem +.8 Gold 4atc& Pens to France........................................................2$@. Foreign Corru"t Practices Act ............................................................................2+
Pur"ose of t&e FCPA.........................................................................................2+ Amendments to t&e FCPA.................................................................................2+
INTELLECTUALPROPERTYLICENSING......................................................................27A. Cross:Border IP Transfers ..................................................................................25
/#er#ie,..........................................................................................................25 IP Protection.....................................................................................................27
B. 'icensing Agreements uro"ean Union ..........................................................30Princi"les of uro"ean Union 'a,.....................................................................30
U (egulations.................................................................................................38 Prolem 9.$ =rill Bit in German)....................................................................3$
C. 'icensing Agreements 6AFTA .........................................................................3$/#er#ie,..........................................................................................................3$
6AFTA:Plus.......................................................................................................3+=. 'icensing Into 'atin America .............................................................................31
=o Antitrust Guidelines....................................................................................31 =o : #aluation of 'icensing Arrangements Under t&e (ule of (eason............35 =o A""lication of General Princi"les..............................................................39
=ecision 6o. 298 Andean Common %arket....................................................$0 Prolem 3.0 'icensing to Guatador................................................................$8
FOREIGNINVESTMENT.....................................................................................42A. =irect In#estment ..............................................................................................$2
T&e 'ifec)cle A""roac& to Foreign In#estment.................................................$2 T&e /"erational Code.......................................................................................$3 (estrictions U"on t&e stalis&ment of t&e Foreign In#estment.......................$3
B. 'ocation of In#estment ......................................................................................$$erseering B? #. 6ordic Construction Com"an) Baumanagement Gm@......$$
Prolem 80.8 =GInt. in German)!United >ingdom.........................................$+C. Codetermination ...............................................................................................$+
Codetermination ) 4orkers in German nter"rises........................................$+ T&e *ocietas uro"eae *..............................................................................$1
=. %erger Control..................................................................................................$5/#er#ie,..........................................................................................................$5
C %erger (egulation 6o. 839!200$.................................................................$7. Pri#atiation ......................................................................................................+0
Fundamental Issues..........................................................................................+0F. In#estment 4it&in 6AFTA ..................................................................................+8
T(I%s (egulations............................................................................................+8 6AFTA (egulations...........................................................................................+2 %e-ico
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U* Forum *election A""roac&..........................................................................11 U* A""roac& to urisdiction...............................................................................11 uro"ean Union A""roac& to urisdiction..........................................................15
C. nforcement of Foreign udgments ...................................................................19Common 'a,....................................................................................................19
Uniform Acts.....................................................................................................50
INTRODUCTION
A. I6T(6ATI/6A'T(A=A6=BU*I6**I**U*
Incoterms as Trade Usage *ince t&e ICC is a non:go#ernmental entit)D Incoterms are neit&er
legislation nor "art of a treat). T&usD it cannot e Ego#erning la, of acontract.
It is a ,ritten form of custom and usage in t&e tradeD ,&ic& can eD andoften isD e-"ressl) incor"orated ) "arties to an international contractfor t&e sale of goods. Terms can ualif) under CI*G Article 92 as a EusageH,&ic& in
international trade is ,idel) kno,n toD and regularl) oser#ed )D
"arties to international sales contracts. Terms can also ualif) under UCC ; 8:20+2 as a Eusage of trade.
Commercial Terms T&e E term 4 e- ,orks is ,&ere t&e goods are made a#ailale to
t&e u)erD ut use of a carrier is not e-"ressl) reuired. T&e EF terms FCA free carrierD FA* free along sideD F/B free on
oard reuire t&e seller onl) to assume t&e risks and costs to deli#er t&egoods to a carrier nominated ) t&e u)er. Free Carrer.
6eed onl) notif) u)er t&at Egoods &a#e een deli#ered into t&ecustod) of carrier.
*eller must "ro#ide a commercial in#oice or eui#alentD an)necessar) e-"ort license and usuall) a trans"ortation documentt&at ,ill allo, u)er to take deli#er) of goods.
Free !" B!ar#. A""ro"riate onl) to ,ater:orne trans"ortation. 6eed onl) notif) u)er t&at Egoods &a#e een deli#ered on
oard. (isk of loss transfer to u)er ,&en t&e goods &a#e "assed t&e
s&i"
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s&i"ment. *eller must "a) t&e freig&t and unloading costs of t&e carrier at
t&e destination "ort under t&e termD ut t&e u)er must "a) allot&er costsD including unloading costs not collected ) t&e carrier.
T&e E= terms =AF deli#ered at frontierD =* deli#ered e- s&i"D =Jdeli#ered e- ua)D ==U deli#ered dut) un"aidD ==P deli#ered dut)
"aid reuire t&e seller to deli#er t&e goods to a carrierD arrange for t&eirtrans"ortationD and assume t&e risks and costs until t&e arri#al of goodsat an agreed countr) of destination.
Asolute!Com"arati#e Ad#antages Asolute ad#antage is t&e common reason ,&) t,o countries engage in
tradeK i.e.D one countr) "roduces a etter "roduct t&an t&e ot&er. 4estia&as an asolute ad#antage in "roducing garments 8!2 da)!)d #s. +da)s!)d in Tro"ica.
Com"arati#e ad#antage is aout s"ecialiing in ,&at )ou are leastinefficient in "roducing. 4estia s&ould focus on garments 80- moreefficient and Tro"ica s&ould focus on "roducing ,ine since t&at is t&eirleast inefficient "roduction.
%et&ods of Protectionism TariffsK ad #alorem ta-esK calculated as a "ercentage of t&e cost of t&e
good. Attracti#e ecause t&e) are a source of re#enueK doesn
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6ot al,a)s risk freeK com"etition can often dri#e de#elo"ment. 6eed &uman ca"italD tec&nolog)D and a sufficient domestic
market. Polic) &as generall) failed in 'atin America.
B. 'GA'A6=(GU'AT/(L*L*T%*
Customar) International 'a, /#er a "eriod of timeD a customar) "ractice ma) e so continuall)
"racticed and acce"ted t&at it ecomes a de facto la, opinio juris. 6ot as "rominent as treaties ecause enforcement reuires a &istorical
e-amination of usage. Foreign in#estments are often co#ered ) customar) international la,s.
-"ro"riation and com"ensation often co#ered in treaties.
Treaties Treaties ma) e seen as Eself:e-ecutingD in t&at merel) ecoming a
"art) "uts t&e treat) and all of its oligations into effect. U treaties are uniue in t&at t&e) often do a""l) to uro"ean
citiens. A Edualist s)stem understands domestic la, and international la, toe t,o se"arate s)stems and it is a constitutional issue as to &o,and ,&ere international la, ,ill a""l).
In contrastD man) uro"ean la,s &a#e "ro#isions t&at it is illegal to#iolate an international la, t&roug& a domestic regulation.
/t&er treaties ma) e non:self:e-ecuting and reuire Eim"lementinglegislation a c&ange in t&e domestic la, of a state "art) t&at ,illdirect or enale it to fulfill treat) oligations. It is t&e c&ange in t&e domestic la, t&at &as effect not t&e treat)
itself. An e-am"le of a treat) reuiring suc& legislation ,ould e one
mandating local "rosecution ) a "art) for "articular crimes.
If a treat) reuires im"lementing legislationD a state ma) e indefault of its oligations ) t&e failure of its legislature to "ass t&enecessar) domestic la,s.
Assume t&at treaties create rig&ts and oligations onl) for t&e states toitD not to "ri#ate "arties ,it&in a state.
For treaties ,it&out direct effect "ro#isionsD treaties often set t&eframe,ork for domestic regulations i.e.D t&e 4T/ does not set fort&customs la,s ut rat&er onl) sets fort& t&ings t&at states can and cannotdo.
Treaties often set u" dis"ute resolution mec&anisms ut are usuall) onl)a#ailale to statesD not to "ri#ate "artiesM
'e- %ercatoria %ercantile customK not necessaril) reflected in an) official regulations.
Inde"endent "ri#ate legal s)stem. /ften drafted to accommodate and incor"orate t&e customs and usages
of t&e trade. Can e codified and!or incor"orated ) reference into legal documents
and gi#en effect in legal s)stems. -am"les include t&e Uniform Customs and Practices UCP and t&e UCC. %a) come u" in aritrationD ,&ere t&e aritrators ma) c&oose to
disregard a national la, t&e aritratorD ,&en in &is discretionD finds t&at
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neit&er nations< la, s&ould a""l)D ma) determine to a""l) lexmercatoriaas t&e go#erning la, of t&e dis"ute.
C. I6T(6ATI/6A'C/6/%IC'A4/(GA6INATI/6*
Ta-onom) of Tariff *tructures Free trade agreements FTA
Commits to ero tariffs. Customs union CU
*imilar to free trade agreements ut adds a common e-ternal tariffCT.
Creates a single customs area ,it& t&e same tariff rate. Common market C%
Aims to estalis& an integrated econom) in goodsD ser#icesD laorand ca"ital.
conomic communit) C Adds in a furt&er le#el of macroeconomic "olic) i.e.D agricultural
"olicies. conomic union U
Adds a common currenc) and common fiscal!monetar) "olicies. To,ards creating a national econom) on a regional scale.
T&e dee"er integrationD t&e more so#ereignt) eac& memer state mustgi#e u" to central institutions.
General Agreement on Tariffs and Trade GATT Treat) 6egotiated "ost:44II and ,ent into effect in 89$5. =rafted in res"onse to trade freee of t&e Great =e"ression to "romote
trade lieraliation "oliciesD i.e.D reduction of tariffs. ?ie,s international la,
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domestic goods. Plugs t&e ga" for ,il) nations ,&o tr) to circum#ent t&e %F6
reuirements ) lea#ing t&e tariff alone ut including a ta- onforeign goods.
4orld Trade /rganiation 4T/
Created in 899$ during t&e Urugua) round t&roug& t&e 4T/ Agreement. In order to oin t&e 4T/D a state must agree to a ,ide treatment of
treaties. Cannot sue as a "ri#ate "art) for a #iolation of a 4T/ "ro#ision onl)
t, go#ernments. @o,e#erD t&ere is a mec&anism ; 308 can force t&e go#ernment to
ring an action for t&e alleged trade #iolation. 6o "ri#ate remediesK and s&ould t&e offending state refuse to com"l)
,it& t&e 4T/ "ro#isionD onl) remed) ,ould e a sanction ) )ourgo#ernment on t&e state
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Initiates legislation. /"erating in t&e est interests of t&e communit)D not indi#idual
memer states. uro"ean Parliament
=irectl) elected re"resentati#esK seats allocated according to"o"ulation.
(ole &as een enlarged to re"resent constituentsK co:decisionrole.
Parliament &as no inde"endent legislati#e "o,er. uro"ean Court of ustice
@as a "olicing role ,it&in t&e ranc&es of t&e s)stem itself. Pro#ides court for intra:communit) dis"utes and enforcement. Article 23$ "reliminar) reference "rocessO Communit) la, enforcement and adudication can e roug&t in
t&e courts of an) memer state. Functions as t&e Esu"reme court on matters of communit) la,
onl). uro"ean communit) la, is a#ailale to "ri#ate "arties.
uro"ean Communit) 'a, (egulations
*imilar to statutes "rimar) legislati#e out"ut. Binding on memer states ,it&out need for furt&er im"lementing
legislation. =irecti#es
%ore o"en:ended onl) inding as to outcome. Commands to memer states to enact national legislation to
accom"lis& outcomes of directi#es. All U legislation must e ased in a treat) "ro#ision. Gi#es indi#idual memer states some lee,a) to going aout
setting u" s)stem goal is mandatedD not met&od of
accom"lis&ment. Treat) Pro#isions
Can e la, if t&e) &a#e direct affect. 4ritten in suc& a ,a) t&at t&e) are adeuate for creating rig&tsD
"ri#ilegesD oligationsD and res"onsiilities.
6ort& American Free Trade Agreement 6AFTA Tec&nicall) a free trade agreement ut it also addresses issues all t&e
,a) do,n t&e list. For e-am"leD it addresses goodsD ser#ices and ca"ital ut does not
"romote t&e free mo#ement of laor in fact it is anti:free mo#ementof laor.
United *tates &as traditionall) eenD and still isD rat&er reluctant totransfer an) so#ereignt) to an international organiation. Facilitates and "rotects foreign in#estments. 6AFTA la, is ust ackground la, t&at sets t&e frame,ork for CanadianD
U* and %e-ican legislation.
T&e Core Pro#isions of 6AFTA C&a"ter 88 co#ers foreign in#estment and estalis&es a inding
aritration "rocedure for dis"utes et,een a "ri#ate "art) and a
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go#ernment. C&a"ter 89 co#ers U*!Canada trade agreement "ro#isions and
"ro#ides for i:national re#ie, "anels for im"artial a""ellate"roceedings.
THEDOCUMENTARYSALEOFGOODS
A. C/6T(ACTF/(%ATI/6
T&e Basic Transaction T&e transaction in fi#e stages i contract formationD ii letter of creditD
iii s&i"mentD i# "a)ment and # deli#er). Transactions "resent t&e risk of non"a)mentD risk of fraudD non:
conforming goodsD loss or damage in transitD currenc) fluctuationsDconfusion o#er c&oice of la,D customs formalitiesD insol#enc) of one"art)D language misunderstandings.
International trading communit) &as soug&t to a#oid large and uncertainrisks ) creating de#icesD ,&ic& reak t&em do,n into man) small andmeasurale risks. Accom"lis&ed t&roug& t&e +,sale contract et,een u)er and sellerK
+, letter of credit contract confirmed irre#ocale negotiale locet,een u)er
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Prolem $.8 Insulation to German) Uni#ersal gi#es uroansas Cit). /ne mont& laterD uro sends Uni#ersal a E"urc&ase order for E+D000ls
of insulation for 80D000 4 >ansas Cit) for immediate deli#er) to=armstadtD German). uro.
*ame da)D Uni#ersal res"onds ) fa-ing a Eorder ackno,ledgment formto uro
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8. IDENTIFYPOSITIONINTHEDISPUTE. =efendant facing "otential liailit).
2. IDENTIFYMEANSANDGOAL. Goal is to a#oid "otential liailit). 4&at means are a#ailale to a#oid liailit)S
Plan A T&ere is a disclaimer in t&e contract and t&at t&e
disclaimer is effecti#e in t&e a""licale urisdiction. Plan B =amages are not a#ailale for t&is t)"e of claim. Plan C 6o reac& of ,arrant). T,o asic t)"es of ,arrantiesK
,arrant) of merc&antailit) "roduct is good and relialee-am"le of its t)"e of "roduct and ,ill "erform associated t)"esof functions and ,arrant) of fitness for a "articular "ur"ose ift&e merc&ant &as reason to kno, ,&at )ou are using t&e "roductforD t&en t&e "roduct must do ,&at it ,as "romised it ,ould do. i.e.D t&is t)"e of insulation is "erfectl) situated for t&e
a""lication it ,as designed for and t&e "rolem ,as t&e metalcom"osition of t&e uro"ean "i"es.
4&et&er t&ere is a disclaimer is a matter of contract formation la,
,&ereas ,&et&er t&e disclaimer is effecti#e is a matter of ,arrant) la,.
3. DETERMINE-HICHLA--OULDBESTACHIEVEYOURGOAL. Cannot oecti#el) searc& t&roug& c&oice of la, anal)sisK must do so
"ur"osefull) to ac&ie#e t&e desired goal i.e.D enforce disclaimerand!or a#oid liailit). >ansas 'a,
2/206. O11er a"# A((e%a"(e " F!ra%!" !1 C!"%ra(%.8 Unless ot&er,ise unamiguousl) indicated ) t&e language orcircumstances a an offer to make a contract s&all e construed asin#iting acce"tance in an) manner and ) an) medium reasonale int&e circumstances an order or ot&er offer to u) goods for "rom"tor current s&i"ment s&all e construed as in#iting acce"tance eit&er )
a "rom"t "romise to s&i" or ) t&e "rom"t or current s&i"ment ofconforming or nonconforming goodsD ut t&e s&i"ment ofnonconforming goods is not an acce"tance if t&e seller seasonal)notifies t&e u)er t&at t&e s&i"ment is offered onl) as anaccommodation to t&e u)er. 2 If t&e eginning of a reuested"erformance is a reasonale mode of acce"tanceD an offeror t&at is notnotified of acce"tance ,it&in a reasonale time ma) treat t&e offer as&a#ing la"sed efore acce"tance. +3, A definite and seasonalee-"ression of acce"tance in a record o"erates as an acce"tance e#enif it contains terms additional to or different from t&e offer. 2/207. Ter$ !1 C!"%ra(% E11e(% !1 C!"1ra%!".*uect to *ection 2:202D if i conduct ) ot& "arties recognies t&ee-istence of a contract alt&oug& t&eir records do not ot&er,iseestalis& a contractD ii a contract is formed ) an offer andacce"tanceD or iii a contract formed in an) manner is confirmed ) arecord t&at contains terms additional to or different from t&ose in t&econtract eing confirmedD t&e terms of t&e contract are a terms t&ata""ear in t&e records of ot& "artiesK termsD ,&et&er in a record ornotD to ,&ic& ot& "arties agreeK and c terms su""lied orincor"orated under an) "ro#ision of t&is Act.
/ffer ,as "urc&ase orderK acce"tance ,as orderackno,ledgment. =e#iant acce"tance is still an acce"tance.
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Comment $ and + to UCC sectionsK disclaimers of liailit)c&ange a material term of t&e contract. If construed as anadditional termD t&en t&e disclaimer falls out ,&ic& is ad forour "art) court fills in a""ro"riate language.
Could argue t&at e#er) contract "resumes a ,arrant) ofmerc&antailit) and t&en t&e disclaimer is a different term.
If different termD t&e) cancel eac& ot&er out and court fillsin la,D ,&ic& includes an im"lied ,arrant) ofmerc&antailit).
4&at aout "ro#ision t&at statesD EContract is go#erned ) t&ela, of >ansas. Is t&at a materiall) altering additional termS *ur"rising to
ot&er "art)S Les. It ,ould materiall) c&ange t&e effect of t&e disclaimerK it falls
out. Also defeats our goal since t&e disclaimer ,ould fall out as
,ell.
German 'a, %irror image rule last s&ot doctrine t&e disclaimer is in. Performance as a met&od of acce"tance.
T&us ,e ,ant German la, to a""l) to t&is claim. Under UCC ; 2:205D t&e courts can find "arties &ad a contract
t&roug& "erformance. Blockuster acce"tance. *ee comments to ; 2:205D 8
t&roug& 3.
$. IDENTIFYTHEARGUMENTSUNDERTHERELEVANTCHOICEOFLA-RULESFORPROVIDINGTHEBESTCHANCEOFSUCCEEDINGINGETTINGTHELA-IDENTIFIEDINSTEPTHREE.
If "art) is a defendant as &ereD it must antici"ate ,&at forumsmig&t e sued in &ere it ,ould e >ansas or German).
For c&oice of la, rules for >ansas (.2d of 'a,s ; 1 and ; 877 ,ould also need to kno, ,&et&er t&e su"reme court of>ansas!legislature &as ado"ted t&e restatement language. ; 875 asicall) states t&e "rinci"le of "art) autonom) allo,s t&e
"arties to make t&eir o,n c&oice. But it doesn
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agreement directed to t&at issueD unless eit&er a t&e c&osen state &as no sustantial relations&i" to t&e "arties or
t&e transaction and t&ere is no ot&er reasonale asis for t&e "artiesVc&oiceD or
a""lication of t&e la, of t&e c&osen state ,ould e contrar) to afundamental "olic) of a state ,&ic& &as a materiall) greater interest
t&an t&e c&osen state in t&e determination of t&e "articular issue and,&ic&D under t&e rule of ; 877D ,ould e t&e state of t&e a""licalela, in t&e asence of an effecti#e c&oice of la, ) t&e "arties.
3 In t&e asence of a contrar) indication of intentionD t&e reference isto t&e local la, of t&e state of t&e c&osen la,.
ns&rines "rinci"al of "art) autonom) ut also gi#es courts latitude tosearc& t&roug& t&e e#idence to determine if t&e "arties &ad a c&oice ofla, in mind. Comment a. (ule is ina""licale unless it can e estalis&ed t&at t&e
"arties &a#e c&osen t&e state of t&e a""licale la,. If ;875 is outD )ou ,ould &a#e to c&oose t&e od) of la, to determine
,&et&er or not t&e c&oice of >ansas la, is effecti#e.
Could inter"ret t&at ; 875 cannot a""l) no c&oice made "er seineffecti#e c&oice. T&en ,e mo#e on to limited ; 877 anal)sis.
(estatement 2d ; 877 'a, Go#erning In Asence of ffecti#e C&oice B)t&e Parties 8 T&e rig&ts and duties of t&e "arties ,it& res"ect to an issue in
contract are determined ) t&e local la, of t&e state ,&ic&D ,it& res"ectto t&at issueD &as t&e most significant relations&i" to t&e transaction andt&e "arties under t&e "rinci"les stated in ; 1.
2 In t&e asence of an effecti#e c&oice of la, ) t&e "arties see ;875D t&e contacts to e taken into account in a""l)ing t&e "rinci"les of ;1 to determine t&e la, a""licale to an issue include a t&e "lace of contractingD Wreference to forum
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In our e-am"leD ,e ,ould ,ant ; 877 to result in >ansas la,eing used to knock out t&e c&oice of la, clause. ; 877 allo,s usroom to argue.
A""lication of t&e Princi"les. Under aD >ansas follo,s t&e mailo- rule and t&e "lace of
contracting is t&e "lace from ,&ic& t&e last communicationacce"tance in t&is case is sent. T&us it is >ansas. *a)s doesnansas is t&at "a)ment
occurs in t&e "lace ,&ere t&e seller
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c&oice of t&e a""licale la, s&all e determined in accordance ,it&t&e "ro#isions of Articles 7D 9D and 88.
Article $ . To t&e e-tent t&at t&e la, a""licale to t&e contract &as noteen c&osen in accordance ,it& Article 3D t&e contract s&all e go#erned) t&e la, of t&e countr) ,it& ,&ic& it is most closel) connected.
It s&all e "resumed t&at t&e contract is most closel) connected ,it&t&e countr) ,&ere t&e "art) ,&o is to effect t&e "erformance ,&ic&is c&aracteristic of t&e contract &asD at t&e time of conclusion of t&econtractD &is &aitual residenceD orD in t&e case of a od) cor"orate orunincor"oratedD its central administration.
Article 7 . T&e e-istence and #alidit) of a contractD or of an) term of acontractD s&all e determined ) t&e la, ,&ic& ,ould go#ern it underWt&is con#entionX if t&e contract or term ,ere #alid. 6e#ert&elessD a "art) ma) rel) u"on t&e la, of t&e countr) in ,&ic&
&e &as &is &aitual residence to estalis& t&at &e did not consent if ita""ears from t&e circumstances t&at it ,ould not e reasonale todetermine t&e effect of &is conduct in accordance ,it& t&e la,
s"ecified in t&e "receding "aragra"&.
A""lication to Prolem. If contract or term of contract ,ere #alid under >ansas la,D under
Article 3 it ,ould e t&e la, of >ansas to determine if t&e c&oice is#alid. Lou ,ould use t&e la, t&e) tried to c&oose to determine if t&eir
c&oice of la, ,as #alid gi#e "art) t&e enefit of t&e dout in t&ec&oice t&e) tried to make.
*ection 3 of Article $ allo,s one to argue t&at t&e contract isEmanifestl) more closel) connected ,it& German) t&an >ansas. If case is tried in German)D >ansas la, ,ould a""l) gi#en t&e
Articles ao#e and t&us Uni#ersal ,ould lose t&e disclaimer as
,ell.
=. C/6?6TI/6/6T@I6T(6ATI/6A'*A'/FG//=*CI*G
A""lication of t&e CI*G In t&e United *tatesD t&e CI*G is considered a self:e-ecuting treat)D so no
domesticD federal legislation ,as enactedD or is necessar). It t&us &as t&e effect of federal la,D "reem"ting all state uniform
commercial codes unless t&e "arties to t&e contract &a#e agreedot&er,ise i.e.D "arties Eo"ted out.
Parties need to s"ecificall) state t&at contract is not go#erned ) t&eCI*G ut t&at it is go#erned ) t&e UCC as ado"ted ) >ansas.
Article 8 . T&is con#ention a""lies to contracts of sale of goods et,een"arties ,&ose "laces of usiness are in different states +a,,&en t&estates are contract statesK or +5,,&en t&e rules of "ri#ate internationalla, lead to t&e a""lication of t&e la, of a contracting state.
T&e United *tates declared a reser#ation under Article 9+ andt&erefore is not ound ) Article 88 i.e.D if action is filed in U*Dand t&e c&oice of la, "oints to t&e U*D t&en t&e U* la, a""liesD nott&e CI*G.
German) made a statement t&at "arties i.e.D t&e U* ,&o
8+
8+
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made a declaration s&all not e considered a contracting "art) tot&e CI*G.
T&e onl) Article 88 situations arise ,it& one non:contracting "art) to3:,a) transaction.
If "arties are t&e U* and German)D t&en )ou in#ol#e t&e reser#ation. If case is filed in U* and c&oice of la, "oints to German)D t&en
German la, a""lies ecause t&e U* made t&e reser#ation.
Ca$e Fe#I"
C*!(e !1La U"%e#
S%a%e$
C*!(e !1La
Gera"8
C*!(e !1La
a"a#'
United*tates
U* Wno 88X
German) anadu
German) U* =omesticW!c
declarationX
CI*G anadu
anadu U* German) anadu
T&e CI*G A""lied to Prolem $.8 %ust first ask ,&et&er ,e ,ant t&e "arties to &a#e o"ted out of t&e CI*G
or not. 4&at does t&e CI*G do to t&e disclaimerS
Article 89 . 8 A re"l) to an offer ,&ic& "ur"orts to e anacce"tance ut contains additionsD limitationsD or ot&ermodifications is a reection of t&e offer and constitutes acounteroffer. 2 @o,e#erD a re"l) to an offer ,&ic& "ur"orts to ean acce"tance ut contains additional or different terms ,&ic& donot materiall) alter t&e terms of t&e offer constitutes anacce"tanceD unless t&e offerorD ,it&out undue dela)D oectsorall) to t&e discre"anc) or dis"atc&es a notice to t&at effect. 3Additional or different terms relatingD inter aliaD to t&e "riceD"a)mentD ualit) or uantit) of t&e goodsD "lace and time ofdeli#er)D e-tent of one "art)
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Juestion of ,&et&er or not >ansas la, a""lies is re"laced ) ,&et&er ornot t&e "arties &a#e o"ted out. T,o A""roac&es.
Use t&e CI*Gansas la, to
determine ,&et&er >ansas la, ,as c&osen is good ecause t&e o"tout fails and t&e CI*G a""lies.
*ummar) of Prolem $.83. DETERMINE-HICHLA--OULDBESTACHIEVEYOURGOAL
CI*G Article 8 urisdictional anal)sis. %odified mirror image rule. =e#iant acce"tance is an effecti#e acce"tance unless it materiall)
alters t&e offerK terms donansas is t&e CI*GD etc.. 4e no, assume t&at t&e language statedD Et&is contract is
go#erned ) t&e UCC of >ansas and is not suect to t&e CI*G.
Case is Filed in >ansas Use t&e CI*G a""roac& c&oice of la, clause is in so t&e "arties
&a#e o"ted out of t&e CI*G t&usD >ansas la, a""lies. Lou
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Using contract la, to determine ,&et&er t&e C/' clause is in ifit is t&en >ansas la, a""lies ecause t&e) o"ted out of t&e CI*G.
(eferencing t&e CI*G language and t&e general "rinci"les on,&ic& it is ased to determine ,&et&er o"t:out succeeds or not.
*traig&t for,ard c&oice of la, a""roac& Article 5 of t&e CI*G. @o, ,ould t&e court anal)e it under its o,n C/' rules i.e.D ;
875S Could e "er se ineffecti#e no c&oice of la, and if soD t&en
t&e CI*G a""lies WGarcia t&inks ad a""roac&X. Use ; 877 in limited sense to determine most significant
relations&i" for anal)ing t&e c&oice of la, clause Forumansas t&e C/' is out and t&e CI*G
a""lies. Case is Filed in German)
CI*G a""roac& C/' clause is in and >ansas la, a""lies ,&ic&is ad.
C/' a""roac& Because it is a German courtD t&e C articles a""l). Article 3 &a#e t&e "arties made an effecti#e c&oiceS Article 7!80 4&en t&e e-istence of a term is in uestionD )ou
use t&e la, ,&ic& ,ould a""l) under t&e regulation todetermine ,&et&er t&e term e-ists or not i.e.D )ou use t&ela, t&at ,ould a""l) if t&e term e-ists to determine if t&eterm e-ists.
Use >ansas la, to determine ,&et&er >ansas la, ,ould allo,t&e c&oice of la, clause C/' is out and t&e CI*G a""lies,&ic& is good.
. BU*I6**P'A66I6G
*tructuring Contracts @a#e im"ortant terms!"ro#isions s"ecificall) negotiated and argained
for. Could e "rolematic for seller
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=oes not &a#e "o,er to ind U* su""lied unless considered to &a#eeen im"lied.
'a,s of t&e agent
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denied an) furt&er rig&ts to im"ort into t&e countr) and ma) not sim"l)s&ift t&e distriutors&i" to anot&er "art).
=enial of -"ort Pri#ileges . T&e U* "art) s&ould include a "ro#ision t&atallo,s sus"ensionD or "ossil) terminationD of an) oligations to "ro#ide"roducts to fulfill ordersD ,&en t&e U* go#ernment im"oses restrictionson e-"orts for an) reason.
Particularl) im"ortant for agenc) agreements ,&en orders are "laceddirectl) to t&e U* su""lier rat&er t&an ,it& sales from t&e su""l) oft&e foreign distriutor.
stalis&ing a =istriutors&i"!Agenc) in %e-ico T&e Use of a Broker or Intermediar) Corredor/Mediador.
T&e roker
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t&e sale of its o,n "roduct to t&e nation.
Com"ensation Arrangement T&e most common arrangement and referred to as com"ensation or
Eu):ackD ,&ere a "ri#ate firm ,ill sell eui"mentD tec&nolog) ore#en a turn:ke) "lant to a so#ereign nation and agree to "urc&ase a
"ortion of t&e out"ut "roduced from t&e use of t&e eui"ment ortec&nolog). T&e "roducts acuired are freuentl) of marketale ualit) and in
demand in t&e international marketD allo,ing t&e firms to earn a"rofit reselling said "roducts.
*,itc& Trading A de#ice used to alance a ilateral clearing agreement. In a ilateral
clearing arrangement et,een and LD ma) &a#e taken more"roducts from L t&an L &as taken from . In t&is instanceD L ,ill &a#ea Ecredit in its clearing account. In t&e s,itc& tradeD L ,ill located a t&ird "art) interested in
"urc&asing goods from and sustitutes t&e t&ird "art)
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incor"oratedD t&e UCP is inding u"on all "arties unless e-"ressl)modified or e-cluded ) t&e letter of credit.
?irtuall) e#er) letter of credit incor"orates t&e UCP in toda)
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t&e likeli&ood of non"erformance or fraud ) t&e eneficiar).
T&e Basis of *trict =ocumentar) Com"liance From t&e stand"oint of t&e account "art) u)er!im"orterD t&e doctrine
functions as a safeguard against t&e "ossiilit) of dis&onest of t&eeneficiar) seller!e-"orter and some t&ird "art) ,&ose ser#ices t&e
seller mig&t enlist in t&e course of "erforming &is oligations under t&eunderl)ing contract i.e.D carrier. From t&e stand"oint of t&e eneficiar)D u"on notification of t&e o"ening
of a letter of creditD t&e eneficiar) &as am"le o""ortunit) to re#ie, t&eterms and conditions under ,&ic& &e ,ould e entitled to make a dra,. T&e emerging solution seems to e t&at once t&e credit &as een
ad#ised and a "resentation madeD asent amiguit) in t&e creditD t&eeneficiar) must li#e ,it& t&e terms of t&e credit as notified.
From t&e stand"oint of t&e issuing ankD t&e underl)ing "rinci"le of t&eletter of credit transaction is t&e inde"endence of t&e t&ree contracts.
T&e issuing ank does not #erif) t&at all t&e terms of t&e underl)ingcontract &a#e een fulfilled and must "a) on a draft "ro"erl) "resented) a eneficiar)D ,it&out reference to t&e rig&ts or oligations of t&e
"arties to t&e contract. T&e issuing ank need onl) make a faciale-amination of t&e "resenting documents to determine ,&et&er t&eeneficiar) &as com"lied ,it& t&e terms of t&e letter of creditD &o,e#erDthe bank bears the risk of any misinterpretation of t&e eneficiar)Vsdemand for "a)ment.
?oest:Al"ine *tandard and UCP 100
?oest:Al"ine Trading U*A Cor". #. Bank of C&inaFa(%$ Plaintiff ?oest:Al"ine contracted ,it& FTC for t&e su""l) of certain materials.Plaintiff financed t&e transaction t&roug& defendant ank. A letter of credit ,as issuedand #arious miss"ellings and tec&nical errors ,ere "resent on t&e instrument. After t&e"rice of materials c&anged sustantiall)D "laintiff failed to reduce t&e "rice and adis"ute arose ,&ic& in#ol#ed t&e entities and t&e financial instruments e&ind t&e
transaction. PlaintiffVs ank reuested t&at t&e defendant ank &onor t&e letter ofcredit and "a) "laintiff accordingl).H!#") T&e court indicated t&at Uniform Customs and Practices for =ocumentar)Credits ,as on "oint and t&at defendant ,as su""osed to file a timel) notice ofreection ,it& t&e reasons set fort& t&erein. T&e court noted t&at t&is ,as not done.T&e court also &eld t&at t&e s"irit of t&e agreement ,as of im"ortance rat&er t&an an)tec&nical miss"ellings or slig&t errors in t&e letter of credit. T&ereforeD t&e court &eld infa#or of t&e "laintiff.Rea$!"") Banks must e-amine all documents sti"ulated in t&e Credit ,it&reasonale careD to ascertain ,&et&er or not t&e) a""earD on t&eir faceD to e incom"liance ,it& t&e terms and conditions of t&e Credit. Com"liance of t&e sti"ulateddocuments on t&eir face ,it& t&e terms and conditions of t&e Credit s&all edetermined ) international standard anking "ractice as reflected in t&ese Articles.=ocuments ,&ic& a""ear on t&eir face to e inconsistent with one another ,ill e
considered as not a""earing on t&eir face to e in com"liance ,it& t&e terms andconditions of t&e Credit.
T&e ?oest:Al"ine *tandard (eecting t&e notion t&at all of t&e documents s&ould e exactly
consistent in t&eir ,ordingD t&e court relied on an ICC o"inion statingDconsistenc) as used in Article 83a to mean t&at Et&e ,&ole of t&edocuments must obviously relateto t&e same transactionD t&at is tosa)D t&at eac& s&ould ear a relation link ,it& t&e ot&ers on itsface.
23
23
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T&e UCP 100 *tandard (eects t&e strict com"liance test and su""orts com"liance under t&e
rational link test.
Prolem +.8 Gold 4atc& Pens to France
Galleries is a""licant u)er and *&ad) is eneficiar) seller. *e"t $ B6P o"ened a letter of credit for u)er. B6P t&en reuested
%etroank in 6e, Lork to ad#ise seller and confirm t&e credit. *e"t 2+ B6P recei#es tele- from %etro t&at seller "resented
documentsD %etro confirmed t&e documentsD and B6P
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6o original in#oices. Article 85 states t&at a Eank s&all treat as anoriginal an) document earing an a""arentl) original signatureDmarkD stam" or laelHunless t&e document itself indicates t&at it isnot an original.
%arked "ro forma. Under Article 8$fD t&e reuirement of acommercial in#oice in a credit ,ill e &eld to a &ig&er standard of
com"liance. Because B6P reuired Esigned commercial in#oicesDt&ere is a strong case for noncom"liance.
(isk of Transmission rror Article 3+ =isclaimer on Transmission and Translation. Article 35 =isclaimer for Acts of an Instructed Part). Bu)er is liale for t&e transmission error. T&ere is no reason for t&e
confirming ank to "a) t&e issuing ank. @o,e#erD t&ere ma) still ean issue et,een B6P and t&e u)er.
Adeuac)!Timeliness of 6otice
Under Articles 81c and fD t&e first notice of discre"anc) 'C= #.IC= is effect ut t&e second notice no originals and "ro forma is"recluded. Article 81f states t&at a notice of discre"anc) must e "ro#ided
Eno later t&an t&e close of t&e fift& anking da) follo,ing t&e da)of "resentation.
Under UCC ; +:807 t&e "reclusion issue is less clear. T&e "&raseEtimel) notice raises uestions of ,&et&er a second timel) noticerecei#ed ,it&in t&e se#en da)s sti"ulated in susection ,ould eacce"tale or "recluded.
@. F/(IG6C/((UPTP(ACTIC*ACT
Pur"ose of t&e FCPA To "ro&iit "a)ments to foreign officials "ro&iited ) t&e act and toreuire issuers registered maintain accurate financial records t&at ,ouldtend to disclose t&e e-istence of suc& "a)ments.
T&e FCPA does not "ro&iit ries ua ries. T,o im"ortant uestions are +,for ,&at "ur"ose ,as t&e "a)ment
made and +,,&at is t&e magnitude of t&e affect on t&e foreignnation caused ) t&e "a)ments to one of t&e nation
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outside t&e United *tatesD and t&e officials of international organiationsare roug&t ,it&in t&e definition of foreign officials.
T&e Eck&ardt Amendment contained in t&e original FCPA effecti#el)"re#ented t&e "rosecution of em"lo)ees or agents for #iolating t&e FCPAunless t&e domestic concerns or issuers ,ere found to &a#e #iolated t&eAct. @o,e#erD t&e amendment ,as deleted under t&e Trade Act.
:; U.S.C.A. 7
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:; U.S.C.A. 7
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affirmati#e acts to take to "rotect trade secrets. @o, to "rotect "atent in foreign urisdictions "arties could tr) to
re#erse engineer. Jualit) control. @o, to incor"orate im"ro#ements and ,&o controls said
im"ro#ements.
-"ort controls i.e.D tec&nolog) )ou cannot e-"ort to certaincountries. (o)alties &o, com"utedD &o, oftenD etcH %onitoring t&e licensee
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>no,&o,. >no,&o, is commerciall) #aluale kno,ledge. Unlike "atentsD co")rig&ts and trademarksD )ou cannot )
registration otain e-clusi#e rig&ts to kno,&o, once released tot&e communit)D it cannot e retrie#ed.
Protecting kno,&o, is mostl) a function of contractD tort and trade
secrets la,. T&e conomic s"ionage Act of 8991 creates criminal"enalties for
misa""ro"riation of trade secrets for t&e enefit of foreigngovernments or anyone. A trade secret is defined as EfinancialD usinessD scientificD
tec&nicalD economic or engineering information t&at t&e o,ner&as taken reasonale measures to kee" secret and ,&oseEinde"endent economic #alue deri#es from eing closel) &eld.
Trademarks. /taining international trademark "rotection reuires se"arate
registration under t&e la, of eac& nation ,&ere it is soug&t. T&e sco"e of trademark "rotection ma) differ sustantiall) from
countr) to countr). Alt&oug& national trademark sc&emes differD it can e said t&at
generall) a #alid trademark ,ill e "rotected against infringing use. Unlike "atents and co")rig&tsD trademarks ma) e rene,ed
continuousl). T&e "rinci"al U* trademark la,D t&e 'an&am Act of 89$1D &as een
construed to a""l) e-traterritoriall) to foreign licensees engaging indece"ti#e "ractices.
Foreigners ,&o seek a registration ma) e reuired to "ro#e a "riorand #alid E&ome registration and a ne, registration in anot&ercountr) ma) not &a#e an e-istence inde"endent of t&e &ome countr)registration
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co")rig&t rig&ts ut it is essential to federal co")rig&t infringementremedies.
In t&e U*D t&e Co")rig&t Felon) Act of 8992 criminalied all co")rig&tinfringements.
T&e =igital %illennium Co")rig&t Act of 8997 roug&t t&e U* intocom"liance ,it& 4IP/ treaties and created t,o ne, co")rig&t
offenses i for circum#enting tec&nological measures used )co")rig&t o,ners to "rotect t&eir ,orks E&ackingK and ii fortam"ering ,it& co")rig&t management information Edecr)"tion.
International (ecognition of Trademarks Asent an a""ro"riate con#entionD co")rig&t registrations must
e acuired in eac& countr) recognied suc& rig&ts. T&e Uni#ersal Co")rig&t Con#ention of 89+2 "ro#ides for national
treatmentD translation rig&t and ot&er enefits. -cuses foreigners from registration reuirements "ro#ided
notice of a claim of co")rig&t is adeuatel) gi#en. T&e GATT!4T/ and Intellectual Pro"ert) T(IPs
T&e Urugua) (ound accords in 899$ included an agreement ontrade:related intellectual "ro"ert) rig&ts creating a generalreuirement of national and most:fa#ored:nation treatment amongt&e "arties.
T&e T(IPs code co#ers t&e gamut of intellectual "ro"ert). /n "atentsD t&e Paris Con#ention "re#ails "roduct and "rocess
"atents are to e a#ailale for "&armaceuticals and agriculturalc&emicalsD limits are "laced on com"ulsor) licensingD and a general20:)ear "atent term is created.
Infringement and anti:counterfeiting remedies are included in T(IPsDfor ot& domestic and international trade "rotection.
B. 'IC6*I6GAG(%6T* U(/PA6U6I/6
Princi"les of uro"ean Union 'a, Transfers of Tec&nolog)
Concerned aout "ossile anti:com"etiti#e "racticesK t&e U &as aderegulator) agenda ut a licensing transaction ,it& e-clusi#it)and!or territor) "ro#isions seems like a segregation of t&e U e-actl) ,&at t&e)
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iseleD meaning t&at I6(A ,ould ensure t&at its Frenc& marketingorganiation ,ould "re#ent t&e rele#ant #arieties from einge-"orted to German) t&roug& "arallel im"orters.
B) 8952 it ecame a""arent t&at dealers in France ,ere selling t&e#arieties directl) to German traders ,&o ,ere marketing t&e"roducts in reac& of t&e reeder
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ot&er "arties of su""lementar) oligations ,&ic&D ) t&eir natureor according to commercial usageD &a#e no connection ,it& t&esuect of suc& contracts.
2 An) agreements or decisions "ro&iited "ursuant to t&is articles&all e automaticall) #oid.
3 T&e "ro#isions of "aragra"& 8 ma)D &o,e#erD e declared
ina""licale in t&e case of an) agreement or categor) ofagreements et,een undertakingsD an) decision or categor) ofdecisions ) associations of undertakingsDan) concerted "ractice orcategor) of concerted "racticesD
,&ic& contriutes to improving the production ordistribution of goods or to promoting technical oreconomic progress,&ile allo,ing consumers a fair s&areof t&e resulting enefitD and ,&ic& does not
a im"ose on t&e undertakings concerned restrictions ,&ic&are not indis"ensale to t&e attainment of t&ese oecti#esK
afford suc& undertakings t&e "ossiilit) of eliminatingcom"etition in res"ect of a sustantial "art of t&e "roducts in
uestion.
Tra"$1er !1 Te(*"!!)8 Re)'a%!" 772@2004
Pro#ides guidance on &o, to fall under t&e e-em"tion "ro#isions ofArticle 783.
=istinguis&es agreements et,een t&ose of Ecom"eting andEnoncom"eting "artiesD t&e latter eing treated less strictl) t&an t&eformer. Parties are deemed com"eting if t&e) com"ete ,!o infringing
eac& ot&er
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Acti#e selling restrictions on licensees can e utiliedD along,it& "assi#e selling restraints in territories reser#ed to t&elicensor or for two yearsanot&er licensee.
Inclusion of ot&er license terms can also cause a loss of e-em"tion. *uc& clauses include mandator) grant:anks or assignments of
se#erale im"ro#ements ) licenseesD e-ce"ting none-clusi#e
license:acksK no:c&allenges ) t&e licensee of t&e licensor
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'icenses et,een com"etitors "ose a great risk to com"etition t&anlicenses et,een non:com"etitors.
Cross licensing!reci"rocal license "oses a greater risk. If )ou &a#e "ro#isions listed in Article + of (egulation 552!200$D
t&ose "ro#isions ,ill not e co#ered ) t&e safe &aror butt&e entireagreement ma) ot&er,ise e sufficient.
Prolem 9.$ =rill Bit in German) =rill Bit %anufacturing Co. ,ants to enter into a license agreement ,it&
6ord%etall. 'aragraph ( " )rant of $icense
=B grants 6% e-clusi#e rig&ts in German) /k under Uregulations.
=B grants 6% t&e tentati#e rig&ts to sell outside of German)e-ce"t t&at it ma) not sell in France or t&e U>.
=B grants t&at no ot&er distriutors ,ill e allo,ed to acti#el) sellin German). As et,een =B and 6%D t&e license sa)s t&at 6% &as
German) and t&e rest of uro"e is t&e territor) of =B t&is isok.
If distriutors&i"s in France and U> are licenseesD t&en )oucannot lock "assi#e sales unless t&e) are in t&e first t,o)ears of t&eir sales.
If t&e distriutors are not licenseesD t&en t&e) can lock acti#esales if t&e distriutors are licenseesD t&e) can lock acti#esales as et,een t,o licensees.
Agreement language regarding E"rices to e estalis&ed ) =B,ould &a#e to e c&anged to ring it in line ,it& t&e regulationonl) allo,ed to set a ma- "rice or recommend a "rice.
'aragraph * " %o Competition +rrangements 6ot going to create an) ot&er licensees ut =B is reser#ing t&e
rig&t for itself to sell into German). 'aragraph , " )rant -ack 'ooks like a te-took #iolation of Article + cannot get e-clusi#e
license. 6o incenti#e to 6% to do an) researc& on t&e licensed
"roduct. Could "us& for a non:e-clusi#e license for im"ro#ements. If t&e im"ro#ement doesn
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roadest "rotection of intellectual "ro"ert) ,ill "re#ail.
General /ligations T&ere is a general dut) to "rotect intellectual "ro"ert) adeuatel)
and effecti#el)D as long as arriers to legitimate trade are notcreated.
At a minimum t&is necessitates ad&erence to C&a"ter 85 of t&e6AFTA agreement. Also reuires ad&erence to sustanti#e "ro#isions of t&e Gene#a
Con#ention of P&onogramsK Berne Con#ention for t&e Protectionof 'iterar) and Artistic 4orksK Paris Con#ention for t&e Protectionof Industrial Pro"ert)K and International Con#ention for t&eProtection of 6e, ?arieties of Plants.
Process of enforcement is also addressedD reuiring fairD euitaleand not undul) com"licatedD costl) or time:consuming enforcement"rocedures.
Patents Article 8509 of 6AFTA assures t&e a#ailailit) of "atents in all fields
of tec&nolog). All "atent rig&ts must e granted ,it&out discrimination as to
field of tec&nolog)D countr) of originD and im"ortation or local"roduction of t&e rele#ant "roducts.
*ince t&e U* a,ards "atents on a first:to:in#ent asisD acti#ities inCanada and %e-ico no, count for "ur"oses of estalis&ing t&edate of an in#ention.
6AFTA s"ecificall) reser#es t&e rig&t to den) "atents for diagnosticDt&era"eutic and surgical met&odsD transgenic "lants and animalsDand for essentiall) iologic "rocesses t&at "roduce "lants or animals.
If commercial e-"loitation mig&t endanger "ulic moralit) or statesecurit)D no "atents need e granted.
6o mention is made of t&e rig&t to lock infringing or unaut&oriedim"orts.
T&oug& not aut&oried under U* la,D go#ernments ma) allo, limitednone-clusi#e usage ,it&out t&e o,ner
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international la, in defining t&e minimum standard of treatment to,&ic& foreign in#estors are entitled.
EFair and euitale treatment and Efull "rotection and securit) are alsono, defined.
6AFTA:Plus &as also mo#ed into t&e Internet age "rotection of domainnames and ad&erence to t&e 4IP/ Internet treaties are sti"ulated.
P&armaceutical "atent o,ners otain e-tensions of t&eir "atents tocom"ensate for dela)s in t&e a""ro#al "rocess and greater control o#ert&eir test dataD making it &arder for generic com"etition to emerge. T&e) also gain Elinkage ,&ic& means t&at local drug regulators must
make sure generics are not "atent:infringing efore t&eir release. Anti:dum"ing and counter#ailing dut) la,s remain a""licale ut
a""eals from administrati#e determinations are taken in national courtsDnot i:national "anels.
T&e U* &as generall) used its le#erage ,it& small trade "artners in t&eAmericas to otain more "referential treatment and e-"anded "rotectionfor its goodsD ser#icesD tec&nolog) and in#estors. It &as gi#en u"relati#el) little in returnD for e-am"le a modest increase in agriculturalmarket o"enings.
=. 'IC6*I6GI6T/'ATI6A%(ICA
=o Antitrust Guidelines General Princi"les.
Antitrust concerns ma) arise ,&en a licensing arrangement &armscom"etition among entities t&at ,ould &a#e een actual or likel)"otential com"etitors in a rele#ant market in t&e asence of t&elicense entities in a E&oriontal relations&i".
A restraint in a licensing arrangement ma) &arm suc& com"etition ifit facilitates market di#ision or "rice:fi-ing. 'icense restrictions ,it&res"ect to one market ma) &arm suc& com"etition in anot&er market) anti:com"etiti#el) foreclosing access toD or significantl) raising t&e"rice ofD an im"ortant in"utD or ) facilitating coordination to increase"rice or reduce out"ut.
%arkets Affected ) 'icensing Arrangements 'icensing arrangements raise concerns under t&e antitrust la,s if
t&e) are likel) to affect ad#ersel) t&e "ricesD uantitiesD ualitiesD or#arieties of goods and ser#ices eit&er currentl) or "otentiall)a#ailale.
T&e Agencies ,ill anal)e t&e licensing agreementD t&e rele#antmarket indicatorsD and all surrounding facts to determine if t&e"ro#isions create an anticom"etiti#e result in an) of t&e follo,ingmarkets Goods %arkets. =oes it decrease t&e numer of firms selling t&e
"roductS Tec&nolog) %arkets. =oes it reduce com"etition ) decreasingt&e numer of firms ,it& t&e tec&nolog) ca"ale ofmanufacturing t&e "roductS
Inno#ation %arkets. =oes it decrease t&e researc& andde#elo"ment conducted to etter manufacture t&e "roductS
@oriontal and ?ertical (elations&i"s T&e Agencies ordinaril) ,ill treat a relations&i" et,een a licensor
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and its licenseesD or et,een licenseesD as horizontal ,&en t&e),ould &a#e een actual or likel) "otential com"etitors in a rele#antmarket in t&e asence of t&e license. T&e e-istence of a &oriontal relations&i" et,een a licensor and
its licensees does notD in itselfD indicate t&at t&e arrangement isanticom"etiti#e.
A licensing arrangement &as a vertical component,&en it affectsacti#ities t&at are in a com"lementar) relations&i"D as is t)"icall) t&ecase in a licensing arrangement. For e-am"leD t&e licensorVs "rimar) line of usiness ma) e in
researc& and de#elo"mentD and t&e licenseesD as manufacturersDma) e u)ing t&e rig&ts to use tec&nolog) de#elo"ed ) t&elicensor.
Frame,ork for #aluating 'icensing (estraints In t&e #ast maorit) of casesD restraints in intellectual "ro"ert)
licensing arrangements are evaluated under the rule of reason. T&e AgenciesV general a""roac& in anal)ing a licensing restraint
under t&e rule of reason is to inuire ,&et&er t&e restraint is
likel) to &a#e anticom"etiti#e effects andD if soD ,&et&er t&erestraint is reasonal) necessar) to ac&ie#e "ro:com"etiti#eenefits t&at out,eig& t&ose anticom"etiti#e effects.
A""lication of t&e rule of reason generall) reuires acom"re&ensi#e inuir) into market conditions. If t&e Agencies conclude t&at a restraint &as no likel)
anticom"etiti#e effectsD t&e) ,ill treat it as reasonaleD,it&out an elaorate anal)sis of market "o,er or t&e
ustifications for t&e restraint. If a restraint faciall) a""ears to e of a kind t&at ,ould al,a)s
or almost al,a)s tend to reduce out"ut or increase "ricesDand t&e restraint is not reasonal) related to efficienciesD t&eAgencies ,ill likel) c&allenge t&e restraint ,it&out an
elaorate anal)sis of "articular industr) circumstances. In some casesD &o,e#erD t&e courts conclude t&at a restraintVs
Enature and necessar) effect are so "lainl) anticom"etiti#e t&at its&ould e treated as unlawful per seD ,it&out an elaorate inuir)into t&e restraintVs likel) com"etiti#e effect. Among t&e restraints t&at &a#e een &eld "er se unla,ful are i
naked "rice:fi-ingD ii out"ut restraintsD iii market di#isionamong &oriontal com"etitorsD i# certain grou" o)cotts and #resale "rice maintenance.
To determine ,&et&er a "articular restraint in a licensingarrangement is gi#en "er se or rule of reason treatmentD t&eAgencies ,ill assess ,&et&er t&e restraint in uestion can ee-"ected to contriute to an efficiency&enhancing integration of
economic activity. A restraint in a licensing arrangement ma) furt&er suc&
integration )D for e-am"leD aligning t&e incenti#es of t&elicensor and t&e licensees to "romote t&e de#elo"ment andmarketing of t&e licensed tec&nolog)D or ) sustantiall)reducing transactions costs.
=o : #aluation of 'icensing Arrangements Under t&e (ule of (eason %arket *tructureD CoordinationD and Foreclosure
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4&en a licensing arrangement affects "arties in a &oriontalrelations&i"D a restraint in t&at arrangement ma) increase t&e risk ofcoordinated "ricingD out"ut restrictionsD or t&e acuisition ormaintenance of market "o,er. @arm to com"etition also ma) occur ift&e arrangement "oses a significant risk of retarding or restrictingt&e de#elo"ment of ne, or im"ro#ed goods or "rocesses.
Potential for com"etiti#e &arm de"ends in "art on t&e degree ofconcentration inD t&e difficult) of entr) intoD and t&eres"onsi#eness of su""l) and demand to c&anges in "rice in t&erele#ant markets.
4&en t&e licensor and licensees are in a #ertical relations&i"D t&eAgencies ,ill anal)e ,&et&er t&e licensing arrangement ma) &armcom"etition among entities in a &oriontal relations&i" at eit&er t&ele#el of t&e licensor or t&e licenseesD or "ossil) in anot&er rele#antmarket. @arm to com"etition from a restraint ma) occur if it anti:
com"etiti#el) forecloses access toD or increases com"etitorsVcosts of otainingD im"ortant in"utsD or facilitates coordination toraise "rice or restrict out"ut.
T&e risk of anti:com"etiti#el) foreclosing access or increasingcom"etitorsV costs is related to t&e "ro"ortion of t&e marketsaffected ) t&e licensing restraintK ot&er c&aracteristics of t&erele#ant marketsD suc& as concentrationD difficult) of entr)D andt&e res"onsi#eness of su""l) and demand to c&anges in "rice int&e rele#ant marketsK and t&e duration of t&e restraint.
@arm to com"etition from a restraint in a #ertical licensingarrangement also ma) occur if a licensing restraint facilitatescoordination among entities in a &oriontal relations&i" to raise"rices or reduce out"ut in a rele#ant market.
'icensing Arrangements In#ol#ing -clusi#it) A licensing arrangement ma) in#ol#e e-clusi#it) in t,o distinct
res"ects. T&e licensor ma) grant one or more exclusive licensesD ,&ic&
restrict t&e rig&t of t&e licensor to license ot&ers and "ossil) alsoto use t&e tec&nolog) itself. Generall)D an e-clusi#e license ma) raise antitrust concerns
onl) if t&e licensees t&emsel#esD or t&e licensor and itslicenseesD are in a &oriontal relations&i".
A second form of e-clusi#it)D exclusive dealingD arises ,&en alicense "re#ents or restrains t&e licensee from licensingD sellingDdistriutingD or using com"eting tec&nologies. T&e Agencies ,ill focus on t&e actual "ractice and its effectsD
not on t&e formal terms of t&e arrangement.
fficiencies and ustifications If t&e Agencies conclude t&at t&e restraint &asD or is likel) to &a#eD an
anticom"etiti#e effectD t&e) ,ill consider ,&et&er t&e restraint isreasonal) necessar) to ac&ie#e "ro:com"etiti#e efficiencies. If t&erestraint is reasonal) necessar)D t&e Agencies ,ill alance t&e "ro:com"etiti#e efficiencies and t&e anticom"etiti#e effects to determinethe probable net effect on competitionin eac& rele#ant market. T&e e-istence of "ractical and significantl) less restricti#e
alternati#es is rele#ant to a determination of ,&et&er a restraint
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is reasonal) necessar). T&e duration of t&e restraint can e an im"ortant factor in
determining ,&et&er it is reasonal) necessar) to ac&ie#e t&e"utati#e "ro:com"etiti#e efficienc).
A restraint t&at ma) e ustified ) t&e needs of a ne, entrantDfor e-am"leD ma) not &a#e a "ro:com"etiti#e efficienc)
ustification in different market circumstances.
Antitrust E*afet) None Asent e-traordinar) circumstancesD t&e Agencies ,ill not c&allenge
a restraint in an intellectual "ro"ert) licensing arrangement if i t&erestraint is not faciall) anticom"etiti#e and ii t&e licensor and itslicensees collecti#el) account for no more t&an 20R of eac& rele#antmarket significantl) affected ) t&e restraint. 4&et&er a restraint falls ,it&in t&e safet) one ,ill e determined
) reference onl) to goods markets unless t&e anal)sis of goodsmarkets alone ,ould inadeuatel) address t&e effects of t&elicensing arrangement on com"etition among tec&nologies or inresearc& and de#elo"ment.
Asent e-traordinar) circumstancesD t&e Agencies ,ill not c&allengea restraint in an intellectual "ro"ert) licensing arrangement t&at mayaffect competition in a technology market if i t&e restraint is notfaciall) anticom"etiti#e and ii t&ere are four or more inde"endentl)controlled tec&nologies in addition to t&e tec&nologies controlled )t&e "arties to t&e licensing arrangement t&at ma) e sustitutalefor t&e licensed tec&nolog) at a com"arale cost to t&e user.
Asent e-traordinar) circumstancesD t&e Agencies ,ill not c&allengea restraint in an intellectual "ro"ert) licensing arrangement t&at mayaffect competition in an innovation marketif i t&e restraint is notfaciall) anticom"etiti#e and ii four or more inde"endentl) controlledentities in addition to t&e "arties to t&e licensing arrangement"ossess t&e reuired s"ecialied assets or c&aracteristics and t&e
incenti#e to engage in researc& and de#elo"ment t&at is a closesustitute of t&e researc& and de#elo"ment acti#ities of t&e "artiesto t&e licensing agreement
=o A""lication of General Princi"les @oriontal (elations&i"s.
T&e e-istence of a restraint in a licensing arrangement t&at affects"arties in a &oriontal relations&i" a E&oriontal restraint does notnecessaril) cause t&e arrangement to e anticom"etiti#e as t&earrangement ma) result in integrati#e efficienciesD arising fromD fore-am"leD from t&e realiation of economies of scale and t&eintegration of com"lementar) researc& and de#elo"mentD"roductionD and marketing ca"ailities.
-clusi#e =ealing. In determining ,&et&er an e-clusi#e dealing arrangement is likel) to
reduce com"etition in a rele#ant marketD t&e Agencies ,ill take intoaccount t&e e-tent to ,&ic& t&e arrangement i "romotes t&ee-"loitation and de#elo"ment of t&e licensorVs tec&nolog) and iianti:com"etiti#el) forecloses t&e e-"loitation and de#elo"ment ofD orot&er,ise constrains com"etition amongD com"eting tec&nologies. T&e likeli&ood t&at e-clusi#e dealing ma) &a#e anticom"etiti#e
effects is relatedD inter aliaD to t&e degree of foreclosure in t&e
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rele#ant marketD t&e duration of t&e e-clusi#e dealingarrangementD and ot&er c&aracteristics of t&e in"ut and out"utmarketsD suc& as concentrationD difficult) of entr)D and t&eres"onsi#eness of su""l) and demand to c&anges in "rice in t&erele#ant markets.
Grant:Back Pro#isions.
Agencies ,ill e#aluate a grant:ack "ro#ision under t&e rule ofreasonD considering its likel) effects in lig&t of t&e o#erall structure oft&e licensing arrangement and conditions in t&e rele#ant markets. If t&e Agencies determine t&at a "articular grant:ack "ro#ision is
likel) to reduce significantl) licenseesV incenti#es to in#est inim"ro#ing t&e licensed tec&nolog)D t&e Agencies ,ill consider t&ee-tent to ,&ic& t&e grant:ack "ro#ision &as offsetting "ro:com"etiti#e effectsD suc& as i "romoting dissemination oflicenseesV im"ro#ements to t&e licensed tec&nolog)D iiincreasing t&e licensorsV incenti#es to disseminate t&e licensedtec&nolog)D or iii ot&er,ise increasing com"etition and out"ut ina rele#ant tec&nolog) or inno#ation market.
=ecision 6o. 298 Andean Common %arket. -"ressed to encourage t&e gro,ing alignment of t&e economic "olicies
of t&e Andean Countries in an effort to attain more efficient andcom"etiti#e economies t&roug& lieraliation and t&e o"ening to tradeand international in#estmentD along t&e lines of eac& countries< interestDand t&e institution of economic rationalit) grounded in "ri#ate initiati#eDfiscal disci"line and a rescaled and effecti#e state.
Article 83 . Contracts for t&e im"ortation of tec&nolog) must contain clauses
aout at least t&e follo,ing matters a identification of t&e "artiesand e-"ress indication of t&eir nationalit) and residenceK identification of t&e met&ods used to transfer t&e im"orted
tec&nolog)K c contract "rices of eac& of t&e elements in#ol#ed int&e transfer of tec&nolog)K and d determination of t&e effecti#e"eriod of t&e contracts.
Article 8$ . In order to register transfer of tec&nolog)D trademark or "atent
contractsD %emer Countries a8 5ear " "# t&at t&osecontracts not contain t&e follo,ing a Clauses ) #irtue of ,&ic& t&e su""l) of tec&nolog) or t&e use
of a trademark ears ,it& it t&e oligation of t&e reci"ientcountr) or enter"rise to acuireD from a gi#en sourceD ca"italeui"mentD intermediate "roductsD ra, materials or ot&ertec&nologiesD or to use on a "ermanent asis "ersonnel indicated
) t&e enter"rise su""l)ing t&e tec&nolog)K Clauses ) #irtue of ,&ic& t&e enter"rise selling t&e
tec&nolog) or enter"rise granting use of a trademark reser#est&e rig&t to set sale or resale "rices for t&e "roducts t&at aremanufactured using t&at tec&nolog)K
c Clauses t&at contain restrictions on t&e #olume and structureof "roductionK
d Clauses t&at "ro&iit use of com"eting tec&nologiesK e Clauses t&at estalis& a total or "artial "urc&ase o"tion in fa#or
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of t&e tec&nolog) su""lierK f Clauses t&at com"el t&e tec&nolog) u)er to transfer to t&e
su""lier all suc& in#entions or im"ro#ements as ma) e otainedt&oug& use of t&at tec&nolog)K
g Clauses t&at reuire t&e "a)ment of ro)alties to t&e &olders of"atents or trademarks for "atents or trademarks t&at are not
used or &a#e e-"iredK and & /t&er Clauses &a#ing an eui#alent effect.
-ce"t in s"ecial cases t&at &a#e een dul) udged ) t&ecom"etent national agenc) of t&e reci"ient countr)D clauses"ro&iiting or limiting in an) ,a) t&e e-"ort of t&e "roductsmanufactured using t&e res"ecti#e tec&nolog) s&all not eacce"ted.
Article 8+ . In t&e degree to ,&ic& intangile tec&nological contriutions do not
constitute ca"ital in#estmentsD t&e) s&all grant t&e rig&t to recei#ero)altiesD in kee"ing,it& %emer Countries legislation.
T&e accrued ro)alties ma) e ca"italiedD "ursuant to t&e terms oft&is (egimeD after "a)ment of t&e ta-es due. 4&en t&ese contriutions are su""lied to a foreign enter"rise ) its
"arent cor"oration or ) anot&er ranc& of t&e same "arentcor"orationD t&e "a)ment of ro)alties ma) e aut&oried in cases
udged efore&and ) t&e com"etent national agenc) of t&e reci"ientcountr).
A""lication of Article 8$ of =ecision 6o. 298 In order to determine ,&et&er Article 8$ a""lies to an agreementD
)ou ,ould need to kno, ,&et&er i t&e &ost nation is a "art) to t&eAndean communit) and ii &as t&e &ost nation &as enacted adomestic la, t&at takes suc& "ro#ision into account.
Prolem 3.0 'icensing to Guatador 6ort& American firm &as de#elo"ed a "rocess for making small
electronic com"onents and ,ants to enter into a licensing agreement,it& a 'atin American firm engaged in similar ,ork. An e-clusi#e license ) t&e licensor.
/k under =ecision 6o. 298 ecause t&e licensee ma) onl) sellDmanufacture and use t&e license in Guatador.
'imitation on e-"orts. *"ecificall) "ro&iited under Article 8$. %a) also e "ro&iited under =o guidelines< rule of reason
a""roac&.
Grant:ack "ro#isions. Pro&iited under =ecision 6o. 298 ecause it does not allo, t&elicensee to use its o,n im"ro#ements.
(o)alties. %a) #iolate Article 8$g and Article 8+.
Tec&nical assistance. In accordance ,it& res"ecti#e national legislationD t&e agreement
must e registered ,it& t&e com"etent national agenc) of t&eres"ecti#e %emer Countr).
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6on:com"etition "ro#isions. Pro&iited under Article 8$d ut ,ould also need to e-amine
national la,s. Termination.
Agreement must include #alid termination "ro#isions.
FOREIGNINVESTMENT
A. =I(CTI6?*T%6T
T&e 'ifec)cle A""roac& to Foreign In#estment T&e natural "rogression from sales of goods licensing foreign direct
in#estment. ntr) /"erations Termination!4it&dra,al.
ntr) *tage 4&ere to in#estS
Ta- and regulator) issues. *ocial stailit) i.e.D lo, ,ages can mean &ig& social unrest.
urisdiction &as &istor) of nationaliing assets or industriesS Trade la, i.e.D &o, "roduct is treated ased on ,&ere it ,as
manufactured. (ules of /rigin "roducts need to e transformedD not ust
assemled. Jualit) of life issues for officers!em"lo)ee of t&e cor"oration. /"erational Code t&e la, as its ,ritten #. &o, it actuall)
o"erates. 4&at t)"e of entit) to estalis&S
Generall) et,een large "ulicall) traded AGD *A and P'C #.small "ri#atel) &eld com"an) Gm@D *A('D P'C. Also &a#e &)rids like *:cor"s in t&e U* or t&e *A* in France.
/"erating as a susidiar) or as a ranc&. >ee"ing costs se"arated in t&e susidiar) #. s"reading t&e
losses. If "rolem on e-am &as not indicated ,&ic& t)"e t&e client
&as c&osenD it is ,ort& discussing "ros!cons of eac& o"tion. /"erating as a oint #enture. /"erating in#estment as an acuisition or a EgreenfieldS
=ifferent foreign in#estment la,s for acuisitions #. creatingne, o""ortunities.
Acuisition ma) trigger an anti:com"etition re#ie,.
/"erational *tage %inimiing liailit).
Ta-ation i.e.D ,orld,ide ta-ationD doule ta-ation. Currenc) e-c&anges and a#ailailit). Transfer "ricing
%ani"ulating "rices et,een su!"arent to otain artificialad#antages.
Transferring income to otain etter ta- treatment
Termination!4it&dra,al *tage (egulations can e urdensome ,&en tr)ing to ,it&dra, cor"orate
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assets. Foreign treatment if in#estment enters into ankru"tc). Parent making secured loans to su rat&er t&an ust infusing ca"ital.
T&e /"erational Code T&e o"erational code consists of t&e un,ritten regulations and decisions
and formal ,ritten regulations and decisions ut not "ulicall) a#ailaleor disco#erale.
N.B.T&e o"erational code is al,a)s at #ariance ,it& t&e ,ritten la,sDut it must not de#iate from t&e ,ritten la,s so e-tensi#el) t&at itgenerates so muc& uncertaint) as to reduce foreign in#estor confidencein t&e regulator) structure.
/"eration and ffect of t&e Code An indirect #ariance e-ists ,&en "ositi#e statements of t&e ,ritten
foreign in#estment la, are conditioned ) e-ce"tion "ro#isions utt&e go#ernment routinel) grants suc& e-ce"tions t&at t&e "ositi#e
la, ecomes a nullit). It reflects t&e &ost nation
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B. '/CATI/6/FI6?*T%6T
erseering B? #. 6ordic Construction Com"an) Baumanagement Gm@ erseeringD a com"an) incor"orated in t&e 6et&erlandsD "urc&ased a
"iece of land in =usseldorf for usiness!in#estment "ur"oses. Itcontracted ,it& 6CC to refuris& a "arking garage and &otel on t&e site.6CC "erformed t&e ,ork ut erseering claimed t&at t&ere ,ere some
"rolems ,it& t&e ualit) of t&e ,ork. In t&e interimD t,o Germancitiens "urc&ased all of t&e s&ares of erseering.
erseering roug&t suit against 6CC ut t&e German court &eld t&att&e) did not &a#e legal ca"acit) in German) andD conseuentl)D couldnot ring legal "roceedings t&ere. T&e German &ig& court e#entuall)affirmed t&e decision to dismiss erseering
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retain t&e "lace of incor"orationingdom =G International ,is&es to locate a "lant and &a#e t&e management seat
of its com"an) in German) ut ,ould greatl) "refer t&e entit) to ego#erned ) U> com"an) la,. T&e &oldings of t&e C lea#e unans,ered t&e e-tent to ,&ic& a
cor"oration incor"orated outside a %emer *tate ma) e suect tocor"orate la,s of t&e %emer *tate ,it&out #iolating t&e U freedom
of estalis&ment rules. Under t&e current German conflicts rulesD ,orker codetermination
regulations are not a""licale to foreign cor"orations ut t&ere isrene,ed "ressure to amend t&at #ie, and include cor"orationsincor"orated in anot&er %emer *tate.
Incor"orate in =ela,areS T&e U* is a "art) to a Friends&i"D Commerce and 6a#igation Treat)
,it& German) ,&ic& seems to gi#e an) U* cor"oration legal status inGerman). In 2003 and 200$D t&e German Bundesgeric&ts&of decidedt&at a Florida and a =ela,are cor"orationD res"ecti#el)D ,ere entitledto &a#e t&eir udicial status recognied in German). 4&ile t&e decisions do not ans,er ,&et&er t&ere must e some
greater link ,it& t&e state of incor"oration t&an mereincor"orationD it seems clear t&at an) reuired greater link doesnot e-tend to &a#e its "rinci"al "lace of usiness in t&at state.
C. C/=T(%I6ATI/6
Codetermination ) 4orkers in German nter"rises T&e Codetermination Act of 8951.
%andates t&e formation of a su"er#isor) oard com"osed of +0Rs&are&olders< and +0R em"lo)ees< re"resentati#es for all usinessorganiations regularl) em"lo)ing more t&an 2D000 em"lo)ees.
At least one enter"rise ,orkerD one salaried em"lo)ee and onee-ecuti#e em"lo)ee must e electedD and t&e numer of
re"resentati#es from eac& grou" must reflect t&e actual "ro"ortion ofeac& grou" to t&e total ,ork force. =e"ending on t&e sie of t&e su"er#isor) oardD t,o or t&ree
seats are reser#ed for t&e unions re"resented in t&e enter"rise. T&e codetermination rules are not e-tended to management ut
t&e unions do e-"ect t&at t&e elected laor relations director ,illeno) t&e confidence of t&e em"lo)ee re"resentati#es.
T&e 4orks Constitution Act of 89+2. %andates t&at t&e su"er#isor) oard of e#er) stock cor"oration: and
$+
$+
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of closed cor"orations ,it& more t&an +00 em"lo)ees e di#idedone t&ird must e a""ointed ) t&e em"lo)eesD none of t&em ) t&eunionD and t,o t&irds are elected ) s&are&olders.
1+mendments in (;;3 made codetermination applicable for the+) only if there are more than .
T&e 4orks Constitution Act of 8952. %andates t&at E,orks councils e elected in all estalis&ments or"lants of usiness organiations ,it& fi#e or more "ermanentem"lo)ees ualified to #ote.
4orks council is elected ) all em"lo)ees "artnersD s&are&oldersDdirectors and e-ecuti#es are not regarded as em"lo)ees under t&eAct.
T&e ,orks council &as a mandator) codetermination rig&t in anumer of instances Social Matters. T&e ,orks council &as a #oice in t&e formal
conditions of ,orkD e.g. commencement and termination of t&edail) ,orking &oursD timeD "lace and form of "a)mentK measuresfor t&e "re#ention of unem"lo)mentD accidentsD occu"ational
diseasesD etcH To t&e e-tent a matter is not com"letel) settled ) a
collecti#e argaining agreementD t&e ,orks council &asadditional influence regarding remuneration.
'ersonal Matters.T&e ,orks council must e notified efore eac&la)off or dismissalD ,&et&er #oluntar) or e-ce"tionalD and isentitled to reuest a &earing. If t&e ,orks council &as not eennotified in ad#anceD t&e la)off or dismissal is #oid and consentcannot e secured after,ards.
-usiness Modifications. In enter"rises ,it& more t&an t,ent)em"lo)eesD t&e em"lo)er must inform t&e ,orks council of an)"ro"osed modificationsD ,&ic& ma) entail sustantial "reudice tot&e em"lo)eesD or a large "ortion t&ereof.
Among t&e modifications enumerated are reductions ofo"erations or closure of ,&ole de"artments of t&e "lantDtransfer of de"artments of t&e estalis&mentD and im"ortantc&anges in t&e organiationD "ur"ose or "lant of t&eenter"rise.
T&e U E4orks Council =irecti#e 6o. 9$!$+. Its rules are mandator) in all memer states. (euires council in com"anies ,it& more t&an 8D000 em"lo)ees
o"erating ,it& 8+0 em"lo)ees in at least t,o memer states. m"lo)ees must e gi#en information on and an o""ortunit) to
res"ond to a road range of to"ics including t&e firm
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"artici"ation in management on U> com"anies. T&e 8979 draft regulation included t,o main "ro"osals i t&e creation
of a uro"ean com"an) to e called a societas euro"eae and ii a"ro"osed com"lementing directi#e ,&ic& co#ered ,orkers< "artici"ation. T&oug& se"aratedD t&e Commission stated t&at t&e directi#e ,as an
indissociale com"lement to t&e regulation and t&at t&e t,o &ad to
e a""lied concomitantl). T&e 8997 "ro"osal in#ol#ed a dual s)stem. 4&ere em"lo)ee
in#ol#ement in management ,as not "resent ,&en a * ,as formedDsuc& "artici"ation ,ould not e reuired. But ,&ere suc& "artici"ationdid e-ist efore a * ,as estalis&edD t&ere ,ould &a#e to e"artici"ation consistent ,it& national "ractices.
In 2008 t&e C issued t&e uro"ean Com"an) *tatute and related=irecti#e effecti#e 200$. An * is ale to o"erate on a uro"ean:,ide asis and is go#erned
) Communit) la, a""licale in all %emer *tates. * com"anies are still registered in eac& %emer *tates as ,it&
com"anies estalis&ed under national la,D &o,e#erD t&e registrationof eac& * is also "ulis&ed in t&e C
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Concentrations ,&ic&D ) reason of t&e limited market s&are of t&eundertakings concernedD are not liale to im"ede effecti#e com"etitionma) e "resumed to e com"atile ,it& t&e common market. 4it&out"reudice to Articles 78 and 72 of t&e Treat)D an indication to t&is effecte-istsD in "articularD ,&ere t&e market s&are of t&e undertakingsconcerned does not e-ceed 2+ R eit&er in t&e common market or in a
sustantial "art of it.
C %erger (egulation 6o. 839!200$ (egulation #ests in t&e Commission t&e e-clusi#e "o,er to o""ose large:
scale communit) dimension mergers and acuisitions of com"etiti#econseuence to t&e common market.
T&e Commission e#aluates mergers in terms of t&eir com"atiilit) ,it&t&e common market. ffecti#e %a) 8D 200$D t&e Commission focuses on "ro&iiting
mergers t&at Esignificantl) im"ede effecti#e com"etition ) creatingor strengt&ening dominant "ositions.
A dominant "osition is defined ) C case la, to mean t&at )ou caneffecti#el) e&a#e inde"endentl) ,it&out res"ect to an) com"etition.
Commission does &a#e some Eteet& &o,e#er. If )ou ignore reuested c&angesD commission can fine )ou 80R of
,orld,ide sales for eac& entit) in#ol#ed. If )ou don
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Article 82 Targeted To,ard 'arge %ergers ,it& a 'arge %arketPresence A concentration &as a Communit) dimension ,&ere
a t&e comined aggregate ,orld,ide turno#er of all t&e firmsconcerned is more t&an Y +D000 millionK and
t&e aggregate Communit):,ide turno#er of eac& of at leastt,o of t&e firms concerned is more t&an Y 2+0 million
U"e$$eac& of t&e firms concerned ac&ie#es more t&an t,o:t&irds of its aggregate Communit):,ide turno#er ,it&in one andt&e same %emer *tate.
Article 83 Targeted To,ard *maller %ergers A concentration t&at does not meet t&e t&res&olds laid do,n in
"aragra"& 2 &as a Communit) dimension ,&ere
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$9
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a t&e comined aggregate ,orld,ide turno#er of all t&e firmsconcerned is more t&an Y 2D+00 millionK
in eac& of at least t&ree %emer *tatesD t&e cominedaggregate turno#er of all t&e firms concerned is more t&an Y 800millionK
c in eac& of at least t&ree %emer *tates included for t&e
"ur"ose of "oint D t&e aggregate turno#er of eac& of at leastt,o of t&e firms concerned is more t&an Y 2+ mill