What Every Business Lawyer Should Know About International Transactions

Transcription

1 What Every Business Lawyer Should Know About International Transactions Presenter M. Angella Castille, Faegre Baker Daniels LLP February 19, 2015 BUS General Credit Title 9 Update: A Review of the New Specialized Driving Privileges and Other Traffic Laws (SSF264) February 24, 2015, Noon 1 p.m. IndyBar Education Center The speaker will review the new law creating specialized driving privileges, including who qualifies and how to help your client request driving privileges. He will also review some of the major changes in Title 9 taking effect January 1, Business Law Skills Series: Mergers & Acquisitions (BUS370) March 18, 2015, Noon 1 p.m. IndyBar Education Center Check out this course for practical insight into the merger and acquisition process. Each step will be covered and discussed, starting with due diligence and following through to post-closing matters. Special attention will be given to proper risk allocation at each step of the process. Wealth Management Planning for Outgoing Business Owners (BUS470) April 21, 2015, 4 5 p.m. TBD Your client needs a succession plan, or foresees selling their business. You need to know how to help, and this session will give you the tools you need to do it! This program will provide information on how to prepare your clients for those business processes prior to the transaction. Arm yourself with information from this course so you can aid your client with their case.

2 Business Law Skills Series: What Every Business Lawyer Should Know About International Transactions Presentation to Indianapolis Bar Association by Angella Castille February 19, 2015 Faegre Baker Daniels LLP 2015

3 What makes a transaction international? a contract international? Parties Location of Performance Payment 2

4 What international laws can change the substance of the contract? Laws with extra-territorial application Treaties Regional laws (e.g. EU regulations) International Commercial Standards (Incoterms, Uniform Customs and Practices for Letters of Credit) Local foreign Laws and regulations 3

5 Basic Contract Issues 1. What s in a name? 4

6 Basic Contract Drafting Issues 1. What s in a name? (con t.) Proper Identification of Parties Exact legal name of the parties and country/jurisdiction where the entity is organized. Type of entity can tell you whom to sue, whether registrations or approvals are required, who is authorized to bind the entity, and whether export licenses are required. Business scope of business license in China 5

7 Basic Contract Drafting Issues 2. Products Every contract involving sales of goods should comprehensively identify and describe the product. Why? Export controls may require an export license to export products that can be used for military or a combination of military and commercial purposes; Sanctions and embargoes; Foreign countries may require the product to meet its national/regional product standards/labeling requirements; Registration of the product in a foreign country may be required before product can be imported there (national & regional requirements). 6

8 Basic Contract Drafting Issues 3. Services Every services contract should clearly define services to be rendered and the service recipient s expectations: Why? Breach and termination for cause Anti-corruption issues Employment relationship versus independent contractor Prior approval or licensing from the government of the exporting country If performed in a foreign country, applicability of local law and tax issues 7

9 Basic Contract Drafting Issues 4. Compensation Sales of goods: Price: Currency of payment, risk of currency exchange variation and changes in costs for materials. Why? 8

10 Contract Drafting Issues 4. Compensation (con t.) 9

11 Basic Contract Drafting Issues 4. Compensation (con t.) To resolve currency fluctuation issues To make contract revenue as predictable as possible To confirm whether foreign exchange rules will prevent your client from making or receiving payment 10

12 Contract Drafting Issues 4. Compensation (con t.) Services: Currency of payment Applicability of value added tax Withholding tax obligations Foreign exchange control rules 11

13 Basic Contract Drafting Issues 5. How do I get paid? Four General Payment Methods Cash in Advance Letter of Credit Documentary Collection Open Account 12

14 Basic Contract Drafting Issues 6. Delivery Passage of title, risk of loss, acceptance, warranty, freight, taxes and insurance Use of international commercial terms Use of the UCC or the U.N. Convention on the International Sales of Goods 13

15 Basic Contract Drafting Issues 7. Warranty, Product Liability, Insurance Warranty Buyer s country of domicile may impose limitations on warranty. Implied terms and warranties. U.N. Convention on the International Sales of Goods (1980). Product Liability & Recalls Law of the country where the product is used is controlling. The contract can be used to allocate the liability and expense. Recall section must address who will be responsible for expenses associated with recall and communications with government agency where the product is used. Insurance Determine the policy s territorial scope of coverage and whether it will extend to product liability for the foreign sale in an amount that is adequate in the foreign buyer s country of domicile. 14

16 Basic Contract Drafting Issues Not to be forgotten. 8. Intellectual Property Consider what IP rights should be in place BEFORE the products are introduced to a foreign market. First to file principle applies outside the U.S. Where IP is created will determine what law applies to that IP. Local law may determine who owns the IP, and whether it can be assigned to your company and whether compensation must be paid for assignment or license of IP rights. 15

17 Basic Contract Drafting Issues 9. Dispute Resolution General enforcement of foreign judgments and arbitration awards U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards Is it a domestic arbitration or a foreign arbitration? Where does the arbitral award need to be enforced? Where are assets located to satisfy the arbitral award or judgment? Is dispute resolution meaningful for the contract? 16

18 Basic Contract Drafting Issues 10. Miscellaneous Force Majeure Always include for acts of foreign governments in list of force majeure events. But, consider whether to include force majeure clause. Language Specify what the controlling language(s) should be for the contract. Some countries will only enforce contracts drafted in their language. Choice of Law Freedom to choose controlling law could be limited by mandatory provisions of foreign law.. Process agent Appointment of a process agent to accept suit on behalf of party who has submitted to the jurisdiction of another country. 17

19 Agents, Distributors, Direct Sales Problems associated with agents and distributors: Application of franchise laws Control and employment laws Termination Proprietary information and competition Liability for taxes (sales, income tax, duties and VAT) Problems associated with sales: For the seller, assuring payment, obtaining product approvals and standards For the buyer, assuring delivery, conforming goods and warranties 18

20 Service Contracts Independent contractor or employee Creation of permanent establishment Application of local law to intellectual property rights, non-competes, confidentiality provisions Tax withholding obligations 19

21 Joint Ventures and Acquisitions Obstacles to acquisition by U.S. buyer under national laws Anti-trust laws Securities laws Anti-corruption issues Export Controls Payment Employee social contributions and retirement Breach and remedies Indemnifications, escrows and price reductions Termination and dissolution of venture 20

22 QUESTIONS? 21