This 36 hour course is dispensed in English at the MBA Institute in Paris to junior and senior undergraduate students from foreign countries.

Its objectives are:

- to introduce participants to the basic rules applicable to international trade and financing agreements,

- to present and compare the most influential legal systems (common law, civil law, hybrid, emerging) in the contexts of international trade and finance,

- to expose students to issues of corporate governance in the contexts of international trade and finance.

Frequent recourse is made to economic analysis to explain legal rules.
 
 

In addition to the book of readings which will be distributed to participants, ample use should be made of the materials on the Professor's Webliography on International and Comparative Business Law, in particular the sections on Public and private international law and on International trade

For additional readings, sudents are referred to Richard Schaffer, Beverly Earle, and Filiberto Agusti, International Business Law and its Environment, South-Western, New York, 2005 in particular chapters 4, 5, 6, 7, 9, 10, 11, 12, 16 and 17.
 
 

SESSIONS 1 AND 2 (6 class hours):

Topics:

Subjects of private international law
Sources of private international law
Jurisdiction
Choice of law
Enforcement of foreign judgments

Web sources:

Hague Institute for Private International Law
International Institute for the Unification of Private Law (UNIDROIT)

case studies:

LICRA vs Yahoo, the nazi memorabilia case

Assignment 1:
Barcelona Traction Light and Power, International Court of Justice

A group of shareholders who are citizens of Belgium invest in a company
incorporated in Canada, the only business of which consists in the production and distribution of electricity in Spain. The operations in Spain are carried on through a branch of the Canadian company.

At a certain point in time, a group of Spanish holders of bonds issued by the Canadian company sue the Canadian company before the Spanish courts alleging that the Canadian company has defaulted on the payments on the bonds. The Spanish court of first instance finds in favour of the Spanish bondholders, declares the Canadian company in default on the bonds, seizes the Canadian company's assets in Spain, auctions them off, and declares the Canadian
company bankrupt.

What are the recourses of the Belgian shareholders and what are their chances of success?

Assignment 2: Applicable law in matters of contract

An American tourist comes to France for a holiday. He goes into a boutique on Boulevard Saint-Germain and buys a couch. He pays cash. He gets a receipt on the letterhead of the boutique which identifies the couch, indicates the price, that it has been paid, and that the price includes the cost of freight, insurance and duties to the New York apartment of the buyer.

72 hours later, after his return to New York, the customer measures his living room and decides that the couch is too big. So he immediately sends a fax to the Paris boutique, which the boutique receives, stating that he cancels the order.

In the meantime, the boutique has already had the couch loaded onto a ship toward New York.

Suppose that under French law, any consumer has the right to cancel any contract with a merchant within 7 days of the conclusion of the contract. Supppose that under New York law, any consumer has the right to cancel any contract with a merchant within 48 hours of the conclusion of the contract.

Assuming that either a New York or a Paris court would accept jurisdiction to hear the case, what are the US customer's chances of getting his money back?
 
 

SESSION THREE (3 class hours):

Topics:

Battle of the forms
Electronic contracts

Web sources:

Guide to International Trade Law Sources on the Internet
European Union Electronic Commerce Directive

Assignment 3 - The battle of the forms in international sales

A French exporter of textile weaving machinery receives a letter from an American company containing a document on the letterhead of the US firm and which is entitled "Order". The US firm orders a weaving machine from the French exporter and indicates the seller's stock keeping unit reference and a price of € 500,000 ex works as per the catalogue, delivery whenever possible. The American buyer's form states on its front that "All other terms and conditions of this order appear on the back hereof". On the reverse side, there are such terms which include the following provision: "This contract shall be governed by the law of the State of New York."

The French exporter decides to accept the order and mails back to his US customer, who receives, his standard form of "Conditions de vente" (terms of sale). On its face, the French exporter reproduces the stock keeping unit, the price of € 500,000 and states that delivery will be carried out within 30 days. This form also makes reference on its face to the "Autres conditions de vente" (other terms of sale) on the reverse side. Indeed on the reverse side of the "Conditions de vente", there is a provision which states that "Ce contrat sera régi par la loi française" (This contract shall be governed by the law of France).

After exchange of these documents, the French exporter duly delivers the machine. But, in the meantime, the US buyer has run into a major problem: his own customer, for whose production it has ordered the French machine, has gone bankrupt and the US firm no longer needs (or wants) the French exporter's machine.

Can the US buyer get out of the deal? On what basis? Please refer to the relevant articles of the UN Convention on the International Sale of Goods (Vienna Convention).

Suppose now that the transaction is conducted by e-mail and that the respective standard forms are sent as PDF file attachments which neither party ever actually opens though they reach their respective designated (in advance) e-mail boxes. Applying the EU Directive's relevant provisions, what would the result be?
 
 

SESSION FOUR (3 class hours):

Topics:

representations, errors and fraud in international contracts
transfer of ownership - reservations of property
warranties - implied and contractual
transfer of risks - INCOTERMS etc.
international transportation
international insurance

Web sources:

International Institute for the Unification of Private Law (UNIDROIT)

Case studies:

Finnish Fur Sales vs Juliet Shulof Furs
Tarbert Trading vs Cometals
Mitsui vs Flota Mercante Grancolombiana
United Trade Associates vs Dickens & Matson

Assignment 4: Ownership

On April 10, 2001, an art dealer from New York City places an order with a French dealer for an original Picasso painting. The price is F 5 million FOB Paris Roissy Charles de Gaulle. The price is paid at the time of signing the order. According to the contract, the painting is to be loaded on board no later than May 15.

On May 1, 2001, a well known Museum in New York City, not knowing that the painting has already been sold, offers the French dealer F 6 million. The French dealer decides to sell the painting to the Museum; they sign a bill of sale and the second buyer walks away with the painting.

Considering himself to be quite honest, the French dealer then writes to the New York dealer apologizing for the change of plans, returning his payment and offering him a special effort on his next purchase as compensation for his disappointment. In closing he consoles the New York dealer by telling that in any case he will have easy access to the painting which will be on exhibit at the  Museum right around the corner from his Gallery!

The New York dealer decides to sue to get the painting. What are his chances of success?

web sources:

Incoterms 2000

Case studies:

Schmitz-WerkeGmbH
Medical Marketing International, Inc.
Allied Chemical International
El Al Israel Airlines, Ltd.
Westway Coffee Corp.
Z.K. Marine, Inc.
Prima U.S. Inc.
Shaver Transportation Co.
J. Gerber & Co.

Assignment 5:

A rapidly expanding French exporter of fashion goods has contracted with a United States chain store for the delivery of a consignment of specially made goods. The exporter has agreed to deliver DDP individual stores within the chain which are located all over the US.

The exporter subscribes an export insurance policy with a specialized insurer in France according to which the insurer will indemnify the exporter for bad debts of the chain.

Once the goods are produced, the exporter pays for them, and has them loaded in a container at Le Havre for shipment to New York where the bulk will be broken and the packages sent to the individual stores throughout the US. The exporter has an office in New York which is expected to clear the goods through US customs and the exporter's freight forwarder will break the bulk and re-despatch the small lots to the individual stores.

The exporter's French bank has agreed to pay an advance of 80% against all invoices drawn on the US chain and covered by the export insurance policy.

The exporter presents to the bank a bill of lading showing the French exporter's NY office as "consignee". The exporter also presents a set of invoices issued by the French company against the various stores in the chain for the goods in the consignment.

While the shipment is on the water toward New York, the US buyer goes bankrupt. In the meantime, the exporter has spent most of the money from the bank to pay suppliers. The goods are virtually impossible to sell to anyone other than the bankrupt chain.

With the bank threatening to sue to get refunded its advance against the invoices, the exporter turns to the export insurance company to claim indemnification off the policy. The policy stipulates as one of the conditions for coverage that the exporter must have performed its obligations under the contract of sale.

What are the chances that the exporter will be indemnified by the insurance company?

What advice would you give the exporter about managing the legal risks of doing business internationally.
 
 

SESSION FIVE (3 class hours):

Topics:

breaches
remedies
excuses for non-performance
arbitration

Web sources:

Pace University Center for International Commercial Law in USA

Case studies:

Asante Technologies, Inc.
Delchi Carrier vs Rotorex
Teca Print vs Amacoil Machinery
Tarbert trading Ltd.
Chateau des Charmes Wines Ltd.
Transatlantic Machinery vs United States
Harriscom Svenska vs Harris
The Eugenia

Assignment 6:

In pre-Khadafi times, a French engineering and construction company accepts a contract to build a highway across the desert in Lybia. The contract is with a Libyan company owned by a group of private Libyan investors.

Shortly after work is started on the highway, Khadafi takes power. The new government promptly triples the import duties on all imported asphalt.

Secondly the new government enacts a law requiring that all transportation within Libya of certain products (including specifically asphalt) must be carried out by Libyan nationals. Consequently, the French company must now contract the transportation of its asphalt through Libyan companies whereas it had intended to organize internally this strategic activity. The result of the law in practice is that the fuel supplies are sporadic, unpredictable and insufficient. Consequently, the contractor's equipment progressively rots in the Libyan desert.

Still the French company considers itself force to continue building the highway, otherwise how would it ever get paid anything. And the Libyan companies and officials with which it has contact all say that eventually the Libyan Government will make an effort to reward total completion of the highway.

Finally the highway is completed but late.

The Libyan invokes the delay to refuse to make the last payment of 33% of the price of the project.

The contract expressly provides that:

"A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences."

The French contractor asks what are its chances of success in the upcoming arbitration.
 
 

SESSION SIX (3 class hours):

Topics:

Regulation of international trade (GATT/WTO)

Web research:

World Trade Organization
World Intellectual Property Organization
International Telecommunications Union
Organization for Economic Cooperation and Development (OECD)
European Union
NAFTA
ASEAN
APEC

Case studies:

WTO panel report: European Union Screwdriver case
WTO panel report: United States and Mexico dolphin case

Assignment 7

The China Textile problem

Find on the web the Accession of Agreement under which China entered the WTO in 2001.
Identify the protection mechanisms.
Based on your research of textile imports into the European Union, make a determination what if any protectionist measures might be adopted in compliance with the Accession Agreement?
 
 

SESSION SEVEN (3 class hours):

Topics:

International trade finance
Letters of credit

Web research:

Uniform Customs and Practice for Documentary Credits (UCP 500) defined by the International Chamber of Commerce (ICC).

Cases:
Biddelle Brohers
Basse and Salve
St. Paul Guardian Ins. Co.
Kumar Corp.

Assignment 8

A French importer obtains that his bank in Paris a letter of credit in favor of his Chinese supplier to pay for a shipment of goods. The LC is payable at sight of various documents, including "an invoice conform with the pro forma invoice referenced herein". It is expressly stipulated in the LC that partial shipments are not allowed.

A few days before the expiration of the LC, the Chinese supplier realizes that it will not be able to deliver all the goods covered in the LC. So the exporters send a message to the French importer requesting an extension of the LC. But the French buyer answers insisting on the improtance of receiving a full shipment of the order or nothing at all.

In these circumstances, the Chinese exporter decides to deliver the goods available at the LC's expiration, in other words to make a partial shipment, but to set down documents showing a full shipment of the goods as indicated on the pro forma invoice. Also, the exporter presents to the French bank a  set of documents that is conform with the LC.

The Chinese exporter then sends a message to the French importer explaining that the amount of over-invoicing would be under-invoiced on the next export.

But the French company does not at all appreciate the maneuver and requests of its bank whether the payment on the LC can be avoided. Suppose that you are advising the bank, what would you recommend?
 
 

SESSIONS EIGHT AND NINE (6 class hours)

Topics:

International financial system
Currency controls

Web research:

The International Monetary Fund
International Finance Corporation
One regional development bank

Case studies:

Exchange controls
Money laundering and corruption

Assignment 9:

Dallal and the Iranian Bank

An Iranian resident, Mr. Dallal, goes to a bank in Iran in 1978 and requests that the bank issue to him two banker's cheques for $ 200,000 each drawn on the Iranian bank's account in New York with a New York bank. Without further formality the Iranian bank debits Mr. Dallal's account at its branch in Tehran and issues to Mr. Dallal the two cheques.

When Mr. Dallal reaches New York and presents the cheques for payment at the counters of the Iranian bank's New York bank, he is informed that the Iranian bank has sent instructions not to pay the cheques.

When Mr. Dallal sues the Iranian bank before the New York courts, the bank raises as a defense that the exchange controls of the Central Bank of Iran require that all transactions other than those for payment of imports of goods and services and other current transactions

As no authorization had been obtained from the Central Bank of Iran for the issue of the cheques payable in New York, the Iranian bank said that their issue was in violation of the exchange controls of Iran.

Iran and the United States are members of the IMF. Apply article VIII of the articles of the IMF to this problem.
 
 

SESSION TEN (3 class hours)

Topics:

Money laundering and corruption

Web research:

OECD The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
The Financial Action Task Force on Money Laundering

Case studies:

Based on the information in these reports are any of the parties guilty of either corruption or money laundering as defined under the OECD treaties? Support your answer with arguments.

Heat is on Attorneys in Drug Trafficking - Florida lawyer is accused of taking 'dirty money'
When Is a Payment a Bribe? Texas executives launch novel court fight over foreign corruption law

Assignment 10:

A Chinese civil servant promises to award to a French exporter a major contract but requests that the French company set up a program of internships in France for his four grandchildren.

The Vice-President International has proposed to accept the contract, and to welcome in France the grandchildren of the civil servant while paying them the minimum wage and bearing all their costs of living. According to the CFO, the actual cost will be less than their face value in that the payments would be tax deductible.

The VP-Legal has doubts about the legality of the operations and asks you, as lawyer of the company, what should  be the company's decision.

Suppose that the norms of the OECD Convention with respect to corruption are applicable in French law but not in Chinese law.

Is the French company a potential target of pursuits?

Assignment 11:

A lawyer receives in his office the visit of one of his best clients who informs him that be intends to engage his services to assist in mounting an operation in Hong Kong.

The client informs the lawyer that he has amassed some € 100,0000 in cash from retail sales in his chain of boutiques in France.

The client intends to carry the amount in cash on the occasion of several trips to Hong Kong over the course of the next year. He intends to deposit the cash in accounts opened by a Hong Kong company which he will effectively control through nominee shareholders and nominee directors.

The Hong Kong company will then lend money to the French company (which will of course claim the interest as a deduction).

The client asks the lawyer first, what is the maximum amount of cash that can be carried out of French territory without making a delcaration thereof to the Customs authorities. Also, he wants the French lawyer to introduce him to a lawyer in Hong Kong who will take care of constituting the company.

If you were the French lawyer, what would you do?
 
 

SESSION ELEVEN (3 class hours)

Topics:

International financial markets
International loan agreements and bond issues
International securities issues and trading
Project finance

Web research:

Bank for International Settlements
International Organisation of Securities Commissions
International Swaps and Derivatives Association
Securities and Exchange Commission
Find any one stock exchange on each of three continents

Web research:

UN Convention with respect to bills of exchange
Geneva Convention of 1930 with respect to conflicts of laws in connection with bills of exchange

Case studies:

Droit communautaire afférant aux Systèmes de Négociation Alternatifs
Droit communautaire afférant aux services financiers en ligne
Régulation américaine des marchés de capitaux face à l'internet
La négociation de contrats à l'ère de l'euro

Assignment 12:

An Italian resident in France proposed to a Brasilian living in Belgium to accept a bill of exchange in the Brasilian's favor for € 200,000 payable in 90 days in exchange for € 160,000 in cash paid by the Brasilian to the Itallian at the time of acceptance of the bill and its remittance to the Brasiilian.

The bill is payable on the Italian's account held with the local branch of a Portuguese bank.

As it turned out, the Italian was a crook who was ultimately found guilty of criminal fraud by a French court.

Having understood even before the due date of the bill that he had been deceived, the Brasilian does not even present the bill for payment to the London bank.

Two years later, he decides to launch legal action against the Italian who in the meantime has once again come upon flourishing times.

If a French court is seized by the Brasilian to pursue to the Italian on the base of the bill of exchange, what is the likelihood of success of the action?
 

Assignment 13:

Your client, a major French bank, has just signed a letter of intent to conclude a loan agreement in favour of its customer, a English subsidiary of a French company, in accordance with the following terms:

amount of the loan: US $ 1 million
interest rate: variable
annual rate of interest: LIBOR plus 200 basis points
term: 10 years
reimbursement of the principal in one payment at the expiration of the loan's term
interest payments: quarterly at expiration of the quarter

Draft the provisions of the loan contract defining the terms of payment of the interest. If you consider that any additional information is required, then make hypotheses to this effect and specify what they are in your anwser.
 

SESSION TWELVE (3 class hours)

Topics:

International taxation
Taxation of e-commerce

Web research:

OECD - taxation
Any two tax treaties

Case studies:

Quelle fiscalité pour le commerce électronique?
 
 

At the end of the course, a written exam is held. The exam consists of theoretical and practical questions as well as case studies. Below is one of the questions that will appear on the exam for 20% of the grade.

In the final evaluation account is taken of participation in class work and discussions, in particular the assignments submitted during the course.
 

PRE-ASSIGNED EXAM QUESTION

Taxation as a trade weapon

The States comprising the European Union charge a value added tax on all sales within their territories but exports from the EU are exempted from the value added tax. Please note that the government in the United States earns its tax revenues mostly from taxes on income whereas the EU countries earn their tax revenues in about the same proportion from the value added tax. Thus more than 40 of tax revenue is charged on account of taxes on income in the US and on sales in the EU; taxes on sales represent about 8 % of taxes collected in the US and taxes on income amount to about 10% in the countries of the EU.

For its part, the United States set up a special tax régime for its exporters. The rules allowed US firms to set up foreign subsidiaries, called foreign sales corporations (FSCs).

The US firm would charge its exports to the FSC which would then reinvoice to the actual buyer abroad. Alternatively the US firm could simply pay a commission on its foreign sales to the FSC. The income of the FSC was treated in a favorable manner. Normally the income of such a passive company as the FSC would be imputed to the US taxpayer even if the income was not actually paid out, and then it would be taxed at the taxpayer's normal rate. With FSCs only one third of their income was thus imputed to the US parent/exporter, and furthermore when any income was paid from the FSC to the US parent, it was exempted from tax in the US.

Discuss the conformity of each of these measures with respect to the rules of the GATT.