PART 1 - RISKS

Sessions 1-2

When have you committed a crime in business?

Cases:
Falcone - Park

Readings:
The OECD Anti-corruption Convention in particular article 1

Assignment - corruption

A French company is negotiating a contract for the supply of goods to the Chinese Government. At a dinner after a day of discussion in Beijing, the chief negotiator for the Chinese side, a Deputy-Minister in the Government, makes it known to the negotiator for the French company, its Chief Executive Officer, that one of his children who is a graduate in business of a leading Chinese university would like to work in France.

The CEO of the French company immediately tells the Deputy-Minister that his company would be pleased to employ his son. Indeed within 10 days, the son sends his CV to the CEO of the French company who makes him a formal offer of employment which is accepted by the young man.

One month later, the son of the Deputy-Minister begins working for the French company in Paris. His post and his annual salary are equivalent to what a graduate from ISC would get as a first job.

A week after the young many begins his work in France, the French company submits its bid to the Chinese Government for the contract. Two months later, the French company is awarded the contract by the Chinese Government.

A competitor of the French company, which also made a bid, but lost, learns of the employment of the Deputy-Minister's son by its French competitor that won the contract and it denounces its competitor that won the bid to the Prosecutor claiming that there was corruption in violation of French laws.

Do you think that law has been violated? (Assume that the applicable French law is conform with the Convention) What additional information might be useful in making a determination?

Additional reading:
The OECD Anti Money Laundering Standards
JP Morgan agrees to pay $ 264 M of hiring princelings
BNP Paribas to pay $8.9 billion to U.S. for sanctions violations
The hidden key to the SNC-Lavalin scandal
World-Wide Coin
Le risque pénal dans les relations d'affaires avec la République Populaire de Chine

Sessions 3-4

When have you concluded a contract?

Readings:
United Nations Organization, Convention On Contracts For The International Sale Of Goods Vienna, 1980, Formation of the contract (CISG), articles 14-24
European Union Electronic Commerce Directive, Article 11.1.

Cases:
Lucy - Lefkowitz

Assignment - 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 Euros DDP 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: "All customs duties shall be borne by the seller."

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 "Tous droits de douane seront support?s par lêacheteur" (All Customs duties shall be borne by the buyer ).

After exchange of these documents, the French exporter makes the machine for delivery. 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 French exporter's shipment reaches the buyer's warehouse where it is received and, after inspection, the buyer claims deficiencies in the machine and writes the seller to take it back without charge. Would the result be the same?

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?

Additional reading:
Guide to International Trade Law Sources on the Internet
International Institute for the Unification of Private Law (UNIDROIT)
Pace University Center for International Commercial Law in USA
Presentation of the INCOTERMS and Text of UCP 500

Session 5

The lurking owner

Readings:
CISG, article 4
Uniform Commercial Code, section 2-401(3)
CISG, article 4

Case:
Weller

Assignment - 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?

Additional reading:
Nolan
Essay on the Value of Ownership

Session 6

When is a director delinquent?

Readings:
Model Business Corporations Act (United States), in particular sections 3.01, 3.02, 3.04 and 8.30 and 8.31

Cases:
Henry Ford
Speigel
Kanavos
Cross

Additional reading:
Socially Conscious Corporations and Shareholder Profit
L'affaire Enron et les relations entre le droit, la morale et l'éthique
Le droit, la morale et l'e´thique dans la gestion des entreprises

PART 2 - OPPORTUNITIES

Sessions 7 and 8

Exploiting the corporate veil

Readings:
Model Business Corporations Act (United States), in particular section 6.22
Examples of corporate structures

Cases:
Dania Jai-Alai Palace v Sykes
Metaleurope

Additional reading:
Belgium v Spain (Barcelona Traction)
Lungowe v Vedanta in particular paragraphs 1, 2, 9-25, 67-91
Okpabi v Royal Dutch Shell in particular paragraphs 1-3, 6-7, 39-44, 84-133
Bank of Credit and Commerce International Ltd Overseas

Session 9

Optimizing international contracts

Readings:
European Union Regulation No 593/2008 on the law applicable to contractual obligations (Rome I) , articles 3 and 4
European Union Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, articles 3, 4, 5 and 6

Assignment:

An online casino incorporated in Nevada operates a web site located on servers in Nevada on which it provides gambling services to online customers all over the world.

In Nevada, gambling is legal.

But, in most other countries, gambling is either illegal or reserved exclusively to local entities which have been authorized by the Government to carry on the activity.

The Nevada casino never obtains any such local authorizations.

Lawyers in Nevada have advised the casino to include in their online contracts with customers that the law applicable to the gambling activity shall be subject to Nevada law and that the Nevada courts will have exclusive jurisdiction over any disputes with gambling customers.

On the basis of this advice, the casino management considers that its gambling contracts are valid and enforceable even in countries where gambling is illegal.

Do you agree, explain your reasoning.

Session 10

Tax optimization

Readings:
Principles of taxation
Types of taxation
Issues in corporate taxation

Cases:
Affaire google, Cour Administrative d'Appel de Paris

Assignment - transfer pricing:
Given the following information, what is the tax optimal transfer price at which the HK subsidiary should re-invoice its French parent for goods it has bought from suppliers in the Peoples Republic of China. What is the after-tax gain from the re-invoicing
Cost of goods in China: 50 Euros Sale price in France (ex-VAT): 100 Euros
Assume:
- Hong Kong does not tax exports and the sales of the HK subsidiary to the French parent would be treated in HK as exports,
- The profits of the French parent will be taxed at 33%,
- The French customs office will impose a duty of 10% on the import price as invoiced,
- There is no serious risk of tax auditors challenging the transfer price applied by the company, and
- Tax deductible items will be the same no matter what transfer price is adopted.

Additional reading:
Affaire google, Cour Administrative d'Appel de Paris
Tax Challenges Arising from Digitalisation OECD, 2018
Quelle fiscalité pour le commerce électronique?

Sessions 11 and 12

Exploiting intellectual property

Readings:
What is intellectual property World Intellectual Property Organization (WIPO)
Researching Intellectual Property Law in an International Context, by Stefanie Weigman
Licensing in France
European Union Treaty, articles 81 and 82

Cases:
Kiesel Stein Cord
Burrow Giles
Monsanto
Coca Cola
Cabbage Patch Dolls
Mattis
Red Owl

Additional readings:
Whales get beached, don't they? An essay on the law and economics of copyrights in music
Outline to a course in International Law for the Design Industry