Transnational Business Environment- Professor LI-Fall 2012
Transnational Business Environment
New Rule: If one is an attorney in other country but practicing in the States, ABA will hold you responsible as a lawyer admitted to the bar here.
Practice of Law: In NY one can practice Foreign Law if competent.
Drafts are ok to draft even if you are not competent (not knowing the laws of foreign country).
Bar Association (pg 9): If not done continuously or rarely, it will not be considered as unauthorized practice of law. It is a matter of degree but the boundary is hard to draw.
In house counsel b/w employers and employees are not privileged in Europe but is in U.S.
Prof believes if not privileged, one should not advise client for policy reasons.
International Dispute Resolution
1. U.S. Courts
2. Foreign Courts
3. International Commercial Arbitration
Litigating in the United States or Abroad?
Key difference b/w U.S. and Foreign Courts
1. JURY in civil case: U.S. use jury in civil cases, EU doesn’t
2. Judicial Backlogs: Indian Court for example will take 320 years to clear their Backlogs!!
3. Civil law system: Discovery Rules are different b/w countries. Some countries, judges are fact finders.
4. Appeals: U.S. Appellate Judges usually doesn’t question facts. Other country use de novo review since there was no jury. Appeals may involve several stages and could be time consuming.
5. Cost: Each party pays their own fees in U.S. but in Great Britain the losing party pays for everything.
6. Class Action: U.S. view class action is a legitimate Policy Goal, other countries class action is not encouraged.
Problems with International litigation
2. Enforcement of verdict
3. Service and process
4. Collection of evidence
International Jurisdiction in U.S. Courts
General jurisdiction: Company resides in U.S. or having continuous and systematic contact with U.S.
Specific Jurisdiction: place where the particular cause of action arose. I.E. where the contract alleged to be breached was to be performed, where the asserted injury took place.
Other countries’ disapproval obviously does not prevent U.S. from relying on a particular basis of jurisdiction, but it may affect the enforceability of the court’s judgment abroad. (refuse enforcement on grounds of lack of jurisidiction by the U.S. court over the defendant).
Foreign Court would not think its enough to give them jurisdiction over parties
U.S. might be enough
Prof: Advise client to have a choice of Forum clause in Contract. U.S. Clients want litigation to be in NY or Delaware
A important base of jurisdiction is consent
When two parties are roughly equal, the policy consideration in favor of allowing them to choose a forum by contract are strong.
If you want to challenge the Forum Clause you must prove it is unreasonable or fraud and enforcement will be unjust.
Scotus give a good def on what is Unreasonable in Zapata case.
M/S Bremen v. Zapata (moving oil rigs)
Parties Agreed to litigate in London, but accident occurred in U.S.
SCOTUS: have to give more weight to the Contract. Most common law countries believe in freedom of contract with Foreign countries. London Forum was a reasonable effort to bring vital certainty to this transaction and to provide a neutral forum experienced and capable in the resolution of admiralty litigation. Whatever the “inconvenience” was, it was foreseeable for Zapata before signing the contract. Unless Zapata can prove it is so difficult that it will deprive him his day in court, otherwise it is not unjust, unfair or unreasonable to
1.Honor agreement in writing, Oral agreement not honored.
Note: whether a subject matter is “capable of settlement by arbitration” and whether an agreement is “null and void” or “incapable of being performed” are questions the Convention leaves for the States and its courts.
I.E: cannot arbitrate some cases b/c some State view ideas so important to the States that they would not allow arbitration.
Article V: List instances where Arb should not be enforced.
Very often public policy is the reason why not to enforce the award.
Professor: When Draft arbitration clause, make sure you specified all questions arise will be subjected to Arbitration. Specify the place of Arbitration (must be a state party to the convention) as well as the procedural rules and choice of law that govern the arbitration.
Mitsubishi v. Soler
Are issues involving U.S. antitrust laws subject to arbitration by an arbitration panel located in a foreign country
There is no reason to assume at the outset of the dispute that international arbitration will not provide an adequate mechanism.
As international trade has expanded so too has the use of international arbitration to resolve disputes arising in the course of that trade.
The U.S. Supreme Court held that issues involving U.S. antitrust laws may be arbitrated by a foreign arbitration panel and ordered the arbitration agreement between Soler and Mitsubishi enforced.
Note: this case shows the general policy of U.S. of Respecting Arb Law.