International Law Office - Legal Newsletters, Law Firm Directory and Legal News

Arbitration

The flexibility of arbitral procedure should provide parties with the means to avoid the unpredictable and unforeseen costs and delays that are often associated with commercial litigation. However, such problems can creep into arbitrations. Parties can take a number of steps to prevent arbitration from taking on the undesirable characteristics of litigation.

International commercial arbitration is not simply domestic commercial litigation in disguise. It involves a unique skill set and requires particular training and expertise. A company that ignores the highly specialised nature of international arbitration does so at its own peril.

The PRIME Finance Disputes Centre will launch its arbitration services in early 2012. PRIME Finance's goal is to provide, encourage, enable and support alternative dispute resolution, with its main focus on disputes concerning complex financial products, such as derivatives. Its panel of experts includes some of the most eminent financial and alternative dispute resolution experts in the world.

The revised United Nations Commission on International Trade Law Arbitration Rules are in force. Key amendments include new provisions to accommodate the potential for multi-party arbitrations, expanded rules on interim measures and a requirement that a respondent serve a response to the notice of arbitration. This last change will be particularly welcomed by corporate counsel.

Aviation

The rules governing the financing that export credit agencies can provide for the purchase of aircraft were recently amended. The new rules apply to all forms of official state support for export credits and set out the most favourable terms allowed for aircraft financings supported by the export credit agencies of members of the Organisation for Economic Cooperation and Development and Brazil.

The International Civil Aviation Organization has adopted two new air law conventions that set out international compensation and liability rules for damage caused by aircraft to third parties. Each treaty makes operators liable for death, bodily injury and mental injury, as well as environmental and property damage. However, both conventions are a long way from coming into effect..

Banking

The Basel Committee on Banking Supervision recently issued a final set of Principles for Enhancing Corporate Governance in the banking sector. Since the adoption of the 2006 principles, there have been a number of corporate governance failures and lapses, many of which became apparent during the financial crisis that began in 2007; the revised principles are intended to deal with these issues.

The oversight body of the Basel Committee has endorsed the Basel 3 capital and liquidity reform package, announcing new levels for capital ratios. Despite generous transition arrangements, banks must consider the impact of the new quality of capital rules on their current capital base, as well as the increase in capital that certain assets, such as repos and derivatives, will require.

If a letter of credit dispute is dealt with properly, the negotiating banks or exporters may recover not only the letter of credit proceeds, but also late payment interest and their costs without resorting to legal proceedings. The success of such claims depends largely on an effective strategy, a good understanding of business dynamics and effective negotiation with the issuing banks.

Competition

The recently created Energy Community Competition Network is intended to facilitate the consistent application and enforcement of EU competition law to the electricity, gas and oil sectors within the contracting parties and regional markets. The network will serve as a platform for promoting discussion and developing best practices among the public institutions participating in the network.

Corporate Finance/M&A

The road to a successful deal holds a wide variety of challenges for both acquirer and target. Bridging the gap between different estimates of the target's value is a fundamental step towards a successful outcome. Various types of earn-out provision can help, but careful drafting is required to prevent future disputes.

The boards of NYSE Euronext and Deutsche Boerse recently announced their intentions to form a business combination. The resulting company would be the world's largest exchanges operator by revenues and profit. The parties to the transaction will have to take into account the applicable provisions of various laws and regulations, considering German, US and Dutch legislation.

Derivatives

Closing down one credit default swap (CDS) following a credit event may be relatively straightforward, but closing down many CDS transactions at once is more problematic; if they are not handled efficiently, losses may occur. The bankruptcy credit event is the most likely credit event to be triggered under the 2003 Credit Derivatives Definitions.

Recent events have left many investors analyzing their derivatives and structured products exposure to financial institution bankruptcy. This update sets out some of the practical steps to take and matters to consider under the International Swaps and Derivatives Association 1992 and 2002 master agreements.

Energy & Natural Resources

In many oil and gas M&A transactions, the valuations by acquirers and vendors tend to differ, and the valuation of oil and gas upstream assets is inherently uncertain, particularly in respect of undeveloped reserves. Although the mechanism has its difficulties, one way to bridge the value gap is by employing contingent consideration.

Carbon capture and storage (CCS) as a way of reducing carbon dioxide emissions is relatively new, but the oil and gas industry has long used many of the processes involved. However, the reduced efficiency of power plants and the cost of CCS technologies are barriers to implementation. As well as providing legislative frameworks, governments must look to implement incentives and penalties.

Responding to industry calls for standard form documentation for the spot and short-term cash-trading sector, the Association of International Petroleum Negotiators released a model form in October 2009, seeking to create a more efficient secondary market for liquefied natural gas. With the industry take-up still unclear, what are its prospects of being used to document spot arrangements?

Environment

The International Organisation for Standardisation (ISO) is reviewing and revising ISO 14001 – the accepted template for environmental compliance systems in the context of resolving enforcement actions. If adopted, the changes will result in closer scrutiny of ISO 14001-certified facilities and less flexible requirements where such environmental management systems are implemented in the context of resolving enforcement matters.

Information Technology

Any software distributor which relies on a patent portfolio in order to protect its developments should think twice about the possible consequences of distributing version three of the General Public Licence (GPLv3) software components as standalones or part of its proprietary developments. A thoughtless distribution of GPLv3 components may lead to the unenforceability of patents.

Insolvency & Restructuring

The 2012 Nairobi INSOL Africa Roundtable confirmed that legislative reform is not an agenda for the government or private sector alone, but rather must involve a cooperative effort. The roundtable's success proves that African governments, financial institutions, policy makers and the private sector are now more actively engaged in modernising the insolvency framework on the continent.

The United Nations Commission on International Trade Law adopted the Model Law on Cross-Border Insolvency in 1997 to provide an interface between the insolvency laws of different countries, focusing on the four key areas of access, recognition, assistance and cooperation. Since then, familiarity with its scope and key provisions is becoming increasingly important.

Insurance & Reinsurance

Has your company's production been adversely affected by the recent events in Japan? Have you considered whether your insurance policy might respond? What should you bear in mind as you answer these questions? Business interruption policies are designed to provide compensation for losses arising from a disruption in operations attributable to an insured peril.

Intellectual Property

The recent introduction of top-level internationalised domain names will affect the way in which brand owners market their products, as the Internet becomes more accessible to those that are literate only in Arabic (or in another language which does not use Latin characters). The impact on brand owners that wish to communicate with a global audience will be significant.

A new top-level domain space is intended for companies in the adult entertainment industry, but may cause problems in other sectors for well-marketed brands with carefully fostered reputations. In opting for preventive measures or a 'wait and see' approach, each trademark holder has a business decision to make.

People may use social media websites to reconnect with friends, but they are also searching for their favourite brands. Consumers increasingly expect their favourite drink, sports shoe and car to have a Facebook page and to share news on Twitter, while heavy-handed attempts to address trademark misuse can risk alienating thousands of fans. How should trademark owners protect their brand's online presence?

Most potential patentees understand that an invention must be novel and inventive to be patentable. Therefore, when they develop a new product or process which uses something previously known, it is often is dismissed as being unpatentable. However, good experimental design and appropriately drafted patent specifications can sometimes produce strong, commercially effective patents.

Media & Entertainment

In recent years economic pressure on the entertainment industry has led companies to seek to broaden the scope of their business. Record labels, tour promoters and other entertainment companies are increasingly negotiating '360-degree' deals with artists, extending their scope for deriving profit beyond the markets in which they traditionally operate.

The rapid growth of new technology and the ease of digital copying and distribution present challenges for media lawyers seeking properly to document the exploitation arrangements for media assets. When confronted with a broad reference to a generic medium, such as 'television' or 'home video', lawyers must ensure that the contractual arrangements correctly reflect the parties' intentions.

Offshore Services

The global financial crisis has arguably revealed a significant gap between the interests of private wealth and the financial industry that is supposed to serve them. This void has largely been filled by family offices, which provide a bespoke approach to personal and investment needs. If well structured, they can smoothe the transfer of wealth between generations, reduce the potential for conflict and ensure wealth preservation.

Many offshore funds have lost large sums of money in the Madoff scandal and face further issues from the liquidation of Bernard L Madoff Investment Securities. Directors have much to consider, including whether the fund which they thought was healthy may now be insolvent and potential derivative actions and misselling claims.

Product Liability

The total global revenue from nanotechnologies - around $2 billion in 2007 - is projected to reach $81 billion in 2015. Despite the rapid development of nanotechnology products in many sectors, the effects of engineered nanoparticles are not fully understood. Although nanomaterials are minute, the potential need for risk assessment and insurance coverage is fast approaching the other end of the scale.

Securitisation & Structured Finance

Recent events have left many investors analyzing their structured products exposure to financial institution bankruptcy. This update sets out steps to take and matters to consider in the context of structured notes, collateralized debt obligations and sale and repurchase agreements.

Shipping & Transport

Shipowners often face a decision as to which flag they should fly on their vessel. Shipowners have considerable freedom when choosing where to register their vessels. The main consideration is usually to minimise costs and maximise revenue. There are certain factors that a shipowner should take into account when making a decision on registering a vessel in order to have an outcome that best meets its requirements.

The shipbuilding market has experienced both peaks and troughs during the past few years. The global financial crisis has affected market conditions, which in turn have impacted on shipbuilding contracts. Owners considering placing new orders may be able to negotiate terms that were unachievable in the pre-crisis era. Given existing market conditions, buyers lose nothing by requesting a particular term or provision.

It is often impossible for shipowners to control the varied interests which may have a claim against their ship in the event of a major maritime incident, and they are often left with little option but to wait to see where creditors take action. However, there is another option – the 'Australian exit', whereby owners can take control and change the traditional forum shopping procedure.

The International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea still has not entered into force some 16 years since it was adopted. Eight countries have now signed the 2010 protocol, which was designed to overcome the practical problems that have prevented the convention from entering into force.

In May 2007 the International Maritime Organisation adopted the Nairobi International Convention on the Removal of Wrecks. The convention fills a gap in the existing international legal framework by providing the first set of uniform international rules aimed at ensuring the prompt and effective removal of wrecked ships. It is expected that sufficient states will ratify the convention for it to enter into force during the next two years.

The Lloyd's Salvage Arbitration Branch, the body responsible for administering the Lloyd's Open Form of Salvage Agreement (LOF), recently issued a new version of the form – LOF 2011. The two most significant changes introduced by LOF 2011 relate to the publication of awards and the procedures to be followed in respect of salvage services provided to container vessels.

More updates >

Trade & Customs

The World Customs Organisation has released the latest amendments to the Harmonised Tariff System. Inadequate management of the changes may cause importers compliance risk, adversely affect duty payments and even influence eligibility for free trade agreements that use tariff shift rules of origin. Importers should review their products to ensure that they understand which goods may be affected.

The World Trade Organization has held a stocktaking of progress in the Doha Round of trade negotiations. The goal of concluding the round in 2010 has been quietly set aside, and no new, artificial deadline has been set. However, the members agreed to continue work at the technical level, the results of which will be drawn on when the negotiations restart.

White Collar Crime

Transparency International has released its 2012 Corruption Perceptions Index, which provides an annual snapshot of the perceived corruption level of almost every country in the world. While corruption can occur in any country, global companies should be aware of where their international areas of operation fall on the index and take steps to minimise the risks inherent in operating in countries that are perceived as more corrupt.

As a result of the Agreement for the Mutual Enforcement of Debarment Decisions between a number of multilateral development banks, the financial risks for companies that do business in the developing world have multiplied overnight. The recent debarment of Macmillan Publishers Limited from World Bank-funded projects has put the issue in the spotlight.

A total of 38 countries have agreed to renew their efforts to prevent, detect and investigate foreign bribery. Measures initiated by the Organization for Economic Cooperation and Development (OECD) update the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. An OECD report, due in March 2010, will doubtless be critical of any country that fails to rise to the challenge.