Comparative Business and European Law

Part I – Instructor: Angelo Borselli

Class 1
 Bine ai venit आपका स्वागत है
Добро пожаловать
Maligayang pagdating Bienvenido
Καλώς ήρθατε
მოგესალმებით
‫ברוכים הבאים‬
‫ ترحيب‬Welcome to… Sveiki atvykę

Willkommen
Benvingut
欢迎
Comparative Business andKaribu
bienvenu European Law ยินดีต้อนรับคุณ
Vítejte Dobrodošli
Üdvözöljük

Hoşgeldiniz Witamy Tervetuloa

benvenuti 歓迎 Velkommen 2
 Class 1
• Presentation of the Course. Introduction to
International Business Transactions

• The “Rules of the Game”

• Some Data and Background Considerations

• Negotiating and Drafting International Contracts

3
 Introductions

• me…

• …and you:
– Countries, languages, courses…

4
 Understanding the Framework

• Transnational Business Law

• Face-to-face national business

transactions vs. international business
transactions

5
International Business

6
From Milan to Madrid From Milan to Bangkok
From Milan to Milan

7
Penetration in International Markets

1. Direct export-import sale

2. Agency and distributorships
3. Technology transfer and licensing.
Franchising
4. Foreign Direct Investment

8
 Rules of the Game

• Syllabus
- Overview of the topics
- Lectures and class discussion
- Required materials
- Attendance
- Final exam
- Office hours and contact information

9
Values and Growth Rates of World Trade
International trade largely relates to
physical goods. Although increasing,
trade in services accounts for a
much lower share. World trade in
goods has increased dramatically
over the last decade, rising from
about US$10 trillion in 2005 to more
than US$18.5 trillion in 2014. Goods
trade fell to about US$17 trillion in
2020 as a consequence of the
COVID-19 trade disruptions and
economic downturn. Trade in
services steadily increased between
2005 and 2019 (from about US$2.5
trillion to close to US$6 trillion). The
COVID-19 pandemic had a
particularly strong negative impact
on trade in services, which had
proven more resilient during past
crises periods. While goods trade
bounced back strongly and
surpassed US$22 trillion in 2021,
trade in services has been recovering
at a slower pace.

source: UNCTAD (2023)

10
Values and Growth Rates of World Trade
Trade in goods

Trade in services

source: UNCTAD (2023)

11
 FDI Global Trends
• After a steep drop in 2020 and a strong rebound in 2021, global
foreign direct investment (FDI) declined by 12 per cent in 2022,
to $1.3 trillion. The slowdown was driven by the global
polycrisis: the war in Ukraine, high food and energy prices, and
debt pressures. Downward pressure on global FDI is expected to
continue in 2023, also due to investor uncertainty and risk
aversity

source: UNCTAD (2023) 12

FDI Inflows, Top 20 Host Economies, 2021-2022

source: UNCTAD (2023)

13
FDI Outflows, Top 20 Home Economies, 2021-2022

source: UNCTAD (2023)

14
Factors Influencing Future Global FDI Activity

source: UNCTAD (2017)

15
MNEs

Source: The Economist

16
2019 Ranking by:
MNEs Assets Sales

Foreign assets Corporation Home economy Foreign Total Foreign Total

1 Royal Dutch Shell plc United Kingdom 376 417 402 681 276 518 331 684
2 Toyota Motor Corporation Japan 307 538 485 422 187 768 275 390
3 BP plc United Kingdom 259 860 295 194 215 203 278 397
4 Softbank Group Corp Japan 253 163 343 306 29 286 56 910
5 Total SA France 249 678 273 865 137 438 175 985
6 Volkswagen Group Germany 243 469 548 271 227 940 282 776
7 Anheuser-Busch InBev NV Belgium 192 138 237 142 44 352 52 251
8 British American Tobacco PLC United Kingdom 184 959 186 194 25 232 32 998
9 Daimler AG Germany 179 506 339 742 163 875 193 357
10 Chevron Corporation United States 172 830 237 428 75 591 140 156
11 Exxon Mobil Corporation United States 169 719 362 597 123 801 255 583
12 Vodafone Group Plc United Kingdom 168 394 184 253 42 530 49 971
13 EDF SA France 155 021 340 692 30 625 79 827
14 CK Hutchison Holdings Limited Hong Kong, China 143 367 155 523 32 556 38 163
15 Honda Motor Co Ltd Japan 143 180 188 541 116 150 137 382
16 Enel SpA Italy 135 691 192 570 28 311 86 597
17 Siemens AG Germany 134 634 163 598 77 280 97 957
18 China National Petroleum Corp (CNPC) China 133 636 595 935 171 756 410 023
19 Deutsche Telekom AG Germany 132 443 191 723 62 605 90 140
20 BMW AG Germany 126 609 256 160 101 614 116 644
21 Microsoft Corporation United States 117 460 286 556 61 644 125 843
22 Johnson & Johnson United States 116 200 157 728 39 152 82 059
23 Apple Computer Inc United States 114 719 338 516 157 908 260 174
24 Takeda Pharmaceutical Company Limited Japan 113 414 118 140 24 828 30 283
25 General Electric Co United States 112 676 266 048 55 850 95 215
17
Source: UNCTAD
 Some Ideas on Comparative Law
• Legal families:
– Common law
– Civil law
• French legal origins
• German legal origins
– Scandinavian legal systems
– Socialist legal systems
– Religious legal systems (e.g., Sharia)
• How do we divide legal families?
– E.g. common law vs. civil law: stare decisis so
different?
– Usually based on “private” law, if you look at
constitutional/public law might find surprises

18
… Just a Funny Quiz

19
 Bottom line…
• …beware of assumptions, stereotypes,
oversimplifications, generalizations…

• Sometimes they might be helpful to capture

some basic distinctions, but never stop there

• Together with convergence of legal systems,

profound differences still exist, but they might
not be where you expect them

20
 Legal Dictionary
• If you need to look up some legal
terms, a possible source is The Law
Dictionary, available at:
http://thelawdictionary.org/

21
Negotiating and Drafting
International Contracts

22
 Negotiation
• Art or Science? Nature or Nurture?
• Very difficult to offer general rigid rules that
apply to any situation, lots of variables:
– Type of negotiation: contract, settlement of a
dispute, treaty …
– Goals: single transaction or repeated game? Short
or long term relationship?
– Personal style: aggressive, cooperative? Focus on
the issue, not the person (up to a certain point...)
– Bargaining power of the parties
23
 Negotiation
• But some general rules and tactics can be
identified, for example:
– clearly identify the specific goals: how important is it to
reach an agreement?
– have a clear understanding of the “reservation price”
and of unrenounceable elements, try to figure out the
info for the other party
– information is often incomplete: sometimes you can
use it to your advantage
– time is often limited: sometimes you can use it to your
advantage (e.g. put pressure on the other party)
• The «temptation» to lie, omit information, etc.:
legal risks
24
 Psychology 101
• Detecting lies
– Facial and body language:
• Right-handed people: eyes up and to the left if they are remembering
things, eyes up and to the right when they are telling a lie.
• Mouth and nose touching, blinking;
• Eye-contact is not an indicator of sincerity; and sweating not
necessarily an indicator of a lie;
• “Incongruence”: slightly shaking the head when saying “yes”;
– What people say:
• Exaggerated details;
• Repeating things verbatim;
– Interactive strategies:
• Ask to repeat the story;
• Stare at the person with disbelief: liars become uncomfortable, people
telling the truth become upset;
• Casually suggest, in a non-offensive way that makes it sound innocent,
that you will check the story with third parties (often liars give you
reasons not to do that).
25
 Psychology 101
• Beware of Cultural Differences!
– Cross-cultural Negotiation: countless cultural
blunders, from how (and if) to hand out a business
card, to more serious issues
• https://www.youtube.com/watch?v=Boc9IutMGbk
• E.g.: negotiations between Christmas and New Year’s Day in
Italy? Or during Ramadan in Islamic nations
• Weekend in Israeli?

• To the extent possible, study before!

– … but also, do not overemphasize stereotypes!

26
 How to Effectively Negotiate
• Some people gave the following advice: “When you’re
dealing – and that’s what I am, I’m a dealer – You don’t go in
with plans. You go in with a certain flexibility. And you sort of
wheel and deal.”
– Donald Trump, as quoted by the NYT, August 11, 2015

• Prepare, prepare, and prepare:

– Terms and history of proposed transaction from a legal (one of
the first questions: applicable law?) and economic point of view;
– Goals of the client (especially, unrenounceable elements,
reservation price);
– Other parties, their possible goals;
– Timetable for finalizing the transaction;
– Client’s business and industry (for example, industry uses), how
this deal fits in the larger picture;
– Consult examples of similar contracts, but attention: tailor-made
is better, especially for complex and unique transactions.
27
 Negotiation
• Location: being the host or the guest?
– Pros and cons: authority, control of the environment (good food?
smoking?), excuse for leaving or for not having information or
documents
• Seating and location arrangements
– More competitive, more cooperative
– Use of evidence and data, e.g. slides, documents?
– “Audience”?
• Timing issues
– Lenght (empirical evidence shows that after a few hours without
progress… it’s better to reschedule); deadlines
– Preparing an agenda? (control over when you discuss what)
• How many people?
– Advantages of having as many as the other party, plus one (time
to speak, fatigue…). But not necessarily…
28
 Negotiation
• Opening offer: better to make it or to receive it?
– High or reasonable? Risk of breaking the deal, risk of losing credibility
(e.g. glass vase in Venice from $700 to $70)
– Attention: when a figure is uttered, even if quickly retracted, it lingers

• Negotiation “games”:
– Establish dominance (experience…); or hide it!
– Wooden leg: «What would you expect from a person with a wooden
leg?»: impossible client game, negotiator not responsible for rejecting
(e.g. lack of financial resources of the client, or legal limitations)
– Yes, but… (beware of cultural issues, e.g. in some countries “yes” might
simply mean “I understand”)
– Red herring: presenting a minor issue as a big one to make a concession;
Minimizing: presenting a major issue as a small one (indicators: “by the
way…”, “before I forget…” often preceed something important)

• Do not personalize, focus on the issue!

– and of course, formulate a strategy
29
 Parts of a Contract
• Preamble (name of agreement, date, parties involved)
• Recitals (why the parties are contracting – could be important!)
• Words of Agreement (parties’ intent to manifest their agreement to the
contract)
• Definitions
• Actions (e.g. goods or services to be provided and payment terms)
• Representations and Warranties
• “Boilerplate” (Standardized pieces of text for use as clauses in contracts. But
they rarely are so standardized! E.g. confidentiality, choice of law… Etimology:
boiler plates standard in ship building, or syndicated articles for local
newspapaers after Civil War)
• Signatures
• Schedules (list of information, e.g. list of materials contracts, not included in
the representations. Reasons: keep contract shorter and easy to read; often
not prepared by lawyers drafting the agreement, e.g. bank)
• Exhibits (agreements or other documents treated as part of the contracts, e.g.
financial statements)
30
 Drafting
• Clear, unanbiguous, plain English

• Common mistakes
– Use of “will”: “The laws of Spain will govern this
Agreement”, from when? Write instead: “The laws
of Spain govern this Agreement”
– Not to use “shall” to signal obligations, covenants

• Clarity through format

31
 “Boilerplate” Provisions
• Confidentiality

• Force majeure

• Choice of law

• Forum selection clause

32
 Confidentiality
• Some protections in the absence of a contract,
but weak, difficult to enforce and generally
limited to “trade secrets” (“sufficiently
valuable and kept secret”)

33
 Confidentiality
• Specific agreement:
– Broadens and clarifies the protection
– Attention: there might be competing disclosure
obligations
– Applicable laws or regulation that trump
contractual confidentiality provisions

34
 Our Little Exercise
• Your client, a U.S. manufacturer of home-brewed beer is
negotiating the acquisition of a corporation in South Korea
that has patented a revolutionary genetically engineered
type of hops.
• The negotiations require reciprocal sharing of very sensitive
economic, strategic and technical information on the two
groups, but your client is very concerned about having a
very strong confidentiality agreement in place.
• Ignoring the international implications of the deal, and the
question of applicable law, try to write a confidentiality
agreement that is as strong and bullet-proof as possible,
preventing any possible unexpected turn of events.

35
Hint on the Confidentiality Agreement
• Look at the wording and be aware of the
complexity of the agreement . . . then only
retain the most important points (see the
summing-up slide at the end)

36
 Confidentiality Agreement: Definition
of Confidential Information
Section X.01. Definitions.
(a) Confidential Information. “Confidential Information” means
(i) all information relating in any manner to the Company or its business
(including, but not limited to, financial statements, budgets and projections,
customer identities, potential customers, employees, suppliers, servicing
methods, equipment, programs, strategies, analyses, profit margins and
other proprietary information), however documented, that has been, or
may later be
(A) provided or shown to the Recipient or any of its Representatives by or on
behalf of the Company [or any of its Representatives]; or
(B) obtained from review of documents or property of, or communications with,
the Company [or its Representatives] by the Recipient or its Representatives;
and
(ii) any and all notes, analyses, compilations, studies, summaries, and other
material, however documented, containing or based, in whole or in part, on
any information included in subsection (a) (collectively, the “Derivative
Materials”).

37
 Confidentiality Agreement: Definition
of Confidential Information
Section X.01. Definitions.
(b) Exceptions to Definition of “Confidential Information.” Despite the definition
of “Confidential Information” set forth in subsection (a), “Confidential
Information” excludes information that [the Recipient demonstrates]
(i) was or becomes generally publicly available other than as a result of a
disclosure by Recipient or any of its Representatives in violation of this
Agreement;
(ii) is in the [lawful] possession of the Recipient or any of its Representatives
prior to its disclosure by or on behalf of the Company or any of its
Representatives; or
(iii) was or becomes available to the Recipient or any of its Representatives on a
nonconfidential basis [prior to its disclosure by or on behalf of the Company
or its Representatives] from a third party that [to the Recipient’s knowledge
[after due inquiry]] is not bound by a similar duty of confidentiality
(contractual, legal, fiduciary, or other).

N.B. define “Representatives”: e.g. any director, officer, executive, employees,

agent, consultant, advisor, or any other representative
38
Confidentiality Agreement: Obligation
Section X.02. Obligation to Maintain Confidentiality.
During and after the term of this Agreement, the Recipient shall, and shall
[use its best efforts to] cause each of its Representatives to, keep the
Confidential Information confidential. Without limiting the effect of the
previous sentence, the Recipient shall not, and shall [use its best efforts
to] cause its Representatives not to
(a) disclose any of the Confidential Information to any person, except
(i) [with the prior written consent of ___________ (the “Company
Contact”)]; or
(ii) as otherwise expressly permitted by the terms of this Agreement;
or
(b) use any of the Confidential Information in any way detrimental to
the Company (it being acknowledged by the Recipient that any use other
than in connection with [insert the defined term for the transaction] (the
“Permitted Use”) is detrimental).

39
Confidentiality Agreement: Unauthorized Use
and Permitted Disclosees
Section X.03. Unauthorized Use.
The Recipient shall give prompt [written] notice to the Company of any
unauthorized use or disclosure of the Confidential Information and shall assist
the Company in remedying each unauthorized use or disclosure. Any
assistance does not waive any breach of this Article by the Recipient, nor does
acceptance of the assistance constitute a waiver of any breach of this Article.

Section X.04. Permitted Disclosees.

The Recipient may disclose Confidential Information to only those of its
Representatives who
(a) require the Confidential Information for the Permitted Use (but to the
extent practicable, only the part that is required);
(b) are informed [in writing] by the Recipient of the confidential nature of
the Confidential Material; and
(c) agree [in writing] to be bound by the obligations of this Article.
40
Confidentiality Agreement: What Happens upon
Termination of the Agreement?
Section X.05. Termination.
(a) Return and Destruction of Confidential Information. Upon the
[termination of this Agreement] [written request of the Company],
the Recipient shall, and shall cause its Representatives to promptly[,
but in any event no later than ___ days after [termination] [the
Recipient’s receipt of the Company’s written request],]
(i) return to the Company all Confidential Information [furnished
to the Recipient or any of its Representatives]; and
(ii) destroy all Derivative Material [and upon such destruction, the
Recipient shall certify in writing to the Company that it has done
so].

41
Confidentiality Agreement: Conflicting
Duty to Disclose
Section X.06. Compelled Disclosures.
(a) Notification, Consultation, and Protective Orders. If the Recipient or
any of its Representatives (a “Compelled Representative”) [is requested,]
[becomes legally compelled or is required,] in any case by a court or
governmental body, to make any disclosure of Confidential Information,
the Recipient shall
(i) promptly [(but in any event no later than __ days after the Recipient
becomes aware that it is required to make such disclosure)] notify the
Company in writing;
(ii) consult with and assist the Company [at the Company’s expense] in
obtaining an injunction or other appropriate remedy to prevent such
disclosure; and
(iii) use its [reasonable] [best] efforts to obtain [at the Company’s
expense] a protective order or other reliable assurance that confidential
treatment will be accorded to any Confidential Information that is
disclosed.

42
 Confidentiality Agreement: Remedies
Problem: often best protection is to quickly obtain injunctive relief, but to
prove that monetary damages are inadequate and irreparable harm might
be difficult and lenghty
An injunctive relief is a court order requiring a person to do or cease doing a
specific action

Section X.07. Injunctive Relief. The Recipient acknowledges and

agrees that because
(a) an award of money damages is inadequate for any breach of
this Agreement by the Recipient or any of its Representatives, and
(b) any breach causes the Company irreparable harm,
in the event of any breach or threatened breach of this Article by
the Recipient or any of its Representatives, the Company is entitled
to equitable relief, including injunctive relief and specific
performance, without proof of actual damages.

43
Confidentiality Agreement: Indemnity
Section X.08. Indemnity.
The Recipient shall indemnify and defend the Company and
its Affiliates against all damages, losses, costs, liabilities and
expenses (including [reasonable] legal fees and the cost of
enforcing this indemnity), arising out of or relating to any
unauthorized use [or threatened use] or disclosure [or
threatened disclosure] by the Recipient or any of its
Representatives of the Confidential Information or any other
violation of this Article.

44
Confidentiality Agreement: Do Not
Forget…
Section X.09. Survival.
Despite any other provision of this Contract, this Article
survives any termination of this Contract or the
consummation of the transactions that this Contract
contemplates.

45
 Summing-up
• Definition of confidential information (original and
derived) - exceptions
• Obligation to mantain confidentiality and what to do in
case of unauthorized use
• Permitted disclosures
• In case of termination (return and destruction)
• Optional: what to do if disclosure is mandated by law
or regulations
• Important: injunctive relief
• Indemnity
• Survival of the confidentiality obligation

46
 Negotiating a Confidentiality
Agreement: Practical Tips
• Costs and benefits of a lenghty discussion at
this early stage of negotiation (might be worth
if your client really has confidential
information that requires protection)

• Pros and cons of showing up with an already

drafted provision/agreement (a common
problem also for other clauses)

47
 Force Majeure
“A party is not liable for failure to perform the party's obligations if
such failure is as a result of Acts of God (including fire, flood,
earthquake, storm, hurricane or other natural disaster), war,
invasion, act of foreign enemies, hostilities (regardless of whether
war is declared), civil war, rebellion, revolution, insurrection, military
or usurped power or confiscation, terrorist activities, nationalization,
government sanction, blockage, embargo, labor dispute, strike,
lockout or interruption or failure of electricity or telephone service.
If the nonperforming party asserts Force Majeure as an excuse for
failure to perform its obligation, then the nonperforming party must
prove that it took reasonable steps to minimize delay or damages
caused by foreseeable events, that the party substantially fulfilled all
non-excused obligations, and that the other party was timely
notified of the likelihood or actual occurrence of an event of force
majeure described in the paragraph above.”
48
 Choice of Law
“This contract is governed by and
interpreted in accordance with the laws
of [the designated State] …”

49
 Forum Selection Clause
“In the event of any dispute
concerning this Contract, suit can be
brought only in the courts of [the
designated State]”

50
 Wrap Up
• Started with background considerations on
transnational business law, some data on
international business, and some ideas on
different legal families and comparative law;
• Negotiation, with references to the international
context: some ideas on strategies, psychology,
culture, etc. (but as you might have guessed, I
have doubts that there are hard-and-fast rules)
• Drafting of International Contracts
– Some examples, in particular confidentiality
agreement

51
 Getting Ready . . . How to Brief a Case
• A brief might include, in outline form, the following items:

1. Title, date, court (. . . this is the easiest part!)

2. Parties: P(s): plaintiff(s); D(s): defendant(s)
3. Issue: Define the dispute before the court (e.g. Can a plaintiff get damages for late delivery
of goods?)
4. Facts: short description of the determinative facts (list the facts that the court considered
important). Distinguish the “facts” from the “legal rules” applied to those facts
5. Arguments: a summary of the arguments made by each side (do not go overboard. Record
the essential points of each side’s argument)
6. The court’s decision: the decision of the court (e.g. “Yes, New York law recognizes a right
to damages for late delivery of goods”)
7. The court’s reasoning: here summarize the court’s thinking (the reasons why the court
decided as it did)
8. Dissent (it is not always present, but sometimes, when there is a panel of three or more
judges, one of them might dissent from the majority and offer a different opinion)
• If a cases resolves several issues, go through items 5-7 separately for each issue
52