Young Lawyers

Newsletter of the International Bar Association Public and Professional Interest Division

OCTOBER 2013  VOL 19 NO 2

From the Co-Chairs Committee officers IBA Annual Conference: Boston 6–11 October 2013 Our Committee’s sessions Articles Crowdfunding in Ontario: finding the balance in fundamental securities law principles Oil royalties in Brazil Jewellery theft and VAT Brazilian National Commission for Truth The right of property in the state of Rio de Janeiro 4 5

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This newsletter is intended to provide general information regarding recent developments affecting young lawyers. The views expressed are not necessarily those of the International Bar Association.




Welcome to the second newsletter of 2013

Dr Rouven F Bodenheimer
LLS Lungerich Lenz Schuhmacher, Cologne


Heather Irvine
Conception to Completion Conference. This project has seen us work closely with the International Construction Projects Committee and the IBA European Regional Forum in such a successful and symbiotic manner that we hope to replicate the cooperation with other committees and fora on a regular basis. It is at this point that we should let you all know that as of 1 January 2014 my current Co-Chair, Heather Irvine, will be taking over the reins in this committee alongside Adam Goodman, a current Vice-Chair. As my term as Chair and later Co-Chair slowly comes to an end and I prepare to bow out gracefully, I want to take this opportunity to thank not only all of the Committee’s leadership both past and present, but also all of you, the members, who have made my time working with you not only productive and motivating but also an immense amount of fun. You are in firm hands with Heather and Adam and, of course, I shall continue to be present at Committee events to lend my support and enjoy the atmosphere and camaraderie which has developed over the years and which I hope to enjoy for very much longer! Dr Rouven F Bodenheimer
Norton Rose, Johannesburg

eedless to say, the Committee’s leadership continues to be hard at work to ensure that plans for the IBA Annual Conference in Boston are progressing and that our sessions will once again be among the most relevant and interesting for young lawyers in particular. As this edition of the newsletter contains plenty of information on our Boston plans (see pages 6–7), we will not go into much more detail in this message; suffice to say we are excited and confident that what we are organising will grab your attention during the conference week. One thing I do wish to mention is our regular ‘Night Out’ which will take place in Boston on the evening of Thursday 10 October from around 9.30pm until... well… whenever the last party animal decides to go back to their hotel! Keep your eyes and ears open for details of the venue at the conference itself – we all hope to see you there and it’s bound to be one of the wildest nights of conference week if past years are anything to go by. Recently, the Young Lawyers’ Committee co-organised a joint specialist conference which was held in September: the 5th Biennial Construction Projects from




Committee officers
Co-Chairs Rouven F Bodenheimer LLS Lungerich Lenz Schuhmacher, Cologne Tel: +49 (221) 130 8160 Fax: +49 (221) 130 8162 Heather Irvine Norton Rose, Johannesburg Tel: +27 (11) 685 8829 Fax: +27 (11) 883 4000 Vice-Chairs Garrett Miller Eugene F Collins, Dublin Tel: +353 1 202 6400 Fax: +353 1 667 5200 Adam Goodman Heenan Blaikie, Toronto Tel: +1 (416) 643 6857 Fax: +1 (416) 360 8425 Secretarys Makoto Hirasawa Okuno & Partners, Tokyo Tel: +81 (3) 3274 3805 Fax: +81 (3) 3272 2245 Catriona Watt Fox, London Tel: +44 (20) 7618 2400 Fax +44 (20) 7618 2409 Website Officers Marc Baltus Heuking Kühn Lüer Wojtek, Düsseldorf Tel: +49 (211) 600 55 257 Fax: +49 (211) 600 55 285 Robert Wakulat Wakulat Law, Toronto Tel: +1 (416) 458 4841 Communications Officers Bruno Barata Magalhaes Correa de Mello & Tolomei, Rio de Janeiro Tel: +55 (21) 8747 0210 Fax: +55 (21) 2232 4415 Masha Ooyevaar McMan & Co, London Tel: +44 75001 31642 Events Officer Rainer Kaspar PHHV Prochaska Heine Havranek Vavrovsky Rechtsanwälte, Vienna Tel: +43 (1) 714 2440 Fax: +43 (1) 714 2440 6 European Forum Liaison Officer Marco Monaco Sorge Tonucci & Partners, Rome Tel: +39 (06) 362 271 Fax: +39 (06) 323 5161 National Representatives Officers Mariana Estrade Hughes & Hughes, Montevideo Tel: +598 2916 0988 Fax: +598 2916 1003 Mark Gilligan Patton Boggs, Abu Dhabi Tel: +971 (0)2651 5900 Fax: +971 (0)2651 5955 Young Lawyers Initiatives Officer Kimathi Kuenyehia Kimathi & Partners, Accra Tel: +233 (0)302 770 447 Fax: +233 (0)302 766 870 Membership Officer Robert Steven Bernstein Holland & Knight, New York Tel: +1 (212) 513 3427 Fax: +1 (212) 385 9010

PPID Administrator Robyn Wheatley




Young Lawyers Section sessions Monday 0930 – 1230
Public inquiries and commissions
Presented by the Forum for Barristers and Advocates, the Judges’ Forum, and the Young Lawyers’ Committee Public accountability and transparency are ever on the increase. Pressure on governments to ensure accountability also increases. As a result, public inquiries and commissions of inquiry are a growing area of practice for many. Debate can be had as to the motivation for setting up, and the benefits, of such inquiries. Also, such inquiries give rise to different procedural and advocacy techniques than arise in usual litigation or arbitration. This session will consider the circumstances of, and approaches to, inquiries in different jurisdictions, including as to differing tribunals, procedure and advocacy, as well as the reports that flow from them. It will be addressed by leading barristers, advocates, and judges. SPPI are able to attract and recruit ‘fresh blood’. Hence, make this session your priority check-in for the Monday morning. And by the way, don’t worry if you can’t make head nor tail of those abbreviations used two sentences above – this will be only one of the thousand topics covered in this essential nutshell to the IBA!

Tuesday 0930 – 1230
Who wants to be an ambassador?
Presented by the Senior Lawyers’ Committee and the Young Lawyers’ Committee Are senior lawyers better ambassadors for their law firms than younger lawyers or vice versa? Assuming each can contribute in different ways, how can senior and younger lawyers best support each other in this vital endeavour? This session will address the following issues:

Monday 1430 – 1730
Young lawyers’ introductory meeting
Presented by the Young Lawyers’ Committee A must-attend if this is your first IBA event! IBA Annual Conferences can be rather overwhelming or even intimidating, particularly for those who are attending one for the first time. To help you find your way, the Young Lawyers’ Committee traditionally hosts an introductory meeting for young lawyers, to which you are warmly invited. Officers of the Young Lawyers’ Committee will provide a general introduction to the IBA, guide you through the conference programme, share with you how to get the most out of the conference and inform you of social events particularly targeted at young lawyers. We are planning to address other topics of interest to newcomers as well. Moreover, it has also become a much-appreciated tradition for the Young Lawyers’ Committee to invite Chairs from other IBA committees to present their group and plans for the conference week. This has led to the perfect win-win situation in which young lawyers learn who to address when identifying their focus of interest, and in which committees from both the LPD and

• What does the role of a law firm ambassador involve? • What personal qualities and skills does a successful law firm ambassador need and how are such skills acquired? • Is involvement in management an essential pre-requisite for an ambassador and, if not, how should an ambassador be briefed? • What should a successful ambassador be expected to bring back to his or her law firm or in-house legal department? • Is there a specific age, or age range, at which lawyers reach their peak in terms of their work production and rainmaking ability? Can lawyers really be grinders, minders and finders at the same time and is there a specific age or age range when they should change roles? • Are senior lawyers too far from the coalface and the cutting edge to do the job properly? Bright and dynamic though they may be, are younger lawyers sufficiently wise and experienced to be the main ambassadors for their law firms? Are they too busy to devote the necessary time to the role? • How do these factors differ as between large, medium-sized and small law firms, and what special considerations apply to in-house counsel as ambassadors? • How does the position differ in different jurisdictions where senior and younger lawyers are respected less or more? • How can senior lawyers successfully pass on ambassadorial goodwill to younger lawyers and how can younger lawyers best succeed to such goodwill?




Wednesday 0930 – 1230
Construction – a wide playing field for lawyers
Presented by the Asia Pacific Regional Forum, the International Constructions Project Committee and the Young Lawyers’ Committee Construction law is a relatively young, highly specialised area of legal practice; one in which it is vital that lawyers new to the field have a strong grasp of both legal doctrine and technical understanding in order to ensure that lawyer and client speak the same language. Construction law is intrinsically functional and pragmatic – architects, engineers and lawyers each bring their own knowledge and perspective to the table – and the lawyer failing to recognise will likely cause friction and even fundamental problems. As construction law is not purely about ‘legal’ matters as such, but also often requires a need for understanding technical terms, engineering failures or design flaws on the part of the lawyer, what better way to learn and gather understanding than from more experienced colleagues and even clients? This session will discuss what benefits experienced lawyers and those new to international construction law can glean from each other in this complex and fast-developing area of the law.

property development and client protection. These are discussed in the context of various property transactions, including issues of: • • • • • statutory requirements for property development; financing and accountability of lawyers; contract negotiations; confidentiality and disclosure requirements on parties; ethical obligations on lawyers involved in dispute resolution for property matters; • protecting the rights of the client; and • dealing with the unethical conduct of others and what professional standards are required.

Thursday 1800

Young lawyers’ reception
Sheraton Boston Hotel The highlight of the reception will be the presentation of the prestigious IBA Young Lawyer of the Year Award in recognition of William Reece Smith Jr. Sponsored by 

Wednesday 1430 – 1730
The thin red line – cartels, fraud and corruption
Presented by the Business Crime Committee and the Young Lawyers’ Committee • When does cartel conduct become criminal? • Where does the boundary between a purely administrative offence, and a criminal one, lie? • Does criminalisation of cartels enhance competition law enforcement? • Recent trends in cartel criminalisation. • What different kinds of legislation regulate bid-rigging? • How do different regulators deal with corrupt bid- rigging, and how do they coordinate their investigations and prosecutions? • What are the potential sanctions for bid-rigging involving corruption (administrative penalties, criminal sanctions, future exclusions from public works) and how do these factor into the decisions made by leniency applicants?

Friday 0930 – 1230
The role of secretaries and other third parties in assisting arbitral tribunals to render awards in international arbitration – a coffeehouse debate
Presented by the Arbitration Committee and the Young Lawyers’ Committee This session will explore the use by arbitrators of tribunal secretaries and other third parties, including counsel at the administering institution, law clerks, associates in law firms and in-house experts, in assisting arbitrators to fulfil their duty of determining the parties’ dispute and rendering the award. The session will identify existing concerns about the involvement of such third parties in the arbitral process: • How visible should their contribution be to the parties? • What are the limits to their involvement? • Should the parties bear their costs as part of the costs of the arbitration? This is a lively and controversial topic in light of the recent ICC revised note on the use of secretaries and concerns raised by commentators and practitioners about so-called ‘super arbitrators’ who attend tribunal deliberations after having been briefed on the issues in the case by a team of researchers.

Thursday 1430 – 1730
‘Swimming with land sharks’: property transactions and ethics
Presented by the Professional Ethics Committee, Real Estate Law Committee and Young Lawyers’ Committee This session addresses the nature of property transactions and the ethical obligations on lawyers in the context of regulation,




Crowdfunding in Ontario: finding the balance in fundamental securities law principles

Robert Wakulat
Wakulat Dhirani, Toronto

Nabil Dhirani
Wakulat Dhirani, Toronto


his past spring, the US-based gossip website Gawker raised just over US$200,000 in approximately two weeks in an effort to purchase an alleged video that depicted the Mayor of Toronto, Rob Ford, smoking crack cocaine with local drug dealers. Ethical questions aside, this is only the latest, and perhaps most esoteric, demonstration of the power of the growing crowdsourcing phenomenon. In the short time that crowdfunding platforms have existed, funders have supported a wide variety of successful projects including Sundance films, a whiskey distillery and a bicycle-powered backyard farming business. According to,1 more than US$2.7bn was raised in 2012 via these platforms. This year, that amount is expected to increase to US$5.1bn. Crowdfunding is hot. Crowdfunding has been defined as seeking ‘financial contributions from online investors, sponsors and donors to fund for-profit or non-profit initiatives or enterprises’.2 Crowdfunding can generally be broken down into a number of variants including: • the donations model, with no expected financial return; • the rewards model, under which funders expect a tangible benefit, such as the privilege to order a company’s products in advance, receive a discount on a product or get access to exclusive content; and • the investment model, where funders provide money in exchange for an equity stake or provide small-scale loans. To date, approximately half of all crowdfunding proceeds have been directed towards donations and rewards-based projects.3 An early example of a crowdfunded success story is the watchmaker Pebble.4 In order to realise its goal of developing an ‘e-paper smart watch for iPhone and Android’, Pebble used a rewards-based model to become the most highly funded Kickstarter project to-date by raising US$10.27m from 68,928 backers.

The donations and rewards models continue to be wildly popular, but this trend is expected to change as more funders gain the ability to participate in equity crowdfunding projects. While both Australia5 and the UK6 have hosted operating equity crowdfunding platforms for a number of years, the passing of the American JOBS Act (Jumpstart Our Business Startups Act)7 is anticipated to drive broader adoption of this model. The JOBS Act was signed into law on 5 April 2012, with the objective of easing US securities regulations for small to medium-sized businesses engaged in equity financing. Unfortunately, the US Securities and Exchange Commission has delayed publishing the applicable rules and regulations for its implementation, so equity crowdfunding is still not yet available. However, the JOBS Act’s passage has kickstarted the interest of other jurisdictions in examining the viability of this option. In the Province of Ontario, the Ontario Securities Commission (OSC) released a paper for public feedback and commentary on 14 December 2012 (OSC Staff Consultation Paper 45-710: OSC Exempt Market Review)8 that examines a potential exemption to enable the issuance of crowdfunded equity for local companies. The OSC’s examination takes into account its dual mandate under section 1.1 of the Securities Act (Ontario)9 to (i) provide protection to investors from unfair, improper or fraudulent practices; and (ii) foster fair and efficient capital markets and confidence in capital markets. In conducting its review, the OSC situated a potential crowdfunding exemption within the broader ‘exempt market’. One of the key principles of Ontario securities law is that ‘securities may not be distributed unless a prospectus is filed with and receipted by the OSC’.10 A prospectus sets out information about the issuer of the securities (the ‘Issuer’), describes the securities and canvasses the anticipated risks

Zev Smith
University of Windsor, Ontario



facing the Issuer. It also provides certain rights to investors, such as the right to sue for damages in the event of a misrepresentation. In order for securities to be issued without a prospectus and qualify as an ‘exempt distribution’ in the ‘exempt market’, the transaction must meet the terms of an available exemption. These exemptions are primarily enumerated in National Instrument 45-106 and include the accredited investor exemption; the founder, control person and family exemption; and private issuer exemption.11 The crowdfunding exemption is proposed to be in addition to these already established exemptions. The OSC proposal closely tracks the approach in the JOBS Act. Its objectives are to allow for equity-based crowdfunding while simultaneously mitigating risks to investors. The OSC’s consultation paper put forth a concept idea for discussion purposes and, based on the received feedback, it will consider modifying the exemption parameters or ending its exploration entirely. A distribution under the crowdfunding exemption would involve three parties: the Issuer, the investor and a funding portal. As in the UK and Australia, the OSC proposes registering funding portals. Portal activity (ie, showcasing investment opportunities and matching Issuers with investors) will generally constitute trading or advising activity under the Securities Act (Ontario), which would normally require registration under an appropriate dealer or adviser category.12 According to the OSC, this registration requirement ‘is an important investor protection measure necessary to address… integrity, proficiency and solvency requirements applicable to funding portals and the persons operating them’.13 Having said that, the OSC also recognises that a funding portal would undertake relatively limited activities in comparison to established categories and may accordingly circumscribe this requirement to some extent. In addition to protecting investors via portal registration, the OSC has also proposed certain Issuer restrictions and investor protection measures. The four primary Issuer restrictions are: • Qualification criteria: The Issuer, and its parent and principal operating subsidiaries, if any, must be incorporated or organised under Canadian laws and must have their head offices located in Canada. • Limit on security: The issuance of securities will be limited to common shares;

non-convertible preferred shares; nonconvertible debt securities linked to a fixed or floating interest rate; and securities convertible into common shares or nonconvertible preferred shares. • Limit on offerings: An Issuer cannot raise more than CAD1.5m in any 12-month period. • Limit on advertising: Other than the funding portal and the Issuer’s website, no other marketing initiatives may be undertaken. However, social media use would be permitted to drive investors to the portal or the website. Even greater investor protection would be put in place through a number of other conditions: • Investment limits: An investor could not invest more than CAD2,500 in a single investment or more than CAD10,000 in total in a calendar year. • Disclosure: The investor must be provided with sufficient disclosure, which includes information certified by the Issuer about the offering, the Issuer, the funding portal and any other registrant involved. This information would include a description of principal risks and audited financial statements for distributions over CAD500,000. • Risk acknowledgement. The Investor must sign a risk acknowledgement form confirming they are within the investment limits, can bear the loss of their entire investment, and that the investment is highly illiquid. • Cooling off period: Investors will be able to exercise a withdrawal right within two business days. • Ongoing disclosure: Investors are entitled to annual financial statements and the Issuer must maintain records about the issued securities, names of investors and the use of funds. The OSC public comment period on its Consultation Paper concluded on 8 March 2013 with over 100 comment letters received. While investor-protection remained an outstanding issue to a minority of respondents, generally speaking the proposal earned widespread support. Many of these respondents view crowdfunding as a means to accelerate innovation and ‘democratise’ markets. As noted by crowdfunding provider HiveWire Inc, ‘having limited access to capital based on gender, race, or (dis)ability is neither fair nor efficient, yet there are clear indications of inequality in our system that directly impact many Ontarians’.14 In particular, they cited Kauffman Foundation research indicating that only four to nine


per cent of all venture capital funding goes to women-owned businesses. Along with other respondents, HiveWire has faith that crowdfunding could alleviate these types of capital market inclusion issues. Other key reasons that were given to support a crowdfunding exemption included: • Funding gap: It would increase the availability of capital for investment in SMEs. Respondents identified a gap in funding for projects in the CAD1–2m range, which could be addressed by growing the pool of available capital. • Market validation: By committing funds to a project, the crowd may also offer market validation for that product. A recent wellknown example was reaching a US$2m goal in less than two days for the resurrection of the Veronica Mars television show as a film project. (Sceptics note that crowds have previously channeled investments into situations that turned into asset bubbles.) • Disincentive to commit fraud: It was suggested that the power of social media will prove to be a greater investor protection tool than regulation because Issuers would be better known to investors via their online interactions. The power of the crowd would ultimately expose fraudulent Issuers. • Market competitiveness: Once the US implements its equity crowdfunding model, it will start attracting entrepreneurs and innovators keen to take advantage of the opportunity. The OSC’s adoption of a crowdfunding initiative would ensure Ontario avoids the risk of lagging behind in the North American investor landscape. These supporting attributes were counterbalanced by a number of concerns including: • Investment risk: It has been argued that it is more likely that poorly informed investors will lose their money by betting on companies they haven’t thoroughly vetted or, in a worst case scenario, are defrauded of their savings. • Illiquidity: There was agreement among respondents that the liquidity of investments is a concern perhaps leaving investors with stakes they can’t easily sell, and thus potentially be saddled with tax liabilities they can’t honour. • Disclosure format: Given the anticipated wide range of investor sophistication, the format of an easily digestible yet effective form of disclosure remains unresolved. Alternative media formats such as short videos or PowerPoint presentations have

become widely adopted in rewards-based campaigns, but whether they should replace or supplement other legal disclosure documents remains a live issue. • Investment appeal: Equity crowdfunding can result in thousands of shareholders, each with fractional interests in the Issuer that may create challenging governance structures for businesses in the early stages of development. This could complicate conducting routine corporate business and arranging future financings. Even if equity investors are given non-voting shares, Ontario corporate laws give shareholders the right to vote in respect of certain fundamental changes. While the above concerns were focused on the impact to the exempt market and investors, the legal profession itself will face a few questions on how to respond to an investment landscape that includes crowdfunding. In a presentation put together by the Law Society of Upper Canada, Alison Manzer of Cassels Brock cautioned that any legal advice sought by Issuers would only reduce the already modest funds available to them, and deter investors by adding unnecessary complexity to the transaction. More significantly, she noted that crowdfunding is liable to create greater risk exposure for lawyers. For instance, given the limitation on fundraising totals, clients may attempt to maximise investor dollars by constraining legal fees through limited mandates, which could prevent lawyers from comprehensively assessing the associated risks. Or, more ominously, the nature of crowdfunding participants may lead them to be more liable to engage in a breach of disclosure obligations and/or commit fraud. These risks are likely to increase considerably if the lawyer uses his or her trust account to collect and disburse the funds. Based on feedback for the proposed crowdfunding exemption from both market participants and the legal profession, a much clearer picture has begun to emerge for the OSC on the best way to move forward. In particular, while OSC Vice-Chair James Turner has acknowledged the risks involved with implementing an exemption, he has also publicly expressed a personal preference to see, at a minimum, a pilot project be set up to integrate the opportunity into the province’s investment landscape. This is in contrast to the Commission’s prevailing view to maintain the status quo. The OSC continued its review with a roundtable discussion for investors



and potential investors in start-ups in June 2013 and has indicated that its response to the consultation paper and this roundtable will be made public in early Autumn 2013. Other Canadian regulators, most notably the Autorité des marchés financiers in Quebec, are also reaching out to the public in order to gauge interest in crowdfunding. In the meantime, Canadians are left to scratch their crowdfunding itch by exchanging cash for rewards related to projects such as graphic novels, video games, string quartets and alleged videos of their mayors smoking illicit drugs.
Notes 1 See 2, last accessed 5 June 2013. 3, ‘2013CF The Crowdfunding Industry Report’, Massolution, 2013 at 7. 4 See 5 See Australian Small Scale Offerings Board at:

6 See CrowdCube at: 7 See: Business_Startups_Act. 8 Ontario Securities Commission, ‘OSC Staff Consultation Paper 45-710: Considerations for New Capital Raising Prospectus Exemptions’ OSC, 14 December 2012. 9 RSO 1990, chapter S.5 10 See note 5 above at 6. 11 Ontario Securities Commission, ‘National Instrument 45106: Prospectus and Registration Exemptions’ (2009), 32 OSCB. 12 See note 6 above; Clause (e) of the definition of ‘trade’ in section 1(1) of the Act includes ‘any act, advertisement, solicitation, conduct, or negotiation directly or indirectly in furtherance of’ a sale of a security. OSC and court decisions have held that establishing a website that offers securities or information about securities offerings to investors through the Internet constitutes an act in furtherance of a trade. Where this type of trading activity is conducted with regularity and for a business purpose, the OSC will generally consider the funding portal to be ‘in the business’ of trading or advising and therefore subject to the dealer or adviser registration requirement. 13 See note 5 above at 30. 14 Asier Ania and Christopher Charlesworth, ‘HiveWire Public Comment to the OSC’, at 2013/03/14/hivewire-public-comment-to-the-osc.

Bruno Barata Magalhães
Corrêa de Mello & Tolomei, Rio de Janeiro

Oil royalties in Brazil


il royalties in Brazil are shared between states, municipalities and the producers who have suffered costs associated with the operation. Although the oil, as a commodity, belongs to the Federal Union, its production raises a number of costs and risks for the local entities and communities in the territory of the exploration and extraction. As a result of this, the Constitution requires compensation to the states and municipalities. With the creation of Federal Law No 12,734/12, the sharing scheme has been changed with royalties now shared among all the states and municipalities across the country. Thus, non-producer states now take advantage of an unusual compensation scheme for losses that they have never experienced. For this reason, the state of Rio de Janeiro filed a lawsuit at the Supreme Brazilian Court

questioning the constitutionality of the law (Claim No 4,917). The minister, Carmen Lucia, was the rapporteur of the claim and approved the suspension of the effects of the law. The suspension will last until a decision is reached by all of the ministers. The reasons for the suspension of the law by the Brazilian Supreme Court were as follows: ‘The relevance of the grounds submitted in the application of this claim by the governor of the state of Rio de Janeiro and the legal plausibility of the arguments it exposed regarding the undeniable risks to legal, political and financial security of states and municipalities experiencing uncertainty as to the rules levied on payments to be made by federal entities, some arising out of improved concessions and rights arising therefrom, have met the instant precautionary measure required for approval.’




Jewellery theft and VAT

Masha Ooyevaar
McMan & Co, Amsterdam mooyevaar@


n 6 October 2007, a spectacular armed robbery, which included the taking of hostages, took place at a Harry Winston store in Paris. Among the items stolen that day was jewellery that Harry Winston had placed under a customs warehouse regime. This regime allows suspension of payment of customs duties and Value Added Tax (VAT) until the items are removed from the customs warehouse and placed into free circulation within the EU. As the warehouse keeper, Harry Winston was responsible for keeping the goods under customs supervision. Following the robbery, the French customs administration sought payment of the duties and VAT on the stolen jewellery items from Harry Winston. After an unsuccessful appeal with the customs authority, Harry Winston brought the matter to the French courts. Ultimately, the Court of Cassation, the highest court in the French judiciary, directed two questions to the Court of Justice of the European Union (CJEU): • whether the EU Customs Code could be interpreted to mean that the theft of goods held under a customs warehouse arrangement amounts to the ‘irretrievable loss of the goods and a case of force majeure’ (ie, ‘causes that are outside the control of the parties, such as natural disasters, that could not be evaded through the exercise of due care’)1; and • whether theft of such goods give rise to a ‘chargeable event’ and to cause the (import) VAT to become chargeable.2 The CJEU focused solely on the wording of the Customs Code and case law that defines it. The Court concluded that, contrary to the opinion of the referring court, the facts in this case were covered by Article 203 of the Code that states that a customs debt arises when goods are removed from customs supervision. A robbery is undoubtedly a removal leading to the occurrence of a customs debt. Contrary to other customs debt articles, Article 203 does not provide for an exoneration clause like irretrievable loss of the goods and force majeure.

Also with regards to VAT under the second question, the CJEU held that the theft of goods from a customs warehouse arrangement will give rise to a chargeable event and since import VAT follows the customs rules thus import VAT will become payable. This case underlines the severity of regulatory requirements placed upon importers of goods that are stored under customs warehouse arrangements. Interestingly, the issue of whether Harry Winston, as the innocent victim of the theft – and not the robbers – should have been the party responsible for the customs debt in the first place, was not addressed by the Court. Article 203(3) Customs Code gives several definitions of debtors, such as, ‘the person who removed the goods’, ‘any persons who participated in such removal’ and ‘the person who acquired or held the goods in question’ (or in other words in this case: the robbers, the accomplices and the fence). The last definition in this list is ‘where appropriate, the person required to fulfil the obligations arising from temporary storage of the goods or from the use of customs procedure under which those goods are placed’. Since the customs authorities were unable to claim the debt from the robbers and accomplices, they probably used this last option and claimed the duty and the VAT from Harry Winston. Whether a hostage-taking robbery, such as in this case, constitutes ‘where appropriate’ is strongly debatable. Apparently, even a brutal armed robbery was not a sufficient reason for French customs to waive the duties and VAT from the innocent warehouse keeper. Another sour point for Harry Winston was that, had the goods been robbed from the store (and not from the bonded warehouse) then no VAT would have had to have been paid because, according to the CJEU, a shopkeeper is not responsible for VAT if the goods are stolen.
Notes 1 Legal Dictionary, ‘force majeure’ at: 2 C-273/12, France v Harry Winston SARL [2013], paragraph 23.




Rodrigo Lopes Lourenço

Brazilian National Truth Commission


ince the 16th century, black people were brought to Brazil and terribly exploited. Whip, rape and murder was usual. After 13 May 1888, the date of the theoretical abolition of slavery, up to 5 October 1988, the date of the promulgation of the effective Constitution, black people continued to be the victims of torture and were significantly more likely to go to jail. Torture in Brazil, from the 16th century until the beginning of the last dictatorship, obeyed a heinous unwritten rule: torture was reserved for black people, the poor and prostitutes. The last dictatorship disobeyed this unwritten rule and barbarously tortured white people, middle class lawyers and college girls. Denying that torture took place is a lie; however, choosing only to investigate certain occurrences of torture is deeply racist. Throughout Brazilian history, black women have been raped in slave houses and in many government facilities and when this has happened, nobody seems to care. However, during the dictatorship the unwritten law about only torturing black people, the poor and prostitutes was discarded and many white college girls affiliated to anti-dictatorship movements were tortured and raped. Today, the Brazilian National Commission for Truth is investigating the crimes committed against rich, white Brazilians. And why is this the case? Because for them, torture against white and middle class people is not acceptable. In São Paulo, the most important business city in Brazil, between October 1975 and January 1976, a famous journalist and a poor metallurgist were brutally tortured and assassinated by police and military officers. Even General Geisel, at that time the Brazilian president, was able to link both episodes and, for that reason, he relieved General Ednardo of the command of the Brazilian II Army. What did the Brazilian people do? In order to protest against the murder of Vladimir Herzog,

the famous journalist, a great religious meeting was held in the biggest cathedral in São Paulo. Where was the mass for the soul of Manoel Fiel Filho, the poor metallurgist? It was certainly not in the cathedral. Two years before the religious meeting for the famous journalist, a catholic mass, again at the São Paulo cathedral, had been held for a victim of the dictatorship. In March 1973, a mass was celebrated for the soul of a college student, barbarously tortured at the same place where the journalist and the worker died. The student was Alexandre Vannuchi Leme. So, for the souls of the famous journalist and the college student, the religious meeting took place at the most important cathedral in São Paulo. Why did nobody pray in the cathedral for the soul of Manoel Fiel Filho? Perhaps because his torture and death seemed to respect the unwritten rule that torture was acceptable for use against black people, the poor and prostitutes. The Brazilian National Truth Commission, created by Federal Law No 12,528, will be interested in the repulsive acts of Cenimar, the Center of Information of the Navy, during the last dictatorship. There, during the dictatorship, many crimes were committed against people who were not black, or poor, nor prostitutes. Unfortunately, the Commission will not investigate the shameful episodes that lead to the ‘Whip Revolt’, which, in 1910, lead black navy men to rebel against the way the Brazilian navy punished their alleged mistakes. Nobody should deny that the last dictatorship tortured and killed many people. However, poor and/or black Brazilians continue to suffer these same tragedies. There is a high risk that the only result of the Brazilian National Truth Commission will be the confirmation that, in Brazil, it is only a crime, a shame or an error to torture people who are not black, poor or a prostitute.




The right of property in the state of Rio de Janeiro

Rafael Picciani
Department of Housing, State of Rio de Janeiro


he right of property is a kind of social right inserted in the Brazilian Federal Constitution (Article 5). Therefore, it is a constitutional precept that, rather than observed, must be guaranteed. In this sense, and to regulate this right, in 2001 the effects of National Law No 10.257 (known as the ‘City Statute’ and which established general guidelines of urban policy, and in 2009, the effects of National Law No 11.977, which creates the social programme ‘My House, My Life’ and establishes regularisation in urban areas), were initiated. The law, which has an impact across the country, created a programme for the production and acquisition of new housing or redevelopment of urban property and production or renovation of rural housing for families with incomes of up to BRL4,650. The regularisation is the set of legal, urban, environmental and social measures aimed at regularising informal settlements, guaranteeing the right of property for their occupants. Therefore, the above-mentioned regularisation should note vectors as the social function of urban property, spatial segregation, vulnerable spaces and urban policy. Such legal measures are consistent with the ‘My House, My Life’ social programme, which is part of the National Urban and Rural Housing Programmes. In the state of Rio de Janeiro, it is possible to say that the advance of legislation in legal and administrative instruments for the promotion of the right of property has accelerated the process of regularisation of social interest. It is an irreversible process that is part of a set of actions of the state government to eradicate poverty and social inequalities in their territory. The recognition by the government of that right in irregular areas enables citizens to have universal access to all the benefits of the formal city. The address allows legalised proof of residence, which shows a significant portion of residents are hiding, and makes the recipient able to claim urban interventions that ensure

basic infrastructure. Also it promotes access to services as well as ensuring the right to transfer their house to their heirs. In this sense, the state of Rio de Janeiro has expanded its local rules to improve – and facilitate – the application of the laws. Thus, the parliament approved Complementary Law No 131/09, which creates the Institute of Land and Cartography, responsible for land regularisation and promotion of donations by public deed. They then also approved the Complementary Law No 144/12, which allows the same institute to carry out the donation of the administrative form, and transfer to the state the notary fees and responsibility of the beneficiary families. No less important was the establishment of partnerships between institutions for the full implementation of regularisation. The stand out partnership is between the Public Defender’s Office of the Institute of Land and Cartography, which has consolidated itself as a great notary engaged in land tenure and conflict mediation in cases of land dispute. Currently, about 800 communities are in the process of regularisation in the state of Rio de Janeiro. There are urban and rural areas where the goal is to reach the issuance of 38,000 property titles by the end of 2014. If seeminly insufficient demand in the state of Rio de Janeiro (where the housing deficit is estimated at 430,000 units, including areas not regularised) indicates, however, that the implementation of these legal instruments as public policy does fulfil the social function of the land, and its action has far-reaching consequences. The awarding of 10,200 property titles in 2012 illustrates this, as this is the equivalent of the entire work of regularisation performed in the previous decade (1996–2006). It is necessary to assign the fulfilment of these goals to the merits of the Brazilian legislation and, in the case of the state of Rio de Janeiro, the local legal mechanisms and institutional partnerships.

Bruno Barata Magalhaes
Corrêa de Mello & Tolomei, Rio de Janeiro