Class notes :

Evaluation : final exam

Business law key words :

• Contract laws
• Customs.
• Legal disputes in cross border transactions
• Investments at international level

Plan :
• Intro
• Actors and institutions (international and regional organisations, non gvt
organisations)
• Anti-trust rules (anti-competitive abuse of dominant position , monopoly and state aids
and M&A rules) => tough section of the course hence 2 sessions for the topic
• Case studies
• Feedback on the case studies
• Companies investing abroad : rules & risks connected to foreign direct investments
• Commercial disputes arising out international transactions between companies
• Case studies in class
• Various case studies putting into practice all the elements covered.

Introduction : class 1 slides

Free trade : goods circulate between countries without restriction, no customs, quotas, etc.

In the EU there’s free trade because it’s a custom union agreement in the regional
organisation. And the theory is that there’s no discrimination between trading partners. No
discrimination against imports or interference with exports by additional tariffs or quotas and
customs.

Customs unions is an example of protectionism and one of the consequences is that

consumers have to pay.

There are risks to free trade and one of the big ones is there is strong competition in
international markets so once the transactions happens between different countries everything
is more competitive.

International transaction : a transaction involving 2 companies based in different countries.

International contracts should be flexible to allow room for changes in case the contract is
translated and the content should remain unchanged once translated.

Globalisation : interdependence between countries economically.

Liberalization of trade allows companies to have access to markets in another country.

Scenario : A French company sells leather clothing. The boss is looking for new markets
(Scottish, Swedish, Spanish, Russian). Is it legally feasible ? does it make sense ? Legal issues
? Advice yes/no ?

Scottish market Swedish market Spanish market Russian market

 • Environmental • Free trade, • Free trade, • Political climate

compliance member of the member of the is not good
obligations EU EU
• Intellectual
• Brexit : customs • Intellectual • Intellectual Property rights
will depend on Property rights Property rights
the origin of the • For all leather
material in our • Tolerance : For • Tolerance : For clothes, labels
case the origin of leather goods leather goods have to have
the leather, sold in Europe, sold in Europe, “contains non
whether it’s EU leather has to be leather has to be textile parts of
made or not. maximum 15% of maximum 15% of animal origins”
the product’s the product’s and labels have to
• Intellectual final price. final price. be attached or
Property rights printed
• For all leather • For all leather permanently on
• For all leather clothes, labels clothes, labels the product and
clothes, labels have to have have to have visible to
have to have “contains non “contains non consumers
“contains non textile parts of textile parts of
textile parts of animal origins” animal origins” • Sanctions.
animal origins” and labels have to and labels have to
and labels have to be attached or be attached or •
be attached or printed printed
printed permanently on permanently on
permanently on the product and the product and
the product and visible to visible to
visible to consumers consumers
consumers
• Voluntary • Voluntary
• Proof of origin : restrictions restrictions
prove that leather
originates in your • REACH • REACH
country and regulation : regulation :
fulfils all chemical chemical
conditions. components components

• Voluntary It is feasible It’s feasible

restrictions so the
company has to
do it’s due
diligence.

• REACH
regulation :
chemical
components

 Actors and institutions (international and regional organisations,

non gvt organisations) – Class 2 slides.
What states do have an impact on companies because of national laws, treaties signed that
impact what companies can do on an international level.

International organisations (WTO, IMF, WB) :

• World bank : is a global institution (not a bank) that offers financial assistance to
developing countries around the world.
• IMF : the international management funds fosters global growth and economic
stability. Ex : Greece which is in an instable economical situation, the IMF funded
some part of the help that went to Greece and the other part was funded by the EU and
the EU bank.
• The WTO : is an international organisation that operates global trade rules. Based in
Geneva. It’s a foreign negotiation between the member states to decide the rules that
will rule international trade.

In case of disputes, states and states only have the possibility to bring it in front of the
WTO, companies can’t.

Rules & principles of WTO :

o Non discrimination : all the imported goods are taxed the same unless it’s part
of the agreement on the WTO. In case states have an exclusive agreement like
France and Quebec, the WTO applies the minimum treatment.
o Market access : customs, non-tariff barriers, quotas. Import bans can be
acceptable if they’re limited in time, if there’s danger for health on consumers,
it must also be proportionate (a reasonable action). The WTO can check if the
reasons are valid.
• The WTO members can protect their industries through import duties and non-tariff
measures.

Workshop :

Future reform of the WTO

Read: https://www.wto.org/english/news_e/news20_e/ddgaw_27may20_e.htm
⇨ Deputy Director-General Alan Wolff 27 May : Trade Forecast. Due to the direct
effects of the pandemic, depressing both supply and demand, as well as to a much
lesser extent trade measures, the WTO has projected that global trade will decline by
13% to 32% this year, 2020.

 ⇨ basic principles. The first two, not obvious to all of us today, are supporting peace and
stability. This was the key concern of the founders of the multilateral trading system in
1948 and the central objective of conflict-affected and fragile acceding members
today,

Other values, such as nondiscrimination, transparency, reciprocity, international

cooperation and the rule of law are more obvious. Still others are more nuanced, less
obvious perhaps, and emerge only upon reflection. They include well-being, equality,
sovereignty, universality, development, market forces, convergence and morality. A
recent addition to the list is sustainability.

Regional organisations & non gvtal organisations : class 2 slides

Anti-Trust & competition rules: Class 3 slides
If a company fails to follow the rules, they pay fines. Huge fines.

Article 101 :

Illustration : when companies decide to go with the same price as their competition (high
price), it’s a disadvantage to the customer because there’s less choice so it’s a breach of the
treaty. But when they go with the lowest price, there’s no negative impact on the consumer,
there’s no breach of the anti-trust law.

When companies decide to fix prices they enter into a written agreement ( a cartel ), the EU
commission and the autorité de la concurrence in France are in charge of ensuring that
companies comply with the competition rules defined by article 101 TFEU.

When calculating the fine, the authorities look at the profits made, period of time in which
they were involved.

Because of the secrecy that surrounds cartels, the companies that denounces the others gets
off without fines.

Article 102 :

Illustration : When Microsoft prevented Sun Microsystem from penetrating the OS market by
abusing their position as leader on the market (by not allowing the manufacturers to work
with Sun Microsystem). Ms breached article 102 TFEU and they paid a fine. Being a leader is
not the issue, abusing that position is the problem.
• Leadership position => market share (30 – 40 percent)
• Abuse of the leadership position => intention from the company to prevent
competitors from entering into the market. => negative impact on the consumer.
(when there’s no negative impact on the consumer then there’s no breach).
• If all conditions are met then there is breach.

 Merger – Regulation n°. 139/2004

In case of mergers, the EU commission is implied when the combined aggregate worldwide
turnover of all the undertakings concerned is more than EUR 5000 million ; and the aggregate
Community-wide turnover of each of at least two of the undertakings concerned is more than
EUR 250 million.

Scenario : for the merger of 2 big companies, the commission was worried that it would
reduce competition and the companies will be in a leading position, which might lead to high
prices and a negative impact on the consumers. So for the merger to be accepted the
commission imposed them to sell a branch so the size can reduce and hence be at the same
level as the other players on the market.

State aid
A state aid is when the gvt give money to a company to help it. For the government to be able
to do that, it has to be able to get permission from the EU commission. For it to be accepted,
the gvt have to prove that :
• There has been an intervention by the State or through State resources which can take
a variety of forms (e.g. grants, interest and tax reliefs, guarantees, government
holdings of all or part of a company, or providing goods and services on preferential
terms, etc.)
• The intervention gives the recipient an advantage on a selective basis, for example to
specific companies or industry sectors, or to companies located in specific regions
• Competition has been or maybe distorted
• The intervention is likely to affect trade between Member States.

Investments (class 6 : cross border investments)

When looking for new clients in a new market, various ways exist like selling on the internet,
building a new factory and opening a shop.

Risks involved are :

• Failure and loss
• New competition
• Political instability
• Political stability
• Fluctuation of the currency
• Cultural differences

 • Customs duties & customs formalities

• Laws such as tax law, employment law etc…
• IP rights
• Counterfeit goods.

Ways to resolve an international conflict arising out of an international transaction.

Expertise => opinion => accepted => issue / problem is resolved

=>not accepted => dispute will remain => courts(litigation)

Clause in the contract ⬄ outside the court system

Alternative dispute resolution :

⇨ Mediation

⇨ Conciliation

⇨ Arbitration

Litigation (going to court) :

⇨ The judge is the one who makes the decision and he isn’t chosen by the parties in
conflict. There may be issues of neutrality, dependence (financial connection to the
parties), impartiality.
⇨ The law is not chosen by the parties (usually the law of the land is used)

⇨ Language

⇨ Civil law cases are open to the public. No confidentiality (disclosure of information)

⇨ The losing party pays for their legal fees, the winner’s fees and the compensation.
o For ex : the value of the contract is 50k, damages are 100k, legal costs are
100k, winner’s legal costs are 120k, court time 5k.
o When the value of the contract is so small, it might not be worth it to go to
court?
o In case the loser refuses to pay, you can go back to court and go for the assets.

⇨ Enforcement of judgement : what happens if the losing side can’t pay ? In case the
loser refuses to pay, you can go back to court and go for the assets.

ADR (alternative dispute resolution) ⬄ private justice

you need a clause in the contract, the benefits of ADR is that the 3 ways are flexible (it can
even be done virtually)

 ⇨ Mediation

⇨ Conciliation

⇨ Arbitration

Mediation Conciliation Arbitration

⇨ Mediator : third party,
neutral, independent,
impartial.
A mediator is a facilitator of
negotiation.
The mediator chooses :
➢ the language
➢ place
➢ timing (3 months – 1
year max)
➢ cheap (the mediator
choses the rates)
➢ Technical knowledge.
For mediation to work, the 2
parties must be willing to
cooperate.
The benefit of the 3 is that they’re cheap, easier and quick.
⇨ Same principle as ⇨ The arbitrator renders a
mediation : decision that is legally
The conciliator choses : binding on the parties
➢ the language ⇨ The arbitrator is a
➢ place lawyer .
➢ timing (3 months – 1 Before choosing the
year max) arbitrator, lawyers and the
➢ cheap (the mediator parties have to make sure
choses the rates) the arbitrator has never
➢ No technical worked for either of the
knowledge required parties before.
but it’s better to have
a lawyer be a
conciliator.
In this case the conciliator
will help and make a proposal
to solve the dispute.

We work for Fabulous planes SA, country N is India.

Advantages Inconveniences
Mediation • Mediation is cheaper than litigation • With mediation, the parties
• This means of dispute resolution don’t always reach an
allows the parties to keep their agreement and it can be a
business private as there’s no waste of time in that case.
audience like it can happen in civil • Mediation relies heavily on
cases. good faith which is not
• Mediation can help the parties always good as one of the
preserve their relationship. parties or both can give
• Mediation is more flexible as the incorrect information.
parties can participate virtually and
the mediator can choose a place
that’s easily accessible by the 3.
• Mediation allows for more flexible
solutions and settlements as the
decision is always equitable and
agreeable by both parties than court

 Conciliation • The parties will choose the
language, the place of meeting,
the time frame
• The conciliation is cheaper than
court
• The process is private
Arbitration • The arbitrator will render a
decision based on the low;
• The law will be chosen by the
parties (as the language, the
place, the timeframe...),
• The arbitrator will be cheaper
and quicker than the court.
• The process is private (before
protection of confidential
business information).
• The parties can have up to 3
arbitrators (lawyer, expert, etc. )
Litigation • A decision is always guaranteed
For the case, when going to arbitration, the parties can choose to go to a neutral place : CH,
Singapore, UK, etc.
• The decision is not
always guaranteed
• The final decision is not
legally binding.
• The decision is only taken
by one person AND
because this resolution is
not taken place in court,
there is no appeal
possible.
• We could also state that
there is a lack of
transparency in the
decision-making process.
• Language barrier could be
an issue
• There could be corruption
• Information could leak to
the public
• It’s expensive
• It takes a long time
• There’s no equity in
justice.