Business Law in English II

Review Class
Emeric Prévost, LLB, LLM
 Overview

I. Final Exam
II. Legal Methodology
III. Core Concepts
 Final Exam
v2 Questions:
Ø First Question (60/100 points):
o Reasoned legal opinion
Ø Second Question (40/100 points):
o Commentary of a legal provision or a court decision
o Critical assessment of a general question
vTime: 1:40 hour + 20 min
vAll documents allowed
Ø if necessary, specific legal provisions will be provided along with the questions
vFormal Requirements:
Ø Indicate: Name, Surname, Year of Studies
Ø Write full English sentences
Ø Use paragraphs
Ø Structure your answers with visible and short titles
Ø Use the legal syllogism
Ø Follow the structures presented in the introductory lecture
 Methodology
vSteps of reasoning:
1. Is the factual situation purely domestic or international?
2. What are the material interests of the parties?
3. What is/are the legal issue(s)?
4. Which court (forum) would be competent to deal with such issue(s)?
5. What is/are the applicable law(s)/rule(s) to such issue(s)?
a. International Material Rules Approach?
b. Conflict of Laws Rules Approach?
6. What is the substantial rule/principle/case law to be applied to the issue(s)?
7. Application of the rule/principle/case law to the factual circumstances of the case
 Methodology
vPlease provide a reasoned legal opinion on the following case:
JP Computers KK is a company which has its registered seat in Tokyo (Japan). JP Computers
mainly operates in Japan, but provides services to foreign companies from time to time. On
5 August 2021, JP Computer concluded a contract of service with DL Production SA, a
company seated and registered in Paris (France), whereby JP Computers undertakes to
provide IT technical and maintenance services for a period of two (2) years. The contract of
service stipulates that JP Computers will bill DL Production every month for the services
provided. The contract is subject to Japanese Law and contains a choice of court clause in
favour of Japanese Courts. It also stipulates that both parties must not assign any claims
arising out of the contract to any third party for the entire duration of the contractual
relationship.
On 20 December 2021, in need of cash, JP Computers concluded nevertheless a Master
Factoring Agreement (MFA) governed by Japanese Law with MitsuBank, a duly licensed Bank
in Japan. The service contract between JP Computers and DL Production was appended to the
MFA. The MFA also stipulates that any dispute relating to the validity, effect or interpretation
of the contract shall be submitted to Japanese Courts exclusively.
 Methodology
JP Computers assigned on 22 December two invoices dated 5 November and 5 December
2021. Notice of the assignments was sent by JP Computers to DL Production on 26 December.
DL Production objected on 28 December 2021 per email that the assignment of claims was
not permitted under the contract and that it will refuse to pay to MitsuBank.
JP Computers is worried that the MFA and the assignments might be invalid and that it will
have to reimburse to MitsuBank the sums already received and pay damages. It seeks your
advice.
 Methodology
vAnswer
1. International situation
o JP Computers and MitsuBank have their registered seat and places of business in
Japan, whereas DL Production has its registered seat and place of business in
France. Whilst the assignment of receivables between MitsuBank and JP
Computers appears to be limited to Japan, the underlying transactions (provision
of services) involve two different jurisdictions: France and Japan (legal definition).
o The overall transaction implies a flux over borders (economic definition) and the
disputes put at stake the interests of international trade (economic definition).
2. Material interests of the parties
o DL Production refuses to pay to MitsuBank.
o JP Computers wants to validly assign the claims arising out of the service contract
concluded with DL Production.
 Methodology
4. Legal issues
o Are the MFA and the assignments of claims from JP Computers to MitsuBank valid,
notwithstanding a clause restricting any transfer of claims in the service contract between
JP Computers and DL Production ?
o May DL Production refuse to pay to MitsuBank ?
5. Competent forum
o Choice of court clause in favour of Japanese Courts in the MFA and the service contract
o Art. 3-7 Japanese Code of Civil Procedure: written choice of court clauses for certain legal
relationships are valid
o Any dispute between MitsuBank and JP Computers will be dealt with by Japanese Courts
o Similarly, any dispute between JP Computers and DL Production will be dealt with by
Japanese Courts
6. Applicable Law
o International material rule approach
o Conflict-of-laws approach
 Methodology
ØInternational Material Rules Approach?
o Rules:
§ UNIDROIT Convention on International Factoring, 1988
§ Art. 1(3): “good” = “service” and “sale of good” = “supply of service”
§ France is a Sate Party, but Japan is not.
§ Geographical scope (Art. 2):
a. supplier and debtor must have their place of business in different states, and
b. alternative condition: (i) those states and the state where the factor has its
place of business are contracting states, or (ii) both contract of sale and
factoring contract are governed by the law of a contracting state.
o Application: the parties do not have all their place of business in contracting states (as
factor and supplier have their place of business in Japan), and the law applicable to
both the service contract and the factoring contract is the law of a non-contracting
state, i.e. Japanese Law.
o Conclusion: The UNIDROIT Convention on International Factoring (1988) is not
applicable.
 Methodology

ØConflict of laws Rules Approach:

o Japanese Courts are competent --> Japanese conflict-of-law rules will
apply
o Validity of MFA
ücontains a choice of applicable law clause in favour of Japanese Law
üArt. 7 Japanese Act on the General Rules of Application of Laws:
“ The formation and effect of a juristic act shall be governed by the
law of the place which was chosen by the party/parties at the time
when the act was made”.
üJapanese Law is applicable
 Methodology
o Effect of the assignments
üArt. 23 Japanese Act on the General Rules of Application of Laws:
“The effect of an assignment of a receivable in relation to a debtor and
other third parties shall be governed by the law applicable to the
receivable which is to be assigned.”
üThe law of the receivable = the lex contractus of the service contract
üThe service contract contains a choice of law clause in favour of
Japanese Law
üPursuant to Art. 7 Japanese Act on the General Rules of Application of
Laws, such choice of law, made in writing and for a certain legal
relationship such as that in the present case, is valid
üJapanese law governs the effects of the assignment of claims on DL
Production (the debtor)
 Methodology
7. Substantial rule(s) to be applied
o Japanese rules on assignment of claims à Art. 466 Japanese Civil Code
o A claim may be assigned despite the existence of a restriction clause
o The assignment of the two invoices is therefore valid
o However, pursuant to Art. 466 (3) Japanese Civil Code, the assignment may be ineffective
towards the obligor (here, DL Production) if the assignee (here, MitsuBank) knew or did not
know due to its gross negligence about the restriction clause
o MitsuBank is a Bank and may be expected to conduct detailed due diligence, especially
since the service contract was appended to the MFA
o There is good argument that MitsuBank was grossly negligent, and that the assignments
may be ineffective against DL Production
o DL Production is however still under the obligation to pay the amounts due to JP Computers
(the assignor)
o JP Computers will then be obliged to transfer onwards the payments to MitsuBank
o If DL Production fails to pay, Art. 466(4) Japanese Civil Code will however apply, and
MitsuBank will be entitled to enforce the assigned claims against DL Production, which has
furthermore been duly notified of the assignments (Art. 467 Japanese Civil Code)
 Core concepts

1. Fields of law:
ØPrivate International Law vs. Substantial Law
ØCompany Law / Financial Law / Dispute Resolution
2. Sources of law:
ØPublic International Law (Art. 38 ICJ Statute):
o International Treaty
o International Custom
o General Principles of Law
o Case law
o Legal scholarship
 Core concepts
ØTransnational Law
o Lex mercatoria
o Private codification (e.g. UNIDROIT, etc.)
o Incoterms
o Trade usages
ØDomestic legal systems:
o Laws and regulations
o Case law
o Legal scholarship
ØPrivate autonomy
 Core concepts
3. Some common Latin or non-English phrases:

ØElectio fori
ØLex societatis
ØAccessorium principali sequitur
ØLex concursus
ØRatione loci/materiae/temporis/personae
ØImperium
ØSpecialia generalibus derogant / lex
ØLex fori / Lex causae superior derogat inferiori / lex posterior
ØLex contractus / Lex celebrationis derogat priori
ØLex loci commissi / Lex loci damni ØIntuitu personae
ØLois de police ( = overriding mandatory ØSocietas Europaea
rules) ØUt singuli
ØRes judicata ØForum non conveniens
ØActor sequitur
 Core concepts
4. Some other core concepts:
Ø Domestic or municipal vs. International vs. Transnational
Ø Mother or Parent company / Subsidiary / Branch
Ø Habitual residence or domicile / statutory seat/ place of central administration/ place of business/ principal or
main establishment
Ø Real seat theory vs. Incorporation theory
Ø Corporate veil vs. Theory of transparency (= piercing the corporate veil)
Ø One-tier structure vs. Two-tier structure
Ø Principal vs. Agent
Ø COMI (Centre Of Main Interests)
Ø Characteristic performance vs. essential obligation
Ø Public or State Justice vs. Private Justice
Ø Principle of Competence-Competence
Ø Doctrine of precedent
Ø Public order or public policy
The Blind Man And The Elephant
By John Godfrey Saxe (1716-1769)
It was six men of Indostan, to learning much inclined,
who went to see the elephant (Though all of them were
blind),
that each by observation, might satisfy his mind.
The first approached the elephant, and, happening to fall,
against his broad and sturdy side, at once began to bawl:
"God bless me! but the elephant, is nothing but a wall!"
The second feeling of the tusk, cried: "Ho! what have we here, And so these men of Indostan, disputed loud and long,
so very round and smooth and sharp? To me tis mighty clear, each in his own opinion, exceeding stiff and strong,
this wonder of an elephant, is very like a spear!"
The third approached the animal, and, happening to take,
the squirming trunk within his hands, "I see," quoth he,
the elephant is very like a snake! »
The fourth reached out his eager hand, and felt about the
knee:
"What most this wondrous beast is like, is mighty plain,"
quoth he;
"Tis clear enough the elephant is very like a tree."
The fifth, who chanced to touch the ear, Said; "E'en the
blindest man
can tell what this resembles most; Deny the fact who can,
This marvel of an elephant, is very like a fan!"
The sixth no sooner had begun, about the beast to grope,
than, seizing on the swinging tail, that fell within his scope,
"I see," quothe he, "the elephant is very like a rope!"
Though each was partly in the right, and all were in the
wrong!
So, oft in theologic wars, the disputants, I ween,
tread on in utter ignorance, of what each other mean,
and prate about the elephant, not one of them has seen!
For a singing version of the poem, see :
Natalie Merchant, The Blind Men and The Elephant:
https://www.youtube.com/watch?v=3lyJLFMSVbY
Thank you and good luck!