International Business Transactions Outline 2020

The Basic Seller’s greatest fear: seller ships goods and doesn’t receive payment for goods
Transaction - Have domestic party to hold accountable (confirming bank)
Buyer’s greatest fear: buyer pays for goods and doesn’t receive goods
- Don’t pay until you know the goods have arrived (BOL)

Payments Against Documents

STAGE 1: the sales contract
1. Request for pro forma invoice (form 1) ~ requesting price quote (not
formal offer)
2. Pro forma invoice (form 2) ~ response with pricing (likely formal offer)
3. Purchase order (form 3) ~ acceptance
STAGE 2: the letter of credit ~ assures payment as long as there are appropriate
docs that demonstrate shipping of goods; promise by buyer’s bank to seller that the
bank will pay sales contract amount
1. Buyer requests buyer’s bank to issue LOC in favor of seller
a. Buyer’s bank provided purchase order so they know what seller must
present to prove he shipped goods conforming to sales contract
2. (if required) seller’s bank confirms LOC per buyer’s bank’s request
3. (^ not required) buyer’s bank sends seller confirmed irrevocable LOC
(form 4)
STAGE 3: seller ships goods
1. Seller proves carrier necessary docs:
a. Shipper’s Letter of Instructions (Form 5) ~ seller identifies info
the forwarder will need to arrange international transportation of the
goods
i. Also letter of credit - to assure forwarded conforms to
requirements
ii. Commercial Invoice (Form 6) ~ formal doc generated by
accounting dept confirming the amount Alpha owes
iii. Packing List (Form 7) ~ doc generated by shipping dept
describing the goods actually packed and prepared for
shipment
iv. Govt required docs that provide info necessary to fill out
Electronic Export Information (Form 8)
1. U.S requires all exporters to provide detailed info on
int’l shipments through Automated Export System
(AES)
b. Certificate of Origin (Form 9) - prepared by seller or forwarder
i. Take to Chamber of Commerce which certifies goods are of
U.S origin
2. Carrier gives seller necessary docs:
a. Dock Receipt (Form 10) ~ confirms receipt of goods
b. bill of lading (Form 11) ~ receipt of goods and contract of carriage
between shipper and carrier
i. Negotiable BOL ~ carrier may deliver only to person in
possession (properly) of BOL
 ii.Non-negotiable BOL ~ carrier may deliver only to specific
person named as consignee on BOL
STAGE 4: seller obtains payments through letter of credit
1. Sight draft (Form 13) ~ resembles personal check; like withdrawing credit
owed to you by bank from LOC
a. Seller gives docs to seller’s (confirming) bank; seller’s bank pays
seller
b. Seller’s bank reimbursed by buyer’s (issuing) bank; seller’s bank
gives buyer’s bank BOL
STAGE 5: buyer uses bill of lading to obtain goods
1. buyer’s bank notifies buyer goods have arrived
2. buyer reimburses buyer’s bank; buyer’s bank issues to buyer BOL
3. buyer uses BOL to pick up goods from carrier

Types of Transactions
1. CIF ~ Cost, Insurance, and Freight; seller arranges shipment and insurance
a. CIF (Destination i.e SD) = goods will arrive @ SD
b. Negotiable BOL always
c. Seller’s obligation ends once goods are delivered to port
i. Seller pays for carriage costs and insurance
2. FOB ~ Free on Board; buyer arranges shipment
a. FOB (Place of Shipment i.e SD) = goods will ship from SD
b. Negotiable or non BOL
c. Seller just need to deliver to ship arranged by buyer

Carrier Liability
Harter Act

Carriage of Goods by Sea Act (COGSA)

§ 4(5) carrier’s liability limited $500 per bundle
- but if carrier misrepresents is own conduct in loading goods abroad ship (i,e
erroneous clean BOL) it is responsible for the misrepresentation and cannot
invoke liability limitation
P has burden to prove goods were damages while in carrier’s custody

Federal BOL Act/Pomerene Act ~ applies to all BOL issued by common carrier for
transportation of goods from U.S.
(1) Put burden onto shipper in proving actual number, weight, etc.
(2) Common carrier not liable for misdescription when
(a) Goods are loaded by shipper,
(b) BOL is qualified by phrase “said to contain” and
(c) Carrier does not know whether any part of the goods was rcvd or conform
to the description

Conflicts of Law - What law governs?

[Issue: is there a contract?]
1. Choice of Law - Pick court, each court will have own “choice-of-law” rule
a. U.S. = UCC 1-301 ~ pick law w/ appropriate relation to transaction
 b. U.K. = Rome I Regulation ~ use substantive law of seller’s place of
business
2. Substantive Law - determine if contract exists using jurisdiction chosen in
step 1
a. U.S. law on whether K exists = UCC 2-207 ~ K if major terms are
agreed upon
i. UCC 2-207(c) ~ knockout rule = conflicting terms not part
of K; missing terms filled by UCC default rules
b. U.K. law on whether K exists = Mirror Image Rule ~ K if
offer/acceptance matches exactly
i. Last shot rule ~ if no match, but seller delivers goods +
buyer accepts, K exists on seller’s terms

UN Convention on Contracts for the International Sale of Goods (CISG) ~

international sales contract regulations
1. Are countries of both parties members of CISG?
a. Yes → CISG applies regardless of what court you file in
2. Did parties opt out of CISG by contract?
a. No → CIGS applies
b. Opt out must be set in contract clearly and unequivocally [Hanwha
v. Cedar]
3. Art. 19(1): mirror image rule
4. Art. 19(2): reply can be acceptance as long as it does not “materially alter”
terms and offeror doesn’t object “without undue delay”
a. Ambiguous as to if K can exist based on performance
5. Art. 8: knockout rule

Frustrations/Impossibility
UCC 2-615 elements
1. Seller must not have assumed the risk of some unknown contingency
2. The nonoccurrence of the contingency must have been a basic assumption
underlying the contract
3. And the occurrence of that contingency must have made performance
commercially impracticable
Three conditions must be present before a seller is excused from performance under
the UCC
1. A contingency must occur
2. Performance must thereby be made ‘impracticable’ and
3. The nonoccurrence of the contingency must have been a basic assumption on
which the contract was made

CISG Art. 79: relieves party from paying damages only if:
1. Failure was due to an external impediment beyond the party’s control
2. The impediment was not reasonably foreseeable at the time the contract was
made and
3. Both the impediment and its effects were unavoidable
- Art. 79(2): exempt a promisor from liability for third-party failure only if:
 1. The impediment hindering performance was out out of her control
and unforeseeable, and
2. The third party would also be exempt under that same standard
Force majeure clause

Financing Letter of Credit

International Issuing Bank's obligations upon presentation of docs:
Sale of Goods 1. Examine docs to determine whether they conform to terms of loc; if:
a. Strictly complies → must honor and pay
b. Do not comply → may refuse to honor or nonetheless honor
(wrongful honor = not entitled to reimbursement)
2. To act upon any discrepancies found
a. Duty of notice; must state
i. Bank is refusing to honor or negotiate docs
ii. Each discrepancy in respect of which the bank refuses to
honour or negotiate
iii. And that bank is either returning docs to presenter or
holding them pending further instructions from presenter or
the applicant
b. Single notice requirement
c. Timing of notice - must give notice no later than close of the fifth
banking day following the day of presentation (UCP 600)

If there’s fraud, Issuing Bank can seek injunction:

Injunction is permitted only if
1. There is “active fraud” by the seller
2. It would not cause hardship to the issuer (buyer’s bank)
3. It would not cause harm to a third party that has already relied on the letter
of credit, especially a confirming or other bank that has already paid out
funds to seller
UCC § 5-109(b) ~ Authorizes injunctive relief where
1. “honor of the presentation would facilitate a material fraud by the
beneficiary on the applicant” or
2. Required doc is forged or is fraudulent or there is fraud in the transaction

Standby Letter of Credit

~ credit issued by seller’s bank and runs in favor of the buyer (backwards
arrangement). Payable against a writing by buyer certifying that the seller has not
performed its contractual promises (“suicide credit”)
Tariffs and WTO’s General Agreement on Tariffs and Trade (GATT)
Nontariff Art. I: most favored nation obligation (MFN) ~ no discriminating against sources of
Import Barriers imports
National treatment (NT) ~ no discrimination between domestic and foreign goods
(exceptions exist)
Dispute resolution panels + appellate body
- If panel’s decision is not followed, other party can raise tariffs as penalty
- Both plaintiff and defendant must be members of WTO

Free Trade Agreements (FTA) ~ goal is to eliminate tariffs and NTBs between 2
nations or within region
- EU started mainly as FTA
- USMCA (formerly NAFTA)
- Trade agreements do not create law directly

I. Classification
A. Harmonized Tariff Schedule of the United States (HTSUS) ~ chart
used to calculate tariff
B. Relative specificity rule
C. Essential character test [Better Home v. U.S.]
II. Country of Origin
A. (last) “substantial transformation” = origin; not necessarily where
it’s shipped from or started out
B. “minor finishing step” = can be done easily anywhere w/ minimal
effort/investment; no major changes made/value added
III. Valuation
A. Test: “transaction value” = how much you paid for it, not including
insurance/freight
B. ^ % of value = tariff
Export Controls Licenses Required to Export
U.S Dept. of Commerce’s Bureau of Industry and Security (BIS) ~ implements and
enforces EAR for national security purposes

How to determine if you need a commerce export license:

1. What are you exporting?
a. Classification - commerce control list
2. Where are you exporting?
3. Who will receive your item?
4. What will your item be used for?
If license is required, must submit application for license to BIS

Export Administration Regulations (EAR) ~

Failure to Obtain License
- EAR requires “knowledge” of a violation to impose penalties (EAR 772.1)
- “Positive” (actual) knowledge or
- Awareness of a high probability of occurrence
- Can be inferred from conscious disregard of facts and
willful avoidance of facts
- EAR 732
Other Reasons Export Might be Prohibited:
- Prohibited end-use (EAR 732.3(h))
- Blacklist (EAR 732.3(g)-(h))
Deemed Exports
- Release of tech to foreign national in U.S. = “deemed” to be an export to
foreign national’s home country once info enters brain (EAR 734.2(b)
- Even if they haven’t gone back to home country yet
- Doesn’t apply to public available tech
- Exception: fundamental research = purely academic (i.e @ university) (EAR
734.8)

Questionable Payments to Foreign Officials

Foreign Corrupt Practices Act (FCPA) Anti-Bribery Provision ~ criminalize the
transfer of money or other gifts to foreign officials and political actors for purposes
of influence to obtain or retain business

Elements
a) Defendant must be a U.S. “issuer,” “domestic concern,” or person acting
within U.S. territory
b) Defendant must utilize “the mails or any means or instrumentality of interstate
commerce”
(1) Unless D is a U.S. person acting abroad
c) Use must be in furtherance of an offer, payment, promise to pay, or
authorization to pay anything of value
d) D must act knowingly, corruptly, or willfully
e) Corrupt payment must be made directly or indirectly to a foreign official,
foreign political party or official thereof, candidate for foreign political office
f) Payment must be made to influence any official act or decision; induce any
action or an omission to act in violation of a lawful duty; to secure any
 improper advantage; or induce any act or decision that assists the company in
obtaining, retaining, or directing business to any person
*Prof’s Elements:
1. Giving anything of value
2. To a foreign national (direct/indirect)
3. To influence official act/decision
4. Knowingly, corruptly, or willfully

Permissible payments and affirmative defenses

a) Permissible payments
(1) FCPA expressly permits “facilitating” or “grease payments” to foreign
officials to “expedite or secure the performance of routine govt action”
(78dd-1(b))
b) Two affirmative defenses:
(1) Allows “payment, gift, offer or promise of anything of value” to a
foreign official, political party, or candidate, provided that such
offerings are legal in that country” under written law (78dd-1(c)(1))
(2) Payments, etc. that constitute reasonable and bona fide expenditure
(78dd-1(c)(2))
(a) Lacks corrupts purpose
(b) Directly related non-corrupt purpose
(c) “Reasonable and bona fide” = (1) when made directly to the
service provider, not govt official, and (2) when payor does
not have pending business with govt agency whose employees
benefit from the expenditures
(d) Burden of proof = Defendant

Not a defense:
- De minimis
- Everybody does it or cultural customs (if not written, then doesn’t matter)
Foreign Foreign Investment
Investment STEP ONE: decide whether and where
STEP TWO: how/corporate form

Barriers to Foreign (Controlling) Investment

STEP ONE: Is investor “covered” by CFIUS?
STEP TWO: Should investor give notice?

Committee of Foreign Investment in the U.S. (CFIUS) ~ agency that reviews

investments in the U.S. for national security implications
1. Reviews and makes recommendation to President
a. May request redo for procedural reasons (more info needed, etc.)
2. President can block investment

“Covered Transaction” ~
1. Acquisition of controlling interest in U.S. entity by foreign person/entity
2. Acquisition of non-controlling interest that would give foreign person/entity
access to sensitive tech/personal data
3. Some real estate purchases by foriegn person/entity

Investor can give voluntary notice (sometimes mandatory)

- If not, run risk of CFIUS retroactively blocking

Right to due process: investor should have opportunity to tailors submission to

CFIUS’s concerns or rebut factual premises underlying Presidential block [Ralls v.
CFIUS]

Barriers to Investment in Developing Countries

WTO Agreement on Trade-Related Investment Measures (TRIMs)
- Only applies to trade investments (import/export)
- “National treatment” ~ treat foreign investors same as local
- Substantial limits
- Generally doesn’t allow countries to require local ownership/control
- Gets rid of “performance requirements”
- limit imports, promote exports
- Exception for national security

Project Financing on Foreign Investments

Parent-subsidiary = legal separation is key to maintain separate liability

Specific Risks
1. Sponsor mismanages project → debt payments not made
a. Mitigation: security interest ~ lenders can takeover projects if
payments not made
b. Allocation: lenders will require sponsor to put in at least some equity
to share risk
2. Project non-completion or delay
a. mitigation/allocation: put risk onto contractors (damages clause in K,
force majeure)
 b. *use of contractor = risk of contractor insolvency
i. Mitigation: standby LOC
3. Project lack of sales/revenue
a. Mitigation: lenders will require extensive research prior to financing
b. Allocation: if possible, project find buyer to a long-terme purchase
contract at a fixed price (standby LOC to prevent insolvency risk)
4. Force majeure during operation (after construction is done i.e. natural
disaster or political unrest)
a. Allocation: force majeure clause in document or sponsor seeks
insurance
5. Host government interference (seizes or prevents operation)
a. Mitigation: choose host country carefully, secure all permits
b. Allocation: if possible, share risk with host govt (joint venture,
contract/treaty, get loans from host govt for project)
Currency Risk
1. Valuation ~ exchange rate may change overtime or suddenly/substantially
2. Currency controls ~ host country may impose currency controls that limit
investors’ ability to move $ out of the host country
Risk for investors:
1. Currency mismatch #1: earnings are in one currency and obligations in
another
a. One may lose value relative to the other
2. Currency mismatch #2: input costs are in one currency and revenues in
another
3. Currency trap: unable to move earnings out of host country
a. Profits accumulated in host country may be unproductive and may
be at risk of inflation or seizure by host govt
Transfer pricing ~ price for sale of goods and services between related entities
(parent/sub)
- Bc they are separate entities, there must be set price
- No regulation = can set any price you want } manipulated for benefit
- Regulation generally requires “arm’s length” price = market price (if any)
- If more unique (no market), then more difficult to assign price
- I.e IP

International Human Rights

*international laws regulate governments (+private individuals acting under “color of
law” 42 U.S.C. § 1983), not private actors

Alien Tort Statute (ATS) ~

- Elements:
(1) Civil action brought by alien
(2) For a tort
(3) That is in violation of international law
→ Application to American companies with business in foreign country: aiding and
abetting foreign officials in committing violations [Doe v. Unocal appeal]
(1) Civil action brought by alien
(2) For a tort
(3) That violates international law (typically committed by foreign govt)
(4) And D (American company) aided/abetted with actual or constructive
 knowledge
(a) aid/abet = practical assistance, encouragement, or moral support
which has a substantial effect on the perpetration of the crime

Kiobel v. Royal Dutch: bad acts that happened outside of the U.S. = not covered by
ATS
Jesner v. Arab Bank: some acts happened in the U.S. but acts were done against
foreign corp = not covered by ATS; ATS creates cause of action against individuals,
not corporations
Beanal v. Freeport: environmental damages that doesn’t cross borders = not
international law violation

Torture Victim Protection Act (TVPA) ~ for torture and extra-judicial killing (govt
killing people)

Expropriation
~ host government takes over investment completely
- Due to new regime, economic stress, retaliation

Customary international law allows expropriation if

1. Is in public interest
2. Is non-discriminatory
3. And compensation is paid
a. Correct calculation of compensation is debated

Remedies:
- Insurance
- Sue in host country (must have independent judiciary)
- Sue in international courts (unlikely bc limited jurisdiction)
- Arbitration (host country must consent)
- Sue in home country (U.S) ↓

Foreign Sovereign Immunities Act (FSIA) ~ foriegn govts (“agencies and

instrumentalities of foriegn states”) are immune from suit in U.S. unless statutory
exception applies
§ 1605(a) exceptions
(1) Waiver (by contract)
(2) Commercial activity ~ by foriegn govt (not investor); in contrast to govt
acting as a regulatory agent
- No immunity if commercial activity was (a) is the U.S. or (b) had
direct effect on U.S.
- Expropriation is likely not commercial act; mere losses by U.S.
company is not enough
(3) Contrary to international law ~ no immunity for taking property if taking
violates int’l law and either
(a) Property taken is now in U.S. or
(b) For instrumentality, defendant engages in commercial activity in
U.S.
(5) Torts (that occurred in U.S.)
 1. Is defendant foreign govt or instrumentality of?
a. Yes - FSIA applies; No - FSIA does not apply
2. Does exception apply/
a. Yes - can use; No - cannot sue (immune)

Even if you do get a judgment against foreign govt, difficult to collect

→ expropriation insurance $

International Development Finance Corporation (IDFC) ~ U.S. govt agency that

issues insurance only to U.S. investors and only for projects in countries that have
agreements with IDFC
- Insures against:
- War and political violence
- Expropriation / interference with investment
- Overregulation
- ‘Regulatory taking’
- Currency controls
- IDFC pays investor, then seeks reimbursement from host govt
- U.S. govt is better able to bear risk
- Host govts may be more afraid to interfere if they know project has
U.S. govt backing

World Bank Multilateral Investment Guarantee Agency (MIGA) ~ agency of World

Bank open to any MIGA member country investing in another MIGA member
country

} insurance is advisable for large, high-risk/high-return projects

Treaty-Based Protections for Foreign Investments

Bilateral Investment Treaties (BITs) ~ between U.S./developed nations and
developing nations to protect investments (FTAs also have similar protections)
- Host govt promises:
(1) No discrimination
(2) No expropriations w/o “prompt, adequate and effective”
compensation
(3) “Fair and equitable treatment”
(a) - vague → could threaten availability of host govt to regulate
foreign investment
- Remedies = host govt promises:
(1) Compensation for losses from violations of above promises
(2) Consent to arbitration of investors’ claims
(a) + better than no legal remedy at all
(b) - arbitrators may be biased towards investors
(c) - arbitration is still costly for investors (cheaper than
litigation)
(d) - investors may not even be able to collect on judgement
 Problems

Issue Transactional Advice

CIF vs. FOB *didn’t explicitly contract Incoterms → don’t apply. Instead, background
4.2 - difference between national law applies.
CIF and FOB + FOB (place of shipment)
Incoterms - Seller not responsible for shipment/insurance (unless there’s
additional side contract that says so)
- Buyer provides for ship/transportation/insurance
- Buyer should pay upon delivery to the port of shipment
- Buyer usually has right to inspect goods before payment at place of
shipment
- Seller is relieved once goods are delivered to shipment port
CIF (destination)
- Seller must arrange shipment and insurance
- Buyer will pay upon delivery of documents (BOL + insurance cert)
- No right to inspect bc seller is paid before buyer receives goods
- Buyer can contract for inspection certificate when goods
arrive at port of shipment
- Seller is “relieved” once goods are delivered to shipment port, but
still paying for carriage/insurance

Lost BOL & Misdelivery Lost BOL & Misdelivery

4.5A - payment through Does buyer have to pay bc goods were delivered?
“collecting banks” (not - No bc buyer did not receive the BOL
LOC, bank acts as Buyer’s remedies against:
seller’s agent for 1. Seller = breached obligations under CIF to deliver BOL
collection)... banks lose a. Breach of contract claim: seller (‘s agent, the bank) did not
BOL, found by random deliver docs to buyer
guy who forges 2. Carrier = breached obligations under Pomerene Act § 80111(a) ~
endorsement and takes carrier is liable if delivered to improper holder of BOL
goods. a. But how could’ve carrier known?
b. Buyer argues carrier should’ve inspected endorsement for
forgery
Seller’s remedies against:
1. Banks - breached obligations under agency relationship
c. Buyer doesn’t have any contracts with banks
What could’ve been done in advance to prevent loss?
- Non-negotiable BOL, but then can’t do CIF
- Be in touch with carrier/be proactive

Misdescription Buyer’s remedies against:

4.5B - goods deliver did 1. Seller = breach of contract: goods were not as described
not match BOL 2. Carrier = breach obligations under Pomerene Act § 80113 ~ carrier
is obligated to reasonably inspect; could’ve used protective
language
Pre-loss protections for buyer
- Get inspection from trusted inspector
- Be in touch with carrier/be proactive
Forged BOL Buyer’s remedies against:
4.5C - seller stole blank 1. Seller = fraud, breach of contract (remedy might be moot if seller is
BOL and forged carrier’s insolvent or in hiding)
signature 2. Carrier = innocent bystander, so likely no remedy
3. Banks = obligation under Pomerene Act § 80107 ~ imposes
liability on person who transfers fraudulent BOL “for value” (in
exchange for $, i.e LOC bank)
a. What about collecting banks = not clear whether they
exchange for value
b. But they are able to assess risk, but Ziraat says collecting
bank says not liable under UCC

Contract Formation - Explicitly agree what choice-of-law applies

4.1 - battle of the forms, - If both parties are part of CISG, and but you do not want CISG
does K exist, what terms, explicitly opt out.
additional terms? - Put terms you want in the form (not website)
- Insist on terms before performance (to satisfy mirror image rule)
- Follow up with communications jon important terms if not agreed

Frustration/Impossibility - If transaction involves multiple contracts, make sure they’re

4.3 - bad fire in factory “matched” / linked to each other
causing delay in delivery - Enter into option contract ~ contract for an option to obtain oil
+ war on delivery route from alternate supplies from secondary supplier if primary supplier
fails (costs more $)
- Understand lower price (greater profit) might mean greater risk

Nonconforming UCP = docs must “strictly comply with” LOC; should be limited to four
Documents corners of document
5.1 - confirming bank → Bulgrains = requires strict identical (except for “unmistakably
seeks payment from typographical” errors)
issuing bank, but docs do → Voest-Alpine = more flexible; allows some non-material discrepancy in
not conform exactly to docs (common sense approach)
LOC; should issuing - Seller’s fault bc didn’t prepare conforming docs
bank refuse? Is - Don’t let go of any money unless docs are conforming
discrepancy material - Issuing bank doesn’t want to pay bc buyer might not
enough to refuse? reimbursement bc docs don’t conform
- But buyer wants the goods, then issuing bank doesn’t have problem
- Maybe get a do-over: get docs fixed by seller (but only the carrier
can fix the BOL)

LOC + Fraud In the moment

5.2 - fraudulent bill of - Could seek injunction, but timing might be too late
lading - Could try to persuade LOC banks to not pay
- Insist documents “strictly comply”
Future
- Pick trustworthy seller
- Get an inspection of goods
- In extreme cases, get a standby LOC

Standby LOC - Injunction to block payment on standby LOC

5.3 - In future, require additional documents to draw on standby LOC;
or else, the only way to stop is if buyer commits fraud
- Require inspection certificate

Tariffs & U.S. Law - Follow process and categorize correctly (best possible)
6.2 - PB&J - Understand risk: customs could disagree and litigate
- Could ask customs in advance for opinion letter
- Describe situation precisely
- Letter can take a while

Export of Ball Bearings - Must look into license requirements prior to export of anything
8.1 - ends up in China - Have compliance team be responsible for it
- Perhaps try to claim lack of knowledge to BIS
- Depends on client having made at least some investigation
of buyer and absence of “red flags”

FCPA - FCPA compliance team

8.3 - wining&dining, - Fact dependent
campaign contributions, - If bad, advise settlement and hopefully convince SEC/DOJ not to
signing ceremony, prosecute individuals
customs payments

Foreign Investment - Goals of client = market access + minimize risk → EU or UK

10.1 - tax/regulatory burden → Ireland, UK, or eastern Europe
- Major investment → subsidiary corp form
- Isolates investment risk into subsidiary
- Acquisition are likely low

CFIUS - Initiate CFIUS notice or else risk retroactive disapproval

10.2 - Approval in Mexico may be subject to less defined process, but
unlikely to be controversial (bc developing countries typically like
investment)

Project Finance - Minimize risk through subsidiary, but will prob have to put some
10.3 equity into it too
- Have contractor issue LOC
- Have buyer issue LOC
- Get insurance

Transfer Pricing - Make sure it price seems like arm’s length at least
10.4 - Maybe offset lower IP price with higher product price
- Be aware of ethical problems
- Act in good faith (but may not be enough)

ATS - Be aware of ATS cases

10.5 - Stay away from abusive govts
- Give operation control to foreign subsidiary

Expropriation - Try to have govt sign waiver

10.6 - Other remedies are not very helpful
- Don’t rely on U.S. court remedy
 - Get IDFC/MIGA insurance for high-risk/high-return projects

Treaty-Based Protections - Benefits of BIT/FTA:

for Investments - Clearer statement of host govts (but still ambiguous
10.7 language)
- Access to arbitration (issue of collecting though)
- But not clear as to whether benefits outweigh a non-BIT location
 Document Supplement

Name Explanation DS pg(s)

UCC § 1-302(a) Variation by agreement ~ can change UCC terms by agreement p.1243

UCC § 2-319 FOB ~ seller bears risk and expense of getting goods to buyer p.1258
FAS ~ “free alongside” ~ seller bears risk and expense of
delivering goods alongside vessel

UCC § 2-320 CIF ~ seller puts goods into possession of carrier and obtain p.1261
negotiable BOL, load goods + obtain receipt from carrier, obtain
certificate of insurance, other necessary docs

UCC § 323(1) If CIF (or C&F or FOB vessel), seller must obtain negotiable pp. 1263-1264
BOL (unless otherwise agreed)

UCC § 2-513 Buyer has right before payment or acceptance to reasonably pp. 1266-1267
inspect goods (unless otherwise agreed)

Harter Applies to any carrier carrying goods to or from any port in U.S. pp. 1163-67
Act/Carriage of § 3(5): shipper guarantees accuracy of goods info
Goods by Sea § 4(5): liability for loss/damage limited to $500 per package
Act (COGSA)

Federal Bills of Applies to any carrier carrying goods to or from any port in U.S. pp. 1179-1185
Lading Act
(Pomerene Act) Nonreceipt, misdescription, and improper loading:
§ 80113(b): carrier is not liable for nonreceipt/misdescription if
(1) goods are loaded by shipper, (2) has qualified language and
(3) carrier doesn’t know whether goods were received or
conformed
(c): carrier not liable for improper loading if (1) shipper loads
goods and (2) bill contains words “shipper’s weight, load, and
count” or something similar
(d): carrier has duty to determine kind, quantity, and number

UCC § 1-301 Parties can choose which law applies. Absence of agreement = p. 1242
UCC applies where relevant.

UCC § 2-207 Acceptance with additional terms = part of the contract unless p. 1249
(a) offer expressly limits acceptance to the terms of the offer; (b)
additional terms materially alter contract; or (c) notification of
objection to additional terms has already been given or within
reasonable time
(3) conduct that recognized existence of contract = est contract;
terms = agreed upon terms + different terms = replaced by UCC
default

UCC §§ 2-314 - § 2-314: implied warranty of merchantability ~ guarantees the pp. 1254-1257
316 goods are merchantable
 § 2-315: implied warranty of fitness for a particular purpose ~
guarantees the goods are fit for the buyer’s particular purpose
§ 2-316: disclaimer of implied warranties ~ may negate or limit
warranty for sale of goods

Convention on Art. 1: application pp. 35-43

Contracts for the Art. 2: does not apply to personal sales
International Art. 10: more than one place of business, use place that is most
Sale of Goods relevant to contract
(CISG) Art. 14: valid offer
Art. 18: valid acceptance
Art. 19: additional terms/limitations/modifications
Art. 35: goods must conform
Art. 36: seller liable for lack of conformity that exists at time of
delivery (or after if due to breach)

UCC §2-615 Delay in or failure to deliver is not breach if due to p. 1268

impracticability; seller must notify buyer; [good faith]

CISG art. 79 Party not liable for failure to perform if she proves failure was pp. 51-52
due to impediment beyond her control and she reasonably
couldn’t have taken the impediment into consideration when
negotiating contract.

UCC § 5-108 Issuer has right within reasonable time after presentation of LOC pp. 1274-1285
(but not beyond end of 7th business day of issuer) (1) to honor,
or (3) give notice to presenter of discrepancies

UCC §5-116 Choice of law and forum = agreed upon; if none, then place p. 1294
where person liable is located

UCC §5-109 If doc contains fraud or forgery: p. 1290

(1) Issuer shall honor presentation if honor is demanded by
(i) nominated person who has given value in good faith and
without notice of forgery or material fraud, (ii) a confirmer who
has honored its confirmation in good faith, (iii) a holder in due
course of a draft drawn under LOC which was taken after
acceptance by issuer or nominated person, or (iv) assignee of
issuer’s or nominated person’s deferred obligation that was taken
for value and without notice of forgery or material fraud after the
obligation was incurred by issuer or nominated person
And
(2) issuer acting in good faith may honor or dishonor
presentation in any other case

UN Convention Art. 17: guarantor/issuer shall pay if demand for payment pp. 61, 66-68
on Independent conforms (skim)
Guarantees and Art. 19: ^ right to withhold payment if doc forged/fraud
Stand-By Letters Art. 20: provisional court orders
of Credit
Harmonized General Rules of Interpretation pp. 585-587
Tariff Schedule Rule 2: essential character, mixtures and combinations
of the United Rule 3: when goods fit under two or more headings
States (a) descriptive descriptions > general (unless mixture/combo)
(c) if cannot be classified, use heading that occurs last in
numerical order among those that equally merit consideration

Additional U.S. of Interpretation

Use = use at time of importation

Tariff Act of Appraisal = transaction value or FMV pp. 612-623

1930 - transaction value ~ price actually paid for merchandise (skim)
19 U.S.C. when sold for export to U.S.
§1401a - + packing costs, commission, value, royalty/license fee,
proceeds of subsequent resale

Export pp. 1079-1126

Administration and 1151-1154
Regulations (skim)
§§ 730-758 and
764.2 – 772.1

Export “ pp. 1154-1158

Administration (commerce
Regulations §774 control list)

Bureau of “
Industry and
Security
Website,
www.bis.doc.gov
, under
“Regulations,”
find the
commerce
country chart

Foreign Corrupt §78dd-1 pp. 1190-1192

Practices Act (a) prohibition
(b) exception for routine govt action
(c) affirmative defenses

Foreign FINSA - “covered transaction” pp. 1201-1215

Investment and = acquisition of controlling interest in U.S. entity by foreign
National Security person/entity
Act of 2007 - Exception for certain real estate transactions
(FINSA) as
amended by the FIRRMA - “covered transaction”
Foreign
Investment Risk = acquisition of noncontrolling interest that would give foriegn
Review person/entity access to sensitive tech or personal data
Modernization = some real estate purchases by foreign person/entity
Act of 2018 - Not including purchase, lease or concession of a single
(FIRRMA) “housing unit” or real estate in “urbanized areas”

WTO Agreement See outline pp. 321-324

on Trade-Related
Investment
Measures
(TRIMs),

DS Alien Tort “District courts shall have original jurisdiction of any civil pp. 1161-1162
Statute (ATS) 28 action by an alien for a tort only, committed in violation of the
U.S.C. §1350 law of nations or a treaty of the U.S.”

Foreign § 1605 exceptions to immunity of a foreign state pp.1217-1226

Sovereign
Immunities Act
(FSIA) 28
U.S.C. §§1602 -
1605