Chap 1
What Is International Public Law?
The international community is most prominently divided into nation states. There are 1953
sovereign nation states in the world. Sovereignty is the supreme and independent power and
authority claimed by a nation state over its own territory.
Public international law has been traditionally defined as the law regulating relations among
nations. It is a set of rules and principles that states follow when dealing with each other. These
rules are derived from practice and codified in treaties and conventions. Public international
law's most basic purpose is to ensure order and peaceful coexistence among the nation states,
and it provides the means for states to maintain diplomatic, economic, and political relations
among themselves.
What Is Private International Law?
Private international law is law regulating the affairs of private persons (including corporations) located
in different countries. It is also described as conflict of laws-it addresses the
question of whose country's laws will govern a transaction.
Treaties
A treaty is a legally binding written agreement between two or more states. The word "treaty" is a
generic term. Treaties cover a variety of topics- for example, trade, investment, human rights, the
environment, control of nuclear weapons, the law of treaties, and international banking and mail.
Treaties are negotiated on either a bilateral basis, meaning between two states, or a multilateral
basis, meaning between several states.
How Are Treaties Created Generally?
The first step is negotiation of the terms of the treaty by representatives of national governments
This negotiation will result in a draft text for the proposed treaty, which may be signed by
representatives of the national governments
Renegotiate on terms
Sign the treaty - signatory country intends to undertake a careful examination of the treaty but not fully
committed yet
A treaty will become binding on the parties once it is ratified by a specified number of the governments
of the participating countries. (In international law, the process of individual countries
confirming under their own domestic law the international obligations undertaken by their
country in a treaty or convent).
Ratification disadvantages:
-
Constraining gov future policy
Limit future option
-
Increase influence of international body like NGOs
Decrease national sovereignty (authority, freedom)
Enforcement of international treaty
Ratification of international law into domestic law:
-
Diplomacy
International reputation
Negotiation
Retorsions: an act perpetrated by one nation upon another in retaliation for a similar act
perpetrated by the other nation
Collective action (UN Security Council)
NGO watch dog
Undertaking: A (90%) promise to ratify the int law into domestic law. Broke undertaking
result in more reputation loss compared to normal promise.
Int Court of Justice (World Court): Mostly take public law dispute
Limitation of authority:
-
Decision only affect parties in the dispute
Only accept case in ICJ jurisdiction
Not for commercial dispute (mainly for trade dispute)
Creating int private law
Element of contract: Offer, Acceptance, Consideration
-
2 Individuals from different jurisdiction agree upon terms proposed by the other party
The treaty then signed
The treaty then ratified
Concept of Sovereignty
Independent power and authority claimed by a national state over its territory
Int agreement force government to commit to agreed policies thus reduce the gov’s sovereignty -> Can
create tension due to clash of interest and political trade off
Limit how gov can change its policies
The rise of supra-national org weaken domestic gov
Canada int law
Canada has 2 levels of Gov: Federal & Provincial
Authority is granted to them by The Constitution
-
Federal power are in section 91 (Treaty making) + (Treaty implementing)
Provincial power are in section 92 (Treaty implementing on some subjects)
When negotiating about subject in provincial jurisdiction, federal representative will consult with
provincial representative on the limit and term.
US int law
US president have power to make treaty with advice and consent from 2/3 of the Senate (The Senate
must approve before sign)
US treat int agreement as FED law
-
US may repeal, modify treaty via legislative action
Int agreement conflict with US constitution = VOID
US require reservation to agree and sign (US will not be obligate to terms that are contradict with US
constitution)
Chapter 2
WTO and GATT are for:
-
Decrease tariff and prevent trade discrimination
GATT: Reduce hostility and maintain peace

-
A collection of trade agreement
Signed by 23 countries
Promote open market and competition protected by agreed rules
Rules: members will expand trade by voluntary making trade concession:
Transparent
Multilateral
Discourage trade discrimination
Focus on reducing tariff to enhance free trade
Role:
-
Develop rule for trade relation for members
Provide forum to discuss trade related issues
Disadvantage: (Later add into WTO)
-
Lack of enforcement mechanism
No rule for service trade
No IP protection rule and lack superstructure
Advantage:
-
Commitment of members
Economic leverage for members
The 3 rules of GATT and WTO
-
-
The binding concession rule: Lowered tariff are “bound” (Nation cannot raise tariff above bound
level). Increase predictability and encourage trade.
The Most Favored Nation: Tariff deal between two GATT members will also available for other
GATT members. Increase Reciprocity and keep trade non discriminated.
+ Pros: Credited for lowering tariff worldwide
+ Cons: There are a lot of exemption
National treatment rule: Once imported into member country, the goods must be treated no
different from domestic version. (Eg: Tax, Health and safety standard)
Round: Major negotiation sessions of WTO and GATT which can extend for years.
Round issues example:


Protectionist measure
Bilateral/ Multilateral trade agreement
Unilateral measures used by members
Those can affect world trade system
The reason for those issue:
+ Democratic gov try to please voter
+ Adopted legislation vs Long term int trade policy obligations
Joining WTO
Require domestic approval of WTO membership by:
-
Treaty must be ratify AND
Agreement provisions must be incorporate into domestic legislation
The Accession process for new members:
-
Apply with detailed picture of national economic structure
Fact finding with major trading partners
Negotiation with major trading partners (Set tariff bound)
Approval of 2/3 of WTO members
New member must adopt entire bundle of agreement reached in the Uruguay ROUND
WTO Provisions: Trade in Goods
Rules on dumping, subsidies, contingencies
Some Agreements allow for exception to MFN and National treatment rules
Eg: Higher tariff allowed if;
-
To protect again dumping
Counteract subsidies
Use Safe guard
Dumping: Selling at lower price than home market
To take anti dumping action a nation must:
1. Proof product price is lower than the home market price
2. Calculate the extent of dumping
3. Proof of threat/injury to industry
 If valid (Per investigation) a nation then inform WTO and may impose anti-dumping duties
Subsidies: Gov support to producers, exporters.
Eg:

Gov direct funds
Gov forgo revenue owed
Goods and Services beyond Gov’s infrastructure
Countervailing duties: Impose higher duties than usual to counter subsidies
Safeguards: Temporary limit import to protect domestic industry from surge of imports (Up to 4 years,
exception may apply)
Criteria for threat to domestic market:
-
Rate of import increase
Market share taken by import increase
Change of sale, production, employment, etc within the industry
WTO Provisions: Exception
1. General exception:
Conservation and protection of public moral, national treasure, human and plant life
Offended party can complain for unjustified discrimination if:
- Discriminatory
- Unjustifiable and arbitrary
- Discrimination occur between nation where the same condition prevail
2. Process and production method
Refer to how a product is made
- If there are trace of how it is made on the final product WTO allow countries to regulate how
these product are produced. Other wise WTO do NOT allow countries to regulate their
production.
3. Int product standard
2 WTO agreement on food safety and animal and plant health and safety
- Sanitary and Phytosanitary measures (SPS) agreement: allows scientific based measure to
protect public health
- Technical barrier to Trade agreement (TBT): Ensure regulation, standard, testing, certification do
not create barrier to trade.
4. Security exception
GATT and WTO do not limit a nation ability to defend itself
Discretionary power but maybe challenged by others
5.
6.
7.
8.
Eg: US set tariff on steel, aluminum from Canada, Mexico, EU -> The three calling tariff
“protectionist” not “security” related.
Regional trade agreement:
FTA and custom union are exception to MFN rule
Developing nation
Lighter requirement for developing nations to encourage and able them to join and committed
to int trade.
Non-tariff barrier
Import licensing: WTO require them to be transparent, simple, predictable and fair
Valuation of goods at custom: To assess duty but WTO forbid arbitrary or fictitious custom
value
Pre-shipment inspection: Verify price, quality and quantity to avoid fraud or duty evasion
Rule of origin: Duties are set by product origin (Processed, labelled packaged)
Investment measures
TRIMP (Agreement on trade related issue) invalidates “local content requirement”
WTO rules: Service
Service is not in GATT
Because the evolution of technology, service rule need to be add
GATS (general agreement on trade in service) is now in WTO
4 modes of Trade in Service
MFN apply to trade in service
National Treatment Rule apply to trade in service
Protection of IP
IP defined by WIPO as “creation of the mind”
Included into WTO via TRIPS (Agreement on trade related aspect of IP)
2 categories:
Industrial: Patent, trademark, industrial design, geographical indication of the source
Copyright: Literacy, artistic works, performance, phonogram recording, radio, tv contents.
WTO transparency
WTO member gov must notify WTO new measure, policies, law
WTO Trade policy review body will review country’s trade policies
Report published on website: Policies statement of gov under review and report by WTO Secretariat.
WTO dispute settlement
The dispute settlement body (DSB):
-
Resolve dispute of WTO member based on WTO rules
Uses clear timeframe
Require losing party to change law to conform with WTO decision
Made up of General council of WTO (representative of member nation)
Establish panels to hear dispute (3-5 experts from member’s nation)
Set appellate body ( 3 of 7 body member hear appeals)
Authorize retaliation if member not comply with ruling
Chap 3
Background
Intro:
In 1989: Canada-US Free Trade Agreement (CFTA)
-
Lack of progress toward modernizing the GATT rules in the Uruguay Round... resulted in CFTA o
Why did CFTA make sense for US and Canada? —The proximity and nearly similar cultures and
standards. •
In 1994: North American Free Trade Agreement (NAFTA)
-
Originally CFTA Plus o Canada's participation prevented separate US/Mexico agreement
Why is this significant? — Cheaper labor from Mexico and it balances the power issues for
Canada and Mexico as opposed to the US' strengths.
In 2020: USMCA ratified by all the nations, updated ver. of NAFTA
GATT (US, CA and others) => GATT threatened (US/CA create CFTA) => CFTA successful (US want to FTA
with Mex) => NAFTA (US/CA/ME) => Revised NAFTA (USMCA)
CFTA/NAFTA/USMCA originate from GATT
-
Both has MFN rule
NAFTA create to promote free trade characterized by:
+ National treatment
+ MFN
+ Transparency
USMCA = CUSMA
Goal of NAFTA
- Facilitate cross border movement of
goods & service within FTA.
- Promote fair competition
- Protect IP
- Produce joint administration for NAFTA
- Effective dispute resolution
- Framework for further concession
Goal of USMCA
- NATFA goal +
- Protect Human + animal + plant life or
health & advance science-based decision
making.
- High level of enviro protection
- Protect and enforce labor’s rights
Increase indigenous engagement in
trade & investment.
NAFTA provide trade rule abt:
-
Tariff and rule of origin
Harmonized commodity description and coding system
Custom and border procedure
Technical barrier to trade and technical standard
Sanitary and phytosanitary measure
Anti-dumping and countervailing
Agriculture
Cultural Industry
Gov procedure
USMCA update NAFTA with the WTO obligation
Tariff and rule of origin:
Most tariffs are phased out if the goods meet the "originating goods" test.
o Rule 1: A good wholly obtained or produced entirely in North America. So if you grow a tomato in
Canada, and sell it in USA, it will be subject to NAFTA.
O Rule 2: Good substantially transformed in NAFTA country so that tariff classification changed)
o Rule 3: Each non-originating good used in production of the good has undergone a change in tariff
classification via production in North America
o Rule 4: Finished good not changed tariff classification but contains sufficient regional value content.
NAFTA members extend: national treatment & most-favoured-nation treatment to each other's service
providers, & waive rqmts for local presence
Exceptions & Reservations
Canada (unlike USA & MEX) has a strong tradition of providing public services
Public health care excluded
Services in place before NAFTA excluded
USMCA expands exceptions to include education, culture, fisheries, and minority affairs, among others...
Rules Relating to Intellectual Property:
• IP rights include Patents, Trademarks and Copyrights
o Owners of these forms of intangible property have exclusive rights to the use and protection of their
property within the country that has conferred protection.
o Canada & US imposed these obligations on Mexico.
o Amend domestic law to include specific enforcement obligations.
-
Geneva convention
Verne convention
Paris convention
Convention for New Varieties of Plants
USMCA:
-
Copy rights for life time of creator + 70 years
10 years of patent protection for agri chemical products
Protect Enviro & Labour: Side Agreements - To help obtain congressional ratification of NAFTA.
• The side agreements:
USMCA include labor and enviro issue
Labor:
-
Prohibits importation of goods produced by forced labour
Addresses violence against workers exercising labour rights
Ensures protection of migrant workers
Protects against employment discrimination based on gender
ENVIRO issues: trafficked wildlife, timber, fish stock and ocean litter
Dispute Settlements under NAFTA:
• Why disputes arise?
o Disputes stem from unforeseen problems during negotiations.
o More commonly, they are due to diversity of
■ Political pressures
■ Economic pressures
■ Social pressures
• How are they resolved?
o There are specific chapters for the dispute resolution
■ Chapter 20- General dispute resolution available only to governments
• Panel reviews
• Duty to consult with other party
• Impartial judges applying transparent rules/standards to facts of the case.
■ Chapter 11 - Antidumping and countervailing duty dispute resolution
• Contingency protection laws
Anti-dumping and countervailing duty issues go to national investigating authority
-
Were domestic laws fairly and correctly applied?
Then to binding binational panel proceedings
-
Uphold domestic decision or remand it back with directions
■ Chapter 19- Investor State Dispute Resolution
- Fair treatment of foreign investors
- Ease investment restriction
Resolution between gov and investor via domestic courts
Investment
Common treatment for investors from USMCA nations
Easing investment restrictions
Resolution of disputes between investors and governments
Includes corporate social responsibility standards
Chapter 4
Intro
EU:
Majority of European nations united to create borderless internal market and uniform external market,
creating the world's largest common market.
Highly developed example of economic integration Over 4.5 million consumers (post-Brexit)
Canada's 2nd largest trading partner
Historical dev: Post WWII goal: prevent further war & promote regional peace
1952: European Coal & Steel Community (ECSC) formed France, Belgium, Germany, Italy, Luxembourg &
Netherlands Integration of coal & steel industries prevented on nation from stockpiling the elements of
war
1957: Treaty of Rome signed by ECSC members, establishing:
1. European Atomic Energy Community (Euratom)
2. European Economic Community (EEC)
- Common European market (gradually remove tariffs)
- Together = stronger global presence (rise of USA after WWII)
EEC — 1957, Treaty of Rome
EC — 1986, Single European Act
EU — 1993, Treaty on European Union
Significant EU development treaties include the:
Single European Act (1986) to develop a single market (4 freedoms): Unrestricted movement of goods,
capital, services & people
Treaty on EU (Maastricht Treaty; signed 1992)
Changed name from EC to EU
Set out 3 Pillars of EU:
-
First Pillar: custom union & single market, agriculture, enviro, trade & monetary policy
Second Pillar: foreign policy & security policy
Third Pillar: policing cooperation, racism, crime & terrorism
Treaty of Lisbon (in force 2009 — clarity/consolidation)
Legal effect to Charter of Fundamental Rs of EU
Central Bank official status
Define role & est'd a President of European Council
Increased leg. Function of Euro. Parliament (equal to Council of EU)
Member nations seats = proportional to population
Restructured/renamed levels of EU Courts
In only 50 years, went from 27 individual nations, to:
United force with common internal market
Common international policy
Central bank and common currency
European Court of Justice
Complex integration and common regulation of:
-
Pre-existing structures and policies
New EU structures and policies
Creation and negotiation of EU social, legal, political entities
EU Trade Agreement
1. Tariffs
- All EU member states share a customs code that creates a single external border between EU
states and non-EU states
- Export to the EU? Same tariff regardless of EU country chosen
- Once in the EU, goods circulate freely (no additional duties)
2. Uniform Rules of Origin
3. Technical Barriers to Trade & Technical Standards
Common technical standards for all member states
Common sanitary & phytosanitary requirements for food/feed safety animal, plant & public health
Government of EU
The European Council
-
Sets the "general political directions and priorities" of the EU
Pres. or PM of all member countries Meets 4x/yr with Pres. the EU Commission
The Council of the European Union
Different than the European Council
Passes EU laws jointly with the EU Parliament
Coordinates economic policies & international agreements
Gov't ministers from EU member state; authority to commit their gov't actions
European Parliament
MEPs elected every 5 yrs by citizens of EU member nations
Sit in Europe-wide political groups, NOT per nation
Pass laws jointly with the Council
Provides democratic supervision & approves budget
European Commission Ensures EU law is consistently applied by all member nations - refers to ECJ
European Court of Justice (ECJ)
Settles legal disputes within the EU
Ensures legislation is applied uniformly in all EU member nations
-
Nations must apply EU laws
May ask ECJ for prelim ruling
The Court of Auditors:
Independent EU institution
Responsible for EU budget & financial management
Leadership:
Over 448 million EU citizens from 27 nations
Elect 705 members of European Parliament
Who speak 24 official languages?
EU Law: Areas of interest
IP Laws & Rights
WTO member, so those IP rules apply
Copyright: life of creator + 70 years
Patent — via national patents or EU patents (created 2014)
TM — via nation or EU (CTM — community TM — for 10 yrs; renewable for another 10 yrs)
Geographical indications = high priority in international agreements, not yet uniformly recognized
E.g. Champagne, Scotch Whiskey
Customs authorities help enforce IP protection Pirated, counterfeit goods
CETA
-
2017 free trade agreement between CAN & EU
Provisionally in force on September 21, 2017
Boosts & diversifies trade
Promotes labour rights and enviro protection
Includes dispute resolution, IP, e-commerce, professional qualifications, sanitary and
phytosanitary measures
Covers: trade in goods, trade in services, rules of origin, customs and trade facilitation,
investment protection & government procurement
What is Brexit?
Britain + Exit = “Brexit” (Britain left the EU)
UK referendum to leave the EU —June 23, 2016
© Article 50
° End to ECJ jurisdiction in the UK
° Sovereign
» End to UK inclusion in the EU single market (EU is UK’s biggest trading partner)
Withdrawal Agreement - Oct. 2019; in force Jan. 31, 2020
* 11 month transition period (ends Dec 31, 2020) for EU/UK to negotiate:
* New trade agreement,
* Debt UK owes EU for leaving,
* Plan for UK and EU citizens living in EU and UK, and
* Solution for no physical border in Northern Ireland
BREXIT Timeline
EU => UK Referendum 2016 => Article 50 Mar 2017 => 2 yrs: Negotiation exit UK White Paper May 2017
=> Brexit (UK ratified) Jan 31 2020 => negotiate treaty with EU.
BREXIT background
UK was one of EU’s member nations 28 (now only 27)
EU created a frictionless internal European market
-
Common regulations
Packaging standards
labelling requirements
But not able to achieve frictionless political system...
» UK maintained own currency
° UK citizens — pushback on transfer funds, immigration, lack of sovereignty /autonomy
Referendum to leave the EU
Current situation:
Decrease in currency value
Gradual economic decline noted
Small increase in unemployment
Future?
Other trade deals? US? Canada? Australia? China?
Will Scotland leave the UK and rejoin the EU?
 Free trade agreement: Each FTA cover different industry sector and has different provisions
depend on trading partner
Chapter 5
Introduction: Canada’s Rules
CDN import / export regulation influence by:
Protect health, safety of CDNs
Maintain CDN economy
Compliance with WTO, NAFTA/USMCA, CETA...
Compliance with enviro protection treaties
WTO drafts Legislation for Nations to Adopt
Eg CDN dumping and subsidies legislation
Canada’s Trade Remedies
Remedies for CDN firms wanting to protect their industry from unfair importing practices:
-
Anti-dumping duties (AD) and
Countervailing duties (CVD)
These measures are authorized by WTO agreements and regulated by:
-
the Canadian International Trade Tribunal (CITT), and
the Anti-Dumping and Countervailing Directorate of the CBSA
Threat and anti Threat tool to Canada Economy
Dumping: (Anti dumping Duties) Duties imposed by the importing country above usual duties
Subsidizing: (Countervailing Duties) Duties imposed by the importing country above usual duties
Flooding: Safeguard: Temporary limit import
No safeguard has been implemented since 1993. Only available when industry is seriously injure or has
potential to seriously injured by unexpected surge on import.
What are Canada’s export / import restrictions (“Export Controls”)?
Endangered species
Cultural artifacts
Uranium & nuclear related material
Certain military goods
Import restriction methods available:
Prohibition on certain goods
Embargo (prohibition on goods from a certain country)
Restrictive licencing/permits
Quotas
Duties
Conforming to WTO Law
WTO agreements impose export / import rules
CDN legislation relating to these rules is found in the:
-
Export and Import Permits Act
Canada Border Services Agency Act
-
Customs Act
Customs Tariff
The Canadian International Trade Tribunal (CITT)
Excise Tax Act — Goods and Services Tax and
Special Import Measures Act (SIMA)
Customs Act
* Customs Act: Canada’s primary legislation on imports / exports
- Authorizes the Canada Border Services Agency
- Regulates: who and what, how much and at what costs imports/exports cross the border
* Customs Act operates with:
- The Customs Tariff, and
- The Special Import Measures Act (SIMA)
An importer (includes traveler) must:
- Provide true and accurate information and report all goods
- Answer questions truthfully
- Pay duties and correct any misinformation
- Provide proof of origin of goods
Customs Tariff
Provides details on duties on goods entering Canada
- Lists specific tariffs for specific goods
- Uses the classification number (using Harmonized Commodity Description and Coding System — used
by over 200 countries worldwide)
Excise Tax Act
All goods entering Canada are subject to GST (5%)
- Applied to value of goods; value determined per Customs Act
- (different Act “Excise Act” for duty on alcohol, tobacco and cannabis)
Special Import Measures Act (SIMA)
Incorporates WTO dumping and subsidies requirements
Canada protects domestic industries via:
- AD duties — in addition to regular import duties on items dumped in the region
- CV duties —in addition to regular import duties on items subsidized by government in country of origin
(creating falsely low priced exports)
ADDITIONAL CONTROL:
Canadian International Trade Tribunal (CITT)
Handles many disputes regarding import/export legislation
9 members, 5 year appointment, quasi-judicial body
Authorized to:
- Investigate dumping/subsidy claims;
- Hear appeals to Customs Act, SIMA and Excise Tax Act decisions; and
- Conduct various trade investigations and inquiries.
Export Controls
WHY?
- Protect Canadians, the environment and the economy; and
- Fulfill obligations per bilateral and multilateral trade agreements.
HOW?
Export and Import Permits Act
-
Violations punishable by fines or imprisonment
Corporate entity AND its officers/directors are open to prosecution
Export Control List
Area Control List
Export Permits:
*not usually required for the passage of ‘regular goods’
*required where goods are ‘controlled, prohibited or regulated’, or in ‘transit’
Usually to comply with multilateral agreements
Individual export permits OR general export permit
Very different from a certificate of origin
2 Types:
* Individual export permit (IEP) — specific goods to specific location by specific exporter
* General export permit (GEP) — specific goods to specific location
Non-compliance? Punishable by criminal sanctions
Export Control List (“ECL”)
Exporters > be aware of what goods are on the ECL (require Export Permit)
HOW? Check Trade Controls Bureau website
Currently includes:
-
Certain agriculture products, like sugar and peanut butter
Textiles and clothing;
Military and dual-use goods with a strategic purpose;
Firearms, ammunition, and explosives;
Nuclear energy materials and technology;
Certain missile, chemical or biological goods;
Softwood lumber and certain other forest products;
Goods in transit or of US origin; and
Goods subject to UN embargo or foreign export controls.
Import Controls: Generally open, but some exceptions
Import Permits
Goods commonly requiring import permits:
° restricted goods, including weapons and hazardous wastes;
Carbon & specialty steel products;
Clothing & textile products;
Wheat & certain other grain products; and
° Certain animals & animal food products including dairy products
Agricultural Products
* Dairy, poultry and eggs (regulated under Supply Management System: match supply with
demand...regulate prices, maintain production)
* Int’l supply regulated via trade restrictive quantities (imports up to a certain quantity = set rate; over
and above = higher rates)
All goods will be subject to this analysis:
2.
3.
4.
5.
6.
7.
Identify the goods and determine tariff classification number;
Country of origin of goods and tariff;
Value of the goods?
GST/PST or HST apply?
Labelling/marketing requirements apply?
Product standards apply?
1. Identify and Classify of goods
*Collect relevant documentation (purchase orders, manufacturing process, parts list, and product
Composition)
Use to determine if product allowed to enter Canada
- Is it banned? (E.g. no child pornography, used mattresses etc)
- Permits, certificates, inspections required?
* If allowed to enter Canada, use tariff classification number (on HS)
Tariff Classification
Customs Tariff lists use Harmonized Commodity Description & Coding System (HS)
Look up product in Customs Tariff to determine rate
Consequences for misclassification:
-
Pay higher rater, or the difference, or arrears plus interest
Pay penalties
Delayed or seized goods
Criminal charges
2. Country of Origin
Rules of Origin
Rules of origin govern the assignment of nationality to goods being imported
Tariff rates are prescribed according to the nationality assigned
(eg product from Canada, US or Mexico attract preferable USMCA rates)
Check for trade agreement with that nation (see p149)
Proof of Origin
° Per Customs Act:
-
Commercial invoice,
Form A,
Certificate of Origin
exporter’s Statement of Origin
3. Valuation of goods
Dutiable Value
° Canada’s transaction pricing system has 6 methods to determine duty (per WTO obligations, ratified
via Customs Act, Valuation for Duty Regulations and
Direct Shipment of Goods Regulations):
-
Transaction value (arm’s length transactions only) eg invoice/receipt
transaction value of identical goods e.g. same good imported by this or other vendor
transaction value of similar goods
deductive value e.g. start with resale value in Canada and work backwards
computed value e.g. resale value in Canada, then allow for overhead/profit
residual value e.g. flexible system but only based on info available in Canada
4. GST/PST or HST apply?
*Determine value for product in Canadian dollars and customs duty rate
*GST taxable on ‘value for tax’ purposes
5. Labelling/Marketing
Certain items need to be labelled with country of origin
Per Customs Act and Customs Tariff, overseen by CBSA
ALSO need to comply with labelling requirements from:
Agriculture and Agri-Food Canada,
Industry Canada and other gov’t bodies
E.g. French and English language labelling
Ingredients of food products etc
6. Product Standards apply?
See relevant Federal/Provincial legislation


Responsibility of Importer
Goal is safety of Canadians
E.g. appliances require Canadian Standards Association (CSA) certification
Regulate size, technology, electricity, construction, hygiene
Canadian Services for Exporters
The Canadian Trade Commissioner Service works to support Canadian exporters



Help assess markets
Find qualified contacts; reliable info
Trouble shooting assistance
Export Development Canada (EDC) - CDN Crown corp
Provides trade finance services to CDN exporters & investors:


Accounts receivable insurance,
Single buyer insurance,



Contract frustration insurance,
Performance security insurance, and
Political risk insurance.
Chapter 6
Contract Fundamentals
Contracts determine the rights and obligations of those involved
Contractual terms are negotiable
Agreement to contractual terms needs to consider:





Strategy
Risk management
Dispute resolution
Costs/profits
International implications
Common law is “judge-made” law and uses precedents (cases) and the principle of stare decisis
Common law jurisdictions:
◦
Canada, USA, NZ, Australia, UK, Ireland, Singapore
Civil law is “code-based” using comprehensive statutes & legislation known as codes
Civil law jurisdictions:
◦
Most of continental Europe, Central & South America, Quebec
◦
CONTRACT
Voluntary: obligations
Private (enforceable only by or against parties to the contract)
Compensation: place plaintiff as if the contract had been performed
Risk Management:
◦
understand obligations in advance
◦
limit obligations
EXAMPLES: Purchase Agreement, Rental Agreement, Insurance Agreement…
TORT
Obligations imposed by law
No Private requirement (enforceable regardless of a party’s agreements)
Compensation: place the plaintiff as if the tort had not occurred
Risk Management:
◦
Take care
◦
insure risks
EXAMPLES: Negligence, Occupier’s Liability, Defamation, Trespass…
A contract is a legally binding agreement between two or more parties for a
particular purpose
◦ Legally enforceable rights and obligations
4 essential elements for a valid, enforceable contract:
1. Intent
2. Offer, Acceptance & Consideration
3. Capacity
4. Legal purpose
Elements of a Contract
1. Each party must intend to create a legal relationship
o Reasonable person test
o Presumption in business settings
o Rebuttable
2. Offer:
◦
Meeting of the minds
◦
◦
Communicated: unsent email? Learned via typing assignment?
◦
◦
shared decision to enter into a contract
Written, verbal, action (=implied)
Offer ends; no contract formed:
-
Revocation (withdraw offer)
Lapse of time
Death or insanity
Rejection of offer
Counter offer – ANY change to original offer
Acceptance:
-
Agreement to the terms
Communicated by words, conduct
Consideration
◦
Exchange of value
◦
Sufficient, but not “adequate”
◦
Bargain theory – reciprocity of promises
◦
Peppercorn theory – exchange does not have to be equal
◦
May be a benefit or detriment – examples
◦
No consideration? – Gratuitous promise – unenforceable
◦
Exceptions:
◦
Seal
◦
Promissory estoppel – prevents a party from retracted a promise that has been
relied upon
◦
Statute
3. All parties must have the legal capacity to make a contract
◦
◦
Individuals
◦
Age of majority
◦
Sober
◦
Not mentally incapacitated
Corporations – properly incorporated & signing authority
4. The contract must be for a legal purpose
- Illegal
- Immoral
 unenforceable
Even if contract meets elements 1-4, unenforceable
◦
◦
◦
Undue influence
◦
Fiduciary relationship and power imbalance exploited
◦
Doctor/patient; lawyer/client
Duress
◦
Economic of physical threats to extract contractual promises
◦
Int’l business: usually in countries w/o infrastructure to enforce rule of law or right of
innocent party
Mistake
◦
◦
if:
Complete misunderstanding between the parties (rare)
Misrepresentation
◦
Misleading or false material statement, influences party to enter contract
◦
Eg mistaken identity
Breach of Contract & Remedies
What if something goes wrong?
If the terms of a contract are not honoured or fully performed
◦
innocent party may sue for damages
◦
Privity of contract - only a contractual party may sue for breach
◦
Some exceptions – e.g. life insurance
2 types of breach:
Breach of condition- essential term of the contract
◦
innocent party may walk away from the contract and have no further obligations to
perform and sue for damages
Breach of warranty- non-essential term of the contract
◦
Innocent party must continue with the contract, but may sue for damages in the amount of
reduced value
◦
NOT excused from completing the contract
Type of Damages available:
◦
Expectation damages: (most common) puts the innocent party into position would have been
in, had the contract been performed
◦
Reliance damages: innocent party took actions, based on the contract…puts party back into
position, before the contract
◦
Restitution damages: in reliance of the contract, innocent party already gave some benefit to
the breaching party; sue to get value of that “unjust enrichment” (rare) – example
NOT in Parties’ Control
Laws of remedy & breach are set by common law, not the parties
In Parties’ Control
Clearly setting out in the contract via subheadings
◦
“Warranties”
◦
“Conditions”
◦
“Liquidated Damages” section – genuine pre-estimate of breach
◦
Courts will NOT enforce “penalty” clauses
◦
Discuss potential hazards while negotiating – high good will
◦
“Choice of law” & “arbitration” clauses
Mitigation of Damages
One party injures (causes a loss) to the other via breach; innocent party must mitigate (minimize) losses
Within reason
If “do nothing” and let damages mount, unlikely to get compensated for whole amount
Pre-Contractual Documents

Purpose: detail the intentions of the parties

Various names: letter of intent, memorandum of understanding, term sheet, comfort
instrument (or informal email summaries)

Vary in authority: full, some or no legal liability arise

Courts decide the authority using the words, intentions and substance of the
documents (not title)

Binding words: agree, grant, undertake, shall, upon acceptance…

Non-binding words: should, likely, potential, expect…

Binding agreements: contracts, protocols, agreements; specifies one language

Non-binding agreements: memorandum, letter of intent; multiply languages may be
used
Sale of Goods Laws

Law of jurisdiction chosen by the parties to govern the contract influences the rights and
obligations of each party


No ‘choice of law’ clause? = uncertainty (which laws apply?)

COSTLY court hearings (litigation to decide where to have the litigation…)

Courts use ‘conflict of laws’ rules
ALTERNATIVE to Choice of Law clause:

Use uniform and model laws

Created to avoid conflict of laws issues

Standardized across nations and industries, but not uniformly used

Canada: each province has Sale of Goods legislation; gaps in legislation filled in
via common law on “contracts”

Convention on Contracts for the Int’l Sale of Goods (CISG)
•
CISG provides uniform law of sales in int’l goods
◦
Modern, fair
◦
Greater certainty
◦
Reduces transaction & litigation costs
•
Created by UNCITRAL
•
applies automatically to all (sale of goods) contracts between places of business in different
contracting states (eg imports and exports)
•
list of (90!) signatories can be found on p.170
•
includes more than ¾ of all world trade
•
UK and India have yet to sign
•
Genuine progress in harmonizing common law & civil law rules re contracts for the sale of
goods
•
Choice of law clauses
◦
Conflict – which jurisdiction’s laws apply? = uncertainty
CISG
o
removes uncertainty
o
Provides default law if no other designation is chosen
o
Provides regime for developing nations that do not have their own formal sales laws
o
Balances interests of buyer and seller
◦
May also adopt CISG, even if neither jurisdiction is a member
◦
◦
“This contract is governed by the CISG…”
Or may adopt OUT; adopt other laws to govern the agreement, instead
◦
Provincial Laws, CISG & the UCC differ on these issues:
◦
Written requirement,
◦
Certain specifications regarding offer and acceptance,
◦
rules on battle of the forms,
◦
Performance of the contract,
◦
Conditions/warranties, frustration and remedies for breach,
◦
issues of missing terms, and
◦
Verbal variations of written contracts.
Contracts for the International Sale of Goods
Importance of the Primary Contract
May need more than 1 contract
Primary contract: parties are seller/exporter & buyer/importer
Subsidiary contracts: contracts necessary to fulfil primary contract (INS, transportation, financing…)
◦
Construction analogy
CONSIDER PRIVITY: ensure primary contract assigns rights and responsibilities for subsidiary contracts
Significance: subsidiary breach may CAUSE primary breach
•
Explicit terms in contract recognized above implied terms
•
Be detailed so courts, arbitrators do not imply terms into your contract
•
Date, title
•
Parties ID
•
Goods description
•
Packing, delivery, price, payment document specifications
•
Representations and warranties
•
Termination, dispute resolution and choice of law
•
Signatures
Include:
Standardizing International Trade Terms
Attempts by int’l bodies to standardize sale of goods terms
◦
ICC (Int’l Chamber of Commerce) developed Incoterms
◦
Help avoid costly misunderstandings
Incoterms: internationally accepted commercial terms for the delivery of goods; 3 letters that represent
delivery obligations
◦
Est’d 1936 (amendments)
◦
Optional – specify use in contract
◦
Only for assigning risk during transport, NOT ownership
◦
Only for contracts of sale, NOT subsidiary contracts
Incoterms coverage
YES
Seller’s obligation re delivery goods
Distribution of risk during production, carriage &
delivery
NO
Transfer of ownership & property Breach of
contract
Consequences of breach Exemption from liability
Responsibilities for border permits
Buyer’s obligation to accept & acknowledge
delivery
Importance of Documentation
Buyer’s goal – to obtain the right to resell the goods
◦
“sale of documents” – original purchaser never takes possession
New owner takes possession; needs docs:
◦
Bill of lading (BOL) – transport docs
◦
Certificate of Insurance
◦
Commercial invoice
◦
Inspection, customs certificates
Right to reject goods – deemed delivery (and property rights pass) when BOL delivered
◦
Conditional – goods conform to contract specs?
Drafting to Avoid Problems
Force majeure clauses: clauses that modify parties’ rights and obligations if a catastrophic events occurs
(beyond parties’ control)
◦
Eg war, fire, government intervention, terrorism, strikes etc.
“Best efforts” phrase commonly used to require a party to ‘do its best’ to satisfy an obligation
◦
Vague
◦
Open to interpretation by courts
◦
Instead, opt for “all reasonable efforts” which invokes the ‘reasonable person’ standard
Chapter 7
Financing International Transactions
Higher risk of non-payment in international contracts, than in domestic contracts
Jurisdiction issue: how to litigation
Mitigate this risk: via international banking arrangements
Verification of available funds fro TER
Verification of clean BOL (EXPORTER)
=Letter of Credit (L/C) - written undertaking by an importer’s bank, to an Exporter’s bank that a payment
will be made provided that specific terms and conditions are met
Letter of Credit Transactions
Important terms to include in L/C:
Specify terms of payment
Specify party on whom drafts are to be drawn; method of communication
Describe goods
Settle freight costs, destination, and shipment
Decide on documentation requirements
State whether partial shipments are permitted, transferability
Expiration date
International Rules for L/C:
Uniform Customs and Practice for Documentary Credits (UPC)
Adopted by Int’l Chamber of Commerce 1933; still used by most banks
Now include rules about e-transfers
ALL L/C are irrevocable when correct documents are tendered
Common documentation errors that cause L/C to be rejected:
Unclean BOL
Shipment between ports different from those named on BOL
Incorrect INS
Differing goods descriptions
Missing signatures
Banks accept no responsibility for contractual compliance between vendor and purchaser
Serious discrepancies in documentation require a waiver by Buyer/importer or L/C will not be honoured
Strict documentary compliance, but buyer has evidence of fraud > exception to the bank’s obligation to
pay on the documents
Level of proof is impractical (too high!)
Instead, inform bank, seek interim injunction on payment
Ie: SATISFY THE COURT, RATHER THAN THE BANK, OF FRAUD
Because bank’s duty to pay on conforming docs is so high
Transportation of Goods
Methods
1. Unimodal: one mode of transport only
If by sea > BOL or ocean waybill
If by air > air waybill or air consignment note
If by rail > rail consignment note
These documents (issued by carrier) detail:
Terms of transportation contract
Applicable (inter/national) laws
May limit liability
2. Multimodal: two or more modes of transport
May require separate single-mode transport documents or a combined transport document
3. Container Transport: unimodal or multimodal; door-to-door or consolidated
Small shipments go as ‘general cargo’ under contracts of “carriage of goods by sea”
USE BOL or ocean waybill; usually door-to-door
Large shipments rent the entire ship
USE CHARTERPARTY (separate CGBS contract)
Documentation
Bill of Lading
Evidence of the contract, NOT the actual contract
Shipper guarantees accuracy of BOL
“Clean” — matches goods
“Unclean” — discrepancies
Banks require clean BOL
° 3 purposes:
1. Receipt from shipper — received goods for shipment
2. Memo re terms of contract between carrier and shipper
3. Evidence of title to the goods
Ocean waybills
Non-negotiable contracts
2 purposes:
» 1. contracts of carriage and
2. Receipts
» (IE NOT evidence of title)
Possession of waybill insufficient to claim goods, must prove you are the person named in the waybill
Electronic BOL
* Ongoing issue to update BOL to electronic form
* Issue: how to deal with multiple print outs of same BOL
* Int’l rules still evolving to provide clear, detailed rules
Carriage of goods by air > air waybills are non-negotiable receipts for the shipment
Must indicate places of departure and destination
3 Purposes:
-
Evidence of the contract
Receipt of the cargo
Conditions of carriage
Governed by the Warsaw-Hague Convention
Possible Exemptions for Liability — in above Methods:
1. Act of God — damage caused by natural disaster natural causes, without human intervention
YES: storms, lightening, high winds (Nugent v. Smith 1879)
NO: H20 damage from burst pipe (frost foreseeable Siordet v. Hall 1828)
NO: rats, cockroaches (Reasonable foresight, care could prevent)
2. Enemies of the Queen (or state) — terrorism
“Restraint of princes”
Includes: enemies the (carrier’s) state is at war with (per Russell v. Neimann)
Excludes: pirates at sea, robbers on land
3. Defect or Inherent Vice of Goods
Carrier NOT liable if: animals fail to eat, liquid ferments/evaporates, perishables rot or metal rusts
HOWEVER, if carrier given NOTICE of inherent vice, MUST TAKE CARE upon delivery (A/bacora v.
Westcott - Carrier advised to keep wet, salted fish cargo
“Away from boiler” but no mention of refrigeration — not liable; inherent vice exception allowed)
4. Default of Shipper — poor/inadequate packaging
Carrier tried to rely on exemption after issuing clean BOL
Eggs w/ clearly inadequate packaging: all broken
HELD: NO b/c 3P reliance on BOL; insufficient packaging =obvious
(Silver v. Ocean Steamship 1930)
Insurance — highly specialized
Exporter protects interest in goods during transport
Marine Insurance
Insurable interest: interest in a subject, such that damage would cause the owner financial loss
Insurable interest AT THE TIME OF PURCHASE (of insurance) AND at the time LOSS occurs
Consider whether goods may travel on deck or below
NOT covered: losses due to —
Wilful misconduct of insured
Delay
Ordinary wear and tear
Breakage
Loss due to rats
Marine Insurance Options:
General average: all parties in sea adventure (ship, cargo, freight) proportionately share losses from
sacrifice to save the whole
(Subrogation: once insurer pays insured for a loss, insurer may assume interest of the insured — and
pursue remedies; sue to recover losses)
OR Particular average: allocating loss - if a portion of cargo is jettisoned at sea to save the remainder;
loss borne entirely by individual owning damaged or sacrificed property
Manage liability
PARTIES TO A CONTRACT
Can largely manage legal obligations (risks) to other party
Have less control over legal obligations to 3P and the world at large (these actions are covered by tort
law)
PARTIES TO A TORT
Method of apportioning loss in society
Generally to compensate victims for harm suffered from the activities of others
Obligations spread wider than in contract
Product Liability — Negligence Tort
Damages arising from faulty product
ELEMENTS of Negligence:
Duty > Breach > Causation of Damages
Breach: assessed in terms of standard of care owed
Product Liability standard of care:
Failure in design, manufacturing OR to warn
Originated from Donoghue v. Stevenson (HL 1932)
Snail in ginger beer; duty of care to 3P who didn’t pay?
HELD: manufacturers owe duties to all they could reasonably foresee could be injured by a defective
product
Product Liability -CANADA
* Negligence (fault) — prove design, manufacturing faulty or distributor’s failure to warn
* Class action suits
Product Liability - USA
* Strict liability
* Defective or unreasonably dangerous goods; sellers liable, even when not negligent
* Manufacturer open to liability if consumer not properly warned of hazards from foreseeable uses
(“learned intermediary” defence available, if item sold to “expert” in better position to communicate
warnings, eg doctor)
* High punitive damage potential
* Class action suits
Product Liability - EU
* Strict liability for manufacturers or producers; recent increases in claims
* “Producer” includes importer of faulty goods & anyone with TM on goods or even supplier, if producer
is unavailable
* No class actions — yet
Product Liability —- China
* Strict liability
* Joint action, not class action
* May use other jurisdiction’s laws to sue Chinese company in Chinese courts
* Choice of law clause
Product Liability INSURANCE
* Get coverage for
* ALL potential liability: strict, negligence, breach of warranty, misrepresentation, failure to warn
* ALL potential remedies
* Risk of recall (usually separate policy)
Privacy Law
Connection to International Trade Law:
* Comply with privacy laws of jurisdiction with connection to your business; often multiple jurisdictions
* Protect customer information: name, race, gender, education, marital status, email address, medical
records, income, purchasing habits, banking information, credit card information, identification
numbers...
Canadian Privacy Law
* PIPEDA (Personal Info Protection & Electronic Documents Act) very detailed, strict
* Federal legislation; some provinces (like BC) have their own
Worldwide
* 107 nations have data protection legislation...
* EU recently passed comprehensive, strict privacy legislation
Competition Law
Connection to Int’! Trade Law: implications for contract negotiation
Make sure int’] transactions do not attract anti-trust law or competition law
Anti-competitive behaviour:
A firm or firms restricting competition to maintain or increase market position without goods or services
of higher quality or lower cost
Examples: conspiracies, mergers, predatory pricing, price discrimination, price fixing, cartels, collusion,
misrepresentation, deceptive marketing etc.
Canada’s competition (or antitrust) rules can be found in the
Competition Act: Civil and criminal consequences
Worldwide: Int’| cooperation among many countries to target anti- competitive behaviour
Chapter 8
Intellectual property (IP): property created by human intellect or creativity that has commercial
application
Includes: intangible subjects (ideas, imagery, relationships eg “goodwill”)
Based on: owner’s legal right to exclude others from using their subject matter
Rights can be:
◦
Transferred
◦
Assigned, and
◦
Commercialized - like voice of celebrity to sell insurance
◦
Protected – like Bill Waterson’s Calvin & Hobbes
IP Primarily Includes:
◦
Patents: protection for new, unobvious and useful inventions, including improvements to
existing inventions
◦
Trademarks: protection for words, designs etc that distinguish goods or services
◦
Copyright: protection for works including books, plays, films, photos, drawings, sculpture,
computer programs, ads etc…
◦
Trade secrets: confidential info that gives a competitive edge
Related to IP rights:
◦
geographical indications: identification of goods with a specific regional origin and have distinct
characteristics of that place
◦
Personality rights: protect the rights of prominent individuals
◦
Industrial designs: ornamental or aesthetic features of a manufactured article
Purpose & Value of IP
Element of economic growth and financial success of businesses
Expansion into foreign markets often via commercializing IP
◦ Joint ventures, assignments, licences etc
◦ AKA “technology transfer”
◦ Exponential growth, internationally
Why?
o
o
o
Protection from global rivals
Encourage innovation
Protection from “trolls” (steal innovative ideas of others)
Not limited to jurisdiction where innovation was created
Purpose & Value of IP
How?
•
Web of int’l treaties and national implementation laws
•
Jurisdiction based protection
•
Asserting IP rights happens nationally
Goals:
•
Example: Canadian patent may not be infringed in Canada, but may be infringed
elsewhere
•
May seek IP protection in other jurisdictions
◦
Social (share ideas, increase trade) & economic (protect earning potential)
◦
Balance interests of owners and users, such as:
◦
Unfettered competition
◦
Creative incentive
◦
Cultural distinctions
Challenges:
•
•
Keeping laws up to date
•
New ideas/inventions test limits of current IP laws
•
Law need to be current in every jurisdiction you seek IP protection in
Discrepancies between IP protection in developed v. developing nations
Developing nations:
•
statistically do not create as much IP
•
Need access to IP to develop
•
“free for all” perspective
Developed nations:
•
Want to protect R&D investments
•
View IP as an economic resource
International IP Framework
WTO
•
global rules of trade among nations
•
including IP rules for goods and services
TRIPS
•
Agreement on Trade-Related Aspects of Intellectual Property Rights
•
sets minimum standards for IP regulation
•
Administered by WTO
•
Includes laws on copyrights, trademarks, patents, geographical indications, industrial designs
and trade secrets
•
Ensures consistency in IP legislation in developing and developed nations
•
Developing nations cannot tailor IP laws to regional needs, unless they w/d from WTO
•
Includes “national treatment” and MFN requirements
•
Established TRIPS Council to oversee compliance and assist nations in dispute resolution
WIPO
•
UN agency to increase worldwide respect for IP
•
Administers 26 IP treaties, including:
1. the Paris Convention for the Protection of Industrial Property (for patents and trademarks), and
2. the Berne Convention for the Protection of Literary and Artistic Works (for copyright)
Trade Secrets/Confidential Info
The most common form of protection used by business
What qualifies? (Legal test)
◦
Any info of a commercial nature
◦
kept in confidence (not general public) and
◦
used to provide a competitive advantage
Examples: scientific, technical, financial, marking info; formulas, processes, computer programs, code,
layouts, databases, designs, research, customer lists…
No registration is required (often enforced privately)
Advantages: cost effective, but must take measure to ensure confidentiality (confidentiality clauses in
agreements with employees, contractors, suppliers, etc)
Enforce via national legal systems – in Canada use contract law or breach of confidence tort
See TRIPS Agreement for a framework for confidential info laws; mentioned indirectly in Paris
Convention
Patents protect function
•
monopoly rights for specific inventions, or improvements of existing inventions
•
For non-renewable 20 years
•
In return, inventor provides full disclosure of the invention so others can benefit from it when
the patent expires
•
Monopoly ONLY if patent is registered
•
Jurisdiction based
•
Int’l treaties facilitate the application process in more than one jurisdiction
How to get a patent:
1. Specialized process – get a lawyer
2. Search each jurisdiction for “prior art” – already public/published/disclosed (ie not novel)?
3. Fill in national, regional, or Patent Cooperation Treaty (PCT) form
•
PCT provides one form, but must still be registered in national or regional office
4. Submit form to national or regional office
Most countries, 3 requirements :( legal test)
1. novelty,
2. utility, and
3. non-obviousness
AND: must also be a proper subject matter for patent protection
Examples of non-patentable subjects in Canada (differ per nation, see statutes):
◦
Abstract ideas, scientific theories, mathematical formulas, methods of medical treatment,
business methods, higher life forms…
1. Inventor: employer or employee? (CANADA)
•
Hired to invent?
•
Employer’s confidential info connected to the invention?
•
Invention resolves problem employee hired to solve?
•
ALWAYS address invention via employment contract
2. Patent Violation?
Patent rights enforceable in court
◦
Pending applications are NOT enforceable
◦
Violator’s ignorance of patent irrelevant
Owner (and licensee, assignee) may sue for infringement, resulting in:
◦
Injunction
◦
Damages ($$$) or Accounting of profits
◦
Seizure/destruction and/or
Int’l standards in patent law - est’d by the:
◦
Paris Convention,
◦
Patent Cooperation Treaty, and
◦
TRIPS agreement
Trademarks (™) protect elements used to distinguish the products and services of one person or
corporation in the marketplace from another (“branding”), including:
◦
words, symbols, three-dimensional shapes, colours, audible sounds, smells, or any combination
of the above
Trademarks protect:
◦
reputation of trademark owners
◦
consumers by connecting source of product/service with trademark (reputation, reliability)
TM owner, ONCED REGISTERED, has exclusive right to its use
Register in each jurisdiction; or 1 application to multiple jurisdictions per Madrid Protocol form
Cannot choose:
•
“prohibited mark” eg RCMP, UN, Red Cross symbol
◦
Deceptive description or the name (in any language) of the of the good/service
◦
Name of a person living or alive within the last 30 years
Civil remedies for TM infringement:
◦
Injunctions
◦
Damages ($$$) or Account of Profits; disposal or deliver of infringing goods
Copyright ©: exclusive right of a creator of a literary, dramatic, musical, or artistic work to
publish, perform, distribute, or use the work and authorize others to do the same
Berne Convention, administered by the WIPO, sets standards for copyright protection (usually life of
author + 70 yrs)
© - yes: books, instructions, essays, ads, song lyrics, poems, photos, art, maps, logos, choreography,
films, computer software…
© - no: mere ideas of works
How to get ©: original, tangible form and creator is citizen or resident of a Berne Convention or WTO
member state
◦
No need to register
In most Berne and WTO member nations, the creator is usually the first owner of the copyright in a work
◦
If the creator is an employee, who creates a work within the scope of his employment, the
employer is entitled to the copyright
Copyright (except for moral rights) can be assigned or licensed by the creator
◦
Moral rights: non-economic rights recognizing the creator’s parental and dignitary rights to
control the work and how it is treated by others
◦
get credit
◦
maintain the integrity of the work
Int’l treaties aim to keep terms and consequences consistent
Infringement:
◦
rights holder uses national law to enforce
◦
EXEMPT: “fair use” – copying for research, personal studying, critique, news, educational use
◦
ALSO EXEMPT: “exhaustion of rights” – owner of purchased copy has right to resell (that copy,
not multiples)
◦
Remedies (Per Berne Convention):
◦
damages,
◦
injunction,
◦
accounting of profits,
◦
delivery of infringing articles
Industrial Design Laws
Protect an enormous range of designs applied to:
◦
mass-produced
◦
manufactured products
Protects the non-functional elements of design—features of:
◦
shape, configuration, pattern, ornament, or
◦
any combination thereof that have solely visual appeal
Does not prevent others from dealing in products with the same function, as long as those products do
not embody or reproduce the protected design
Geographical Indications
Marks used on a product that identify it as originating in a geographical region
◦
where its quality or reputation is linked to that region
For example, Champagne (the drink)
NOT necessarily a place name
For example, “feta” cheese - inherently identified as Greek Conditions for protection vary in different
jurisdictions NOT clearly defined, like other forms of IP
Personality Rights
Personality rights protect the personas:
◦
names, nicknames, images, & voices
◦
of prominent individuals: Entertainers & Sport figures
Celebrity rights: 3 major classifications:
◦
personality rights,
◦
publicity rights and
◦
privacy rights
Personality & publicity rights may be licensed or assigned
Use of an individual’s fame to promote goods or services, without authorization, is generally actionable
--------Products can exhibit a number of attributes eligible for protection under different IP regimes
In Canada and other jurisdictions, IP concepts overlap— multiple protectable IP rights co-exist in the
same attribute of a product
OR
More than one IP form applies to an attribute, but cannot co-exist and an election (one or the other)
must be made
Expert advice; case by case analysis
----------
Chapter 9
Globalization
Global value chain: worldwide dispersion of production
Factors:
Internet
Falling transportation costs
Lower barriers to trade and investment
Improvements in information and communications technology
The most common forms of global business are:
Agency,
Distributorship,
Licensing agreement,
Franchising agreement,
Outsourcing,
Joint venture, and
Direct investment.
Careful attention required to:
* Clarify expectations,
* Anticipate problems, and
* Engage legal safeguards.
Agent: relationship between one person (the principal) who is a Supplier of goods or services and
another person (the agent) who carries out the specific task on the principal’s behalf, usually to sell the
The agent:
Principal’s product or service
Located in foreign jurisdiction
Familiar with local laws and regulations
° Specialized knowledge about the product/service
May provide additional services (eg installation — difficult from abroad)
Common characteristics of an agency relationship:
Agent facilitates (but does not decide) sales on principal’s behalf
Agent may bind principal, but only within scope (of agent’s apparent authority)
Commission compensation
Ownership and economic risk remain with principal
Relationship terminates: death, dissolution, bankruptcy of principal;
Principal to notify 3 parties (may presume continuation until actual notice)
“Utmost good faith” relationship — why?
Represents the principal’s brand to the customer
° Chooses customers
Entrusted with principal’s goods
Determines customer credit terms
Often receives purchase prices
Therefore:
High standard of duty toward one another
Reveal all relevant info and put other’s interests first
Agent may not act for both customer and principal, unless full disclosure
PRINCIPAL’S DUTIES
Pay agent agreed fee
Reimburse agent’s reasonable expenses
AGENT’S DUTIES:
Obey principal’s (lawful) instructions
Respect principal’s confidential information
Constant feedback
Uphold appropriate standards
Accounting to principal
Principal’s interests 1°
Only delegate with specific permission
Most common problems:
Failure to consider full effect of terms agreed to in agreement
Omission of important term from contract
Failure to properly define the relationship
Failure to set boundaries on the agent’s authority
Failure to consider laws of foreign jurisdiction re agency relationship
Arm’s length relationship with principal Otherwise = employee
Distributorship
Distributorship: the foreign distributor purchases goods on its own account from the supplier for resale
to customers in its own market
Another type of foreign intermediary (like agent): individual or corporate resident in a foreign
jurisdiction that conducts business on behalf of an individual or corporation that is resident elsewhere
Which one? Depends on the type of business/industry
Distributors more common in:
Standardized goods and after-sales service
Distributor’s characteristics:
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Usually purchase the goods from the supplier for resale
May be any type of legal entity (or individual)
Often has rights for sub-distribution
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May have license to use the brand name
Often knows how to service the product
Takes on economic risk of payment, extending credit
Selects own customers, pricing
Foreign Protective Legislation
Legislation often protects distributors of foreign goods/services re:
1. Minimum notice requirements
2. Compensation for termination
Why?
Foreign suppliers seeks: customer base & goodwill in foreign region
Without legislation, suppliers let distributors to established a foreign market, then terminate the
contract
To protect distributor’s return on investment, cannot terminate unless foreign supplier shows “just
cause”
Criminal offence in Canada to have:
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Price discrimination
Price maintenance,
Predatory pricing
Conspiracy or
Bid rigging
Licensing
Licensing: is obtaining the right to use intellectual property rights (and tradesecrets) that belongs to
someone else
WHY grant a license?
Frequently used to establish a manufacturing base or a market in a foreign country without capital
investment
Avoid the risk and expense of foreign direct investment
What am | risking, by granting a license?
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Losing control of IP and technology
Foreign country may not have some IP protections
If it does, licensor ought to register for IP protection
Also, get legal advice about whether the IP is actually enforced by courts
Otherwise, use detailed contract provisions for protection
Also risking disclosure of confidential info as part of the negotiation process
Get lawyers involved to protect your trade secrets, IP
Anti-competition red flags:
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Licensee agreements makes up 25+% of the market
Exclusive licensing arrangements that prevent the use of competing technology
Agreements that tie products together
Combine firms working on forefront of research “innovation markets”
Non-use of certain technology
Cornering a market through restrictive licensing
Franchising
Franchising: is a form of licensing, where the franchisee obtains the right to use a trademark or logo,
provided that strict quality standards are maintained and the business is run in a manner and style
determined by the franchisor
Characteristics
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Almost every aspect of the business is controlled by the franchisor strict uniformity among all
franchises > penalty of termination
Franchisee likely required to purchase certain products from franchisor
Rarely involves tech transfer or patent law issues
Franchisee owns the business and risks the capital
Negotiate renewal rights > usually tied to sales quotas (royalties)
Inequality in bargaining power
In franchisor’s favour
Legislation in many jurisdictions to protect franchisees, such as:
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Franchisor must provide disclosure documents
Good faith requirement for both parties
Must use reasonable commercial standards
Joint Venture Agreements
Joint venture: is a legal collaboration:
An arrangement among individuals (groups of individuals, companies, or corporations), which may take
the form of a short-term partnership or a newly incorporated entity, whereby they jointly undertake a
transaction for mutual profit
Joint venture agreements must be more than a simple contractual undertaking to work on a common
project
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Usually involves the creation of distinct legal entity
Contractual arrangements involved in a joint venture can include:
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Cross-licensing: firms grant licenses to one another to all the use of some or all of their
technology
Joint marketing, distribution and sale agreements: for example, Subway Sandwiches & Coca
Cola contract
Alliances or business networks: small/medium businesses share resources and skills to create
critical mass; usually not a new legal entity; and
Consortiums: umbrella association takes on part of the business of several “partners”, usually
for the completion of one specific project (may be contractual or multi-party joint venture)
Why join?
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Expand market presence
Share or develop technology to keep pace with global competition
Combine strong corporate strengths (marketing, export development, research and
development, training etc.)
Pool financial resources to expand a project into a new market
Successful Joint Ventures in Int’l Trade Require:
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Open and frequent communication
Well-established hierarchy
Pre-determined dispute resolution plan
Realistic expectations
Complementary strengths and weaknesses
Managements of the alliance
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Non-competition among partners
Common issues among joint venture partners:
Control, licensing and transfer of IP rights, capital requirements and distribution of earnings, deadlock
and arbitration
Outsourcing
Outsourcing: is the delegation of specific operations from the internal operation of a business to an
external entity
Usually cheaper, more efficient form of business activities in foreign countries, but NOT usually used to
enter a foreign market
* Supply chain issues may arise
Legal concerns include:
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Protection of IP
Adhering to foreign privacy laws
Protecting personal info
PROCESS:
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Request for information
Request for proposal
Non-disclosure statement
Contract
CONTRACT TO INCLUDE:
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Work transfer details
Operational requirements
Personnel controls
Performance standards
Quality control, continuous
Improvement requirements
Performance verification — audits, records, milestones
Remedies for breach
Change management
Termination provisions
Dispute- resolution provisions
Foreign Direct Investment
Foreign direct investment: long-term investment by a foreign investor in an enterprise resident in a
foreign economy
Common forms include:
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Start-up operations,
Greenfield investments (Parent Company builds its operations in a foreign country from the
ground up — build new factories, warehouses)
Specific projects, mergers, and acquisitions.
Risks Associated with FDI
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A foreign investor’s greatest fear is seizure of assets without compensation by government of
host country
Other potential FDI difficulties include:
Inadequate access to legal recourse in host country
Lack of transparency (in rules/regulations) in host country restricted right to repatriate profits
Host-country requirements for local sourcing and hiring
Chapter 10
Overview of Int’! Dispute Resolution
Legal Issues in an Int’! Disputes Law Suits in Domestic Courts
Jurisdiction Suing & Being sued
Resolution Options Enforcement of Foreign Judgments
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Litigation Actions Involving Foreign States
Mediation Selecting a Dispute Resolution
Conciliation Mechanism
Arbitration
3 potential issues in Int’ business
1. Which country’s laws will the parties use to resolve the dispute?
2. Which country’s courts will hear the case? Or, in the alternative, will the parties go to arbitration?
3. Will the courts in one country enforce a judgment or award obtained in another country?
Preventing Jurisdictional Issues
1. Which country’s laws will apply? “Choice of law” clause: a term in a contract in which the parties
specify that any dispute arising under the contract shall be determined by the law of a specific
jurisdiction
2. How to resolve the potential disputes:
Parties may specify a preferred method of dispute resolution, for example:
Litigation: process whereby a plaintiff initiates a lawsuit to enforce a right in court against a defendant
Alternative Dispute Resolution: (or ADR) is an umbrella term for methods of resolving disputes other
than litigation
Types of ADR include:
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Negotiation
Mediation /conciliation, and
Arbitration
Litigation
Characteristics:
* Notice of Civil Claim filed in the court registry
* Notice is served on defending party
* Party files Response to Civil Claim
* Lists of Documents are exchanged
* Discovery process (interview witnesses under oath)
* Trial
* BINDING Judgement
* Possible Appeal
* Very adversarial
* Relationship between parties rarely remains intact
ADR
Characteristics:
* Opportunity for relationship to continue
* Parties decide the process, law, adjudicator and admissible evidence
* Multiple ADR methods may be used together or serially
NEGOTIATIONS:
* Least adversarial, most flexible and least expensive
* Parties decide process and rules
* Both parties must seek a win/win solution, or negotiations will break down
* Formal (with lawyers, in a boardroom) or informal (business partners over dinner)
* May result in a modified contract
* Private and confidential
MEDIATION & CONCILIATION:
* Voluntary
* Neutral 3P guiding the process
° Formulates issues
° Seeks clarity (goals, perceptions, assumptions, preferred outcomes)
Facilitates communication; explores available options
* Outcome usually NON-BINDING
* Lawyer/Mediators will encourage signed (binding) agreements
MEDIATION:
* Parties resolve their own conflict
CONCILIATION:
° Meets with each party separately, then together
° Interprets and explains each position to the other party
° Suggests proposals to resolve the conflict
ARBITRATION:
* Voluntary
* Neutral 3P: “arbitrator”; chosen by the parties
* Hearing
* More relaxed rules of evidence than court
* Parties AGREE TO BE BOUND by 3P’s (“award”)
* Enforceable internationally
* UN’s Arbitration Rules (“UNCITRAL Arbitration Rules”)
* NOT adopted by countries, but by parties to an int’ Contract
* Parties agree to be bound by these rules, in their arbitration clauses
Highly favoured for int’| disputes
* b/c int’l rules can be applied to arbitration awards
* Therefore, easier to enforce int’l (than mediation contracts or court judgements)
2 types of arbitration:
Ad hoc: for the purpose of a particular dispute
° No formal structures or institutions
° Proceedings initiated by parties
Institutional: parties agree any and all arbitration will be conducted by specific arbitration body, and
according to its rules
° Examples:
© The Int’l Chamber of Commerce in Paris, France
© The BC Int’ Commercial Arbitration Centre in Vancouver, BC
Contractual term — “all disputes arising in connection with the present contract shall be finally settled
under the rules of [be specific] by [specify # or arbitrators — one or panel?] Arbitrators appointed in
accordance with said rules.”
Advisable to specify:
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Name of arbitral institution
Nationality of arbitrator(s)
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Place of arbitration (may affect applicable procedural law)
Language the hearing will be conducted in
Applicable law
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And be sure the location is a country that has adopted the UNCITRAL Model Law
Arbitration Rules
1. UN General Assembly approved (UNCITRAL) Arbitration Rules
Comprehensive set of procedural rules
Parties to a contract may incorporate these
2. (UNCITRAL) Model Law on Int’! Commercial Arbitration
Document to assist countries in reforming/modernizing arbitral laws
Covered the needs of int’| commercial arbitration
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Agreement
Tribunal composition & jurisdiction
Extent of court intervention
Recognition & enforcement of awards
° Nations may adopt these
3. Convention on the Recognition & Enforcement of Foreign Arbitral
Awards (NY Convention): int’ agreement enabling enforcement of foreign arbitral awards in int’ trade
disputes
Do Courts Always Honour Arbitration Clauses?
Canada adopted the UNCITRAL Model Law for arbitration
Int’l arbitral awards recognized in Canada, w/o local court action
NOTE: foreign court orders require local court proceeding, to be enforced in Canada
SIGNIFICANCE: Can bring an award from other jurisdiction and enforce it in court immediately instead of
requiring court order and another hearing in Canada court.
Canadian courts reluctant to overturn Arbitral Awards
Respect specialized knowledge of tribunal decision makers
Court is not an “appeal” for tribunal
Judge does not substitute own judgment for that of arbitrator
Only if corruption, bribery or fraud; or contrary to natural justice
Choice of Law
Parties are free to specify the law of their choice in the contract, provided that the selection is in good
faith
Eg of bad faith — trying to avoid the legal system provisions of country most closely related to the
contract
Refers to law governing terms of contract, parties must still obey laws of jurisdiction where they carry
on business
In federal countries, specify laws of state or provincial (otherwise too vague)
Proof of Foreign Law
In most common law jurisdictions, including Canada, any choice-of-law clause specifying a foreign law
must be raised in the case’s pleadings
Evidence of foreign, applicable law must be proven via expert witness; if insufficient, local law will be
use
° In most civil law jurisdictions, judges will be required to determine the applicable foreign law
° NOTE: In EU, Convention applies that deals with disputes between those in
Member States and Non-Member States:
» Parties have right to choice of law
When parties have not chosen, the law of the contract will be the law having the closest connection
with the contract (NOT where contract is performed, but the domicile of the party performing the
contract)
The Proper Law of the Contract
If int’l parties have not made a Choice of Law, the court will determine the ‘proper law of the contract’
via:
1. Have the parties expressed a (valid, conclusive) choice of law?
2. Have the parties implied a choice of law, via arbitration clause?
3. If no, which legal system has the closest and most real connection with the contract?
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Where was the contract made?
Where the contract was performed?
Where the businesses of parties’ were are located?
What language & terminology is used in the contract? AND
What is the contract’s connection with any preceding transaction?
Choice of Forum
Parties may choose where a dispute will be heard
e.g.: in what jurisdiction
NOT common in ordinary commercial contracts.
° Courts may overturn with strong policy reasons that the chosen forum would be unreasonable or
unjust (per Douez v. Facebook, Inc, 2017 SCC)
Who Can Sue & Be Sued in CDN
Courts?
Plaintiff starts an action in Canada — will the court accept jurisdiction?
Does the defendant have assets in the jurisdiction?
Usually, a defendant must be served in BC for BC courts to assume jurisdiction
To be served outside the province, there must be some connection to BC—usually, where:
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The defendant is domiciled or resident in the province;
The defendant carries on business in the province;
The tort was committed in the province; or
A contract connected with the dispute was made in the province.
Plaintiff > presents a connection between the defendant and BC
Defendant > may rebut the presumption
Argue: Forum non convenient
Discretionary power of the court to dismiss a case where another court or forum is much better suited
to hear it
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Show that another forum is more appropriate
Court agrees > stayed or dismissed
Court disagrees > court will assume jurisdiction and hear case
Enforcement of Foreign Judgments
Not automatic
Try to sue where the Defendant has assets
Otherwise, will have to seek recognition of foreign judgement BEFORE seeking to enforce it
For example, if Juan decided to sue Hiro over their automotive supplier issue, and he obtained a
judgement against Hiro in a Mexican court,
Juan would have to go to court in Canada to try to get the judgment recognized, before attempting to
enforce it against four Vancouver real estate properties registered in Hiro’s company’s name.
Canadian courts are increasingly prepared to enforce judgments by US, and other respected courts, if:
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Proper jurisdiction over the Canadian parties;
Judgment is not fraudulent, against public policy or natural justice; AND
Real & substantial connection between the court and the action
BUT: not international system or convention for reciprocal enforcement of orders obtained in other
jurisdictions
° Arrowmaster Inc. v. Unique Forming Ltd (ON Ct. Trial Div, 1993)
° Foreign judgement deemed final, unless:
1. Lack of jurisdiction
2. Lack of ID of defendant — defendant not party to the action
3. Fraud
4. Failure of natural justice
5. Contrary to public policy to enforce the judgment
If entering into a contract with a foreign state:
If ends in litigation, foreign state may plead:
Sovereign immunity: prevents a lawsuit against a government without its consent
2 theories (types):
1. Absolute immunity: a country cannot be sued for acts that are an integral part of its government
functions
2. Restrictive immunity: a country may be sued for acts the government performs while engaging in
ordinary commercial activity