International Business Law Advisor : International Business Lawyer & Attorney : Santiago Cueto Law Firm : Global Business Litigation & Finance Commentary

In a trend that could spread to other jurisdictions, Liechtenstein is asking wealthy UK investors who have assets hidden abroad to take advantage of its “unique and attractive” amnesty program.

The agreement reached between the UK and Liechtenstein combines generous terms with a promise by the principality to close the accounts of customers who could not prove they were tax-compliant. The disclosure facility offers minimal penalties, a guarantee of no prosecution in non-criminal cases and an exemption from the threat of “naming and shaming”.

You can read about the program in the Financial Times article Liechtenstein woos investors with tax amnesty.

While I think the deal comes close to striking a balance between banking confidentiality and tax transparency, it comes at the expense of rewarding the users of the most secretive jurisdictions.

Trend to Watch: Look for Similar Deals to Be Forged with Monaco, Singapore, Hong Kong and Gibraltar

      -Santiago

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  I recently represented an overseas client who sued a U.S. party based on a transaction that took place overseas.  The transaction centered on several key affidavits, powers of attorney and attestations that we would need to use in U.S. litigation.  

Traditionally, for such documents to be made admissible in U.S. courts, the documents must have been authenticated or “legalized’ by the U.S. embassy or consulate in the country in which the documents originated.  And before authentication is possible, the document must have been certified by the foreign ministry of the country of origin. 

Folks, the red tape involved can be a real headache and extremely time consuming.  This is not what your clients want to hear.

Hague Convention Gives VIP Status to  Documents to Be Used Abroad

 Fortunately, there’s the Hague Legalization Convention to streamline the authentication of documents for use abroad. The Convention is a multilateral treaty designed to cut through the traditional certification process by relying solely on the convention “apostille.”

The apostille gives any public document VIP status for acceptance into any country that is a party to the Convention. Currently, 98 countries have signed on to the Convention.  As one commenter, correctly pointed out--be sure to verify that the target country (ies) are signatories to the Convention before assuming otherwise. You can check here.

U.S. Origin Documents for Use Abroad

In the U.S., all states have authorized their respective Secretaries of State to sign Hague Convention apostilles. Also, the clerk of each federal court has been empowered to issue apostilles for documents originating in that court or contained in the records of cases before that court.  Documents originating in state courts are subject to certification by the court clerk and issuance of a convention apostille by the secretary of state.

When you request the apostille, be sure to specify in which country the document is to be used.  Once the apostille is issued, it’s ready to be used abroad.

Foreign Documents for Use in the U.S.

To be admissible in the U.S., documents from other countries that are parties to the Convention and the prior certifications of those documents need only be covered by a completed apostille issued by the official of the country of origin. That’s all that is generally required.

The documents certified by apostille do not require legalization by the U.S. embassy or a U.S. consulate in the country  where the country originated.

It’s that easy!

What has been your experience with authenticating documents under the Convention?

         -Santiago

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Define. Scrutinize. Monitor.

About 11 years ago my firm was retained by a large computer company to file a claim against an Original Equipment Manufacturer (OEM) based in Taiwan for theft of trade secrets.  Our client had retained the OEM to manufacture what was then the first “all-in-one” motherboard. I’ll spare you the technical details but this technology was revolutionary.

The OEM was no dummy—it quickly identified the potential market for the technology. It subsequently went behind my client’s back and began selling the computers into other distribution channels under its own private label.

The OEM simply affixed its own label, “Brand X,” on top of my client’s equipment and passed it off as its own. The theft was ultimately uncovered at a trade show in Las Vegas several months later.  One of my client’s engineers happened to stop by a booth displaying some interesting technology-- a very familiar looking motherboard..

Upon closer inspection of the circuitry, it was discovered that the motherboard was exactly the same one that the engineer had designed 10 months earlier and outsourced to the shady OEM.

Upon learning of the trade theft, we immediately filed suit in federal court.  An extensive 5-year international legal battle ensued culminating in a  2 month long federal trial in which we ultimately prevailed.

I tell you this story as a cautionary tale on how important it is to make sure all details of your clients’ outsourcing endeavors are closely  defined, scrutinized and monitored.

The incomparable China Law Blog has a “not-to-be-missed” post on outsourcing appropriately titled China Outsourcing 101. The Legal Basics. While the post deals exclusively with China, I think it’s applicable when dealing with any OEM.  My friend Dan Harris lists five outsourcing basics including the need for trademark registration and non disclosure agreements:

1. Create and properly register your intellectual property rights in the United States or whatever country or countries in which you sell the bulk of your products. If you do not have a firm basis for your IP rights under U.S. law, you will have nothing to protect in China. Before you go to China, be sure your intellectual property is protected under U.S. law or the laws of whatever country or countries in which you sell your products. Protect your brand identity by creating and registering your trademark, slogan and/or logo. Register your important copyrights. Carefully identify and protect your trade secrets, proprietary information and know how. Patent what you can.

Doing the above will mean that no matter what happens in China, you will at least be able to protect your product to the fullest extent possible in the country or countries in which you sell your products.

2. Register your trademarks in China. Registration can protect your future access to the Chinese market, prevent the export of counterfeit goods from China, and prevent a competitor from registering your mark in China, which would prohibit you from exporting your own product from China. For more on the necessity of registering your trademark in China, check out, "WHEN To Register Your China Trademark" and "China Trademarks -- Do You Feel Lucky? Do You?"

3. Use a written agreement to protect your know how and trade secrets in China. Small and medium sized companies usually do not have an extensive portfolio of patents. Their most valuable intangible assets typically are their know-how and their trade secrets, which cannot be protected by formal registration. Chinese law, however, permits companies to contractually protect their know how and trade secrets by contract. Such agreements may (and in most cases should) also address issues such as non-competition and confidentiality. Without such a written agreement, no such protection is available. For more on using non disclosure agreements (NDA) in China, check out, "China Non Disclosure Agreements (NDA). A Really Good Thing."

4. Product Quality and Payment Terms. The rule here is simple. Do not make final payment to your Chinese manufacturer until you are confident you will be getting an on time shipment of the correct items and quantities at the quality standards you require. This usually means you must incur inspection costs in China and provide for a clear procedure for dealing with these problems as they arise. You must take the lead on this. You cannot depend on the OEM manufacturer to do this for you.

5. Use comprehensive OEM Agreements with each manufacturer. Small and medium sized businesses often enter into OEM manufacturing transactions with a simple purchase order. This is a mistake. The purchase order will not protect you. Your protection depends on your securing a signed written OEM manufacturing agreement with each Chinese manufacturer with which you deal. The ideal OEM agreement will address all of the issues discussed above while also addressing other basic legal issues such as jurisdiction and dispute resolution. This agreement should be in both Chinese and English, since the Chinese language version will control in China. For more on this, check out, "China OEM Agreements. Why Ours Are In Chinese. Flat Out."

I agree with all these points but would add where applicable drafting specifically tailored Technology Transfer Agreements where the OEM is also granted a license to market and sell the product within predefined parameters.

These agreements set forth exactly what a licensee is free to do under the patent rights. Depending on the claims in the patents, the licensee can be given the right to manufacture, have manufactured, use and/or sell the subject matter of the license. The agreements often set forth terms of exclusivity depending on the territorial rights granted.

The agreement should also state that the licensor owns the subject technology of the license (patents, patent applications, know-how trade secrets, trade marks and / or copyrights ), that it has the right to grant the license and that it has not granted a previous conflicting license.

What other precautions would you take when dealing with OEMs?

      -Santiago

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The International Law Prof Blog has passed along details about an upcoming teleconference, “Doing Business with Japan,” sponsored by the American Bar Association Section of International Law.

The conference could not come at a better time. Businessweek’s Daniel Kruger reported this week that Japan has overtaken China as the largest foreign holder of U.S. Treasury securities. The number is staggering--Japan is now holding $768.8 Billion in U.S. T-Bills.

Folks, the conference is a great first step towards bridging the trade gap and getting back some of those T-Bills.

Here are the details:

90-Minute ABA Teleconference on Doing Business with Japan

Are you interested in getting a better understanding of the legal system in Japan?  Or in the advantages (and dangers) of selecting Japanese law or Japan as a place to arbitrate?  Or other issues relating to doing business with (and in) Asia? 

There's a teleconference on "Doing Business with Japan" on Wednesday, February 24, 2010 from noon to 1:30 p.m. Eastern US Time.  The program is organized by the Asia/Pacific Committee of the American Bar Association Section of International Law.  Click here for the program description, speaker bios, and registration form.  Download Japan.  There is an extremely modest fee to call in ($15 for section members and $25 for non-members).  Register by Monday, February 22, 2010.

Looks like an excellent program. Will you be attending?

    -Santiago

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And Why Relocating to Switzerland May be the Best Corporate Strategy

There’s nothing more annoying than finding hidden fees buried deep inside obtuse and mangled contract language. The only thing worse than finding hidden fees is learning about these punishing provisions from someone else—after you’ve signed the agreement. 

If you thought hidden fees provisions were the exclusive craft of credit card and cable companies, I’ve got bad news. The biggest offender just might be the drafters of the proposed federal budget making its way through Congress.

International Tax Increase Buried in Proposed Bill

Thanks to the keen eyes of the Wall Street Journal’s Matthew Slaughter, U.S. based Multinationals have a chance to lobby against what may be the largest hidden fee--an obscure tax provision--ever levied against them. Matthew writes in the article “How to Destroy American Jobs:”

Deep in the president's budget released Monday—in Table S-8 on page 161—appear a set of proposals headed "Reform U.S. International Tax System." If these proposals are enacted, U.S.-based multinational firms will face $122.2 billion in tax increases over the next decade. This is a natural follow-up to President Obama's sweeping plan announced last May entitled "Leveling the Playing Field: Curbing Tax Havens and Removing Tax Incentives for Shifting Jobs Overseas."

A proposed $122 Billion international tax burden? Placed on pg. 161? On a chart? Apart from the obvious lesson to carefully scrutinize the details of everything, and I do mean e.v.e.r.y.t.h.i.n.g., that comes across your desk, the substantive point of the article is absolutely correct—the proposed tax hike on U.S. based MNCs will bankrupt those that earn a significant amount of their revenue overseas.

Proposed Tax Will Force US-based MNCs to Relocate Overseas

As one commenter noted, it is the fiduciary responsibility of the board of a company to protect the investors in that company, and to provide them with the maximum safe return on their investment. In the new tax and regulatory environment the U.S. is in the process of imposing, any company that earns a large percentage of their revenues outside of the US simply cannot remain U.S. based.

Under the proposed tax hike on U.S. based MNCs, what incentive is there for Coca-Cola to remain a US based multinational? Why not move the corporation to Switzerland, where the favorable corporate tax structure has long been lured the operations of large MNCs such as Johnson & Johnson and Burger King Holdings Inc.

Switzerland Offers Optimal Tax Environment for MNCs

The timing could not be better for companies looking to relocate their operations overseas-- and to Switzerland in particular.  The Wall Street Journal recently reported on an emerging trend among Swiss cantons to compete for the business of MNCs by lowering their corporate tax rates. In the article Switzerland’s States Compete on Tax Cuts, the cantons of Zug, Schaffhausen (just north of Zurich) and Lucerne have all cut their tax rates in a heated battle to lure more MNCs.

For U.S.-based MNC’s looking to dodge the proposed international tax bullet, Switzerland provides the most favorable corporate tax environment in which to relocate U.S. based operations.

Conclusion

According to KPMG’s Corporate and Indirect Tax Survey 2009, the current effective U.S. Corporate tax rate is 40%, while in Switzerland the effective tax rate is 21.2%--and considerably less in some cantons. Under the proposed bill, the tax gulf will only grow wider.

It will be interesting to see what happens with the proposed tax. Until then, MNCs should take a look at Switzerland.

Trend to Watch: If the Proposed International Tax is Enacted Look for an Exodus of U.S.-based MNCs to Switzerland and to Other Favorable Tax Climates.

       --Santiago

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As an international business attorney, a focal point of my practice involves advising clients how to best handle cross-border disputes.  The most effective mechanism by far in resolving international dispute is international arbitration. Why?  International arbitration levels the playing field by taking away the home court advantage of parties on either side of a transaction.  

But the most attractive aspect of arbitration is that the awards issued by an international arbitration tribunal will receive worldwide recognition by countries that are members of one of the international conventions on the enforcement of tribunal awards.

Given the superior advantages arbitration has over litigation in resolving international disputes, it’s essential that you make the international arbitration agreement ironclad and bullet proof.  

Here’s how to do it:

             1.  Be Unambiguous.  

Unequivocally state that any dispute will be resolved through arbitration e.g. “Any dispute or difference arising out of or relating to this agreement shall be finally resolved by arbitration …”

              2.  Be Clear

Define whether arbitration is to be preceded by negotiation or mediation and designate a timeframe e.g. “If no agreement has been reached within __ days of the delivery of  written notice of the existence of a dispute, either party may serve a request for arbitration …”.

3.      Be Specific

Specify the administering institution and the rules to be applied e.g. “The arbitration shall be administered by the International Center for Dispute Resolution in accordance with its International Arbitration Rules

4.      Be Careful

Carefully select the site of the arbitration taking into consideration the quality of its arbitration jurisprudence and the respect of its courts for the arbitral process. e.g. China, no. Hong Kong, yes.

5.      Be Meticulous

 Meticulously set forth the number of arbitrators on the panel and how they will be      selected. Choose an arbitrator who demonstrates communicative proficiency, a firm appreciation of the rules of evidence and an acknowledged expertise in the industry in which the dispute arose or about the issues in dispute.

6.      Be Heard.

Designate the language of the proceeding. It is unsettling how many times parties overlook this provision and are forced to rely on a foreign translator to communicate every word of the proceeding.

7.      Be Final

 In order to prevent further review and appeals of an arbitral award once it is rendered, you must include a statement in the arbitration agreement that clearly states that the award is final e.g. “The arbitral award is binding, final, not subject to review, and not subject to appeal  by the courts in any jurisdiction." This provision is  particularly essential in jurisdictions where the laws allow parties to appeal an  award issued  in that country.

Follow the points I described above, and you’ll be well on your way to drafting a bullet proof international arbitration agreement. 

     -Santiago

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Only 2 weeks into 2010 and I’m seeing a lot of positive movement on the street. The international markets are roaring back to life. Deal makers are picking up the phone again. And lawyers are being hired to put these deals together.  Based on this snapshot view, I expect to see international transactions skyrocket as investor confidence and flexible credit terms return. While some may perceive this forecast as abundantly rosy, it is not without its thorns.

As the number of international transactions skyrocket, so do foreign parties' attempts to escape from their arbitration agreements and to force disputes into foreign courts. All too often, a party that thought it would be arbitrating international disputes - and that may have commenced arbitration in the agreed forum - may nevertheless find itself the target of foreign litigation.

A recent federal court decision reinforces strong public policies in favor of arbitration and against improper collateral  litigation.  In Telenor Mobile Communications v. Storm LLC, the United States Court of Appeals for the Second Circuit affirmed the district court’s granting of an anti-suit injunction against Ukraine litigation in aid of an UNCITRAL arbitration. You can read the decision here.

As the case illustrates, U.S. federal courts are increasingly resistant to efforts to use foreign litigation to interfere with pending international arbitration, and are increasingly willing to brandish their injunctive powers to prevent such interference.

The Telenor decision should cause parties to arbitration agreements to think twice before staging "friendly litigation" in an effort to avoid their contractual obligations, as Judge Robert D. Sack wrote for the court:

Our view, in light of the findings of the arbitration panel and the district court, is that it is Storm's improper collateral litigation, not the arbitral award that is contrary to public policy, viz., the well-established federal public policy in favor of arbitration. "Through the FAA, Congress has declared a strong federal policy favoring arbitration as an alternative means of dispute resolution." (Internal quotation marks omitted)). Collateral and unilateral litigation of arbitrability – or any other issue pertinent to arbitration, for that matter --undertaken in a foreign forum by a party to that arbitration in an attempt to protect itself from an adverse arbitral award would, if indulged, tend seriously to undermine the underlying scheme of the FAA and the New York Convention.

It's reassuring to see that U.S. federal courts are increasingly protecting the integrity of awards rendered in international arbitration and that collateral litigation commenced by a foreign party to avoid an arbitral award will not be tolerated. 

Trend to Watch:  Look for More U.S. federal courts to hold international parties to their arbitration agreements, and to prevent them from seeking refuge in litigation abroad.

      -Santiago 

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The  Snuggie was a huge hit in England over Christmas. The product, which was conceived and developed by New York-based Allstar Products Group, LLC, has also been a huge hit in Canada and Australia. For those unfamiliar with the product, the Snuggie is essentially a backwards robe that one wears to keep warm.

By leveraging its success in these markets, this latest American export is quickly building momentum in Asian markets--a natural fit, so to speak, considering it’s manufactured in China.

The Snuggie? Global Domination? How---Why?

 Elegant Simplicity

Lucky for us, the playbook Snuggie used to dominate world markets is shockingly straight forward and easy to follow. Indeed, the genius of the Snuggie’s global game plan was its elegant simplicity.

A Global Domination Campaign has Several Moving Parts

How did a product that was launched in 2008 become a worldwide phenomenon by 2009? It achieved global dominance with careful attention to the legal landscape underpinning its expansion strategy. It knew exactly what U.S. export regulations covered its product. And more crucially, it knew exactly how to comply with the import laws in each of the foreign markets it entered. This was the Snuggie’s masterstroke and what allowed it to crush world markets in record time.

Your product’s tipping point can come early in the launch stage if you institute a global domination campaign from the outset. This entails ironing out the legal details in both domestic and global markets contemporaneously. While the two-pronged attack requires additional legwork to comply with trade laws in selected international markets, the extra work will pay huge dividends when orders start pouring in from all over the globe.

The 3 Step Formula for a Successful Global Product Launch 

Going global has never been easier and should be part of every company’s initial launch strategy. Here are some key points to speed your way to global dominance in your industry:

Step 1: Select your Global Domination Targets.

Review the law in every country that you intend to crush and dominate. Look for foreign customers who resemble your domestic clients and customers. They may not be as difficult to find as you expect. The Snuggie pulled this strategy off flawlessly by first penetrating the UK and Australia, whose consumers have similar tastes to those in the U.S.

Step 2: Penetrate to Dominate

The absolute best way to quickly penetrate a foreign market is to contact your country's consulate or embassy in the foreign market that you're trying to enter. Government Trade Officials are placed in those foreign countries specifically to assist enterprises like yours export products there. These officials collect market data and have access to directories of potential buyers for specific industries. Follow this step and it will be like having your own international consulting firm at your beck and call.

Step 3:  Master the Supply Chain.

This requires professional management of the logistics of delivering your product from A to B at just-in-time speeds as your product rapidly reaches critical mass. Unexpected perils such as currency fluctuations, transportation break-down and catastrophic infrastructure damage can all derail the best laid plans. Be sure to have back-up suppliers to keep your empire growing at breakneck speed.

 
High Octane Resources to Supercharge Your Global Domination Strategy

To supercharge your global domination plans, do not hesitate to utilize the vast arsenal of resources provided by the federal government—they are unparalleled in their scope, depth and breadth. While there is an infinite amount of “how to go global” literature online, there is no better source of information than the U.S. Government—and it’s free.  The resources below are among the very best:

Export.Gov

The most important step in going global is understating the legal requirements and regulations associated with you product. Export.gov offers a vast array of helpful guides and resources to help you get started.  

Export.gov's Export Program’s Guide is a great resource and offers and overview of industry and country specific counseling and trade leads.

U.S. Department of Commerce

Be sure to visit the United States of Commerce’sBuyUSA division to find an export assistance center near you. The professionals staffing the assistance centers will counsel you all the way through the export process.

Business.gov'sGet Started in Exporting guide provides a comprehensive list of resources and services to help small business start up their exporting operation, including information on required licenses.

U.S. Department of State

The U.S. Department of State has a business sector with international market resources such as trade policies and restrictions, country commercial guides, and operational guides to help Americans before doing business overseas.

Export-Import Bank

The Export-Import Bank of the United States has a small business division helping exporters get started.  The excellent export guide provides information for businesses that are trying to establish themselves in the export market.

While these resources are not comprehensive, they are the cream of the crop for anyone wanting expert help with their global domination strategy.

What do you think?

    -Santiago

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For any business with global reach, collecting payment from overseas customers can be a real headache. Laura Delany offers sound advice on the Small Business Trends Blog on how to get paid on international transactions.  While the article also deals with advance payment and payment online, I’ll focus on the letters of credit portion here because that’s what my clients typically use.  

 Collecting money from your overseas customers with letters of credit can be a breeze if you follow the guidelines below.  Using letters of credit with the help of a solid international banker will allow you to confidently secure payments from customers all over the world. Then sit back and watch your global business empire grow.

   -Santiago

Letters of Credit — Security with Flexibility

After payment in advance or payment online, securing payment with a letter of credit is the next best option to collect money from overseas customers. We will take a detailed look at how letters of credit work, who participates in the transaction, and what variations and modifications are available to help the parties negotiate mutually acceptable terms.

THE FOUR KEY PLAYERS IN THE LETTER OF CREDIT PROCESS

There are four participants in a letter of credit transaction — two businesspeople and two banks:

1. The buyer.  That’s your customer.

2. The opening bank.  This bank normally issues the letter of credit, so it is sometimes referred to as the “issuing bank.”  They assume responsibility for the payment on behalf of the buyer.

3. The paying bank.  This is the bank under which the drafts or bills of exchange are drawn under the credit.  A paying bank in an L/C transaction might also act as the negotiating bank, advising bank or confirming bank, depending upon what responsibilities it accepts.

4. The seller.  That’s you.

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 Nothing is more interesting than the intersection of international business law and sports. Add Charlize Theron into the mix and things get, well, even more interesting. Over the weekend, Ms. Theron, representing the host country South Africa, announced the draw for World Cup 2010, the biggest sporting event on the planet.

If you haven’t already, you can read all about the draw in the Wall Street Journal article The Envelopes, Please and in the Financial Times article English hopes rise after World Cup draw. Also be sure to check out the Fédération Internationale de Football Association (FIFA) website, the go-to site for World Cup information.

EU Sports Are Big Business

Because of the massive revenue the World Cup generates for each participating nation, soccer  has become big business to which the rules on competitive and anti-competitive behavior apply. How these rules are applied often determine which teams ultimately qualify for the world’s greatest sporting event.

No region has more at stake than the EU, which is sending many of its members to South Africa. With so much on the table, it is unsurprising that the business decisions of EU football clubs are often contested under anti-trust laws. This is particularly true in the areas of M&A, salary caps and media rights.  

EU Anti-Competition Law Increasingly Applied to Sports

England, Spain, Germany, France and Portugal are considered the European Union’s top contenders to win the World Cup in 2010. And all of them are subject to the same EU Anti-Trust laws, which are contained in Articles 81 and 82 of the EEC, which state:

Agreements, decisions and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition are prohibited by art. 81 (1) of the Treaty of Rome if and in so far as they may affect trade between EC member states.”

The following is an overview of the areas and issues where EU Anti-trust laws are frequently invoked to contest the business decisions made by EU football clubs.

• M&A Activity: At present, no two or more clubs participating in a UEFA club competition may be directly or indirectly controlled by the same entity or managed by the same person. However, one might question how legitimate this rule is given the broad definition of 'control' that is typically adopted in the context of mergers. Should an investment fund be prevented from buying more than one club, if it is just a financial holding company with no right to influence the club's management?
• Salary Caps: Salary caps have an inherent potential to breach EC competition rules. They may constitute an anti-competitive agreement or concerted practice between national or international sporting associations and either clubs or players' unions under article 81(1) EC. Equally, there is a potential for violation of article 82 EC, given that sporting associations can be dominant in the market for the competitions they control. Need I mention the Yankees?
• Media Rights: The restricted structure of the broadcasting market has frequently raised issues under articles 81(1) and 82 EC. Team owners in the industry show a clear willingness to seek redress under EC law when their commercial interests are threatened, and may be even more likely to do so as bottom lines are squeezed in the current recession. As the largest revenue stream in sport, media rights will continue to be the focus of disputes across the EC and beyond. The next major battlegrounds are likely to include access to content on the internet and territorial broadcasting restrictions

As these issues illustrate, competition law remains at the heart of EU sports law disputes and often impact how each national team fills its roster. Ultimately, this plays a central role in which teams qualify for the World Cup.

Trend to Watch: Look for EU Anti-Competition Law to Be Increasingly Applied to Sports …And Look for Spain to Take the World Cup in 2010.

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I received several calls today from clients doing business in the EU about the Lisbon Treaty and what it means for their European business operations. In the short term—absolutely nothing. The Lisbon Treaty is essentially just a clarification and simplification of previous European treaties into one single document.

In the long term, however, the Treaty is a boon for business. Why? Because it will galvanize and embolden the EU to rise again as a major global player in an arena currently dominated by China, India and Brazil.  Until now, Europe has been largely stagnant in comparison to these economic juggernauts. In fact, Gross domestic product in the EU is expected to rise by only about 0.7 percent in 2010 and official data show unemployment is expected to rise above 10 percent next year.

You can read more about the Lisbon Treaty's international debut in the BBC article EU Lisbon Treaty Comes into Force and in the Irish Times article Lisbon Treaty Comes into full force in the EU.

The immediate aim for the Lisbon Treaty is to streamline EU decision-making, which had become increasingly unwieldy as it took on an additional 10 countries in the past five years.  The long term aim of the Treaty is to lay the foundations for the EU's efforts to wield more economic influence in today’s globalized environment.   

Fredrik Reinfeldt, the Swedish prime minister who is currently steering the EU presidency said earlier today:

A new era of European co-operation begins today. With the Treaty of Lisbon, EU citizens get a union that can meet the demands of the 27 member states for transparency, democracy and efficiency; a union that can better meet the challenges of globalization."

These are great words, but it will take more than a speech to bring the EU in line with the rest of the world's competitive prowess.

From a judicial standpoint, the Treaty makes some minor changes. The Court of Justice has published this very useful short guide to the changes that the Lisbon Treaty makes to the Court of Justice itself, the General Court, as the Court of First Instance is now known, their jurisdiction and their procedures.

Overall, the Lisbon Treaty is simply a matter of form over substance for the time being and it will have marginal effect on business in the upcoming year.

Trend to Watch: Look for Europe to Wield More Economic Force in Late 2010 and Early 2011.

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 Dan Harris of the China Law Blog posted an excellent article, Setting up your worldwide Internet empire (China too), on the complex legal issues that a company must consider before it sells products worldwide over the internet.  As Dan highlights below, setting up a global internet business is not as simple as setting up a web page and waiting for the orders to roll in:

1. What type of legal entity(ies) are you going to want? Where will you want them? These two questions must be answered in tandem.

2. From what countries will you accept purchases? Are you going to accept purchases from every country or are you going to limit yourself? Selling into multiple jurisdictions means you are going to be subject to multiple tax regimes. Who is going to figure out your taxes in each country? Are you going to use a third-party merchant of record to do this for you?

3. Selling into multiple jurisdictions means you are going to be subject to the privacy and consumer protection laws of multiple jurisdictions. We need to know the jurisdictions in which you will be selling to know what laws will apply to your company. Many countries have very strict shipping date and return requirements.

4. Is your product legal in all of the countries to which you intend to sell it? Is it legal for foreign companies to sell that particular product into all of the countries in which you intend to sell it? Is it legal in your home country to export your products into all of the various countries in which you intend to sell?

5. It would be nice if we could set you up with one law applying everywhere in the world, but most countries do not allow this when it comes to the sale of consumer goods. So we are going to have to discuss where you will be focusing your efforts.

6. Are you going to sell your products in local currencies or in just the major ones or in just dollars? Are you aware that some countries forbid its citizens from using foreign currencies?

7. Are the electronic contracts you propose using enforceable in all of the countries in which you will be selling?

8. Let's talk about dispute resolution. Arbitration? Where? Will all of the countries in which you are selling enforce this? Many will not enforce an online provision requiring their consumers to arbitrate in a foreign country.

Number 8 is of particular interest to me given that a significant part of my practice involves international litigation and arbitration. I wrote an earlier post, Online Litigation and Foreign Jurisdiction, suggesting ways a company can minimize its exposure in international contract disputes.

Thanks Dan for the great post. These are extremely important issues that must be addressed before a company sells its products internationally over the internet.

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