Please allow us to refer you to the blog below on the SEC Chairman’s remarks on ICO’s and Securities Offerings:
SEC Chairman Jay Clayton spoke at the PLI Annual Institute on Securities Regulation in re: The DAO and his skepticism about ICOs being a securities offering.
Among several other topics, Mr. Clayton made reference to the SEC’s Report of Investigation Pursuant to Section 21(a) of the Securities and Exchange Act of 1934; The DAO.
To read the full post as well as the script and comments from Mr. Clayton, click here: http://www.wallerlawblog.com/post/176/SEC-Chairman-Sees-ICOs-as-Securities-Offerings
Please allow me to refer you to the analysis below on the development of Latin America through Foreign Trade & Investment:
José Francisco Mafla and Camilo Castrill at Brigard & Urrutia Abogados explore the development of trade throughout Latin America, and its effect on and importance for the region’s economic growth.
Latin America’s current economic growth levels are among the world’s highest, and the region is preparing its regulations to meet new economic challenges. As such, the fostering of foreign trade and foreign direct investment (FDI) is important to increase GDP growth, create job opportunities, and improve logistics and production. In the pursuit of economic and social development, modern economies are implementing new regulations to develop strategies aimed at attracting new investments and facilitate trade. In this article, we analyse the most important regulatory tools that Latin American countries are developing, with the aim of improving their economic and social conditions, and ultimately consolidating Latin America as a region open to business with favourable conditions for the development of high-value investment projects.
You can read the full analysis on the development of Latin America through Foreign Trade & Investment here: http://www.worldservicesgroup.com/publications.asp?action=article&artid=8912
Please allow me to refer you to the article below on the challenges with international recognition and enforcement of mortgages on ships:
Having practised both as a shipping lawyer and an aviation lawyer for many years, I do find the experience and practice with the Cape Town Convention and aviation finance transactions to be interesting when experiencing the challenges faced by the shipping industry with respect to recognition and enforcement of mortgages. The shipping industry does not have a global legal regime governing these issues in the same way as the aviation industry, and when looking at the OSX-3 matter from last year, where the Brazilian courts have set aside the Liberian first priority mortgage, the need for a global legal regime becomes quite evident.
The fact that the shipping world is yet to adopt an international legal scheme governing recognition and enforcement of rights in ships and offshore units is complicating the financing of such objects, and the mentioned court case in Brazil has cast a shadow over the Brazilian offshore sector which should trouble the international banking community. In this brief article I would like to discuss a little more in detail the challenges caused by the Brazilian judgment and how these challenges could be solved by looking towards the aviation finance sector and the Cape Town Convention.
You can read the full analysis of the solutions offered by the Cape Town Convention and the aviation finance sector here: https://goo.gl/izpyY5.
A few days ago in Washington DC we had the first cocktail of our Trade and Investment Practice Group. It was an excellent opportunity for networking and strengthening relations among delegates of several WSG firms.
The participants to the event were able to meet and network with delegates from around the world and share their experiences, ideas and projects. Networking is a key activity for business growth and development, as it is a great tool to promote you and your firm’s profile, creating new opportunities, and sharing knowledge (which provides an opportunity to learn and avoid pitfalls).
Networking is not about meeting more people, it is about building long-term relationships. Accordingly, networks must be constantly strengthened and improved, and for this purpose, it is important to keep in touch with new acquaintances and nurture relationships.
This is an invitation to remain in contact, share news and opportunities, make use of WSG’s and our practice group’s resources, and prepare for our next year’s gathering in during the 2016 ABA SIL spring meeting to be held in New York City from April 12 until April 16.
Over the last years, most WTO Members have categorized China as a Non-Market Economy (“NME”) during antidumping investigations (“AD investigations”). For this reason, China and Chinese companies have been subject to methodologies that deviate from the strict comparison with domestic prices or costs required by the GATT 1994 and the Antidumping Agreement (“ADA”). Inevitably, China’s categorization as a NME has soundly affected Chinese industries due to the imposition of high antidumping duties during AD investigations.
This differential treatment is based on paragraph 15(a) of China’s Accession Protocol, which allows importing Members to use an alternative methodology when Chinese producers cannot clearly show that market economy conditions prevail in the industry in question. However, paragraph (d) of Article 15 contains an expiration clause stating that the provisions of subparagraph 15(a)(ii) will expire 15 years after the date of China’s accession, namely after December 11 of 2016.
The purpose of this entry is to discuss China’s potential recognition as a Market Economy (“ME”) after 2016, the effects of granting Market Economy Status (“MES”) to this country in antidumping investigations, and hopefully discuss how your corresponding jurisdictions would address this matter.
Market Economy Status and Non-Market Economy Status
Pursuant to the provisions set forth in Article VI of the GATT 1994 and the ADA, dumping occurs when products of one country are introduced into the market of another country at a value lower than the normal value of the products in the market of origin, and causes or threats to cause material injury to an established industry or materially delays the establishment of a domestic industry of like products. In such circumstances, the importing country is authorized to levy on the dumped product an antidumping duty up to the margin of dumping (the normal value minus the export price).
According to subparagraph 1 of Article VI, the general rule is that normal value is the comparable price, in the “ordinary course of trade, for the like product when destined for consumption in the exporting country”. The comparability in the “ordinary course of trade” requires that both countries have ME. Therefore, when an importing country initiates an antidumping investigation over an exporting Member with MES, it is obliged to use domestic prices or costs when determining the normal value of the products.
Nevertheless, for NME exporters, as it is the case of Chinese companies, the general rule may not be applied as it is deemed that domestic prices are largely determined by the State, and not by the market. Thus, for WTO Members who are subject to a specific provision in a WTO Accession Protocol, the importing Member may adopt an alternative methodology instead, such as the use of surrogate prices in a third ME country (analogous third country methodology).
In this regard, Section 15 of China’s Accession Protocol established a NME clause providing that, if Chinese producers under investigation can clearly demonstrate that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product, the importing WTO Member shall use Chinese prices or costs for the industry under investigation in determining price comparability (Section 15(a)(i)). However, if producers under investigation cannot clearly demonstrate that market economy conditions prevail, the importing WTO Member may use a methodology that is not based on a strict comparison with domestic prices or costs in China, such as the analogous third country methodology (Section 15(a)(ii)).
This NME clause is critical to Chinese domestic industries since exporters have suffered significant financial losses due to the implementation of alternative methodologies used to calculate antidumping duties.
For instance, we draw attention to the U.S antidumping cases against color televisions originating in China and Malaysia in 2004. In these cases, the U.S Commerce Department initiated AD investigations against televisions manufactured in China and Malaysia which were essentially identical and used the same internationally available parts and components. In spite of this fact, the U.S. found no dumping in the proceeding against Malaysia, but found dumping margins of up to 78% in the proceeding against Chinese producers. This discrepancy occurred mainly because the U.S. Commerce Department treated China as a NME in the investigation and used India as a surrogate country when determining the normal value of the products.
It is important to recall that China has been the principal target in AD investigations over the last years. According to the WTO Antidumping Statistics, between January 1, 1995 and June 30, 2014, 1022 AD investigations were initiated against China, 185 against Japan, 181 against India and 119 against Malaysia. 73% of the initiated investigations were successful in levying antidumping duties to Chinese producers. While 69%, 57%, and 56% of the investigations against ME such as Japan, India and Malaysia were successful.
Expiration of the NME clause
According to paragraph 15(d) of China’s Accession Protocol, the NME clause (Section 15(a)(ii)) will expire on December 11, 2016. As from that date, importing Members will be obliged to treat China the same as other Members during AD investigations, since there will be no longer a legal basis in the Accession Protocol to treat China as a NME.
This means that the importing country will have to calculate the normal value of Chinese product according to the general rule embedded in subparagraph 1 of Article VI, and use domestic prices and costs in China to perform the comparison.
Nonetheless, a methodology not based on a strict comparison with domestic prices or costs in China is still applicable according to the Ad Note to Art. VI.1 GATT 1994 (the “Ad Note”). The Ad Note recognizes that, in the cases of imports from countries where the State has a complete or substantially complete monopoly of trade and where all domestic prices are fixed by the State, importing Members may determine that a comparison with domestic prices may not be appropriate due to special difficulties in determining price comparability.
However, the application of the Ad Note requires the investigating authority to demonstrate that the exporting State monopolizes trade and sets all domestic prices. Thus, if importing Members continue to apply alternative methodologies based on the categorization of China as a NME after 2016, without invoking the Ad Note, the affected producers may resort to the WTO dispute settlement system and request the restoration of their rights to the use of domestic prices or costs.
While a significant share of China’s economy is thought to be driven by market forces, allegedly the Chinese government continues to play a major role in economic decision-making, possibly distorting trade and investment flows.
According to the U.S China Economic and Security Review Commission, the Chinese government maintains policies to bolster domestic enterprises such as subsidies, tax breaks, preferential loans, trade barriers, foreign direct investment restrictions, discriminatory regulations and standards, export restrictions on raw materials (such as rare earths), technology transfer requirements imposed on foreign firms, public procurement rules that give preferences to domestic firms, and weak enforcement of Intellectual Property Rights laws (“IPR”). Furthermore, the Chinese government has taken quick steps to take full control of industries such as, autos, aviation, banking, coal, construction, environmental technology, information technology, insurance, media, metals (such as steel), oil and gas, power, railways, shipping, telecommunications, and tobacco.
Recently, U.S. policy makers and stakeholders have expressed their concern for these issues, as well as for the widespread cyber economic espionage against U.S. firms by Chinese government entities, the increasing pressure over foreign-invested firms to transfer technology in exchange for market access, and China’s inconsistent record on implementing its WTO obligations.
These control-based policies have placed China’s recognition as a ME on 2016 in the tightrope. For instance, the EU and U.S have expressed their reluctance to treat China as a ME until it demonstrates that it operates under market policies. In fact, in 2012, President Obama created a new Trade Enforcement Unit “charged with investigating unfair trade practices in countries like China.”
Currently, the U.S China Strategic and Economic Dialogue is exploring the possibility of cooperating to enable the U.S to treat China as a market economy, and treat certain Chinese firms as market-oriented industries, for the purpose of U.S. trade remedy laws.
Thus, it is still not clear whether in practice China will start to enjoy MES for the purpose of AD investigations, along with the expiry of the NME clause in December 11, 2016.
What are your views and your prediction on this issue? How do you foresee that your jurisdiction will treat China and Chinese companies for purpose of trade remedies investigation after 2016?
In order to highlight the global reach and impact that certain industries have, WSG and the Mining Practice Group will be hosting their first ever PDAC Networking Cocktail in Toronto, Canada on Tuesday, 3 March, from 16:00 to 18:00 at Michael’s on Simcoe restaurant. (Registration: http://www.worldservicesgroup.com/meeting2.aspx?id=980)
WSG members attending the conference will be able to connect in an intimate setting to exchange opinions, best practices and, more importantly, share recent experiences in the nowadays sensitive field of work that encompasses the mining and minerals industries. Members already registered for the event practice in the areas of environmental and energy, as well as foreign investments, securities and capital markets.
WSG and the Mining Practice Group are looking forward to meeting you all at the event and enjoying an enriching evening in amazing Toronto. The PDAC Convention will take place March 1 - 4 in Toronto, where 1,000 exhibitors and 25,122 attendees from over 100 countries will be in attendance.
For more information, please contact Gaby Saldaña, WSG Practice Group Administrator, [email protected] or 1-713-650-0333.
It is common knowledge that trusts haven’t exactly received a warm welcome in civil law (ius commune) jurisdictions. It seems to be a result of the incompatibility of traditional trusts with the doctrine of absolute ownership, the numerus clausus property law concept, and the conflict with traditional doctrines of inheritance and matrimonial property law. However, trust structures carry with them a concern that they will be used to circumvent the law, tax evasion or to pursue other goals which are in conflict with public interests or good morals. These concerns have deeper roots than mere adherence to the formal structures of a legal doctrine.
The civil law jurisdictions tend to ignore or even reject trusts. They are concerned with their own concepts that the courts usually apply to foreign trusts. Trusts are regarded as creating an agency or mandate. If the trust concerns local assets, it may be regarded by the lex situs as the transfer of ownership and simultaneous creation of an obligation of contractual nature (fiducia). The trustees of a testamentary trust may easily find themselves in the position of a Testamentsvollstrecker (testamentary executor?). To find a functionally corresponding legal instrument is not always possible. Moreover the decisions of the courts concerning the trust structure are scarce and hard to predict. This creates a barrier for the trusts to be active in civil law jurisdictions.
On the other hand the practitioners in the civil law jurisdictions feel the deficit of their jurisdictions not having or recognising the trust concepts, most particularly in the realm of commercial transactions. Over the past few years, the attempt may be observed in continental Europe to respond to the perceived problematic lack of existence of institutes comparable to trust, or trust-like institutes. Apart from Liechtenstein, which has its own Trust Code of 1926 (amended in 2008), the structures corresponding functionally to trusts were implemented in France, Malta, and recently Hungary and the Czech Republic. In Germany the concept of Treuhand is becoming increasingly recognised by the courts as a separate fund. It might be noted that also the foundation sector tends to be more liberal and provides the possibility to use private foundations for the purposes trusts are used in common law jurisdictions (e.g. Austria).
Italy, the Netherlands, Luxembourg, Switzerland and Monaco ratified the Hague Convention on the Law Applicable to Trusts and on their Recognition (1985). Especially, the example of Italy using the opportunity offered by the Hague Convention to establish trusts governed by foreign law over assets located in Italy, for the benefit of Italian beneficiaries or for the advancement of purposes to be carried out in Italy (trust interno) shows us a different way of civil law jurisdiction to the trust without the need of creating its own domestic trust structure. It seems that Switzerland will also follow this path.
It seems that the circumstances are suitable for European law action. It can be noted that the provisions on trusts were included in the Draft Common Frame of Reference and the idea of an EU Directive on Protected Funds is discussed. In connection with the 4th Anti-Money Laundering Directive, it is proposed that public central registers should be set up in each EU country listing information on the ultimate beneficial ownership of companies, foundations, holdings and also trusts. The registers will be interconnected across Europe and access will be made public to those who complete a basic online registration.
The European Court of Justice was confronted with the trust recognition issue in the famous case of Webb v. Webb (C-294/92) (1994). However this decision focuses only on the implications of lex situs rules in connection with the specific features of the trust.
However, the European Free Trade Association (EFTA) Court decision in the case of Olsen v. Norway(1) from July of this year might open new horizons of the EU law. It says that a trust, which pursues a real economic activity within the EEA, can invoke the freedom of establishment and the right to free movement of capital pursuant to the Agreement on the European Economic Area. It means that the member states are prohibited from restricting those rights by their national law. If the European Court of Justice follows this decision, it will have significant implications not only for the tax policy (which was the primary concern of the decision), but also for the general civil law of all EU member states.
In my view, reflecting the developments in the European company law, it follows from the Olsen v. Norway case that all EU states shall recognise the EU trust operating on their territories even if settled by their citizens (Centros case). If this is right, then all EU states seem to be forced to recognise the internal trusts such as Italy. Further, the recognition of the trust must be recognised without further formality (Uberseering case). It would alter the landscape of the law in most of the EU civil law jurisdictions.
The main question seems to be the extent of such trust recognition. In what extent should the national jurisdictions accept the implications of trust structures in the areas such as the right of ownership and other rights in rem, inheritance or matrimonial property law? If these implications are accepted, should not be the trust law harmonised on an EU level?
All in all, I believe that the mentioned decision of the EFTA Court in the case of Olsen v. Norway reflects the current convergence of legal cultures that the latest development seems to confirm, and that is necessarily associated with the destruction of traditional approaches.
Fellow Practice Group members,
I am very glad of making the first entry of the group’s blog, in which I sincerely welcome you again to WSG’s new International Trade and Investment Practice Group (Latam). This Group was created to exchange opinions, relevant news and comments in the field of international trade and investment, as well as a forum to build professional rapports, especially in Latin America.
The constant changes on the rules governing trade and cross-border investments pose major challenges to companies and consultants around the world. These changes must be assessed from an interdisciplinary approach that adapts to different trends and markets and that encourages the exchange of experiences and knowledge. This goal may be better achieved through a solid and efficient network to build knowledge, share experiences, and generate business among the firms, with the multidisciplinary approach of WSG; these are the main objectives of this Practice Group.
We have the following ideas and activities for the group:
- On-line discussion of relevant topics and news: Members are encouraged to share news and exchange opinions through the online interface, mainly through this blog tool. Actually, I will soon start a separate blog discussion on a specific trade issue.
- Conference calls and webinars: We may organize conference calls to discuss the group’s initiatives and activities, and webinars to develop continuing education sessions.
- Joint publications: Further down the road, we may organize joint publications by the different firms on relevant topics (guides, articles, year in review, etc.).
- Meetings: Soon, we should be able to meet at least every year or every two years, in order to strengthen our ties and discuss relevant topics.
- Use of free advice policy: Learn and correctly use WSG’s free advice policy, to access free advice on specific matters from other WSG members.
Please share your ideas through comments to this blog entry, so we can all jointly build the group’s plan for the forthcoming years.
Practice / Industry Group: Technology, Media & Telecom
On 15 October 2014, Members of the WSG (World Services Group) Technology, Media and Communications (TMC) Practice Group attend a one-day seminar in Paris at the offices of the French WSG member Jeantet. Members have the occasion to present themselves, debate interesting legal topics in their jurisdiction, evaluate past co-operation and ways to better co-operate in the future. For more information see www.worldservicesgroup.com
Gerrit Vandendriessche, TMC Group Leader