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Review the scenario and complete the activity below. This scenario can also be found in the “Questions & Problems” section of Ch. 6, “International and Comparative Law” in Dynamic Business Law.
QUESTIONS & PROBLEMS
Spain divided unroasted nondecaffeinated coffee into five separate classifications. A 7 percent tariff was imposed on three of these classifications. The other two classifications were duty free. Brazil, the principal supplier of the coffee subject to the tariff, alleged that the Spanish classification regime failed to extend most-favored-nation treatment to like products originating from Brazil, thus violating GATT. Spain defended the classifications on the basis that the products were not like products due to differences resulting from geographic factors, cultivation methods, processing, and genetics. The GATT panel rejected these arguments. The panel noted that most coffees are blends, coffee is universally regarded as a well-defined and single product intended for drinking, and no other state maintained a similar classification scheme. The panel thus concluded that the classification system Page 156discriminated against like products in violation of GATT’s most-favored-nation requirement. Do you agree with this decision? Is coffee a single universal product regardless of where it is grown, how it is processed, or what the cost is to consumers? [Spain—Tariff Treatment of Unroasted Coffee, 1981 GATTPD LEXIS 5 (1981).]
Two North Carolina teenagers were fatally injured when the bus upon which they were riding overturned on a roadway outside Paris, France. The parents of the decedents brought a lawsuit in North Carolina state court against Goodyear Tire and Rubber Company and its subsidiaries based in Luxembourg, Turkey, and France, alleging that the accident was caused by negligent design and production of the bus tires. The plaintiffs alleged that the subsidiaries placed their tires into the stream of commerce and some of these tires ended up in North Carolina. The subsidiaries alleged that there was no personal jurisdiction as the mere placement of a product in the stream of commerce is an insufficient basis for the assertion of personal jurisdiction, especially when the accident had no connection with the forum other than the residence of the decedents. The North Carolina state courts disagreed and exercised personal jurisdiction over the subsidiaries. The subsidiaries appealed to the US Supreme Court. Do the North Carolina state courts have personal jurisdiction over the defendants in this case? Why or why not? [Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011)].
Nicastro was severely injured at his workplace in New Jersey by an industrial metal-shearing machine manufactured by J. McIntyre Machinery, Ltd., an English company. Nicastro filed a product liability claim against McIntyre in New Jersey state court. McIntyre denied that the New Jersey state courts had personal jurisdiction. McIntyre had no office in New Jersey, and it did not pay taxes, own property, advertise, or maintain employees in New Jersey. McIntyre’s only contact with New Jersey was the presence of the metal-shearing machine at Nicastro’s workplace. The New Jersey Supreme Court held that state courts could exercise personal jurisdiction with respect to Nicastro’s claim. McIntyre appealed this decision to the U.S. Supreme Court. Do the New Jersey courts have personal jurisdiction over McIntyre arising from Nicastro’s injuries? [J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011).]
Michael Ghannoum, a resident of Texas, was hired to work as a pilot for Qatar Airways which is wholly owned by the Qatari government. Ghannoum’s employment was based in Qatar, where he resided under a resident permit. Qatar Airways terminated Ghannoum’s employment and refused to pay him for previously performed work. Ghannoum’s residency permit was canceled, which prevented him from leaving the country to interview for jobs with other airlines. Ghannoum was subsequently deported and was unable to return to Qatar. Ghannoum filed a lawsuit against Qatar Airways for interference with prospective business relations, infliction of emotional distress, invasion of privacy, and defamation. Qatar Airways contended that Qatar was a more convenient forum for the resolution of the claims and moved to dismiss Ghannoum’s lawsuit on the basis of forum non conveniens. Qatar Airways advised the US court that it would do everything within its power to facilitate Ghannoum’s reentry into Qatar to allow him to pursue his claims. Is Qatar an adequate alternative forum? What are the private and public interest factors implicated by this case? How do these factors balance in this case? [Ghannoum v. Qatar Airways, 2014 WL 4354436 (S.D. Tex. Sept. 2, 2014).]
Seung was a passenger on the M/S Paul Gauguin cruise ship owned by Regent Seven Seas Cruises. The cruise ship operated exclusively in French Polynesia. Seung’s ticket contained a forum selection clause that designated Paris, France, as the sole location for any lawsuit that might be filed arising from passenger injuries on cruises that did not include a US port. Seung was injured on her cruise and filed a lawsuit in the US District Court for the Southern District of Florida. Regent Seven Seas Cruises moved to dismiss the lawsuit on the basis of the forum selection clause. Seung claimed that the clause was unfair as she was financially and medically unable to bring a lawsuit in Paris and that Paris was a “remote alien forum” designated for the sole purpose of discouraging passengers from bringing legitimate claims. The district court dismissed Seung’s lawsuit, and she appealed to the US Court of Appeals for the 11th Circuit. Is the forum selection clause as drafted enforceable against Seung barring her lawsuit in the United Page 157States? Why or why not? [Seung v. Regent Seven Seas Cruises, Inc., 2010 U.S. App. LEXIS 17449 (11th Cir., August 19, 2010).]
Juliette Shulof Furs (JSF) was a New York corporation that had been in the fur-dealing business for 15 years. George Shulof, an officer of JSF, attended two auctions conducted by Finnish Fur Sales (FFS) in Finland in 1987. He purchased more than $1.2 million worth of skins at the auctions. Shulof attended each auction and was the actual bidder. The conditions of sale were listed in the auction catalog in English. Section 4 of “Conditions of Sale” provided that “[a]ny person bidding at the auction shall stand surety as for his own debt until full payment is made for purchased merchandise. If he has made the bid on behalf of another person, he is jointly and severally liable with the person for the purchase.” Section 15 of “Conditions of Sale” provided that “[t]hese conditions are governed by Finnish law.” JSF paid for the majority of the skins purchased, leaving an unpaid balance of $202,416.85. FFS brought an action to recover the contract price of the skins from Shulof, claiming he was personally liable for payment under Finnish law. Shulof responded that he was acting only as the agent for JSF and that under New York law he was not personally responsible for the contracts of the corporation he represented at the auction. He also claimed that the choice of Finnish law was invalid, and its application would lead to a result contrary to the public policy of the state of New York. Is the choice-of-law clause valid? Would the imposition of personal liability upon Shulof be in violation of New York public policy? What are the reasons for your answers? [Finnish Fur Sales Co., Ltd. v. Juliette Shulof Furs, Inc., 770 F. Supp. 139 (S.D.N.Y. 1991).]
In an interview published in The New York Times in February 1976, former Lockheed president A. Carl Kotchian defended the payment of bribes by the company as follows:
Some call it gratuities. Some call them questionable payments. Some call it extortion. Some call it grease. Some call it bribery. I look at these payments as necessary to sell a product. I never felt I was doing anything wrong.
More than 30 years later, Reinhard Siekaczek, an accountant employed by Siemens who oversaw an annual budget for questionable payments in excess of $50 million, stated:
I never thought I would go to jail for my company. … We thought we had to do it. Otherwise, we’d ruin the company. … People will only say about Siemens that they were unlucky and that they broke the Eleventh Commandment. The Eleventh Commandment is “Don’t get caught.”
Given these attitudes, is the Foreign Corrupt Practices Act likely to result in a change in corporate culture at multinational businesses? Is the FCPA a success or a failure to the extent that its prohibitions are not taken seriously, as demonstrated by the above statements?
Morgan van Breda, a resident of the province of Ontario, was injured while vacationing at Club Resort in Cuba. Van Breda booked the trip utilizing the website of Sport au Soleil, an Ontario-based travel agency. Club Resort employed Canadian professionals and tour operators, including Sport au Soleil, for advertising, promotion and bookings. Van Breda sued Sport au Soleil and Club Resort in Ontario for negligence. Club Resort sought to have the litigation dismissed on the basis that Cuba was a more appropriate forum. Does Canada or Cuba have a more substantial connection to this litigation? Was Ontario a more appropriate forum for van Breda’s lawsuit? Why or why not? [Club Resorts v. Van Breda, 2012 SCC 17 (Supreme Court of Canada 2012).]
In an interview published by The New York Times in February 1976, former Lockheed President A. Carl Kotchian defended the payment of bribes by the company as follows:
“Some call it gratuities. Some call them questionable payments. Some call it extortion. Some call it grease. Some call it bribery. I look at these payments as necessary to sell a product. I never felt I was doing anything wrong.”
More than 30 years later, Reinhard Siekaczek, an accountant employed by Siemens who oversaw an annual budget for questionable payments in excess of $50 million, stated:
“I never thought I would go to jail for my company. …We thought we had to do it. Otherwise, we would ruin the company. …People will only say about Siemens that they were unlucky and that they broke the Eleventh Commandment. The Eleventh Commandment is, ‘Don’t get caught.’”
You have been hired to assist ABC Multinational Company to help educate employees on ethical practices and corporate culture. More specifically, related to the Foreign Corrupt Practices Act, your role is to prevent situations described in the above scenario.
Create either a handout, job-aid, poster, or flier to educate employees on the Foreign Corrupt Practice Act. Complete the following for your educational tool:
Explain what the employees should know regarding the Foreign Corrupt Practices Act.
Provide examples of Foreign Corrupt Practices Act violations.
Identify company actions or red flags that might indicate violations of the Act.
List any consequences of the violations.
Recommend actions to report possible violations.
Describe protections for whistleblowers. Why are they important? How do the protections impact the Act?
Cite references to support your assignment.
Format your citations according to APA guidelines.
