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12383 results in International Trade Law

Page 230 of 620

  • Chapter 7 - Comparative Observations

  • Ekaterina Pannebakker
  • Book:
    Letter of Intent in International Contracting
    Published by:
    Intersentia
    Published online:
    27 September 2018
    Print publication:
    22 December 2016, pp 233-274

  • Summary

    Introduction

    The previous Chapters have addressed the approaches to letter of intent in the Netherlands, France, England and Wales, and the United States. This Chapter will identify commonalities and differences in the national approaches and explain the main converging and diverging tendencies. The comparison will be structured around the main provisions of letter of intent – obligations that contractually organize the dynamics of negotiations. Each obligation will be illustrated and analysed in a comparative perspective. The structure of the Chapter aims to reflect the content of letter of intent used in practice. For this reason, a note on the selection of the provisions will be made prior to the analysis.

    Comparative observations will address the following questions. What is the approach of each provision framing the dynamics of negotiations in a comparative perspective? What similarities and differences can be observed? Is each obligation treated as severable and stand-alone, as hypothesized in Chapter 2? Can converging tendencies be revealed in the liability that may be incurred for the breach of the obligations? How can the similarities and differences identified be explained?

    After a note on the provenance and selection of the provisions discussed (Section 7.2), the following clauses of letter of intent will be addressed in this Chapter. Firstly, the provisions whereby the parties endorse an obligation to negotiate (Section 7.3) or conduct negotiations in a specific way, for example require bona fides, best efforts and similar, with or without specifying the content of the duty (Section 7.4). Secondly, clauses whereby the parties purport to keep negotiations non-binding and free from any regulation, contractual and non-contractual (Section 7.5) or make an explicit division between the binding and non-binding provisions of letter of intent (Section 7.6). Thirdly, the formulations purporting to create stand-alone obligations confined to the process of negotiations and limited in time to contract formation. This is the case with an obligation of confidentiality. Parties may agree on non-disclosure of any information disclosed in the course of negotiations, for example in the domain of innovation. Parties may also aim to keep secret the mere fact of negotiations, because it may represent a value in itself, while public disclosure of the fact of negotiations may be used as a bargaining tactic, as noted earlier (Section 7.7).

  • Chapter 1 - Introduction

  • Ekaterina Pannebakker
  • Book:
    Letter of Intent in International Contracting
    Published by:
    Intersentia
    Published online:
    27 September 2018
    Print publication:
    22 December 2016, pp 1-18

  • Summary

    Memorandum of agreement in Texaco v. Pennzoil

    In 1984, two US companies – Pennzoil and Getty Oil negotiated a merger. They signed a ‘memorandum of agreement’. However, before the transaction was finalized Getty Oil broke off negotiations. The company concluded a merger contract with a third party – Texaco – which offered a higher price for the shares. Pennzoil brought an action against Texaco, declaring that Texaco had tortiously interfered with the transaction in process. To sustain the claim, Pennzoil had to prove that the ‘memorandum of agreement’ between Pennzoil and Getty Oil was binding and therefore, in respect of this document, Getty Oil had no right to break off negotiations to conclude a contract with third party. According to the court, the memorandum of agreement was binding, representing the prospects of the transaction. At first instance, it was held that Texaco had interfered with the prospects of the transaction; an award of 11 billion US dollars, including damages, interest and punitive damages was granted. On appeal, punitive damages were reduced from three to two billion. Nevertheless this amount remains one of the largest damages awards in US history.

    The decision in Texaco v. Pennzoil gave rise to questions concerning a variety of areas of law. Focusing on the ‘memorandum of agreement’, why was it qualified as a prospect of a transaction? Can such document preclude the possibility of breaking off negotiations in order to accept a more profitable offer? Is this the case even if the document does not establish that negotiations are exclusive? Could an enforceable provision on exclusivity be included into letter of intent? If such a document binds the parties, what is the nature of the obligations it may contain, as compared to the effects of the final contract? How do these effects relate to freedom of contract? To what extent may the parties agree in advance on recovery in case negotiations fail? Could the parties have kept their negotiations non-binding by explicitly stating this in their ‘memorandum of understanding’? Could they have created some binding obligations to structure the deal, while remaining free to not conclude the final negotiated contract? In other words, could parties create by consent an arena for conducting parallel negotiations, retain their discretion to accept higher bids and deploy other negotiation tactics, while contractually specifying the scope of their eventual liability?

  • Chapter 5 - English Law

  • Ekaterina Pannebakker
  • Book:
    Letter of Intent in International Contracting
    Published by:
    Intersentia
    Published online:
    27 September 2018
    Print publication:
    22 December 2016, pp 113-174

  • Summary

    Introduction

    English law assumes that negotiations represent a genuinely adversarial process. The freedom from being bound by the final contract before the negotiations are finalized is a cornerstone of contract law. This ‘negative’ side of freedom of contract also implies that contract law imposes no general duties on the parties’ behaviour during the course of negotiations. No specific intermediary regime of contractual negotiations has been developed. The so-called ‘bare agreements to agree’ that is, promises about the manner of negotiating, are not enforceable, the domain of contract and non-contractual regulation being rather sharply divided.

    Nevertheless, contractual negotiations are not a period of ‘no law’. As Lord Justice Bingham has famously stated, discussing contractual negotiations from a broader perspective of private law, ‘English law … has developed piecemeal solutions in response to demonstrated problems of unfairness’. In the same vein, Lord Justice Mummery has contended that English law addresses ‘particular problems of unacceptable conduct occurring in the course of negotiations without unduly hampering the ability of the parties to negotiate their own bargains without the intervention of the courts’. Andrews has compared the English law solutions applicable to negotiations to a ‘Swiss army knife’. The available tools include not only contract law doctrines ascertaining the enforceability of contractual promises, but also the law of restitution or unjust enrichment, the duty of confidence developed in equity, and torts of deceit and negligent misrepresentation; the doctrine of estoppel may play a role in this regulation as well.

    This multifaceted framework of regulation provides several solutions applicable to the practice of issuing letter of intent. The solutions are more nuanced than it might appear at first sight, when one's attention is primarily drawn to the unenforceability of ‘bare agreements to negotiate’. English law has developed two exceptions to this unenforceability: temporary agreement on exclusive negotiations and undertakings to use best efforts to obtain an export licence or a planning permission. To be treated as exceptions, these should fulfil the criteria of certainty and consideration. These requirements are deeply rooted in the requirements as to the enforceability of a contractual promise. Furthermore, English courts have developed a detailed approach to various provisions whereby the parties may negate contractual intent. The approach to such clauses was developed using another doctrine relevant for contract formation – the assessment of intention to create legal relations.

  • Chapter 9 - Conclusion

  • Ekaterina Pannebakker
  • Book:
    Letter of Intent in International Contracting
    Published by:
    Intersentia
    Published online:
    27 September 2018
    Print publication:
    22 December 2016, pp 327-354

  • Summary

    The threads running through the previous parts of the study may now be drawn together. This research has focused on the contractual organization of commercial negotiations by letter of intent. The following main research question has been addressed. To what extent can the law, particularly international regulation, accommodate the practice of contractually organizing or ‘privatizing’ negotiations made through a letter of intent? The research was divided in three sub-questions:

  • – First, what is the nature of a letter of intent?

  • – Second, what are the similarities in and the differences between the national approaches of the selected jurisdictions to the legal effect and remedial consequences of the contractual organization of negotiations? How can the converging and diverging tendencies be explained?

  • – Third, how can the existing international approach to contract negotiations formulated in international instruments (e.g., the UPICC, PECL, and DCFR) be interpreted and developed in light of the answers to the previous questions?

    • The nature of letters of intent and the related remedies were explored from interdisciplinary and comparative perspectives, with the aim at formulating a harmonized approach to letter of intent in international transactions. Chapter 2 was dedicated to the content of the letter of intent. After drawing attention to the practice of negotiations, the study was narrowed to exploration of the ‘dynamics’ of negotiations. These were defined as a specific dimension of contract formation: the management of a transaction. It was argued that the provisions relating to the ‘dynamics’ of negotiations form the content of the letter of intent. This approach underpinned the subsequent parts of the research. Chapters 3, 4, 5, and 6 discussed the general regime of negotiations and the limits of private organization of the ‘dynamics’ of negotiations in the national rules of the selected jurisdictions: the Netherlands, France, England and Wales, and the United States. National approaches were addressed in seeking to identify the converging and diverging tendencies relating to the contractual organization of negotiations by letter of intent. Chapter 7 compared the national approaches and proposed explanations for the similarities and differences observed. Chapter 8 addressed the international uniform hard and soft law. First, it advanced a nuanced view within the debate on the applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG, also referred to herein as ‘the Convention’) to letters of intent.

  • Chapter 4 - French Law

  • Ekaterina Pannebakker
  • Book:
    Letter of Intent in International Contracting
    Published by:
    Intersentia
    Published online:
    27 September 2018
    Print publication:
    22 December 2016, pp 73-112

  • Summary

    Introduction

    French law addresses precontractual negotiations as a relationship that may be regulated by law. The idea of legal duties imposed on the parties once they enter into negotiation is rooted in the views of Saleilles, who came up with a concept of responsabilité précontractuelle (precontractual liability) in 1907. In a manner innovative for his time, Saleilles suggested that the mere process of negotiations inevitably binds negotiating parties together by practical, social, and moral links. He advocated that breaking these ties should be qualified as a tort and lead to precontractual liability.

    Subsequently, legal regulation of the precontractual period has attracted considerable attention in the French literature. The interest has been further revived with the drafting of the PECL and DCFR and the projects of reforming the French law of obligations.

    Since the nineteenth century, precontractual liability has become a usual concept in French law. However, it was scarcely incorporated in legal texts, the main source of French law. This concept was not incorporated into the Code civil. The regulation of precontractual relations was based on general principles of the law of obligations and the ‘praetorian’ judge-made rules. Since the adoption of the Napoleonic Code two centuries ago, French courts have come some distance in interpreting its provisions in the context of practical changes. Over the years of application and interpretation of the Code civil, judges have developed standards of conduct to be respected by the parties during negotiations. These standards have been referred to as ‘particularly rigorous ethics of negotiations’. The sanction for their breach is a liability in tort.

    French case law or, to use the exact term, jurisprudence has not confined the legal regulation of negotiations to precontractual liability in tort. In French law, parties may organize negotiations contractually. During the last few decades, French judges and scholars have become receptive to the practice of creating various precontractual documents. Drawing on the general provisions of contract law, they have recognized a plethora of avant-contrats, including the project of contract, agreement in principle, pre-emption agreement, promise to contract and others. The validity of these documents is underpinned by the distinction made in French scholarship and case law between the future contract and the process of negotiations towards this contract. It is the process of negotiations that is privatized by contractual obligations.

  • Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear (Colombia–Textiles), DS461

  • Rodd Izadnia
  • Journal:
    World Trade Review / Volume 16 / Issue 1 / January 2017
    Published online by Cambridge University Press:
    19 December 2016, pp. 141-143
    Print publication:
    January 2017

  • This dispute concerned the imposition by Colombia of a ‘compound tariff’ on the importation of certain textiles, apparel, and footwear classified under Chapters 61 through 64 of Colombia's Customs Tariff. The compound tariff was composed of an ad valorem levy, expressed as a percentage of the customs value of goods, and a specific levy, expressed in units of currency per unit of measurement. The ad valorem component of the compound tariff was 10% for all products regardless of their value; the specific component depended on price thresholds for certain textiles, apparel, and footwear, imposing a higher levy on products imported below the price threshold set out in the corresponding Chapter of Colombia's Customs Tariff.

  • WTR volume 16 issue 1 Cover and Front matter

  • Journal:
    World Trade Review / Volume 16 / Issue 1 / January 2017
    Published online by Cambridge University Press:
    19 December 2016, pp. f1-f3
    Print publication:
    January 2017
    • Article
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  • WTR volume 16 issue 1 Cover and Back matter

  • Journal:
    World Trade Review / Volume 16 / Issue 1 / January 2017
    Published online by Cambridge University Press:
    19 December 2016, pp. b1-b5
    Print publication:
    January 2017
    • Article
      • You have access
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  • 11 - State Controls over Available Remedies in Investor-State Arbitration

  • from PART III - Substantive Aspects and Avenues of Reassertion
  • Edited by Andreas Kulick, Eberhard-Karls-Universität Tübingen, Germany
  • Book:
    Reassertion of Control over the Investment Treaty Regime
    Published online:
    12 January 2017
    Print publication:
    15 December 2016, pp 259-282

  • Summary

    The emergence of other actors in the international system means that the observer has to take these changes into account and may consider that in certain domains (e.g. economic relations) other actors may often function more effectively than states. But the state is still, and in the foreseeable future will remain (notwithstanding the relative decline of its strength), the main and the most powerful actor … [States] still provide the chief institution through which societies will try to respond to change.

    Traditionally, arbitration has been used for disputes in which the issues are legal and the desire to improve relations makes the idea of a binding settlement handed down by a third party attractive … [A] further advantage of arbitration is that the parties define the question or questions they want the tribunal to answer and can also specify the basis of its decision.

    A. Introduction: State Power in Investor-State Arbitration

    The shifting balance of power between States and foreign investors has always been a central theme in the ongoing debate over the content and force of international investment law. In the decolonisation era, it was critical to newly independent States and former colonies regaining their independence to emphasise the ‘full permanent sovereignty of every State over its natural resources and all economic activities’, alongside their power of ‘regulation and supervision of the activities of transnational corporations, by taking measures in the interest of the national economies of the countries where such transnational corporations operate on the basis of the full sovereignty of those countries’. In contemporary debates involving investor-State dispute settlement procedures for new behemoth economic agreements such as the recently concluded Trans-Pacific Partnership (TPP) and the proposed Trans-Atlantic Trade and Investment Partnership (TTIP), there has been a growing narrative expressing discontent that States are somehow becoming powerless, taken advantage of or otherwise short-changed by the predatory acts of foreign investors able to seek direct recourse against States to challenge their regulatory actions through investor-State arbitration.

  • 4 - Early Dismissal of Claims in Investment Arbitration

  • from PART II - Procedural Aspects and Avenues of Reassertion
  • Edited by Andreas Kulick, Eberhard-Karls-Universität Tübingen, Germany
  • Book:
    Reassertion of Control over the Investment Treaty Regime
    Published online:
    12 January 2017
    Print publication:
    15 December 2016, pp 83-102

  • Summary

    A. Introduction

    In the last two decades, there has been a significant increase of investment arbitrations. According to statistics of the International Centre for Settlement of Investment Disputes (ICSID), the number of cases registered under the ICSID Convention and the Additional Facility Rules until 31 December 2015 amounted to 549, out of which 517 cases date from 1996 onwards. At the same time, the statistics show that States still win in more than half the cases decided by arbitral tribunals under the ICSID Convention and the Additional Facility Rules.

    Despite this high success rate, a number of States have criticised the time and costs needed to defend their position in investment proceedings. The criticism has been particularly sharp in situations where the underlying claim of the investor had from its outset no prospects of success. Why conduct lengthy and expensive proceedings if arbitration is doomed to fail?

    It is against this background that various initiatives have been taken to create mechanisms for the early dismissal of claims. Some of these mechanisms have only recently been applied in case law. Others are yet to be tested in practice. As we are venturing into largely unchartered legal territory, this chapter takes a closer look at these different instruments, which include a procedural mechanism for early dismissal under the ICSID Arbitration Rules (see Section B) as well as treaty mechanisms under certain investment agreements (see Section C).

    It is submitted that most of the mechanisms for early dismissal provide for a rather weak form of control by States. While increasing codificatory efforts have limited the flexibility of arbitral tribunals to conduct the proceedings as they deem appropriate, States are not in a position to control the ultimate outcome of cases. The situation is different under the Comprehensive Economic and Trade Agreement (CETA), which includes a non-judicial mechanism for the early dismissal of certain claims relating to financial services. In this limited field, States have gained control over the ultimate outcome of the proceedings, and the law-based paradigm of investment protection appears to have given way to a policy-based paradigm of investment protection (see Section D).

  • 8 - Systemic Integration: An Instrument for Reasserting the State's Control in Investment Arbitration?

  • from PART III - Substantive Aspects and Avenues of Reassertion
  • Edited by Andreas Kulick, Eberhard-Karls-Universität Tübingen, Germany
  • Book:
    Reassertion of Control over the Investment Treaty Regime
    Published online:
    12 January 2017
    Print publication:
    15 December 2016, pp 182-208

  • Summary

    A. Systemic Integration under General International Law

    It is only in the last two decades that the so-called principle of systemic integration became the object of scholarly and judicial debate. This is unusual, given that the principle forms part of the general rule of interpretation set out in the 1969 Vienna Convention on the Law of Treaties (VCLT). Systemic integration is an integral and indeed obligatory part of the general rule on interpretation. The unity of the rule is underlined by the International Law Commission (ILC) Commentary on the provision highlighting that ‘the provisions of the article form a single, closely integrated rule’. Notably, the principle is different from paragraphs 1 and 2 of Article 31 in that it requires the taking into account of an element extrinsic both to the text and to the context of the treaty. This is probably the reason why, unlike the other aspects of the general rule of interpretation, it is not formulated as outcome determinative. According to the ILC Commentary, the wording of Article 31(3)(c) was intended to ‘state only the broad principle and not attempt define its results’. This stands in contrast with the formulae used in Article 31(1) and (2), respectively. This is due to the extrinsic elements in paragraph 3 underlying the intention to leave much broader scope for discretion to the interpreter, further reinforced by the generality of the reference to ‘any relevant rules of international law’, also left open for determination.

    The precise meaning and scope of Article 31(3)(c) remain controversial. Scholars disagree on the criteria for assessing ‘relevance’ in this context. For instance, Linderfalk favours a broad interpretation where relevant are those rules which ‘govern the state of affairs, in relation to which the interpreted treaty is examined’. Villiger constructs relevance more narrowly, as a reference to rules which ‘concern the subject-matter of the treaty term at issue’. Gardiner takes the middle ground, arguing that relevance refers to rules ‘touching on the same subject matter as the treaty provision or provisions being interpreted or which in any way affect that interpretation’. Pauwelyn adopts a functional test where a rule is relevant if it ‘sheds light on the meaning of the [treaty] term’ under interpretation. This approach is persuasive in linking relevance to the actual term of the treaty under interpretation, which is in line with the wording of the VCLT.

Page 230 of 620