Briefing Paper 1
a.) The “act of state doctrine” provides that a court in the United States, cannot pass judgement on the actions of a foreign government taken within their own country or territory that it has jurisdiction over (Cheeseman, 2012). In essence, the doctrine bars U.S. courts from interfering in the domestic policy actions of another government in their own country.
b.) Under a communist theory of the world, the government of Cuba did act ethically when it appropriately the Glens’ property. From an American perspective, the expropriation was not only ethically questionable but most likely illegal. Club Med, under the circumstance, also acted ethically, especially considering that they most likely did not know of the Glens’ claim until after they entered into a contract with Cuba.
c.) The expropriation of property by a government refers to a government’s taking of a citizen’s real or personal property without just compensation for the value of the property.
d.) In the 2006 case Glen v. Club Mediterranee, the Glens were formerly citizens of Cuba who fled to the United States after the Cuban Revolution that brought Fidel Castro’s communist regime to power (Glen v. Club Mediterranee, 2006). One of the new governments first acts was the expropriation of all privately help real property including beachfront land owned by the Glens. Forty years later, Cuba and the hotel resort company Club Med entered into an agreement to develop the land that formerly belonged to the Glens. The Glens then sued Club Med in the U.S. arguing that land was illegally taken from them and that Club Med was unjustly enriching themselves as a result of the illegality. The trial denied the Glens’ claim arguing that the act of state doctrine barred relief. The appellate court confirmed the trial court decision.
On the one hand, the Glens have a valid argument in that their land was taken from them without compensation and now Club Med was profiting from that action. However, a U.S. court truly does not have power or jurisdiction over the domestic policy of another country. On the other hand, Club Med most likely did not know of the Glens’ claim when they entered into the contract. Moreover, from a Cuban law perspective the expropriation was clearly legal.
Briefing Paper 2
In the 1992 case Argentina v. Weltover, Inc., Argentina had a policy of issuing bonds to investors that could be paid out on their maturation dates in U.S. dollars in New York, London. Frankfurt or Zurich. However, upon their maturation date, Argentina decided on their own to extend the time for bond pay outs while offering bond holders an alternative means to restructure their debt (Argentina v. Weltover, 1992). Several bond holders refused to accept the alternative means and demanded that Argentina pay on the bonds as promised. When Argentina failed to do this, the bond holders sued Argentina for breach of contract. Argentina moved to have the case dismissed based on the principle of foreign sovereign immunity. The bond holders responded in that there was an exception to immunity if the actions were commercial. The U.S. court agreed and found that Argentina could be sued.
On the one hand, Weltover was correct. Under the terms of the law, Argentina was indeed putting itself out as a private actor, rather than a state actor, in issuing the bonds. That is to say, the bonds were apolitical and had the same characteristics as a bond issued by a bank. Accordingly, just as a bank could be sued for failing to repay the bonds on maturity so could Argentina. In other words, the case had not political implications and was a purely commercial transaction. On the other hand, Argentina, ultimately, is a state actor. It issued the bonds in an effort to finance policy decisions that it would be making to benefit itself and its nation (Cheesman, 2012). Accordingly, one can never really separate the commercial from the political. Accordingly, foreign sovereign immunity should have prevailed.
Briefing Paper 3
a.) In the 2006 case Northeast Iowa Ethanol, LLC v. Drizin, Drizin established a corporation, named GSI in Nebraska and convinced Northeast Iowa Ethanol to transfer its funds to the corporation in the hopes that it would provide collateral for a loan they needed to develop ethanol. Instead, the money was invested in a number of money losing project. Northeast Iowa Ethanol then sued Drizin for fraud. Drizin then countered that he was not liable but rather the corporation, GSI was liable. Northeast Iowa Ethanol was eventually able to gain a money judgement against Drizin from the court based on the principle of piercing the corporate veil (Northeast Iowa Ethanol, LLC v. Drizin, 2006).
The case absolutely affects business in the United States. To be sure, the principle that the court relied on to find for Northeast Iowa Ethanol is a common cause of action in business law. The best case scenario, is as was demonstrated in this case, where plaintiffs can protect themselves from corporations that were established for the singular purpose of hiding the owner’s criminal behavior or illegal acts. The worst case scenario is when a corporation owner is able to use or blame the corporation for his criminal acts and victims have no ability to truly prosecute or sue the real perpetrator.
b.) In the 1990 case Reves v. Ernst & Young, investors bought promissory notes from Arkansas and Oklahoma Co-Op. (Co-Op). Co-Op guaranteed that the notes would be payable on demand. However, soon after the notes were sold, Co-Op declared bankruptcy (Reves v. Ernst & Young, 1990). Several of the note holders then sued the accounting firm Ernst & Young, ostensibly for illegal raising the value of assets (Reves v. Ernst & Young, 1990). At trial, Reves won. Ernst & Young then appealed and the appellate court found for them, arguing that a promissory note is not a security. Reves then appealed to the U.S. Supreme Court. The Supreme Court, found for Reves stating that for all intents and purposes, a promissory note is a security under the law.
This case also affects business in the U.S. Any company that provides a promissory note to finance its business, under the case, should be on notice that it will be considered a security by the court. The best case scenario is that a business that understands the potential of a promissory note to be a security can use it as a viable financing alternative. The worst case scenario is that they do not understand the law and use notes to finance development but do not apply the applicable regulatory framework and find themselves to be in violation of the law.
c.) The North America Free Trade Agreement (NAFTA) refers to the agreement signed by Canada, Mexico and the United States in the 1990 that, in essence, creates a three nation single market (Cheeseman, 2012). Under the terms of NAFTA, the taxes, duties and restrictions that had formerly existed between the three nations on a wide range of goods and services were eliminated or reduced. In addition, “do business” formalities were standardized so that it would be easier for a firm to relocate to another without too much inconvenience.
NAFTA fundamentally affects business in the U.S. by creating a market for U.S. products and services that adds the population of Mexico and Canada to that of the U.S. The best case scenario of NAFTA is that it allows businesses to expand into Mexico and Canada not only in terms of selling goods but also in terms of obtaining resources, employing persons, and otherwise taking advantages of each countries competitive advantages. The worst case scenario, is that firms from Mexico and Canada will provide better goods and services that will drive U.S. firms to bankruptcy or relocation.
d.) The World Trade Organization (WTO) refers to the international organization that seeks to harmonize the trade policies of its member states in a way that increases trade and growth, decreases trade barriers, and manages trade disputes from getting too disruptive (Cheeseman, 2012). Naturally, the WTO affects business in the U.S. A best case scenario is illustrated in the circumstance where a nation is found to be unreasonably discriminating against a U.S. industry in their domestic market. The WTO might be able to require that country from continuing the discriminatory acts. A worst case scenario, is the opposite argument. That is to say, where the WTO is used to force U.S. businesses to act in a way that they feel decreases their advantage unreasonably against a foreign competitor.
Briefing Paper 4
In the 1981 case Texas Trading & Milling Corp. v. Federal Republic of Nigeria, In response to the nation’s domestic needs, Nigeria implemented an effort to develop its infrastructure. Consequently, the government of Nigeria began buying enormous quantities of cement from cement producers around the world including the U.S. Unfortunately, they did not determine their need for the cement versus their capacity. When they discovered that they ordered more than they needed, they began to repudiate the contracts already made including one with a U.S. firm (Texas Trading v. Nigeria, 1981). The firm then sued Nigeria for breach of contract. Nigeria then moved to dismiss the claim based on foreign sovereign immunity.
a.) Under the commercial activity exception to a claim of foreign sovereign immunity, if a nation enters into a contract and portrays itself a commercial party, as opposed to a state party, in the agreement; and the agreement is for all intents purposes a transaction that would normally be considered commercial, such as the buying and selling of securities, then foreign sovereign immunity would not apply and the nation could be sued by a plaintiff in U.S. courts (Cheeseman, 2012).
b.) No, Nigeria did not act ethically in its attempts to avoid the contracts. On the one hand, the fact that it ordered so much it is understandable that it would want stop the contracts for what it did not need. However, it could have negotiated with those contract holders a better means to resolve the situation or renegotiate the terms of the contract. Simply repudiating the contracts then claiming that they cannot be sued is extremely unethical especially considering that the plaintiffs satisfied their terms of the bargain.
c.) In this case, the doctrine of foreign sovereign immunity should protect Nigeria from liability. The contracts were with Nigeria as a state actor. That is to say, Nigeria was putting itself out a party to the contract with payments being made directly from them and delivery of goods being made directly to them. Under these circumstances, the commercial exception of the law should not apply.
Briefing Paper 5
In the 1985 case AMF Inc., v. Brunswick Corp., a dispute has begun between AMF and Brunswick, who are both involved in supplying bowling alleys with a range of goods and services. AMF filed suit against Brunswick claiming that it falsely advertised the advantages of one of its one of its scoring machines (AMF Inc., v. Brunswick Corp., 1985). Ultimately, AMF and Brunswick settled and agreed that in the event of future advertisement disputes, they would submit their claims to arbitration before the National Advertising Division of the Council of Better Business Bureaus for settlement rather than a court (AMF Inc., v. Brunswick Corp., 1985). Soon afterwards, Brunswick advertised that it produced a flooring that was cheaper and better then AMF’s wooden flooring. AMF then requested an arbitration, as per their prior agreement, claiming that it disputed Brunswick’s claims. Brunswick refused to submit to the arbitration and AMF brought suit to compel Brunswick to enter into arbitration.
a.) Arbitration refers to a non-court based alternate dispute resolution program where parties choose and agree on an arbitrator who then listens to both sides’ arguments and makes a legally binding decision on the parties (Cheeseman, 2012). Parties often choose arbitration because it allows cases to be decided in a timelier manner, at less costs, and in a more efficient way.
b.) Yes, if a party has voluntarily and knowingly entered into an arbitration agreement than it is ethically questionable for them to seek to avoid arbitration when a dispute occurs. An agreement to enter arbitration is like a contract where both parties receive a benefit for the bargain. Trying to achieve a benefit without consideration or avoid a cost without a penalty is similar to a breach of a contract.
c.) Yes, the arbitration agreement in this case is enforceable. The focus of the arbitration is an advertisement dispute, namely Brunswick’s claim that its flooring is better than AMF’s. That satisfies the requirements of the arbitration agreement signed between the two after the scoring machine dispute. Accordingly, the arbitration agreement should be enforceable.
References
AMF Inc., v. Brunswick Corp., 621 F.Supp. 456 (1985). Retrieved from http://www.leagle.com/decision/19851077621FSupp456_11019/AMF%20INC.%20v.%20BRUNSWICK%20CORP.
Argentina v. Weltover, Inc., 504 U.S. 607 (1992). Retrieved from https://www.law.cornell.edu/supct/html/91-763.ZO.html
Cheeseman, H. (2012). The Legal Environment of Business and Online Commerce, 7th ed. Upper Saddle River, NJ: Pearson Education.
Glen v. Club Mediterranee, 450 F.3d 1251 (llth Cir. May 31, 2006). Retrieved from http://caselaw.findlaw.com/us-11th-circuit/1423489.html
Northeast Iowa Ethanol, LLC v. Drizin, No. Co3-2012 (N.D. Iowa, Eastern Div. Feb. 07. 2006). Retrieved from https://casetext.com/case/ethanol-v-drizin
Reves v. Ernst & Young, 494 U.S. 56 (1990). Retrieved from https://supreme.justia.com/cases/federal/us/494/56/case.html
Texas Trading and Milling Corp., v. Federal Republic of Nigeria, 647 F.2d 300 (2nd Cir. 1981). Retrieved from http://www.leagle.com/decision/1981947647F2d300_1903/TEXAS%20TRADING%20&%20MILLING%20CORP.%20v.%20FEDERAL%20REPUBLIC%20OF%20NIGERIA
