INTERNATIONAL PRACTICE SERIES

GUIDE TO INTERNATIONAL COMMERCE LAW

1994 Cumulative Supplement to Volume 1 Current through June 15, 1994

Paul H. Vishny DIAncona & Pflaum Chicago, Illinois Member of the Illinois Bar

Shepard'sIMcGraw-Hill, Inc. P.O. Box 35300 Colorado Springs, Colorado 80935-3530

December, 1994

New sections and titles appearing in this supplement to Volume 1

U.N. Convention on Contracts for the International Sale of Goods -Applicability of the U.N. Convention -Exclusions under the U.N. Convention -1CC Uniform Rules for Demand Guarantees --''FreeU Terms; F.C.A., F.A.S. (New Title) -C.I.F. Variations; C. & F. (or CFR) (New Title) -The North American Free Trade Agreement-

NAFTA -The EEC Directive on Self-Employed Commercial

Agents -Bribes and Other Corrupt Practices Common Market Directive on Commercial Agents -Remuneration -Termination of Agency Contracts -Franchising and Common Market Competition Law -United States-European Communities: Agreement

on Antitrust Interest Payments-Earnings Strippings Branch Profits Tax -Special Exceptions: De Minimis and High Foreign

Tax Jurisdictions -Income from Unrecognized and Other Countries -Excess Passive Assets

@ McGraw-Hill, Inc

NEW SECTIONS iii

Passive Foreign Investment Companies (PFIC) -PFIC: Tax Effects -PFIC: Excess Distributions -Qualified Electing Fund (QEF) -Interest Charges Foreign Sales Corporations (FSC) -Formation and Qualification -Foreign Trading Gross Receipts -Foreign Management -Foreign Economic Processing -Transfer Pricing Rules -Exempt Foreign Trade Income; Deductions; Foreign

Tax Credit -FSC Shareholders -Small FSC -Blocked Payments and 5482 -Transfer Pricing Penalties -Stock, Securities, and Intangibles

December, 1994

Acknowledgments

I deeply appreciate the help and encouragement I received during the preparation of this work.

My research would not have been possible without access to library facilities and staff. The work was aided by capable coopera- tion from the Cook County Law Library and its International and Foreign Law Department staff. A special expression of gratitude is due to the Library of the School of Law, Northwestern University, for granting me the privilege to use its superb international col- lection throughout my work.

Robert M. Cordon prepared the tables and index with diligence and skill. My secretary, Kathleen M. Bacom, devoted countless hours to typing the entire manuscript with unusual dedication. During manuscript preparation, I benefited greatly from the en- couragement and advice of several editors at Shepard1s/McCraw- Hill.

Lorin S. Weisenfeld's reading of the manuscript was helpful and encouraging, and I am grateful.

Above all, I acknowledge with love the understanding, patience and encouragement of my wife, Michele.

Paul H. Vishny September 15, 1981

December, 1981

Contents

Summary

Volume 1

Acknowledgments

Short Reference List

1 Introduction

2 Export-Import: The International Sale of Goods

3 Export-Import: Licensing of Technology and Intellec- tual Property

4 Agents, Distributors, and Other Representatives

5 Wholly-Owned International Operations

6 Foreign Business Entities

7 Joint Venture Participation

8 United States Taxation of International and Foreign Operations

August, 1984 C- 1

C-2 CONTENTS

Supplement

Volume 2

9 Foreign Taxation

10 Treaties and Other International Agreements

11 Regulation of Foreign Investment and Multinational Enterprises

12 Foreign Governments: Dispute Resolution

13 Financing, Incentives, and Transaction Risks

Supplement

Sample Agreement Forms

Tables

Index

Detaiied

Voiume 1

Acknowledgments

Short Reference List

1 Introduction

§1.01 International' Commerce

McCraw-Hill, Inc.

2 $ CONTENTS C-3

, -And the Law

The United States and Foreign Commerce

-International Commerce Abroad

Commerce, Law and Change

2 Export-Import: The International Sale of Goods

52.01

52.02

52.03

52.04

52.05

52.06

52.07

52.08

52.09

52.10

52.11

52.12

52.13

52.14

52.15

92.16

52.17

August, 1984

. . -7 , ' !;:,

' .j: ,Ji : ., >..r.. . ..

. I : . .:> : r:.,

.. , < . .. . , ' . r.. ,'

,. . , ', . ,, . + . '... , ' .,. - :\ , . .c. ,?.. . ...

, ,':. ' .<;'- . . y; .

The International Merchant: An Introduction

Forming the Contract

-Form of Contracts

-Consideration

-Acceptance of Offer

-Preliminary Negotiations

-The Battle of the Forms

Price and Payment

-Currency and Price Fluctuations

-Methods of Payment

-Guarantees and Standby Letters of Credit

Documentary Letters of Credit

-The Documentary Credit Cycle

-Contents of the Letter of Credit

-Documents under Letters of Credit

-Revocable and Irrevocable Credits

-Special Forms

C-4 CONTENTS

-Strict Compliance

-Doctrine of Independence

-Letters of Credit and Purchase Contracts

Trade Terms

-"FreeM Terms; F.A.S.

- F.O.B.

-F.O.B. Variations; Free Carrier; F.O.B. Airport

-C.I.F.: Introduction

-Loading and Transportation

-Other Documents

-Insurance; Other Requirements

- C.I.F. Variations; C.&F.

-Freight o r Carriage (And Insurance) Paid

-Ex Terms

Transportation

-Freight Fowarders and Other Agents

-Inland Carriage

-Charter Parties

-Common Carriage

-Bills of Lading

-Liability of Carriers and Statutory Enactments

-Containerization

-Air Freight' 0 McCraw-Hill, Inc.

CONTENTS C-5

December, 1987

Insurance

-Perils

-Average Clauses; Claims

Trade Barriers

lmportation into the United

States-Customs and Tariffs

-Temporary Importation

-Bonded Warehouses and Free Trade

Zones

-Classification

-Evaluation and Duty

-Judicial Review

-Penalties

Unfair Competition and Defensive Measures

-Antidumping Laws

-Countervailing Duties

-Section 337 of the Tariff Act

-Foreign Import Restrictions and Subsidies

-Import Relief

-Adjustment Assistance

Nontariff Barriers

State Action

Regulation of Exportation

-Export Administration Act of 1979

C-6 CONTENTS

52.63 -Export Licensing

52.64 Performance and Dispute Management

52.65 Express and Implied Warranties

92.66 Products Liability

92.67 Penalty and Liquidated Damage Clauses

92.68 Frustration and Force Majeure in General

52.69 --Operative Events and Consequences

aw and Forum and ~ r b i t r a t i o n

92.72 The Search for Uniformity

92.73 -Model and Standard Contracts

t 92.74 -The lnternational Institute for the Unification of Private Law (UNI

92.75 -The Hague Conferences 7

92.76 -The Hague Conference on Private lnternational Law

@7 -United Nations Commission on lnternational Trade Law (UNCITRAL)

92.78 -Other Agencies

Appendix 2-1 United Nations Convention on Contracts For The lnternational Sale of Goods

3 Export-Import: Licensing o f Technology and Intellectual Property

93.01 Technology Transfer and Licensing

53.02 The License as Contract

53.03 The Decision t o License

@ McGraw-Hill, Inc.

CONTENTS C-7

-Licensing t o Acquire Technology or Rights

-Licensing t o Penetrate Markets

-Licensing to Meet Local Requirements

-Licensing for Income

-Balancing Disadvantages

The Subject Matter of Licenses

-National Character of Patents and Trade- marks

Paris Convention

-Proposed Revisions t o the Paris Convention

Inter-American Conventions, Nordic Patent System, African System

Patent Cooperation Treaty, European Patent Convention, Community Patent Convention

53.19 Madrid Agreement, Trademark Registration ... L:

Treaty . i ,,.

.,i! 53.20 Tlw Content of License Agreements :A t +.

, i t s3.21 -Licensed Subject Matter 4,

.3 .-, k .

53.22 -Technical Assistance and Training ta : i

.$ 53.23 -Improvements

August, 1984

C-8 CONTENTS

-Exclusivity

-Antitrust Considerations and Exclusivity

-Sublicenses and Assignments

-Warranties of Licensor

-Exploitation of the Licensed Rights

-Quality Control, Products Liability

-Infringement

-Invalidity

-Duration

-Effect of Termination

-Fees and Expenses

-Maintenance of Rights

-Lump Sum Payments

-Periodic Royalties and Royalty Products

-Net Selling Price Royalties and Controlled Pricing

-Minimum Royalties, Remittances

-Taxes

-Most Favored Licensee Clauses

Contractual Restrictions

-Patent Misuse and Antitrust Violations

-Specific Subject Matter and Free Movement of Goods in the European Economic Com- munity

@ McCraw-Hill, Inc.

CONTENTS C-9

53.45

53.46

53.47

53.48

53.49

53.50

53.51

53.52

53.53

53.54

53.55

53.56

53.57

53.58

53.59

53.60

53.61

53.62

53.63

53.64

August, 1984

-No Contest Clauses

- Grant-Back Clauses

-Field of Use Restrictions

-Territorial Manufacturing Limitations P

-Territorial Sale Restrictions and the Exhaus- tion Doctrine

i

4;

< "

-Process Patents

-Resale Price Restrictions I

-Postexpiration Royalties

-Total Sales Royalties, Discriminatory or Op- pressive Rates

Tying

-Package Licensing

-Other Miscellaneous Restrictions

-Cross-Licenses and Patent Pools

Justice Department's Antitrust Guide for Inter- national Operations ..* ,.:

I . . +

Protective National Legislation .. $. ,

United Nations Conference on Trade and De- P j

velopment Proposed Code of Conduct , ,

f 4,. . United States Trade Barriers and Technology

I Transfer: Export Control

-Trademark Protection

C-10 CONTENTS

53.65 Tax Aspects of Licensing

53.66 -Income Received from Licensing, Sales or Exchanges

53.68 -Sections 1221 and 1231

53.69 -Qualifying Property

53.70 -All Substantial Rights

53.71 -Imputed Interest

53.72 -Transfers t o Controlled Corporations

53.73 -Technical Assistance

53.74 -Foreign Taxes

53.75 -United States Income Taxes on Payments to Foreign Licensors

4 Agents, Distributors, and Other Representatives

54.01 Intermediaries and International Trade

of Agency

54.06 -The Independent Commercial Agent

54.07 -The Commission Agent

54.08 - Del Credere Agents, Brokers

54.09 Some Aspects of Agency and Distribution Agreements, Territory

McCraw-Hill, Inc.

,i, $1

54.10 -Resale Prohibitions in General and United C . t. States Law B

.d . 5' k. :

54.11 -Territorial Restrictions in the European Eco- 3: y . nomic Community .j .*

54.12 -Restrictions on Supplier, Exclusivity

54.13 -Authority

54.14 -Taxation and Agent's Authority

54.15 -Acceptance of Orders

54.16 -Products Liability and Warranties :;,>., .c:: .

54.17 -Payment of Expenses . . $‘!. :. . i t ? .4.

54.18 -Sales Aids, Advertising, and Technical Assis- .I\ y, tance Y. :

* 1, b.

54.19 -Best Efforts and ,Sales Goals

54.20 -Restraints on Competition

54.21 -Selective Distribution Contracts, Refusal to . Lr. Deal ....

.a P

54.22 -Pricing, Agency Contracts %sf .:-. il

54.23 -Resale Price Maintenance, Suggested Prices 3r t,?

8 -

C-12 CONTENTS

54.29 -Termination Provisions in Contracts: Fixed Term and Renewals

54.30 -Other Termination Clauses

54.31 -Antitrust and Termination

54.32 Protective Legislation

54.33 -Protecting Agents and Distributors

54.34 -Right to Terminate, Notice Provisions

54.35 -Goodwill Compensation

54.36 -Other Penalties

54.37 -Citizenship of Agents

54.38 Preventive Contract Procedures

54.39 -Clarification of Status and Obligations, Rea- sonableness

54.40 -Choice of Law

54.41 Franchising: Federal and State Regulation

54.42 -Franchising Outside the United States

54.43 -The Problem of Definition

54.44 Contract Formalities

5 Wholly-Owned International Opera ns

i--~- 55.01 --\ Direct Invest A b r o J

55.02 Direct Investment Motivation

55.03 -Meeting Competition

0 McCraw-Hill, Inc.

CONTENTS C-13 1 i , ,-. I ;

,tC - ., . 1'1

55.04 -Access t o Raw Materials; Exchange Rates; It

Customer Considerations 8 I .. - . ..I

55.05 -Labor and Trade Unions I\ q

I-. 55.06 -Labor Laws . . . .. ., -

55.07 -Restrictive Trade Policies ,( _ i

55.10 Investment by Acquisition

55.1 1 -Asset Acquisitions -.. . c* .

:?

55.12 -Stock Acquisitions

55.13 -Tax Aspects of Acquisitions

55.14 Antitrust Considerations 'P

55.15 -Applicable United States Laws t*: - . i

55.17

55.18

55.19

55.20

55.21

55.22

55.23

55.24

55.25

August, 1984

-Premerger Notification under United States h,

Law ... -European Antitrust Laws . .

?

Subsidiary or Branch Operations 7 :C.

j-. -Tax Considerations ir , ,!4

. '.# -Tax Deferral $:I+

gj,

-Consolidation and Losses .,.$ - 8

-Planning for Deductions . {i . -Repatriation of Earnings \

-Intercompany Transactions 6 .

-Sale or Liquidation .+ .'+ iI .

C-14 CONTENTS

-Permanent Establishments

Nontax Considerations

-Local Restrictions or Encouragement

-Simplification and Costs

-Avoidance of Local Company Laws

-Local Incentives and Sentiment

-Access t o Regional Markets and Associa- tions

-Avoidance of Disclosure

Liability and Litigation: Piercing the Corporate Veil

-Penetrating Corporate Personality: General Considerations

-United States Law

-Foreign Law

- One-Person Companies

-The Enterprise or Economic Unit

-Special Aspects

-Preventive Measures

Express Assumptions of Liability: Letters of Responsibility

United States Subsidiaries

Base Site Selection

-Tax jurisdiction, Rates and Treaties 0 McGraw-Hill, Inc.

55.46 -Notional Agreements

CONTENTS C-15

55.47 -Disclosure Rules

55.48 -Legal Systems

55.49 -Regional Associations

55.50 -Accounting Practices

55.51 Nationality of Corporations in International Law

55.52 -The Incorporation Theory

55.53 -The Seat Theory

55.54 -The Application of Theory

55.55 -Recognition

55.56 -Governing Law

55.57 -Taxation

55.58 -Incentive and Benefit Programs

55.59 -Alien and Enemy Laws

55.60 -Jurisdiction and Process

55.61 -Diplomatic Protection

6 Foreign Business Entities

56.01 The Company

56.02 Stock or Limited Liability Company

56.03 Formation

56.04 -Founding Documents

56.05 -Capitalization

August, 1984

2 .

, >

, .

! C-16 CONTENTS

-Authorized Shares

-Consideration for Shares

-Impairment of Capital

-Simultaneous and Staged Incorporation

-Formation Completion; Interim Contracts

-Defective Incorporation

Shares and Shareholders

-Nominee Arrangements

-Equity and Debt

-Preferred Stock

-Stockholder Meetings

-Cumulative Voting and Special Voting Pro- visions, Proxies

-Quorums

-Super Majorities

-Class Voting

-Dividends and Reserves

-Compelling Dividends

-Conflict Potential and Dividend Policy

-Preemptive Rights

-Information

-Stock Redemptions

-Stock Transfers

@ McCraw-Hill, Inc.

CONTENTS C-17

56.28 -Restrictions o n Transfer C' :I & '!

56.29 Stockholder Agreements-Defining Control ;r.

56.30 -Agreement Enforcement: General Consid- :! '; erations , :FI .

$. 56.31 -Voting Trusts and Proxies ,a %

?*:

. * 56.32 -Partnerships, Holding Companies, and Vot- i(

ing Syndicates i.,.

2 5

56.33 -Contractual Arrangements i, -, I . , ,. -,, &

56.34 -Enforcement Problems r'

56.35 -Miscellaneous Minority Rights

56.36 Management . .$

56.37 - One-Tier Management Systems ... .tl . ' r!!.

56.38 -Two-Tier Systems

56.39 -Employees in Management

56.40 -Board Qualifications

56.41 -Share Ownership, Corporations as Direc- tors, Age and Other Requirements

56.43 -Management Authority

56.44 -Statutory Auditors

56.45 Fundamental Changes

56.46 Other Foreign Forms of Business

56.47 -General Partnership * !,,$

56.48 -Limited Partnership . B c , ,!L - . August, 1984

C-18 CONTENTS

56.49 -Limited Partnership with Corporate General Partner

56.50 -Partnership Limited by the Shares

56.51 -Participation Companies: Silent Partnerships

56.52 -Miscellaneous Forms and Partnership Ques- tions

56.53 -Corporations as Partners

56.54 -Leonine Clauses

56.55 -Form

56.56 Harmonizing Company Laws, European Eco- nomic Community, Inter-American Conven- tion

7 Joint Venture Participation

57.01 The Meaning of Joint Venture

57.02 The Importance of Form

57.03 Joint Venture Entrance

57.04 -Mandatory Local Participation

57.05 -Access to Raw Materials and Technology; Risk Reduction

57.06 -Need for Local Participation

57.07 Avoiding or Resolving Conflicts

57.08 -Control or Minority Position

57.09 -Minority Protection by Local Law

57.10 -Other protective Devices

@ McGraw-Hill, Inc.

CONTENTS C-19 ,J

57.18

57.19

57.20

57.21

57.22

57.23

57.24

57.25

57.26

57.27

57.28

57.29

57.30

57.31

57.32

August, 1984

-De Facto Control: Management and Other Contracts

. ., -Fifty-Fifty Companies: Deadlocks . ;.: ..

1. ' -Swing-Vote Directors

, I .

-Put-Sell Options, Dissolution, Arbitration !. .: ,

-Miscellaneous Contract Restrictions ?;s

. - Validity of Stockholder Agreements

;4 -Effect of Contract Violation, Remedies for " .

Breach . . t - . .

Miscellaneous Contract Provisions ,

-Capital Requirements ?

$ 4 '

-Technology

-Dividends and Other Distributions

-Intercompany Transactions ... -:>. ...-

-Share Transfers '

. '. , .'4!.,.._ ..:. #

-Effect of Termination .$<. . , . . .. . ..., ... .:, . ii.. .. . . ,

Antitrust Considerations in Joint Ventures . . . -,,. ! . ,. -.,. ,.; '

-The Sherman Act ..I.. ;.: b %*,

-The Clayton Act ;,'I

-Federal Trade Commission Act

-Foreign Statutes -

(7

: t':, ' -Threshold Inquiries I,:?.

.:+< 1f..

-Joint Venture Creation ..a,

. .'?.. -Collateral Agreements and Spill-Over Effects . ~ , &, , .

. ,

C-20 CONTENTS

57.33 -Bottlenecks

57.34 -Some Practical Conclusions

57.35 -Prevention of Unlawful Effects

57.36 -Notification Under the 1976 Act

8 United States Taxation of International and Foreign Operations

Taxation: Policy and Jurisdiction

-United States Residents and Citizens

-Foreign Corporations, Nonresident Aliens

Interest lncome

Dividend lncome

Fixed or Determinable lncome

Trade or Business Determination

Effectively Connected lncome

Classification of Businesses

-Consequences of Classification

-Foreign Entities

Disregarding the Foreign Entity: Controlled Foreign Corporations

-Defined

-United States Shareholder Defined

-Constructive and Indirect Ownership

-Measuring Dates @ McCraw-Hill, Inc.

CONTENTS C-21

38.31

58.32

58.33

58.34

58.35

August, 1984

-Categories of lncome Taxed to Shareholders

-The 10 Per cent-70 Per cent Rules

-Foreign Personal Holding Company lncome

-Foreign Base Company Sales lncome

-Branch Rule

-Foreign Base Company Services lncome

-Income Attributable to International Boycott Participation and Illegal Conduct

-Increase in Investment in United States Prop- erty

-Section 1248: CFC Stock Transactions and Liquidations

Disregarding the Entity: Foreign Personal Holding Companies (FPHC)

Domestic International Sales Corporations (DISC)

-Formation, Qualification, and Administra- tion

-Gross Receipts Test

-Assets Test

-Producer's Loans

-Intercompany Pricing

-Taxation of DISC lncome to Shareholders

C-22 CONTENTS

-Taxation of DISC Income, Aggregating Base Periods

-Disqualification, Disposition of Stock, and Distributions

Foreign International Sales Corporations (FISC) and Related Companies

United States Possessions Corporations

Other Special Corporations

The Foreign Tax Credit

-Creditability: Taxes Eligible

-The Deemed-Paid Credit for Corporations

-Limitation on Credit

-Carryback and Carryover

-Recapture of Foreign Losses

Intercompany Transfers, Pricing and Alloca- tions: 5482

-Loans and Advances

-Intercompany Services

-Use of Tangible Property

-Transfer or Use of Intangible Property

-Sales of Tangible Property

-Section 482 Allocations and Incidental Relief

Taxing the Tax-Free: 5367

-Formations and Other Capital Contributions

@ McGraw-Hill, Inc.

Supplement

Volume 2

9 Foreign Taxation

59.01 Introduction

lncome Taxation

59.02 -Global and Schedular Systems

59.03 Jurisdiction-Citizenship

59.04 -Residence

59.05 Source of lncome

59.06 Measuring Income, Applicable Rates

59.07 Taxpaying Entities

December, 1987

C-24 CONTENTS

Distributions: Shareholder Integration and Imputation Systems-Tax Credits

-Gross-Up and Excess Credits

-Foreign Income and Shareholders, Tax Credits

-Intercompany Dividends, Consolidations

-Germany, France, the United Kingdom

lntercompany Issues

59.1 3 lntercompany Transfers and Pricing

59.14 -General Legal Principles

59.15 -Legislation and Administrative Guidelines

Miscellaneous Issues

59.16 Liquidations, Mergers, and Reorganizations

59.1 7 Accumulations

59.1 8 Tax Avoidance Through Foreign Holdings

59.19 Value Added Taxation (VAT)

59.20 Other Taxes

Appendix 9-1 Corporate and Branch Tax Rates i n Fifty Countries

10 Treaties and Othe r lnternat ional Agreements ,

S10.01 Treaty Law and lnternational Trade: An Introduction

510.02 Terminology and Treaties

510.03 Executive ,and Other International Agreements

@ McGraw-Hill, Inc.

: .'i . - I . ' & . C ,.' !;I-

;?. . ..\' ! ;I! .; . ..

,.c. . .. . ? ( I .

CONTENTS C-25 ,.':'. r; "

: I . . "., ..'i ,,.- . . .CT . ,,,: .... .,, , ..

Cj10.04 Treaties as Domestic Law in United States Prac- 2:) . * . ., . .r. 1. I

tice . , .,2 -

J .. P,

510.05 United States Treaty Making Procedures , i; P

I I '

Cj10.06 -Full Powers .t i . n I J -

Cj10.07 -Bilateral and Multilateral Agreements: Ne- gotiation and Signing

,i P.

Cj10.08 -Ratification and Entry into Force f-y-) *::

Cj10.09 The Law of Treaties: The Vienna Convention *, d

F'

CjlO.10 Treaties of Friendship, Commerce and Navi- +,'

gation % i ,

- 3 ,

510.11 -FCN Treaty Contents . %;:

Cj10.12 -FCN Treaties and Some Recent Issues I .

m . ,:

, . t-.

Cj 10.13 Totalization Agreements .5' 3; .

Cj10.14 Other Treaties and International Trade / ?; . >,

Cj 10.15 Tax Treaties- Introduction - ?. ,. . 1:

Cj10.16 -Policy Issues < . ,.,

Cj10.17 -Tax Sparing Credits

Cj10.18 -Integration Systems

Cj10.19 -Policy Issues: State Taxation a b i ?

Cj10.20 Model Income Tax Conventions: United ('7 '. .

States and OECD l'! 8 :

510.21 -Scope, Taxes, and Application - ,

Cj10.22 -Business Profits and Permanent Establish- ments

August, 1984

C-26 CONTENTS

510.23 -Permanent Establishments: Attributable Profits

510.24 --Intercompany Pricing and Transfers

510.25 -Real Property and Capital Gains

510.26 -Investment Income: Dividends

510.27 -Investment Income: Interest

510.28 -Investment Income: Royalties

510.29 -Personal Services

510.30 -Other Income and Tax on Capital

510.31 -Dealing with Double Taxation

510.32 -Nondi~crimination

510.33 -Administrative Practice: Competent Authority

510.34 -Administrative Practice: Exchange of lnfor- mation and Assistance

Appendix 10-1 Withholding of Tax on Nonresident Aliens and Foreign Corporations

Regulation of Foreign Investment and Multinational Enterprises

511.01 Foreign Business and Host

51 1.02 -Legislative Reactions

§11.03 -Regulatory Patterns; Sanctions

511.04 -Host Country Goals

5 11.05 -Investment Applications 0 McCraw-Hill, Inc.

CONTENTS C-27

August, 1984

-Administrative Discretion

Prohibited Industries

Limitations on Foreign Equity

Capital Investment a@-

-Profit Repatriation - -Financing Restrictions

-0ECD'S Code of Liberalization of Capital Movements

Registration and Approval-A General View

-Screening and Investor Commitments

-Extraterritorial Transfers

Foreign Management and Personnel

Technology Transfer

Local Capital Markets

Regulation and International Agencies

-0ECD'S Guidelines for Multinational Enter- prises

- OECD Guidelines- Reviews

-UN'S Multilaterally Agreed Equitable Princi- ples and Rules for the Control of Restrictive Business Practices

UN'S Code of Conduct on Transnational Cor- porations

-UN Conference on International Code of Conduct on the Transfer of Technology

-UN Draft International Agreement on Illicit Payments

-Private Law Effects

-Other Private, Legal Effects

Illicit Payments-The United States Response

-Applicable Laws: A General Review

-Tax Reform A d of 1976

-FCPA Accounting Provisions

-Accounting Provisions: Interpretation Prob- lems; Systems

- FCPA Illegal Payments Provisions

-Grease Payments and Other FCPA Excep- tions

-Foreign Subsidiaries

-Other FCPA Issues and Suggested Amend- ments

United States Law

Participation

-Reporting Requirements: General

-Participation or Cooperation

-Reporting Compliance

-Operations; Nonlisted Countries 0 McCraw-Hill. Inc.

CONTENTS C-29

511.45 -Agreements t o Participate or Cooperate

511.46 -Letters of Credit; Permitted Practices; Ship- ping and Insurance

51 1.47 Export Administration Act

511.48 -United States Person

€j 11.49 -Commerce Requirement

511.50 -Intent

fj11.51 -Prohibited Actions: Refusal t o D o Business

5 11.52 -Discriminatory Actions

51 1.53 -Other Information

511.54 -Letters of Credit

5 11.55 Exceptions to Prohibitions

51 1.56 Reporting Requirements

511.57 Other Applicable Laws

511.58 Foreign Investment in the United States: Non- Tax Reporting Requirem-

12 Foreign G o u e r n m e n t ~ R e s o I ~ o n

512.01 Protecting MU- usiness- General Observations

512.02 Overview of Sovereign Immunity

512.03 The Foreign Sovereign Immunities Act

512.04 -Foreign States, Agencies, and Instrumental- ities

512.05 -Waiver of Immunity

August, 1984

C-30 CONTENTS

512.06 -Implicit Waivers

512.07 -Commercial Activity

Effect

512.12 -Maritime Liens

512.13 -Extent of Liability

512.14 -Procedural Matters: Service on Foreign States

512.15 -Service on Agencies or Instrumentalities

512.16 -Answers: Default Judgments A/-- I - / j m e n t of Property: FOS-S

512.18 -Agencies or Instrumentalities

512.19 -Prejudgment Attachments

512.20 -Property Immune from Execution

512.22 -Jury Trials

-Choice of Law Issues . /'.' 512.24 Forum Non Conveniens

.A-

@ McGraw-Hill, Inc.

CONTENTS C-31 I

: I& ir

512.30 -Within Its Own Territory

512.31 ea5y 5 12.32 - Bernstein Exception; Counterclaims

512.33 -Commercial Activities ,? 512.34 -Int@ht~onal Law Exception

512.35 e h 3 e r Amendment *.t ,:. a - ,?

512.36 Other lnternational Organizations %+ :' I

512.37 Arbitration; International Centre for Settle- r )

ment of Investment Disputes

5 12.38 - ICSID Jurisdiction; Applicable Law

.n 6 12.39 -Tribunal; Place of Arbitration

. . 513.01 Financing, Incentives, and lnternational Com-

merce +

1'

513.02 Sources of Financing t '

513.03 -Time Drafts and Bankers' Acceptances

513.04 -Selling Receivables: A Forfait; Factoring I ,

513.05 Countertrade . + . .-. 513.06 -Countertrade Contracting \ <

513.07 Export Credits Arrangement August, 1984

I . : C-32 CONTENTS

United States Government and Government- Assisted Programs-Export-Import Bank of the United States

-Foreign Credit lnsurance Association

-Policies

-Requirements; Loan Agreement Implications I > -

;), ? - . *.

A . . . 513.14 -Investment Insurance

+:: . './"

'r 513.16 -Letter of Credit Guarantee Insurance

513.17 -Commodity Credit Corporation and Small Business Administration

- I

/ 7

. ) _ 513.18 Private Sector Export Credit Insurance

, s 513.19 Foreign Export Credit Assistance

- ., . . , . . 513.21 -Federal Republic of Germany

5 13.23 -Japan . ,. _

513.24 -The Netherlands

513.25 -The United Kingdom

513.26 Development Banks

513.27 -World Bank Group

5 13.28 - Inter-American Development Bank

0 McCraw-Hill, Inc.

CONTENTS C-33

513.29 -Asian Development Bank

513.30 -European lnvestment Bank

513.31 Other Export Assistance in the United States

513.32 -United States Government Assistance

513.33 -Local Government Assistance

513.34 - Webb-Pomerene Associations

513.35 Export Trading Company Act of 1982

513.36 -Banking Participation

513.37 -Antitrust Certificates of Review

513.38 -Effect of Certificate of Review

513.39 -Sherman Act and Federal Trade Commission Act Modifications

513.40 Direct lnvestment Incentives

513.41 -Forms of Incentive

513.42 -Procedures and Limitations

513.43 Financing Documentation

513.44 -Credit Agreements

513.45 -Default; Setoff

513.46 -Security Interests

513.47 -Promissory Notes

513.48 -Drafts or Bills of Exchange

513.49 -Legal Opinions

513.50 Money in International Transactions

August, 1984

C-34 CONTENTS

s13.51 -Nominalism: A Dollar Is a Dollar

s13.52 -Money of Account; Money and Place of Payment

s13.53 -Foreign Currency Obligations

s13.54 -Maintenance of Value

513.55 -Currency Basket Loans

913.58 -SDRs in Private Transactions

s13.59 Eurocurrency Financing

s13.60 -Loan Clauses

s13.61 Exchange Control, Exchange Arrangements, and Private Commerce

s13.62 -Contractual Violation of Exchange Control Laws

s13.63 United States Tax Aspects of Foreign Currency Transactions

s13.64 -Forward Contracts in Foreign Currency

Supplement

Sample Agreement Forms Form 1 License and Technical Assistance

Agreement

Form 2 Development and Distribution Agreement

Form 3 Distribution Agreement A. Nonexclusive Agreement

0 McGraw-Hill, Inc.

CONTENTS C-35 -d . .<. .

B. Alternate Clauses for Exclusive ,: , r ?

Agreement J .

Form 4 Sales Representation Agreement A. Nonexclusive Agreement B. Alternate Clauses for Exclusive

Agreement Form 5 Formation Agreement Form 6 Currency Agreements

A. Typical Eurocurrency Loan Agreement

B. Provisions for Multicur- rency Currency Option

Form 7 Syndicated Dollar Loan Agreement

Table of Cases

United States

Foreign

Table of United States Statutes 1,

Internal Revenue Code .,. ,

December, 1985

United States Constitution

United States Code

Sherman Antitrust Act

Clayton Antitrust Act

Tariff Act of 1930

Public Laws, Common Statutes at Large

State Statutes

Table of Regulations

Code of Federal Regulations

C-36 CONTENTS

Treasury Regulations

Federal Register

Table of Revenue Rulings

Revenue Procedures

Private Letter Rulings

Table of Foreign Statutes and Regulations

Table of Treaties

Warsaw Convention

European Patent Convention

Paris Convention

Treaty of Rome

Vienna Convention

Table of Model Statutes

Table of Model Treaties, Uniform Laws and Uniform Customs

OECD Model

U N Model

US Model

Uniform Customs

l ndex

@ McGraw-Hill, Inc.