Fundamentals of Business Law

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Quiz 31 :

International Law in a Global Economy

Quiz 31 :

International Law in a Global Economy

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Dumping. The fuel for nuclear power plants is low enriched uranium (LEU). LEU consists of feed uranium enriched by energy to a certain assay-its percentage of the isotope necessary for a nuclear reaction. The amount of energy is described by an industry standard as a "separative work unit" (SWU). A nuclear utility may buy LEU from an enricher, or the utility may provide an enricher with feed uranium and pay for the SWUs necessary to produce LEU. Under an SWU contract, the LEU returned to the utility may not be exactly the uranium the utility provided. This is because feed uranium is fungible and trades like a commodity (such as wheat or corn), and profitable enrichment requires the constant processing of undifferentiated stock. LEU imported from foreign enrichers, including Eurodif, S.A., was purportedly being sold in the United States for "less than fair value." Does this constitute dumping? Explain. If so, what could be done to prevent it? [ United States v Eurodif , S. A., 555 U.S. 305, 129 S.Ct. 878, 172 LEd.2d 679 (2009)]
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Dumping:
Dumping is a process in which an exporter may engage in supplying material to a foreign nation at a less price than the fair market value of the goods. This causes the domestic markets to suffer and thus it is also termed as an unfair trade practice.
Facts:
Nuclear Power Plants uses enriched Low enriched Uranium (LEU) as a fuel, Uranium has to be enriched in Seperative work units. Seperative Work Units enrich the Uranium and supply it to customers, However, Uranium has to be enriched constantly and otherwise it will be losing its quality. Some suppliers in U.S filed cases against the Uranium suppliers of other countries for supplying Uranium at lower price than the fair market value.
Outcome:
The Sale of Uranium by Foreign Suppliers at a less price than the market value cannot be considered as dumping because Uranium constantly requires processing and the value of the Uranium depends on the quality of the Uranium. In case the Uranium supplied by the Foreign Suppliers is of low quality, then they have to sell it for a lesser price because it requires further processing in SWU.
In case the foreign Suppliers engage in unhealthy price cuts and dumping practices then U.S Government can impose a quota system to cut down the practice. This is because by imposing a quota system the suppliers cannot dump the material at less than the fair market value for a loss. Therefore, they will not resort to such activities.

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Letters of Credit. The Swiss Credit Bank issued a letter of credit in favor of Antex Industries to cover the sale of 92,000 electronic integrated circuits manufactured by Electronic Arrays. The letter of credit specified that the chips would be transported to Tokyo by ship. Antex shipped the circuits by air. Payment on the letter of credit was dishonored because the shipment by air did not fulfill the precise terms of the letter of credit. Should a court compel payment? Explain.
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Letters of credit is a written instrument in which the issuing bank agrees to pay the beneficiary (seller), in return, the account party (buyer) assures to reimburse the issuer for the payment made to the beneficiary after the beneficiary has complied with the terms of the letter. Letters of credit facilitate international transactions.
No , the court should not compel the bank to pay the beneficiary.
The letter of credit required goods to be transported by ship. Since the seller shipped the goods by air, the shipment was nonconforming. Thus, the bank was justified in dishonoring the letter of credit because the seller failed to comply with the terms specified in the letter.

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Under the Foreign Sovereign Immunities Act of 1976, on what bases might a foreign state be considered subject to the jurisdiction of U.S. courts?
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Foreign State Immunity Act, 1976:
The Foreign State Immunity Act issues in the year 1976 specify the conditions under which a foreign state or a country falls under the jurisdiction of the Federal court.
The Foreign State Immunity Act issues in the year 1976 specify the conditions under which a foreign state or a country falls under the jurisdiction of the Federal court.
• The States fall under the jurisdiction of the federal courts if they fail to establish that they are foreign states.
• In case the Country or the state engages itself in any commercial dealing in U.S or expropriates a property in U.S then they fail in establishing that they are foreign states.
Based on the above conditions, a foreign state may fail to convince that it is a foreign state.

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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What is the act of state doctrine? In what circumstances is this doctrine applied?
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Question with Sample Answer-Dumping. U.S. pineapple producers alleged that producers of canned pineapple from the Philippines were selling their canned pineapple in the United States for less than its fair market value (dumping). The Philippine producers also exported other products, such as pineapple juice and juice concentrate, which used separate parts of the same fresh pineapple, so they shared raw material costs, according to the producers' own financial records. To determine fair value and antidumping duties, the plaintiffs argued that a court should calculate the Philippine producers' cost of production and allocate a portion of the shared fruit costs to the canned fruit. The result of this allocation showed that more than 90 percent of the canned fruit sales were below the cost of production. Is this a reasonable approach to determining the production costs and fair market value of canned pineapple in the United States? Why or why not? (See page 720.)
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Under the Foreign Sovereign Immunities Act of 1976, on what bases might a foreign state be considered subject to the jurisdiction of U.S. courts?
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International Agreements and Jurisdiction. The plaintiffs in this ease were descendants of Holocaust victims who had lived in various countries in Europe. Before the Holocaust, the plaintiffs' ancestors had purchased insurance policies from Assicurazioni Generali, S.P.A., an Italian insurance company. When Generali refused to pay benefits under the policies, the plaintiffs, who were U.S. citizens and the beneficiaries of these policies, sued for breach of the insurance contracts. Due to certain agreements among nations after World War II, such lawsuits could not be filed for many years. In 2000, however, the United States agreed that Germany could establish a foundation-the International Commission on Holocaust-Era Insurance Claims, or ICHEIC-that would compensate victims who had suffered losses at the hands of the Germans during the war. Whenever a German company was sued in a U.S. court based on a Holocaust-era claim, the U.S. government would inform the court that the matter should be referred to the ICHEIC as the exclusive forum and remedy for the resolution. There was no such agreement with Italy, however. The plaintiffs sued the Italy-based Generali in a U.S. district court. The court dismissed the suit, and the plaintiffs appealed. Did the plaintiffs have to take their claim to the ICHEIC rather than sue in a U.S. court? Why or why not? ( In re Assicurazioni Generali, S. P. A., 592 E3d 113 (2d Cir. 2010)]
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Sovereign Immunity. When Ferdinand Marcos was president of the Republic of the Philippines, he put assets into a company called Arelma. Its holdings are in New York. A group of plaintiffs, referred to as the Pimentel class, brought a class-action suit in a U.S. district court for human rights violations by Marcos. They won a judgment of $2 billion and sought to attach Arelma's assets to help pay the judgment. At the same time, the Republic of the Philippines established a commission to recover property wrongfully taken by Marcos. A court in the Philippines was determining whether Marcos's property, including Arelma, should be forfeited to the Republic or to other parties. The Philippine government, in opposition to the Pimentel judgment, moved to dismiss the U.S. court proceedings. The district court refused, and the U.S. Court of Appeals for the Ninth Circuit agreed that the Pimentel class should take the assets. The Republic of the Philippines appealed. What are the key international legal issues? [Republic of the Philippines v. Pimentel, 553 U.S. 851, 128 S.Ct. 2180, 171 L.Ed.2d 131 (2008)] (See pages 716-717.)
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What types of provisions, or clauses, are often included in international sales contracts?
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Case Problem with Sample Answer-Comity. Jan Voda, M.D., a resident of Oklahoma City, Oklahoma, owns three U.S. patents related to guiding catheters for use in interventional cardiology, as well as corresponding foreign patents issued by the European Patent Office, Canada, France, Germany, and Great Britain. Voda filed a suit in a federal district court against Cordis Corp., a U.S. firm, alleging infringement of the U.S. patents under U.S. patent law and of the corresponding foreign patents under the patent law of the various foreign countries. Cordis admitted, "[T]he XB catheters have been sold domestically and internationally since 1994. The XB catheters were manufactured in Miami Lakes, Florida, from 1993 to 2001 and have been manufactured in Juarez, Mexico, since 2001." Cordis argued, however, that Voda could not assert infringement claims under foreign patent law because the court did not have jurisdiction over such claims. Which of the important international legal principles discussed in this chapter would be most likely to apply in this case? How should the court apply it? Explain. [Voda v. Cordis Corp., 476 F.3d 887 (Fed.Cir. 2007)] (See pages 714-715.)
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Dumping. A newspaper printing press system is more than one hundred feet long, stands four or five stories tall, and weighs 2 million pounds. Only about ten of the systems are sold each year in the United States. Because of the size and cost, a newspaper may update its system, rather than replace it, by buying "additions." By the 1990s, Goss International Corp. was the only domestic maker of the equipment in the United States and represented the entire U.S. market. Tokyo Kikai Seisakusho (TKSC), a Japanese corporation, makes the systems in Japan. In the 1990s, TKSC began to compete in the U.S. market, forcing Goss to cut its prices below cost. TKSC's tactics included offering its customers "secret" rebates on prices that were ultimately substantially less than the products' actual market value in Japan. According to TKSC office memos, the goal was to "win completely this survival game" against Goss, the "enemy." Goss filed a suit in a federal district court against TKSC and others, alleging illegal dumping. At what point does a foreign firm's attempt to compete with a domestic manufacturer in the United States become illegal dumping? Was that point reached in this case? Discuss. [ Goss International Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 434 F.3d 1081 (8th Cir. 2006)
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Robco, Inc., was a Florida arms dealer. The armed forces of Honduras contracted to purchase weapons from Robco over a sixyear period. After the government was replaced and a democracy installed, the Honduran government sought to reduce the size of its military, and its relationship with Robco deteriorated. Honduras refused to honor the contract by purchasing the inventory of arms, which Robco could sell only at a much lower price. Robco filed a suit in a federal district court in the United States to recover damages for this breach of contract by the government of Honduras. Using the information provided in the chapter, answer the following questions. 1. Should the Foreign Sovereign Immunities Act preclude this lawsuit? Why or why not? 2. Does the act of state doctrine bar Robco from seeking to enforce the contract? Explain. 3. Suppose that prior to this lawsuit, the new government of Honduras had enacted a law making it illegal to purchase weapons from foreign arms dealers. What doctrine might lead a U.S. court to dismiss Robco's case in that situation? 4. Now suppose that the U.S. court hears the case and awards damages to Robco, but the government of Honduras has no assets in the United States that can be used to satisfy the judgment. Under which doctrine might Robco be able to collect the damages by asking another nation's court to enforce the U.S. judgment? DEBATE THIS The U.S. federal courts are accepting too many lawsuits initiated by foreigners that concern matters not relevant to this country.
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What is the principle of comity, and why do courts deciding disputes involving a foreign law or judicial decree apply this principle?
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The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions: What is the principle of comity, and why do courts deciding disputes involving a foreign law or judicial decree apply this principle?
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The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions: What is the act of state doctrine? In what circumstances is this doctrine applied?
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What types of provisions, or clauses, are often included in international sales contracts?
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ISSUE SPOTTERS Gems International, Ltd., is a foreign firm that has a 12 percent share of the U.S. market for diamonds. To capture a larger share, Gems offers its products at a below-cost discount to U.S. buyers (and inflates the prices in its own country to make up the difference). How can this attempt to undersell U.S. businesses be defeated? (See page 720.)
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S. laws prohibiting employment discrimination apply in all circumstances to U.S. employees working for U.S. employers abroad?
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ISSUE SPOTTERS Café Rojo, Ltd., an Ecuadoran firm, agrees to sell coffee beans to Dark Roast Coffee Company, a U.S. firm. Dark Roast accepts the beans but refuses to pay. Café Rojo sues Dark Roast in an Ecuadoran court and is awarded damages, but Dark Roast's assets are in the United States. Under what circumstances would a U.S. court enforce the judgment of the Ecuadoran court? (See pages 714-715.)
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S. laws prohibiting employment discrimination apply in all circumstances to U.S. employees working for U.S. employers abroad?
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