With the economy gaining traction, there’s been a marked increase in the number of U.S. companies looking to capture international markets through export sales.

After all, there are  billions of potential customers out there.

Just yesterday I received a call from a Miami, Florid- based manufacturer wanting more information about how to export their goods to various international markets

I’m thrilled to see increased interest in exporting U.S. made goods.

This is not only good for the economy but great for small American manufacturers, which represent 72 percent of U.S exporters.

Benefits of Exporting

A great place to learn more about exporting  is the U.S. Department of Commerce’s International Trade Administration website Export.gov

As the site points out, there are may benefits to exporting:

Why Consider Exporting?

• 95 percent of the world’s consumers live outside of the United States, so if a U.S. business is only selling domestically, it is reaching just a small share of potential customers.
• Exporting enables companies to diversify their portfolios and to weather changes in the domestic economy.
• Exporting helps small companies grow and become more competitive in all their markets.
• Free trade agreements have opened up markets in Australia, Chile, Singapore, Jordan, Israel, Canada, Mexico, and Central America, creating more opportunities for U.S. businesses.

The Economic Impact of Exporting

• In the past 25 years, U.S. exports increased five-fold from $224 billion to more than $1.1 trillion in 2004.
• About one of every five factory jobs—or 20 percent of all jobs in America’s manufacturing sector—depends on exports. Workers in jobs supported by merchandise exports typically receive wages higher than the national average.
• Small businesses create 70 percent of the new jobs in America.

The Number of Small Business Exporters is Growing …

• Small and medium-sized firms account for the vast majority of growth in new exporters.
• Small and medium-sized companies account for almost 97 percent of U.S. exporters, but still represent only about 30 percent of the total export value of U.S. goods.
• Because nearly two-thirds of small and medium-sized exporters only sell to one foreign market, many of these firms could boost exports by expanding the number of countries they sell to.
• More than two-thirds of exporters have fewer than 20 employees.

Export Controls: The Basic Legal Framework

To get started exporting, you’ll need to become familiar with U.S. export regulatory regime.

The United States has a comprehensive set of statutes, regulations and executive orders with respect to export controls, all of which are intended to curb the world wide proliferation of weapons to prevent certain countries from obtaining goods and technology that may contribute to their military potential.

The various sets of export controls are administered by a variety of federal agencies, particularly the Department of Commerce, the Department of State and the Department of Treasury.

Export controls can be imposed for reasons of national security, foreign policy and in cases of short supply.

The essential elements of the DOC’s export control regime are set forth in detailed Export Administration Regulations or EAR.

Do You Need An Export License? Follow the EAR Steps.

In the EAR, anything that is not prohibited specifically is permitted, meaning exports do not require a license unless the EAR expressly indicates that a license is required for the products category and destination.

Nearly 95% of all exported products do not  require a license.

The main criteria used to determine the necessity of an export license are the product, its destination, it end user and its end-use.

Asking the questions below will determine your obligations under the EAR and will be of help to

you in reviewing these steps:

•  What is it? What an  item is, for export control purposes, depends on its classification, which is its place on the Commerce Control List (see part 774 of the EAR below).
• Where is it going? The country of ultimate destination for an export also determines licensing requirements (see parts 738 and 774 of the EAR below).
• Who Will receive it? The ultimate end-user of your item cannot be a bad end-user.  (see parts 744 and 764 of the EAR below).
• What will they do with it? The ultimate end-use of your item cannot be a bad-end use. (see part 744 of the EAR below).
• What else do they do? Conduct such as contracting, financing and freight forwarding in support of proliferation may be prohibited (see part 744 of the EAR below).

Steps for using the EAR are embedded below, for ease of reference.

Follow these steps and you’ll be well on your way to importing profits through exports.

How to Export: Steps for Using the EAR

For nearly three decades, the International Law Quarterly has been recognized as one of the world’s leading

journals covering all areas of international law.

The current issue, edited by Hogan Lovells partner Alvin Lindsay, builds on this legacy with an extraordinary collection of articles covering today’s cutting edge legal issues.

If you have any doubt, here are 3 compelling reasons to read the ILQ Winter 2012 edition:

1.  Focus on intellectual property

This edition of the ILQ is rich with articles exploring the many aspects of international  intellectual property law— from the challenges and strategies involved in managing a client’s IP on a worldwide basis, video pirating in Europe, the challenges of protecting patents in India to  foreign registration applicants seeking U.S. trademark protection—this issue has it all.

2.   World Roundup

This edition of the ILQ marks the debut of the World Roundup section. Six months in the making, this section promises to deliver the most important international legal stories from around the world in every issue going forward.  The first-rate group of regional each has a strong connection to the assigned region. These regions include Asia, Europe, South America and other regions.  You won’t find this in any other international law journal.

3.   Cutting Edge Legal Issues

This edition of the ILQ  also includes articles in other areas– from the impact of Scotland’s Damages Act of 2009, the United States’ E-2 investors’ visa  to developments in the law of the international civil service—this issues has it covered.

For ease of reference, I’ve embedded the latest issue of the ILQ below. Enjoy!

International Law Quarterly Winter 2012 Issue

According to a recent survey, less than 40 percent of U.S. corporate counsel are unable to predetermine the costs of managing business disputes.

And that’s hardly a surprise. It’s difficult to predict exactly how much a given case will cost because of the inherent uncertainties of litigation. However, there are several things that you can do to reduce the expense of a heated court battle.

I mention this because the National Law Journal has an excellent post by attorney Damon Wright on how to keep litigation expenses down. The article, Top 12 Tips for Saving Money in Litigation, is a great read.

While I think the article is right on point for domestic litigation, there are three additional  money saving points to consider in the context of international litigation:

1.   Determine Jurisdiction Strategy from the Outset. Whether you are a plaintiff or defendant in international litigation, jurisdiction will almost always be the threshold issue. Challenges on grounds of foreign non conveniens can be extremely costly and drag on needlessly.

From the outset, plaintiffs should carefully evaluate whether the chosen forum will hold up to jurisdictional scrutiny. And Defendants, in particular, should assess whether a motion to dismiss on grounds of forum non conveniens is even the best way to go. It’s critical to understand the foreign jurisdiction’s law before your client is stuck there in litigation. An important consideration is whether a defendant can get out of the case on summary judgment. Many foreign jurisdictions do not provide for summary judgment. Therefore, all matters before a court must be tried to conclusion, which may potentially lengthen and increase the cost of proceedings.

2. Utilize Technology to Avoid Unnecessary Travel Expenses. In today’s interconnected world, it’s never been easier to communicate with clients no matter where they’re located.  The advent of video conferencing tools such as Skype Video and Apple’s Facetime have made it possible to instantly “meet” with client without the cost and hassle associated with air travel. Collaborative document sharing software and other cloud computing tools have also greatly reduced the need to travel. While nothing can ever replace in-person meetings, costs can be greatly reduced if these resources are used to maximum benefit.

 3. Translation of Documents. The cost of document production in domestic litigation can be extremely costly. In international litigation, the cost is multiplied exponentially when documents need to be translated from a foreign language. While one page may run twenty five cents, it is not unusual for a document translator to charge forty cents a word. When you’re tasked with translating thousands of documents, the associated costs can become prohibitive. To minimize costs, it’s a good idea to explore outsourcing the translation to firms located abroad. The savings will be significant and help minimize litigation expenses.

 Conclusion

As I’ve described above, expenses associated with international litigation can be minimized with careful consideration of threshold jurisdictional issues, smart use of technology and outsourcing document translation overseas. While every case is different,  international litigation expenses can be contained with smart planning and  a modicum of resourcefulness.

While I am being purposefully vague as to the details, it’s safe to say that employment- related liability for U.S. companies operating overseas is on the rise.

I think part of this can be attributed to the fact that more U.S. companies are, for the first time, expanding into foreign markets.

While overall this is a positive trend for the U.S. economy, it does carry significant risk for those first-timer companies unfamiliar with the extraterritorial reach of U.S. employment laws.

Counsel representing companies based outside the U.S., or U.S. companies with foreign operations, should be aware of the U.S. employment laws that apply  to conduct that takes place outside the U.S.

Below, I’ll go over the basic framework for the extraterritorial application of U.S. employment law.

International Reach of U.S. Employment Law

Currently, three major U.S. employment laws apply extraterritorially:

1. Title VII of the 1964 Civil Rights Act. Bars discrimination in employment based on race, color, national origin, religion and sex.
2. American with Disabilities Act; bars discrimination based on disability and requires employers to make reasonable accommodations where necessary.
3. Age Discrimination in Employment Act.  Makes it unlawful to fail or refuse to hire any person based on their age. It applies to persons 40 years of age or older

Each of these three laws also makes it illegal for an employer to retaliate against an employee because the employee exercised rights under the law.

Who’s Covered Under these Laws?

These laws apply to U.S. citizens employed outside the U.S. If the employee is not a U.S. citizen, the laws do not apply.

Thus, U.S. resident aliens working abroad are not covered.

But not all foreign employers that employ U.S. citizens outside of the U.S. are subject to these U.S. employment laws.

Numerical Threshold Must be Met

Each of these three laws has a numerical threshold.  Under the ADEA, the company must have 20 or more employees.

Both Title VII and the ADA require 15 or more employees.

Employer Category

An employer that meets the numerical threshold must still fall into one of the following 3 categories to be subject to these U.S. Employment laws:

1. An employer incorporated in the U.S.:  Significantly, a foreign branch of a U.S. company also will be considered a “joint employer” and subject to U.S. employment laws.
2. An Employer not incorporated in the U.S. but having sufficient contacts with the U.S.:  “Sufficient contacts” is determined under the “totality of the circumstances” test. The factors a court will consider include i) the company’s principal place of business; ii) the nationality of the dominant stakeholders; and iii) the nationality and location of officers and directors; and
3. A non-U.S. firm “controlled” by a U.S. company: Courts examine various in determining control including extent of shared operations and degree of common ownership or financial control.

How to Limit Liability

While there are numerous measures a U.S. company can implement to minimize employment-related liability in connection with its international operations, the basic framework for a best practices program should include written policies that prohibit discrimination and retaliation under U.S. law.

These policies are ordinarily included in manuals distributed to each employee.

Another component of a company’s best practices program should include complaint handling and investigation mechanisms. Many employment disputes can be resolved internally without the aggrieved employee filing a lawsuit.

Finally, a solid training program should be implemented to educate executives, managers and supervisors about the applicability of these U.S. employment laws.

This training should include a review of the substantive laws and the appropriate response of an employees’ right s are being violated

Conclusion

With more U.S. companies expanding overseas, it’s no surprise that employment-related liability is on the rise. U.S. companies should be aware of the legal implications of their employment practices outside the U.S.  Doing so will go a long way towards minimizing employment-related liability.

Given the recent stream of positive economic news, it’s not much of a surprise.

As economies all over the world bounce back from the global financial crisis, U.S. companies are looking overseas to capture new markets.  Of course, the same is true for foreign companies looking to penetrate the U.S. market.

Whether yours is a U.S. or foreign-based business, an international franchise is a quick and effective way to expand into overseas markets.

Different Types of Franchises.

A franchise can be analyzed in terms of the number of outlets that are authorized.:

1. Direct Franchise: The franchise grants the franchise right to operate only one outlet.
2. Area development:  the franchisor gives the franchisee the right to develop multiple outlets in a designated territory
3. Master Franchise:  the franchisor appoints a master franchisee that has the right to appoint sub franchisees in a designated territory. This approach is used for a large territory, such as all of China or Brazil.

The Franchise Agreement

Whichever type of franchise you choose, it will be governed by a franchise agreement.

The franchise agreement is the cornerstone document of the franchisee -franchisor relationship.  The agreement is legally binding on both parties, laying out their respective rights and obligations.  It is on this basis that a long term relationship grows and prospers.

When drafting an international franchise agreement be sure to include provisions covering, in considerable detail, the obligations of the franchisor (the company franchising its business) and franchisee (the individual buying a franchise) regarding the day to day operation of the business.

A well-drafted franchise agreement will include:

• Right to use franchisor’s intellectual property
• Franchise territory and appropriate exclusivity
• Expansion options
• Business Development obligation
• Royalty fees that are payable
• Equipment and supplies
• Training and Proprietary Manuals
• Term and Termination
• Dispute resolution

Of course, because every case is different there is no standard form of franchise agreement because the terms, conditions, and the methods of operating vary widely.

For example, franchises for printing, employment agencies, and automotive products will differ from the franchises for fast food service, convenience stores, or clothing.

Conclusion

Entering into an international franchise agreement is an excellent way for a business to capture a foreign market. Unlike other business arrangements, an international franchise is a time-tested business enterprise that poses less risk than other types of international expansion vehicles.

What is a Licensing Agreement?

So what exactly is a licensing agreement anyway? In basic terms, a licensing agreement is a contractual right that gives someone permission to do a certain activity or to use certain property owned by someone else. Increasingly, these agreements are being reached between companies located in different parts of the world.

An international license agreement doesn’t have to be long or complicated. It can be straightforward and enforceable. However, many issues come up when drafting a license agreement. Laws relating to intellectual property can be extremely complicated. An attorney can provide invaluable help with drafting your agreement and enforcing it.

Advanategs are technology aquisition, market penetration, protection of intellectual property rights and cost reduction.

A license facilitates the transfer of valuable legal rights and technology bewteen parties to further the overall purpose of the relationship.  A licensing agreement is created when the licensor who owns or otherwise controls the rights, grants to the licensee the right or license to use the legal right specified in the partoies’ contrcat.

It’s important to keep in mind that a license is not an outright assignment of the legal rights from the licensor to the license because the licensor will retain the actual ownership of the licensed subject matter. When the term of the license expires, the licensed right will rvert back to the licensor.  The license, really amounts to a form of renatl or lease of the subject matter.

A company may look at a licnesing arrangement as a means for acquiring new or existing technology needed to lawfully continue its own development or product sales efforts.

Many companies maintain significant parts of their technological portfolio through licening arrangments with other companies, universities, and also foreign companies without the costs and risk associated with new development efforts.

In drafting an international intellectual property agreement be sure to include the following 10 key provisions:

1. Grant of Rights–  definition and description of licensed technologyscope and use of intellectual property assets
2. Grant-Back to Licensor
3. Warranties by Licensor
4. Royalties
5. Confidentiality
6. Quality
7. Noncompetition
8. Sub-License
9. Term & Termination
10. Compliance with Law

For more on how to draft an arbitration, be sure to check out my post, 7 Ways to Bulletproof Your International Arbitration Agreement.

It seems the timing could not have been better, as the U.S. Supreme Court is set to hear oral arguments on Tuesday on whether corporations may be sued in the same manner as “individuals” under the ATCA for torts committed abroad in violation of international law or U.S. treaties.

If the issue sounds familiar, it’s because the U.S. Supreme Court answered a similar question in the context of campaign finance in Citizens United.

Kiobel v. Royal Dutch Petroleum Co.  will be the first case to address the “personhood” of a corporation since Citizens United was decided.

This case will be heard in tandem with Mohamad v. Palestinian Authority, which raises a similar question involving claims against non-natural persons under a different statute — the Torture Victim Protection Act.

ATCA Background.

The ATCA originally appeared in Section 9 of the first Judiciary Act of 1789, which created the U.S. court system.

The statute provides that “the district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”

While the law was originally intended to protect US financial interests from piracy on the high seas, it was revived in the early 1980s to seek accountability for overseas human rights violations, such as extrajudicial killings.  The early-1990s saw the first ATCA case filed against corporations, and now dozens of companies face such suits.

In fact, according to Marcia Coyle of the National Law Journal “since its enactment in 1789, about 150 Alien Tort Statute cases have been brought. Of that total, about 50 are pending at any one time in federal district and circuit courts.”

Coyle further notes that, in recent years, settlements and judgments have ranged from $1.5 million to $80 million.

At present the majority of the circuits hold that corporations may be subject to liability under the ATCA.

The outlier is the split decision in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010), set to be heard tomorrow.

In Kiobel, a three-judge panel addressed head-on the question of corporate liability under the ATS in a case brought by Nigerian residents against Dutch, British and Nigerian oil companies for allegedly aiding and abetting the torture and killing of residents who protested the environmental effects of the companies’ drilling in their region.

Two of the judges concluded that “although customary international law has sometimes extended the scope of liability for a violation of a given norm to individuals, it has never extended the scope of liability to a corporation.

In other words, no corporate liability–corporate defendant wins.

Thus, the U.S. Supreme Court will decide in the next few months whether the Kiobel court got it right.

Corporations Are People And They’re Not.

In light of the Court’s decision in Citizen’s United, a decision affirming the 2nd Circuit in Kiobel, would lead to a troubling  paradox, no?

On the one the hand, because it’s a person, a corporation can make unlimited political contributions.

Yet on the other hand,  because it’s also not a person, a corporation is immune from prosecution for the most atrocious international human rights violations, i.e. murder, torture and rape.

Or as Maxwell Kennerly explains it in his excellent post, Originalism and Corporate Personhood Meet The Alien Tort Statute:

‘Corporations may soon have “rights without responsibilities.’ They will have the unrestrained right to influence your government, but not the slightest responsibility to compensate the victims of their own human rights violations.”

A troubling paradox indeed.

Whether I proceed under the Hague Convention or letters rogatory, the process can be frustrating even for seasoned practitioners.

I mention this because I just read of a fascinating development in the United Kingdom regarding service of process on a defendant.

As reported in the United Kingdom’s Telegraph, a judge in the United Kingdom agreed to allow a hard-to-locate individual to be served via Facebook in a civil case.

This decision comes on the heels of a the notable 2009 decision, where the same High Court gave permission for an injunction to be served via Twitter.

Here is the background of the latest case courtesy of Legalweek:

The case, involving a $2.1m claim brought by investment-managers AKO Capital and AKO Master Fund against former broker TFS Derivatives, has seen Mr Justice Teare approve the use of Facebook to locate former TFS employee Fabio de Biase. The investment managers allege that the broker significantly overcharged them; however, the broker denies liability and has argued that if held liable, it is entitled to recover a contribution from former AKO employee Anjam Ahmad and de Biase, who handled the relationship. De Biase has not participated in the proceedings to date and the parties involved have been unable to locate him. Following pre-trial discussions held last Friday (17 February), Teare granted Stephenson Harwood permission to serve de Biase with a claim via Facebook after it had not been possible to locate him.

Interestingly, Justice Teare gave the defendant 14 days to respond to the claim from the day it was served – sometime between February 17 and February 21 – an increase on the usual two days permitted due to uncertainty over how often he checks his Facebook account.

The time frame was reached after Justice Teare questioned whether the plaintiff could verify that the Facebook account belonged to the right defendant and whether he was in the habit of checking it.

The court heard that the defendant was friends with colleagues of the plaintiff, and that the account was known to be in use because he had accepted a few recent friend requests.

The decision is understood to mark the first time a claim (rather than a court order) has been served in the UK using the social networking site at the level of the High Court.

The ruling is being heralded by attorneys around the world, with one commenting:

The decision to permit service by Facebook demonstrates that the judges in London’s commercial court are prepared to deploy modern technology and changing social behaviors in support of litigants needing to serve opponents. In doing so they are continuing to enhance the reputation of London as a venue for the global business community’s high value and complex disputes.”

That’s a great point. For all its perceived old world style of  jurisprudence, it’s exciting to see the High Court leap more progressive countries in making it more difficult for defendants to evade service of process.

The UK High Court joins courts in Australia and New Zealand, which have previously allowed service via the social networking site.

Is the United States be far behind?

“In 2009, Twitter inspired protesters in Moldova to demand political power. In 2010, the microblogging service channeled food, medical supplies and hope to the desperate victims of the earthquake in Haiti. Last year, that little blue bird did no less than foment revolution across the Arab world while uniting Americans against corporate greed and inequality.”

While Twitter’s power to foment change and revolution is unquestionable, a major change to the way it treats its tweets, has  sparked a fire storm  of debate.

Under a new initiative just announced by Twitter,  it will now censor messages on a country-by-country basis to comply with national laws such as the bans on pro-Nazi speech in Germany and France.

Whether or not one agrees with the change, Twitter’s revised technology exposes the alarming reality of how a seemingly benign tweet (or other internet post) may be legal in one country, yet be criminal in another.

As an international attorney, I find the discussion fascinating because it touches on the limits and contours of how law is applied across the world.

Forbes’ Tim Worstall recently wrote an excellent article touching on these points. In  Twitter’s New Censorship System and International Internet Law, Worstall explains that

[t]he law that guides what we write or say upon the internet is not the law of the jurisdiction in which we write or say it. It is also not the law of whatever jurisdiction hosts the material. No, we are covered by the law of whatever jurisdiction the material is read in.”

At that’s a great point and echoes the holding of a recent European Court of Justice decision where the court issued a ground breaking ruling giving plaintiffs, no matter where they reside, the right to sue in an EU member state of their choosing over online content that’s alleged to be defamatory or a violation of the plaintiff’s publicity or privacy rights.”

Worstall further points out:

We’re all liable to the laws of all the countries in which tweets can be (or are) read. Yes, all 190 odd members of the United Nations, all 250 odd legal jurisdictions around the world. If France has a law against insulting bureaucrats (it does) and you insult a French bureaucrat on the web then you have, at least arguably, just committed a crime in France.

This new reality may be hard to swallow for some, but what recent developments in jurisdiction and internet jurisprudence demonstrate is that we’re not just subject to our own local laws, but also the laws of the rest of the world.

Never before has jurisdiction been so pliable. And never before have the consequences of our online activities  been so uncertain.

What do you think?