During his campaign for president, President-elect Trump promised repeatedly to renegotiate NAFTA and impose a 35 percent tariff on imports from Mexico and even higher tariffs on imports from other countries. Under current law and absent the passage of new legislation, the U.S. President does have legal authority to take the requisite steps to withdraw the U.S. from NAFTA and raise tariffs on imports.
Isn’t NAFTA a treaty that cannot be unwound unilaterally by a President?
No. U.S. trade agreements such as NAFTA, the World Trade Organization agreements, and many other bilateral free trade agreements (“FTAs”) are technically not treaties, but congressional-executive agreements approved by a majority vote of each house of Congress. Pursuant to the Omnibus Trade and Competitiveness Act of 1988 and the Trade Act of 1974 (“Trade Act,”) Congress authorized the President to negotiate and enter into tariff and nontariff barrier agreements for limited periods, while permitting free trade agreements negotiated under this authority to enter into force when approved by both houses of Congress in implementing bills. Under this authority, NAFTA was approved by Congress in 1993 and took effect on Jan. 1, 1994.
Could the U.S. pull out of NAFTA?
Yes. Similar to provisions in other FTAs, Article 2205 of NAFTA enables any member to withdraw from NAFTA six months after giving written notice to the other parties: “A Party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties.”
Who is authorized to give notice on behalf of the U.S. to withdraw from a trade agreement?
NAFTA did not specify who is supposed to give notice on behalf of the U.S. or how that decision is to be reached. While Congress passed a number of bills in order to implement NAFTA, under the U.S. Constitution, the President, not Congress, has power over foreign policy. Thus, it is generally accepted that only the President is authorized to give notice on behalf of the U.S. to terminate a treaty or trade agreement, such as NAFTA.
Could the U.S. President unilaterally pull out of NAFTA without Congressional approval?
Most likely, yes. There are two prior cases involving U.S. presidents who terminated a treaty by executive decree. One case involved President Jimmy Carter’s executive termination of the Sino-American Mutual Defense Treaty with Taiwan in 1979. The second involved President George W. Bush’s withdrawal in 2001 from the Anti-Ballistic Missile Treaty. In each case, when the President’s authority was challenged in a lawsuit, the court dismissed the case as a “nonjusticiable political question.” This doctrine of constitutional law holds that certain matters are really political in nature and best resolved through the political process rather than by judicial review. In addition, Section 125(b) of the Trade Act gives the U.S. President additional authority to revoke any earlier presidential proclamations implementing U.S. tariff reductions under a free trade agreement. Accordingly, if a lawsuit was filed as to whether the U.S. President had the power unilaterally to terminate NAFTA, it is likely that U.S. courts would dismiss the case based on the “political question” doctrine.
Would tariffs rise automatically if the U.S. withdrew from NAFTA?
Not automatically. If, after providing the requisite six months’ notice, the U.S. withdrew from NAFTA, the President would, effective upon such withdrawal, issue a new proclamation imposing tariffs on goods imported from Mexico and Canada at the preferential rates granted to most-favored-nations (“MFN,”) which rates average approximately 3.5 percent on most items.
Could the new President impose additional duties on goods from Mexico and Canada?
Section 125(e) of the Trade Act provides that existing U.S. tariff levels normally should remain in effect for one year after termination of a trade agreement. However, the President also has authority to raise U.S. duties after terminating NAFTA, but these increases are capped at 20-50 percent higher than the rates previously in effect on January 1, 1974. If a President wanted to raise tariffs more significantly, such as imposing 35 percent tariffs on goods from Mexico, the President might be able to do so by invoking other statutory authority under the Trade Act and other acts of Congress on grounds of unfair trade practices, national security, and other similar threats.
Notably, these grants of authority made by statute were intended originally to give the President broad authority to respond to countries that violate trade agreements or discriminate against U.S. companies. However, it would be difficult and very time consuming for anyone to challenge, in a U.S. court, the underlying legal basis for the invocation of these provisions by the President.
What is likely to happen?
U.S. withdrawal from NAFTA is not imminent – it requires at least written notice to be given to the other parties at least six months prior to such withdrawal. President Trump will not take office until January 20, 2017. So any withdrawal from NAFTA is at least 8 months away.
Moreover, while campaigning, President-elect Trump stated his primary goal was not to withdraw from NAFTA, but to renegotiate the terms of NAFTA and other FTAs. Accordingly, using the threat of withdrawing from NAFTA would provide President Trump with leverage to negotiate amendments to NAFTA that are more favorable to the U.S., such as obtaining certain job protection assurances. To get even more leverage, President Trump may also seek to negotiate a separate deal with Canada.
However, certain actions, particularly those relating to U.S. companies, would require congressional approval – for example, if President Trump were to seek the authority to sanction (on a monetary basis or otherwise) U.S. companies moving production to Mexico.
What should companies do to prepare for any changes?
Both the Mexican and Canadian governments have already indicated their willingness to meet with the future Trump Administration to discuss these issues, but at this point in time, before President-elect Trump takes office or at least makes some more appointment and announcements, it is difficult to predict precisely what will happen. Also, in addition to possible changes to NAFTA and other FTAs, the new Trump Administration may make some policy changes to the U.S. Government’s procedure for vetting foreign acquisitions (CFIUS). In summary, the situation is highly fluid, and for this reason, Miller Canfield is giving up-to-date advice and counsel to its clients on a regular basis.
Durante su campaña para presidente, el Presidente-Electo Trump prometió repetidamente renegociar el TLCAN e imponer un arancel del 35 por ciento sobre las importaciones procedentes de México y un arancel aun mayor a las importaciones procedentes de otros países. Bajo la ley actual y salvo la promulgación de nuevas leyes, el Presidente de los EE.UU. tiene autoridad legal para tomar las medidas necesarias para retirar a los Estados Unidos del TLCAN y elevar los aranceles a las importaciones.
¿No es el TLCAN un tratado que no puede ser revocado unilateralmente por un Presidente?
No. Acuerdos comerciales de los EE.UU., como el TLCAN, los acuerdos de la Organización Mundial del Comercio, y muchos otros acuerdos bilaterales de libre comercio (“TLCs”) técnicamente no son tratados, sino acuerdos ejecutivos congresionales aprobados por mayoría de votos de cada cámara del Congreso. Conforme a la las leyes de comercio estadounidenses – Omnibus Trade and Competitiveness Act of 1988 y Trade Act of 1974 (“Ley de Comercio Exterior”) – el Congreso autorizó al Presidente a negociar y entrar en acuerdos de aranceles tarifarios por períodos limitados, permitiendo que los acuerdos de libre comercio negociados bajo esta autoridad entren en vigor una vez que sean aprobados por ambas cámaras del Congreso. En virtud de esta autoridad, el TLC fue aprobado por el Congreso en 1993, y entró en vigor el 1 de enero de 1994.
¿Podrían los Estados Unidos salirse del TLCAN?
Sí. Similar a las disposiciones de otros TLCs, el artículo 2205 del TLCAN permite a cualquier miembro a retirarse del TLCAN, seis meses después de la notificación escrita a las otras partes: “Una Parte podrá denunciar este Tratado seis meses después de notificar por escrito a las otras Partes su intención de hacerlo.”
¿Quién está autorizado a dar aviso en nombre de los EE.UU. de su intención de retirarse de un acuerdo comercial?
El TLCAN no especifica quién debe dar aviso en nombre de los Estados Unidos o cómo se llega a esa decision. Mientras que el Congreso Estadounidense aprobó una serie de leyes para implementar el TLCAN, bajo la Constitución de los Estados Unidos, el Presidente, no el Congreso, tiene poder sobre la política exterior. Por lo tanto, es generalmente aceptado que sólo el Presidente está autorizado a dar aviso en nombre de los EE.UU. para dar por terminado un tratado o acuerdo comercial, tales como el TLCAN.
¿Podría el Presidente de los EE.UU. salirse unilateralmente del TLC sin aprobación del Congreso?
Lo más probable es que sí. Hay dos casos anteriores involucrando a presidentes de EE.UU. que han finalizado un tratado mediante decreto ejecutivo. Un caso fue el de la terminación ejecutiva por parte del presidente Jimmy Carter del Tratado de Defensa Mutua Sino-Americana con Taiwán en 1979. El segundo involucró la salida en 2001 del Presidente George W. Bush del Tratado de Misiles Antibalísticos. En cada caso, cuando la autoridad del Presidente fue cuestionada en un litigio, el tribunal se negó a escuchar el caso considerándolo una “cuestión política no-juzgable.” Esta doctrina de derecho constitucional sostiene que ciertas cuestiones son realmente de carácter político y se resuelven mejor mediante el proceso político en lugar de la revisión judicial. Así mismo, la Sección 125(b) de la Ley de Comercio Exterior da al presidente de EE.UU. autoridad adicional para revocar cualquier proclamación presidencial anterior que implemente reducciones arancelarias estadounidenses en virtud de un acuerdo de libre comercio. Por lo tanto, si una demanda fue interpuesta con respecto a si el Presidente de los EE.UU. tenía el poder para rescindir unilateralmente el TLCAN, es probable que los tribunales de Estados Unidos se nieguen a escuchar el caso en base a la doctrina de la “cuestión política.”
¿Aumentan los aranceles tarifarios automáticamente en caso de que los EE.UU. se retire del TLCAN?
No automáticamente. Si, una vez proporcionado el requisito de aviso de seis meses, los Estados Unidos se retira del TLCAN, el Presidente emitiría, con efecto a partir del momento de dicho retiro, una nueva proclamación imponiendo aranceles sobre los bienes importados de México y Canadá a tasas preferenciales otorgados a las naciones más favorecida (“NMF”). Dichas tasas son de un promedio de aproximadamente 3.5 por ciento en la mayoría de los bienes.
¿Podría el nuevo presidente imponer deberes adicionales a las mercancías procedentes de México y Canadá?
La Sección 125(e) de la Ley de Comercio Exterior establece que los niveles arancelarios actuales en Estados Unidos normalmente deberían permanecer en vigor durante un año después de la terminación de un acuerdo comercial. Sin embargo, el Presidente de los EE.UU. también tiene autoridad para elevar los aranceles estadounidenses tras su retiro del TLCAN, pero estos aumentos están limitados a un incremento máximo de 20-50 por ciento mayor a las tasas anteriormente en vigor el 1 de enero de 1974. Si el Presidente quisiera elevar los aranceles más significativamente, tal como la imposición de una tarifa arancelaria de 35 por ciento sobre las mercancías procedentes de México, el Presidente podría ser capaz de hacerlo invocando otras facultades legales bajo la Ley de Comercio Exterior y otros actos del Congreso por motivos de prácticas desleales de comercio, seguridad nacional y otras amenazas similares.
Notablemente, estas concesiones de autoridad hechas por estatutos estaban originalmente destinadas para darle al Presidente amplios poderes para responder a los países que violan los acuerdos comerciales o que discriminan en contra de compañías estadounidenses. Sin embargo, resultaría difícil y muy laborioso que alguien impugne, en un tribunal de los Estados Unidos, el fundamento jurídico para la invocación de estas disposiciones por parte del Presidente.
¿Qué es probable que suceda?
El retiro de los EE.UU. del TLCAN no es inminente – se requiere al menos un aviso por escrito a las otras partes con seis meses de anticipación antes de dicho retiro. El Presidente Trump no tomará el cargo hasta el 20 de enero de 2017. Por lo tanto, cualquier salida del TLCAN se encuentra a mínimo 8 meses.
Adicionalmente, durante su campaña, el Presidente Electo Trump declaró que su objetivo principal no era retirarse del TLCAN, sino renegociar los términos del TLCAN y otros acuerdos de libre comercio. Por lo tanto, utilizando la amenaza de retirarse del TLCAN proporcionaría al Presidente Trump con apalancamiento para negociar enmiendas al TLCAN más favorables para los Estados Unidos, tales como la obtención de ciertas garantías de protección del empleo. Para obtener incluso más influencia, el Presidente Trump también puede tratar de negociar un trato por separado con Canadá.
Sin embargo, ciertas acciones, en particular las relativas a las compañías estadounidenses, requerirían la aprobación del Congreso – por ejemplo, sí el Presidente Trump procurara sancionar (de manera monetaria o de otro modo) a compañías de EE.UU. por mover su producción a México.
¿Qué deben hacer las empresas para prepararse para cualquier cambio?
Tanto el gobierno mexicano como el canadiense han manifestado su voluntad de reunirse con el futuro equipo de gobierno de Trump para discutir estas cuestiones, pero en este momento, antes de que el Presidente-Electo Trump asuma el cargo o al menos haga más anuncios, es difícil predecir precisamente lo que sucederá. Así mismo, además de los posibles cambios en el TLCAN y otros TLCs, la nueva administración de Trump puede que realice algunos cambios políticos en los procedimientos gubernamentales estadounidenses para la investigación de adquisiciones extranjeras (CFIUS). En resumen, la situación es muy fluida, y por lo tanto, Miller Canfield brinda asesoría actualizada a sus clientes de manera constante.
Troy, Michigan – September 28, 2016
The Legal Alliance of the Americas (“Alliance”) held successful events in Detroit, at the offices of Miller Canfield, and in Washington, D.C., at the International Bar Association’s (“IBA”) Annual Conference. The Detroit event, on September 16th, was a client event, which included Alliance presentations on “Doing Business in Key Markets of the Americas” and on “Transnational Compliance Issues.” Copies of the written presentations from this event are available in the Publications tab of the Alliance website for review. The Washington event, on September 19th, was a reception at the Omni Shoreham Hotel, attended by more than 150 IBA delegates from the Annual Conference. It included informative presentations from U.S. Senator Dick Durbin and World Bank Senior Director Felipe Jaramillo. For further information on these events, please contact the Alliance’s Executive Director, Jose P. Ceppi, at email@example.com or 1-248-267-3318.
Sen. Dick Durbin and World Bank Chief C. Felipe Jaramillo to attend/present
DETROIT, September 6, 2016 — The Legal Alliance of the Americas, a network of more than 400 attorneys from top law firms in North and South America, has announced that it will host informative presentations in Detroit and Washington, D.C. The events coincide with the International Bar Association Annual Conference, which attracts 6,000 legal professionals from around the world, and will be held in Washington, D.C. Sept. 18-23, 2016.
The first will be a pre-conference informal program and continental breakfast. The keynote speaker will be Robert Dye, chief economist for Comerica Bank, who will speak about the U.S. economy and cross-border business in the Americas. The presentation will be at Miller Canfield’s world headquarters in Detroit, 8 a.m.-noon, Friday, Sept. 16.
The second will be a reception at the IBA Conference in the Diplomat Room at the Omni Shoreham Hotel in Washington, 5:30-7:30 p.m., Monday, Sept. 19. Keynote speakers will be Sen. Dick Durbin, who will talk about the upcoming U.S. presidential election and prospects for international trade and commerce in the next administration, and World Bank Chief Economist for the Americas C. Felipe Jaramillo, who will discuss economic prospects for the Americas.
“The IBA Annual Conference is an essential event for attorneys working in the global marketplace. We are pleased to have prestigious keynote speakers for the events the Alliance planned to coincide with the conference, offering invaluable opportunities to network and gain information,” said Alliance Executive Director José P. Ceppi.
The Legal Alliance of the Americas focuses on providing legal services throughout the Americas, helping companies navigate the legal issues that arise when operating or investing in the Americas. It comprises top-tier law firms in Argentina, Brazil, Chile, Colombia, Mexico, Peru and the United States.
For information about the events, contact Sandy Bera at firstname.lastname@example.org.
About The Legal Alliance of the Americas
The Legal Alliance of the Americas is a network of market-leading, independent law firms with an international focus, shared values and approaches that bring together more than 400 lawyers in 14 cities. The Alliance firms strive to provide superior coordinated legal services throughout the Americas, providing clients seamless services across key jurisdictions of North and South America. For more information, visit http://legalallianceoftheamericas.com
São Paulo, Brazil, July 20, 2016.
Luiz Fernando Plastino Andrade, Rothmann Sperling Padovan Duarte Advogados, Email: email@example.com
Transportation is one of the greatest challenges regarding urban planning, especially in a bustling metropolis like São Paulo. The city has grown quickly and erratically in the Twentieth Century and, a few decades into the Twenty-first, it is now struggling with serious deficit in public transportation. Both the government and the private sector have been seeking for alternatives to automobiles with a single occupant for some time. Recently, Uber and other firms are taking advantage of this situation, establishing themselves as viable means of transportation within the cities in which their services are provided.
In this context, services like Uber at first view seem a blessing. Being overall cheaper and arguably more comfortable and reliable than ordinary taxi services, with stricter codes of conduct and specifications, they provide serious incentives for people to leave their own cars at home. This means fewer vehicles crowding the streets, more parking spaces available for those who need it, and a most welcome slack to the public transportation system, thus improving overall traffic welfare. Uber also increases competition within the cab service market as it provides an alternate means of transportation in the same niche traditionally occupied by ordinary taxi services without the need for permits and bureaucracy, disrupting the established situation in said market. Healthy competition among cab service providers should mean benefits to the costumers of said services, as it leads each player to struggle to be more attractive for the demand than the others.
That being said, it still seems that the more people tend to rely on services like Uber, the more they are prone to some practices such as surge pricing that may not be as desirable, besides being grounded in economic reasoning. Their pricing practices are of dubious legality in Brazil, since they feature fairly arcane fare formation algorithms, which befall in a grey area considering that Brazilian law calls for clear information of prices to the costumers. The nature of the service itself is also hotly debated, since the company’s claim that Uber is simply a sharing-economy platform used by independent drivers, yet the services are rendered in a quite similar fashion to ordinary taxis, including the intensive use of municipal motorways and public spaces.
Thus, these services are of great concern for both lawmakers and spokespersons of the civil society. Some call for stricter, taxi-like regulations, or even propose that such services be banned altogether. These proponents are often skeptic of the unregulated markets and have an understanding that only under government supervision could such essential services be free of mishandling. On the other hand, there are also free-market enthusiasts which argue that, contrary to this belief, closed and overregulated markets are what gives margin to abuse, since costumers would not be free to choose better services over a few sanctioned ones, while competition would create an environment in which only the most reliable firms would thrive.
In this regard, both radical views tend to be off their marks. Too regulated markets tend to eliminate incentives for firms to improve on their services without the fear of competition, while keeping loose reigns on technology service markets tend to lead to natural monopolies in which firms are left free to impose their own terms to the costumers, who are bound to accept them for the lack of better options. In tune with these views, the new regulations on transport applications passed in São Paulo try to tip the market onto an ideal equilibrium, opening the market to competition while trying to regulate key practices of the industry.
Municipal Ordinance nr. 56,981/2016 set companies relatively free to choose their partner drivers and exploit their activities, while putting on strict rules over pricing, cap fares, carpooling and registration, and also imposing fees for the use of motorways, charged per driven distances. The upside of this regulation is taking transport applications off the gray area and into legality with minimal regulation to try to accommodate the interests of multiple stakeholders, as legislation has been lacking in the field due to the abovementioned stalemate between them. The downsides are the possibility of chilling innovation in the industry and, as regards to costumers, a rather serious threat of violation of their privacy, since the new ordinance requires that the municipal administration is informed of the time and itinerary of every trip, which seems to be quite harsh and potentially illegal when confronted to legislation such as the Legal Framework of the Internet (Federal Law nr. 12,965/2014). The merits of such regulations, however, remain to be seen in practice, as the ordinance is set to be put in force gradually within the next couple of years. In the meantime, Uber has already started to adapt to the new regulations, for instance by offering a cheaper pooling mode for those who are willing to split a ride with strangers and by charging an additional amount from the users in São Paulo to recoup the municipal fees.
Services like Uber do have the potential to bring a sound contribution to São Paulo’s transportation system. They may present some risk to excessively dependent costumers, but no more than ordinary taxis already present in an overregulated market. Fine-tuning between freedom and regulation should be the answer to unlocking the most benefits from such services, while safeguarding the population from the downsides of their inception, and that is the direction recently taken by the municipal administration.
2016 DOJ/SEC REPORTED FCPA CORPORATE RESOLUTIONS
|(NPA[i]) Analogic Corp.||Medical Devices||Russia||$3.4M||Use of distributors to make over $18M in illicit payments to government officials|
|(NPA) Akamai Technologies||Internet Services||China||$670K Disgorgement||Gifts and entertainment to government officials by local subsidiary|
|(NPA) Nortek Inc.||Building Products||China||$320K Disgorgement||Gifts and entertainment to government officials by local subsidiary|
|Las Vegas Sands Corp.||Gaming||China||$9M Civil Penalty||Use of former government official as consultant|
|Novartis AG||Pharmaceuticals||China||$2M Civil Penalty plus $23M Disgorgement||Gifts and entertainment by local subsidiary to doctors in “pay-to-prescribe” scheme|
|Nordion Inc.||Health Science||Russia||$375K Civil Penalties (No Profits to be Disgorged)||Use of agent to get government approvals of cancer treatment|
|Qualcomm Inc.||Telecom||China||$7.5M Civil Penalty||Hiring unqualified relatives of government officials|
|(DPA[ii]) VimpelCom Ltd.||Dutch Telecom||Uzbekistan||$397.6M SEC and DOJ Penalty/Disgorgement. Total Penalty of $795M.||Greater than $110M bribe to “government official” for market entry and preferential treatment|
|(NPA) PTC Inc.||Software||China||$14.5M Criminal Fine plus $13.6M Disgorgement||Travel and entertainment to government officials|
|SciClone Pharmaceuticals, Inc.||Pharma||China||$12.8M Disgorgement and Civil Penalties||Money, gifts and travel to government officials (liability as agent of local subsidiary)|
|SAP SE||Software||Panama||$3.8M Disgorgement||$145,000 bribes to government officials to secure contract|
|(DPA) Olympus Latin America||Medical Equipment||Argentina Bolivia Brazil Columbia Cosa Rica Mexico||$22.8M Criminal Penalty. Monitor for three years.||Money and gifts to doctors at government hospitals to purchase company equipment (more than $3M in payments)|
[i] NPA stands for non-prosecution agreement, typically for a three-year period.
[ii] DPA stands for deferred prosecution agreement, typically for a three year period.
For questions or additional information on U.S. legal compliance matters, including the Foreign Corrupt Practices Act, please contact José P. Ceppi at Ceppi@millercanfield.com or Tom Appleman at Appleman@millercanfield.com.
From Bloomberg BNA
By Michael Greene
June 23 — As more and more companies go global, they are demanding that their law firms provide multi-jurisdictional expertise.
A recent study by Deloitte Legal found that in-house counsel view global regulatory compliance as one of the biggest challenges they face.
“The availability of multi-jurisdictional firms can be of critical strategic importance,” said Suzanne Rich Folsom, general counsel and senior vice president for government affairs at U.S. Steel Corp., a multinational steel producer with major production operations in North America and Central Europe.
“Having a firm that understands our operating environment, both internally and externally, is imperative,” Folsom told Bloomberg BNA in an e-mail.
Law firms must be able to deliver services that allow their clients to operate in global markets, Folsom said. This includes offering effective legal counsel on issues and risks presented by the locale and industry sector, on the amount of government regulation and oversight, and on exposure to potential legal action.
To compete for business, more and more firms are embarking on initiatives for their multinational corporate clients. Among other examples:
• Hogan Lovells this month unveiled an app that allows companies doing business in Indonesia to access legal guidance.
• Also this month, Jones Day launched a blog dedicated to multi-jurisdictional issues arising out of the Trans-Pacific Partnership, a trade agreement among 12 countries, including the U.S., Australia, Japan and Mexico.
• Late last year, four law firms—Arizpe, Valdes & Marcos (Mexico), Estudio Malis & Asoc. (Argentina), Miller, Canfield, Paddock & Stone PLC (U.S.), and Rothman Sperling Padovan Duarte (Brazil)—announced a legal services network for clients in North and South America. The “Legal Alliance of the Americas” has now grown to seven firms.
Companies are competing in an increasingly complex global economy, and they expect their law firms to deliver cutting-edge services on their behalf, said Glen Nager, client affairs partner at Jones Day’s Washington office. Because of that, “we approach client service with special emphasis on delivering solutions across practices and jurisdictions,” Nager told Bloomberg BNA in an e-mail.
Multinational companies want support on mergers and acquisitions, labor and employment, tax, import and export requirements, and intellectual property, among other matters.
“Global compliance is a top priority for every company that is functioning in multiple countries,” John Gilmore, managing partner at legal services consultant BarkerGilmore, told Bloomberg BNA. In-house legal departments are looking for attorneys in the countries in which they operate, he said.
To that end, many law firms are rapidly expanding their operations. For example, DLA Piper operates in more than 30 countries, the latest of which is an office in Johannesburg, South Africa, that opened in January.
Baker & McKenzie LLP has 77 offices around the world, including one in Brisbane, Australia.
Meanwhile, Dentons late last year sealed a merger deal with China-based Dacheng to form the largest law firm in the world in terms of attorney headcount—more than 6,500.
With local expertise, a law firm can understand how the market in a certain jurisdiction works, said Michael F. DeFranco, a Chicago-based partner at Baker & McKenzie LLP who chairs the firm’s global mergers and acquisitions practice group.
By having people on the ground who are part of the local, legal and business community, “we are able to provide clients with more practical legal advice about what is the most efficient way to get something done rather than a purely legal answer of, `This is what the statute says,’” DeFranco told Bloomberg BNA.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
For More Information
The Deloitte Legal report, “Future Trends for Legal Services,” is available at http://src.bna.com/gf8.
In an unprecedented administrative decision, in April 2016, the Federal Comptroller’s Office (Controladoria Geral da União – CGU) determined the debarment of the construction firm Mendes Junior Trading and Engineering S/A (Mendes Junior) , involved in “Operation Car Wash” (Operação Lava Jato). The company was prohibited from contracting with the Public Administration for at least two years. This is the first punishment applied to a legal entity in Operation Car Wash.
Mendes Junior was convicted for harmful acts aimed at frustrating bids through collusion between companies that entered into contracts with Petrobras (arrangement for deciding the winner of the bid prior to the bid itself) and the payment of bribes to public officials, often through front companies, which ensured the continuity of anti-competitive agreements.
Such irregularities were committed by Mendes Junior between 2004 and 2012 and are in violation of Acts No. 8,666/93 (Public Bids and Contracts Act) and No. 12,846/2013 (Anti-Bribery Act). Although the conviction that led to the debarment occurred in the context of proceedings under the Public Bids and Contracts Act, there could be another administrative proceeding against the company under the Anti-Bribery Act, which in theory might result in a double conviction.
The debarment under the Public Bids and Contracts Act prevents the company from participating in new biddings and from contracting with public authorities at the federal, state and municipal levels. The punishment also includes the registration of Mendes Junior in the Registry of Debarred or Suspended Companies (Cadastro Nacional de Empresas Inidôneas e Suspensas – CEIS), available on the Transparency Portal of the Federal Government.
In addition to Mendes Junior, seven other construction companies are involved in administrative proceedings under Operation Car Wash and are awaiting final decisions. Considering that most of these companies work with large infrastructure projects, which would be interrupted due to the suspension of contracts with the Public Administration, the conviction might induce them to execute leniency agreements under the Anti-Bribery Act, while the Provisional Measure enacted in 2015 is still in force.
However, as was recently disclosed in the press, the leniency agreements that were on the verge of being executed are on hold as a result of proposed legislation on leniency presented by allies of Acting President Michel Temer, which is supposed to substitute the current Provisional Measure. It is still unclear if the proposed law will give incentives to the execution of leniency agreements, or even how the process around the approval of the new law will develop, considering that the impeachment proceedings concerning President Dilma Rousseff are pending and she may still return to office. The only thing that seems to be clear is that there is currently a great deal of uncertainty around leniency agreements in Brazil.
Leniency agreements are mechanisms created to obtain the cooperation of investigated companies with the governmental entity pursuing the investigation, by means of providing information and documents relating to the matters under investigation. The agreement reduces (or extinguishes) the sanctions to be applied to the cooperating company, if the requisites of the law are satisfied. However, the current regulation on leniency agreements has given rise to several questions, among them, the lack of legal certainty that the company will avoid liability before other governmental players which were not a party to the leniency agreement.
The Mendes Junior resolution is further demonstration of the growing importance of preventing corporate acts of corruption in Brazil. The administrative proceedings take into account the active role taken by the company not only in curbing corrupt acts, but also in encouraging lawful practices through widespread training and clear guidelines within the corporate structure. This is demonstrated through a robust compliance program which is adequate to the circumstances of the company.
For further information on these issues, please feel free to contact Lira Padovan or other attorneys at Rothmann Sperling Padovan Duarte Advogados, who may be reached at www.rothmann.com.br.
A few days ago decree #531/2016 was executed by President Macri to enact Law #26190 on Alternative Energy Production (AEP). This new regulation completes last year amendment to the AEP that granted new benefits for those companies involved in generating electricity through alternative and renewable energy resources and at the same time it sets a new goal for this kind of power production to the end of 2017 as of the 8% of total consumption of electrical energy countrywide.
The Law encourages not only the production of electricity with sustainable resources, but the investment in research for development and manufacture of new equipment with that purpose.
The term Renewable Energy Sources includes a vast scope of new techniques such as wind, solar heat, photovoltaic, geothermic, sea-tides, sea-currents, sea-waves, hydraulic, biomass, landfill gases, biogas, biofuels etc.
Individuals or legal entities are both eligible for the benefits granted as far as they undertake new projects to be actually invested at lease to its 15% before the end of 2017, and are intended to provide public services or the wholesale electricity market. The applicable benefits are:
Candidates are asked to renounce to any other fiscal or industrial benefits in the country.
The Authority for implementation of the AEP Law is the Ministry of Energy and Mining.
This new regulation turns into full operational force the AEP Law that until now stayed set aside by last government and brings real and optimistic investment opportunities for all players in the energy industry worldwide.
Author: Cristian Maldonado, Estudio Malis & Asociados, Argentina.
On April 5, 2016, the Department of Justice’s Fraud Section (“DOJ”) issued its Foreign Corrupt Practices Act (“FCPA”) Enforcement Plan and Guidance (“Guidance”), which announced (1) a more than doubling of DOJ resources allocated to FCPA enforcement, (2) increased coordination with its foreign counterparts and (3) the launching of a FCPA enforcement pilot program, effective immediately.
The Guidance indicates that the DOJ is adding 10 more prosecutors to its FCPA Unit, which represents a more than 50% increase in its attorney staff. Also, the FBI has established three new squads of special agents devoted to FCPA investigations and prosecutions. Thus, the DOJ is likely to significantly increase the number of FCPA investigations and prosecutions in the coming months and years.
The Guidance also announces the DOJ’s increased cooperation with foreign law enforcement agencies. International cooperation in this area has increased in recent years. The third element, the FCPA pilot program, is the most significant aspect of the Guidance. By setting forth the Guidance, the DOJ ”intend[s] to provide a clear and consistent understanding of the circumstances in which [the DOJ] may accord additional credit in FCPA matters to organizations that voluntarily disclose misconduct, fully cooperate, and timely and appropriately remediate.”
The Guidance indicates the DOJ’s desire to achieve this goal by “providing greater transparency about what we require from companies seeking mitigation credit” and “what sort of credit those companies can receive[.]”
The Guidance then sets forth how the pilot program will work and how DOJ might accord credit over and above what is currently provided for by the U.S. Sentencing Guidelines and the Principles of Federal Prosecution of Business Organizations found in the United States Attorneys’ Manual.
To qualify for this enhanced credit, a company must take the following steps:
1. Voluntarily disclose all known facts concerning the potential FCPA violation, within a reasonably prompt time of becoming aware of the offense. A disclosure that is required to be made by law, contract, or is otherwise imminent, does not qualify as a voluntary disclosure under the Guidance. A company which does not voluntarily disclose, but which cooperates with the investigation and takes appropriate remedial steps, may still receive some credit under the program. However, such credit will be “at most” a 25 percent reduction of the bottom of the Sentencing Guidelines fine range.
2. Fully cooperate with the DOJ’s investigation of the potential violation. The Guidance incorporates the principles of the recent DOJ “Memo on Individual Accountability,” which focuses on the involvement in criminal activity by a company’s officers, employees and agents. It provides that such cooperation should be pro-active and comprehensive. It indicates that less-than-prompt and complete cooperation might result in some degree of credit under the program but that such credit will be “markedly less than for full cooperation[.]”
3. Timely and appropriate remediation of the potential violation. The Guidance makes clear that remediation includes: (1) “[i]mplementation of an effective compliance and ethics program, the criteria for which will be periodically updated and which may vary dependent on the size and resources of the organization;” and (2) appropriate disciplinary action of affected employees, officers or agents.
If a company fully meets the standards set forth by the Guidance: (1) the DOJ may reduce by 50 percent the bottom end of the otherwise-applicable sentencing guideline fine range; (2) a corporate monitor will generally not be appointed if the company has implemented an effective compliance program; and (3) the DOJ will consider declining prosecution of the company. The Guidance is not intended to offer any benefits to individual violators of the FCPA.
The Guidance follows a recent announcement by the US Securities and Exchange Commission that companies subject to FCPA enforcement actions are required to self-report their potential misconduct to be eligible for deferred prosecution agreements and non-prosecution agreements.
The Guidance is a step forward in providing clarity and more incentive for companies to voluntarily disclose FCPA violations before they are uncovered by the government through other means. It is also consistent with the DOJ’s recent emphasis on uncovering violations by individuals.
If you have questions about the Guidance or need assistance in proceeding with the mitigation credit, please contact José Ceppi (firstname.lastname@example.org) or Tom Appleman (email@example.com) at Miller Canfield (www.millercanfield.com).
November 19, 2015
DETROIT, MI – Miller Canfield announces that Frederick Acomb, leader of the International Disputes Group (Detroit office), has co-edited a 50-nation legal compendium published by the International Bar Association Litigation Committee. The compendium is entitled, “Handbook on Multi-Tiered Dispute Resolution Clauses.”
The 229-page compendium includes individual chapters on the relevant law in the following jurisdictions: Albania, Argentina, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, England, Estonia, Finland, France, Guatemala, Hungary, India, Ireland, Italy, Japan, Latvia, Lithuania, Macedonia, Malaysia, Mexico, Moldavia, Montenegro, Netherlands, Norway, Philippines, Poland, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, UAE, Ukraine, New York, and the USA.
Miller Canfield received national first-tier rankings in Labor & Employment Litigation and Public Finance Law. The firm is recognized as having the most first-tier rankings in the United States in the area of Municipal Litigation, and was ranked nationally in a total of 18 practice areas. Miller Canfield also received 70 first-tier metropolitan rankings, including the most first-tier rankings in Michigan, the most first-tier rankings in Michigan for Commercial Litigation, Municipal Litigation, Real Estate Litigation, Securities Litigation, Mass Torts Litigation/Class Actions –Defendants, Real Estate Law, and Securities Regulation. In all, the firm has 114 metropolitan rankings. Miller Canfield is the only firm with a first-tier ranking in Michigan in Utilities Law.
DETROIT, MI – Miller Canfield announces that Julian Davis Mortenson has joined the firm as Of Counsel to its International Disputes Group. He will continue as a full-time professor at the University of Michigan Law School.
“As a leading international law firm with business clients engaged in transactions around the world, it’s imperative that we offer the breadth of experience that Julian Mortenson brings. Our clients will benefit from his keen insights on every aspect of cross-border business structures and process. We’re delighted to add him to our team,” said Michael McGee, Miller Canfield CEO.
Mortenson brings to the firm extensive experience in both academia and private practice. Named by the law school as the 2015 recipient of the L. Hart Wright Award for Teaching Excellence, Mortenson is active in both international arbitration and domestic constitutional litigation. He has served as arbitrator, counsel, and expert witness in commercial and investor-state disputes under the ICC, ICSID, UNCITRAL, and VIAC rules, and has litigated complex transnational matters in the U.S. courts, including actions involving the enforcement of foreign law and foreign judgments.
Other representative matters include his work as one of the principal drafters of the merits briefs in the landmark case Boumediene v. Bush, which secured the right of Guantanamo detainees to challenge their incarceration, and his role as lead counsel in Caspar v. Snyder, which required Michigan to recognize the marriages of more than 300 same-sex couples.
Prior to joining the Michigan Law School faculty, Professor Mortenson was an associate at Wilmer Cutler Pickering Hale and Dorr LLP in Washington DC and New York, NY. He also served as a law clerk to Justice David Souter on the U.S. Supreme Court. Mortenson received his J.D., Order of the Coif, from Stanford Law School after earning a Bachelor of Arts, summa cum laude, at Harvard College. He lives in Ann Arbor.
“Our chief aim is excellence, and there is little question that Julian brings excellence to the firm,” said International Disputes Group Leader Frederick Acomb. In addition to Mortenson and Acomb, the International Disputes Group includes Professor Charles H. Brower II, Professor Troy L. Harris, Larry Saylor, Paul D. Hudson, and James Woolard. All of them actively work on the firm’s international disputes matters.
Miller Canfield’s International Disputes Group has presented and defended a wide range of international arbitration claims, conducted under most institutional rules, in every major region of the world. The Group also has a robust cross-border litigation practice. Drawing on its deep roots in Detroit, the center of the global automotive industry, the group’s mission is to be the preeminent midmarket international disputes group in the world in service of the global manufacturing industry.
The Grand Chamber of the Court of Justice of the European Union recently invalidated the Safe Harbor Framework for data transfer from the E.U. to the U.S. The Safe Harbor Framework has provided a method to transfer personal data outside the European Union to U.S. companies in a way that is consistent with the EU Data Protection Directive. Now, U.S companies receiving personal data from a subsidiary, branch or established commercial presence in the E.U. can no longer rely on the Safe Harbor Framework.
The EU Data Protection Directive generally prohibits organizations from transferring personal data from the E.U. unless there is an adequate level of data protection (the adequacy requirement). Until now, a U.S. entity could satisfy this requirement and lawfully receive the personal information of EU citizens (personal data) from organizations located in the E.U. if it complied with a set of privacy principles developed by the U.S. Department of Commerce and approved by the European Commission (the “Safe Harbor Decision”).
On October 6, 2015, the Court of Justice of the European Court delivered a judgment in Maximilian Schrems v. Data Protection Commissioner. The case stemmed from the request made in proceedings between Mr. Schrems and the Data Protection Commissioner concerning the Commissioner’s refusal to investigate a complaint made by Mr. Schrems regarding transfers of personal data of Facebook users made by Facebook Ireland Ltd. to the U.S., and storing the data on servers located in the U.S. The case arose because the Commissioner originally rejected Mr. Schrems’ claim, referring to the Safe Harbor Decision. The Commissioner concluded that Mr. Schrems’ allegation about his data being accessible by U.S. surveillance services was unfounded and that the Safe Harbor Decision prevents the complaint from being brought forward.
Against this background, the Irish High Court referred the matter to the Court of Justice of the European Union, as to the binding character of the Safe Harbor Decision for a preliminary ruling. The CJEU was asked whether the national authority should conduct its own investigation or instead rely on the Safe Harbor Decision only in the event of doubt about the U.S. ensuring an adequate level of protection of personal data.
In its judgment, the Court of Justice of the European Union made two main findings. First, it held that any European decision which finds that a third country ensures an adequate level of protection does not prevent a supervisory authority of a Member State from examining a complaint brought by a person claiming to the contrary. In other words, any decision of this kind does not introduce a binding presumption which would prohibit any contradictory statement.
Second, and even more far-reaching, the Court found the Safe Harbor Decision itself invalid. The CJEU explained that the Safe Harbor Decision did not state that the U.S. in fact “ensures” an adequate level of protection by reason of its domestic law or its international commitments, as required by the EU Data Protection Directive. In addition, by restricting the powers available to national supervisory authorities, the Commission, in adopting the Safe Harbor Decision, exceeded the power conferred to it by that EU Data Protection Directive.
The CJEU’s ruling triggers serious implications for subsidiaries of U.S. companies in Europe as well as for any organization that was relying on safe harbor privacy principles when transferring data from the E.U. to the U.S. What was legal and in compliance with E.U. data protection law before October 6, 2015, is no longer considered safe.
So what is a U.S. company having subsidiaries in Europe to do now? On the day the decision in Schrems v. Facebook was delivered, the European Commission published a press release confirming that it would keep working with U.S. authorities on a renewed and safe framework for the transfer of personal data across the Atlantic. In light of the judgment, it also promised to come forward with clear guidance for national data protection authorities on how to deal with data transfer requests to the U.S.
In the meantime, U.S. companies should review their data privacy policies, certifications and practices to ensure that they will comply with U.S. and European data protection law.
Miller Canfield, with offices in Europe, can help US companies navigate the EU data privacy laws. If you have questions or concerns about the above or any issue involving EU data privacy laws, please contact Justyna Regan at firstname.lastname@example.org.
At the conference, held between October 4 and 9, 2015, the Alliance firms’ attorneys made legal presentations and met with law firms and clients from all over the world. These included one on transfer price and customs issues.