University of Southern Mississippi MISSISSIPPI DISTRICT EXPORT COUNCIL & EXPORT UNIVERSITY Exporting 201-Intermediate Series International Legal Considerations University of Southern Mississippi Gulf Coast Campus March 23, 2010 Edward T. Hayes, Esq. Partner, Leake & Andersson, L.L.P. 1100 Poydras Street, Suite 1700 New Orleans, LA 70163 ehayes@leakeandersson.com Tel: (504) 585-7500

International Legal Considerations 3. Primary Legal Issues/Areas International Trade & Investment Agreements 2. Rules Governing International Cross-Border Transactions (Contracts) 3. Dispute Settlement Leake & Andersson, L.L.P.

International Legal Considerations International Trade & Investment Agreements Macro level view of international law impacting international transactions Always start international business project with an understanding of how particular international agreements help your business International agreements require non-discriminatory treatment of foreign goods and investments—your goods are guaranteed non-discriminatory treatment! How? Leake & Andersson, L.L.P.

International Legal Considerations Importing country must treat your goods no differently than the same domestic product or the same product being imported from another country Must apply similar taxation, regulatory requirements, etc Problems arise when foreign governments protect domestic goods Examples: Free Trade Agreements Provide widespread trade liberalization by eliminating tariffs and significantly reducing other non-tariff barriers Your goods enter free trade country markets duty free Leake & Andersson, L.L.P.

International Legal Considerations NAFTA (US, Mexico and Canada); CAFTA (U.S., Costa Rica, El Salvador, Guatemala, Nicaragua, Honduras, and Dominican Republic) Always consider marketing your products to FTA countries US-Australia, Chile, Bahrain, Israel, Jordan, Malaysia, Singapore Pending US Free Trade Agreements with Panama, Colombia and South Korea Free Trade Agreements provide “free” benefits to your goods so pay attention and consult with counsel to make sure you take advantage of these benefits Leake & Andersson, L.L.P.

International Legal Considerations 2. Rules Governing International Cross Border Transactions Micro level view of domestic laws that apply to your business transactions Absolutely imperative that you have a valid and enforceable international contract not just to secure payment, but to avoid potential liability 3 primary areas of concern for international contracts: A. Mandatory Laws of Foreign Jurisdiction These are systems of law that apply as of right in the jurisdiction and your transaction needs to comply with them or null and void Know the applicable legal system because some preclude freedom of contract in certain important areas and fields Examples: Common law, Civil law or Sharia law systems Examples: Mandatory lifetime distributor contracts, no mutual indemnity allowed, no interest allowed on finance Leake & Andersson, L.L.P.

International Legal Considerations B. Contractual Choice of Law Provisions You can contractually decide which law applies to your transaction Usually seller/exporter has bargaining power to insist on the law of its jurisdiction You don’t want to have to litigate disputes under foreign law Make sure the foreign country’s legal system recognizes party autonomy to select choice of law If your trading partner’s country is a member of the Convention for the International Sales of Goods (CISG), the terms of that treaty apply to your contract unless you exclude CISG imposes some significant warranty obligations that most sellers/exporters do not like so most parties always exclude CISG Leake & Andersson, L.L.P.

International Legal Considerations C. Specific Contractual Provisions ALWAYS require defense and indemnity obligations for third party claims arising out of other party’s negligence or fault Provides you contractual legal protection if your good or product causes damage through misuse or negligence of others that you are not responsible for Always require that they name you as an additional insured under their liability policies to cover their defense and indemnity obligations in case of bankruptcy Force Majeure clauses account for natural disasters and other business interruptions Leake & Andersson, L.L.P.

International Legal Considerations Dispute Settlement Proactively prepare for potential disputes Add contractual arbitration provision in contract Maintain clear choice of venue/jurisdiction Consider liquidated damages provisions for failure to pay or perform Leake & Andersson, L.L.P.

International Legal Considerations CONCLUSION International trade and business is a key component to the US economy and President Obama has pledged to double exports in 5 years Minimal amount of preparation can ensure smooth export process and decrease risk and increase benefits Leake & Andersson, L.L.P.