The following abstracts summarize articles appearing in Volume 27:
"The Hague Convention on Choice of Court Agreements: The United States Joins the Judgment Enforcement Band"
By Matthew H. Adler & Michele Crimaldi Zarychta
In 2005, the United States signed the Hague Convention on Choice of Court Agreements. If ratified, it would be the United States ' first international agreement on judicial enforcement. The treaty provides that (a) where two commercial parties elect to resolve disputes between them in a particular forum, and (b) a judgment issues from that forum, then (c) all member states must enforce the judgment. Although the treaty fell short of original U.S. plans, the treaty fulfills the goal of creating a treaty that would allow successful U.S. litigants to collect money by enforcing U.S. judgments against their opponents' foreign assets. This article discusses the history of U.S. efforts to make it easier for U.S. litigants to enforce judgments, discusses the negotiations and drafting history of the Convention, analyzes the treaty provisions, and addresses the question of whether the treaty is the first step on the path to a broader enforcement agreement.
"Defragmenting World Trade"
By Sungjoon Cho
Trade barriers resulting from a recent proliferation of bilateral, regional trading blocs clog multilateralism, the global trading community's dominant system. Stemming from the WTO's 1995 creation, these blocs disrupt the GATT-induced equilibrium between regionalism and globalism maintained from 1947 to 1994. Regional trading blocs prevent small economies from participating in global commerce by erecting barriers against non-members. While there are benefits to regional trade agreements, regionalism can result in stress to global trade, institutionalization of protectionism, potential for regulatory failure or gridlock, increased transaction costs, and possible negative developmental consequences for poor countries. This article adds to the effort to raise the warning level about the damaging effects of regionalist fragmentation, and provides a more comprehensive and legal-minded comparison of regionalism and multilateralism than currently exists. This article also posits that the only solution for the WTO is to restore equilibrium by multilateralizing the current configuration of regional trade agreements using two different strategies: institutional reforms or judicial intervention, the result being a "federalistic" reconfiguration of regional trading blocs.
"The New Chapter 15 of the Bankruptcy Code: A Step toward Erosion of National Sovereignty"
By John J. Chung
Chapter 15 of the Bankruptcy Code as reformed by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 moves the United States in a universalist direction regarding transnational bankruptcies. Universalism, succinctly, is about one country applying its domestic bankruptcy law to a debtor's global creditors and assets. The article contends that the debate surrounding the reforms to Chapter 15 is a variation of the national debate regarding the growing trend of internationalizing American law, through citations of foreign law in Supreme Court opinions.
This article contends that the universalist approach is unproven and questions whether the "trend" of internationalism should be the basis for law making without understanding the effect on those other than the transnational elite. The article contends that the claimed benefits of universalism (e.g. economic gains and efficiencies) are largely hypothetical, abstract and unproven but the harms of universalism (e.g. weakening national sovereignty and harm to unsecured creditors, tort creditors and employees) are certain. Lastly, the article argues that the safety valve provisions in Chapter 15 ought to be construed broadly in order to protection national interests and the interests of small participants in transnational bankruptcies.
"Islamic Principles Governing International Trade Financing Instruments"
By Jason Chuah
International financial instruments increasingly have become governed by what are expressed to be Islamic principles. The question of what law or legal principles should govern such instruments must necessarily be determined. This article uses the Shamil Bank of Bahrain EC v. Beximco Pharmaceuticals Ltd. to examine how compliance with Islamic principles might best be achieved in a financing agreement governed by English law. The author views that the incorporation might best be achieved by proper contract construction and further examines the English Court of Appeal's approach to the issue of incorporation of Islamic principles into the contract. The Shamil discussion also gives rise to the question of whether parties could choose Islamic law as the applicable law of the contract and ultimately seeks to explore the legal implications under the Rome Convention for a choice of law where the contract in question has a connection with a country where Islamic principles are applied.
"Falling Short of the Mark: The United States' Response to the European Union's Data Privacy Directive"
By Morey Elizabeth Barnes
Data security and the risk for identity theft are causes of growing concern for Americans. During the past four decades, the legislative attempts to address personal data privacy and security in the United States have followed a relatively consistent approach to the issue, based on sector-specific legislation and self-regulation by U.S. industries. When the European Union introduced sweeping privacy legislation, however, it became clear that the U.S. approach might create serious obstacles for U.S. companies engaged in international transactions.
This comment addresses the legislative proposals and discusses the potential conflict between the U.S. and European approaches. Specifically, it explores how U.S.-E.U. cooperation on the Safe Harbor framework has impacted the U.S. approach to privacy regulation, and outlines proposed changes to the current U.S. regulatory regime. After explaining why the proposed changes have fail to address the problems that prompted renewed attention to the issue of data privacy and security, this comment explores the alternatives to new legislation, which might protect both the consumers and the economic interests of U.S. companies while preserving the traditional U.S. regulatory scheme.
"Brazil's Recent Threat on Abbott's Patent: Resolution or Retaliation?"
By Jennifer Bjornberg
WTO's Agreement on Trade Related Aspects of Intellectual Property (TRIPS Agreement) prevents the unauthorized use, production, sale, import or distribution of patented product for 20 years, with very specific and limited exceptions. The agreement practically ended the production and distribution of low-priced generic drugs used by developing countries. Facing the higher prices required to pay for its government-funded program to treat the AIDS epidemic, Brazil threatened to infringe Abbott's patent of anti-AIDS drug Kaletra by producing a generic version itself. Eventually, the dispute was resolved after Abbott agreed to lower the price of Kaletra, and Brazil agreed not to produce the generic version. The controversy frames the problem of how to balance the property interests of patent holders with the needs of developing countries in terms of economics and public health. This comment argues that this resolution failed to establish an important precedent of gaining a compulsory license or defining AIDS epidemic as a "national emergency" under Article 31(b) Exception of TRIPS Agreement. Pharmaceutical companies will likely to fight applications of such exception until a precedent of compulsory licensing is established.
"Taxing the International Athlete: Working Toward Free Trade in the Americas Through a Multilateral Tax Treaty"
By Jeffrey Dunlop
There is currently no tax treaty in place with any South American country. Similarly, recent attempts at discussion and negotiations toward opening free trade in the Americas seem to have hit a standstill. This article focuses on the relationship between taxation issues facing the international athletes in the United States and developing free trade between North and South America. Although no tax treaty is currently in place with any South American country, high profile athletes have raised the level of attention given to the issue. This article argues that the United States should capitalize on this opportunity by pursuing a multilateral tax treaty in the Americas on the singular issue of taxing the international athletes; such treaty, according to the author, will open doors to further economic integration resulting in a positive effect on free trade discussions by removing barriers to cross-border transaction and investment.
"The Equivalence Approach to Securities Regulation"
By Tzung-bor Wei
The trend toward globalization and integration of the world's financial markets presents new challenges to securities regulators. Regulatory response has typically taken either of two forms: "harmonization" or "regulatory competition." Each has advantages and costs in striving to promote market efficiency while protecting investors.
This article examines the recent emergence of a third approach, wherein one regulatory scheme will exempt a foreign issuer if the foreign issuer’s home regulatory scheme is substantially similar in design, practice, or economic result. This "equivalence" approach is analyzed through contemporary examples, including: U.S. and E.U. accounting rules convergence; E.U. regulation of financial conglomerates; U.S. accounting oversight; and U.S.-Canada cross-border disclosure. These examples lead to the conclusion that harmonization and equivalence, taken together, may prove a viable regulatory response to global financial market integration.
"Class Actions and Group Litigation in Switzerland"
By Samuel P. Baumgartner
Participants in transnational class action litigation face questions concerning procedure, institutions, and jurisprudential values. The answers have far-reaching consequences. As such, comparative studies of group litigation law and procedure provide valuable information to international market participants.
This article discusses the procedures and devices--including those in use, those proposed, and those rejected--governing group litigation in Switzerland. Accounting for historical and social imperatives and implementing new research concerning usage rates, the article evaluates the Swiss system's ability to meet its goal of enforcing individual rights.
"Center of Main Interests, International Insolvency Case Venue, and Equality of Arms: The Eurofood Decision of the European Court of Justice"
By The Honorable Samuel L. Bufford
In the Eurofood insolvency case, the European Court of Justice ("E.C.J.") gave the Irish court priority under E.U. law over a similar insolvency case commenced shortly thereafter in Italy. The courts in each country, based on different criteria, argued that Eurofood’s center of main interests ("CoMI") was located in its own country. The decision is enormously important because it holds that the CoMI must be determined from the viewpoint of third party creditors and other parties in interest. Also important in this decision is the E.C.J.’s statement that the "equality of arms" principle is particularly important with respect to the right of creditors to participate in insolvency proceedings. This Article examines the Eurofood case and evaluates its impact on the decisions of the Irish and the Italian courts to open main insolvency cases for Eurofood. This Article also addresses the broader international insolvency law issues that the E.C.J. decision left open.
"A Comparison Between U.S. and E.U. Antitrust Treatment of Tying Claims Against Microsoft: When Should the Bundling of Computer Software Be Permitted?"
By James F. Ponsoldt & Christopher D. David
Microsoft's practice of bundling its Windows OS and Windows Media Player has received different treatments from U.S. Courts and E.C. In deciding Microsoft III, the D.C. Circuit refused to apply the traditional per se rule and adopt the more flexible rule of reason test despite the fact that tying arrangements historically was analyzed under the former by the Supreme Court. Alternatively, the E.C. declared the software bundling practice of Microsoft to be illegal by using a test that resembles the traditional per se test. This article criticizes both the U.S. and the E.C.'s approach to software bundling. Specifically, the E.C.'s approach is characterized as too rigid and formalistic. It is further stated that the E.C.'s approach retards innovation by prohibiting revolutionary bundles and ignores future changes in the market. The U.S.'s rule of reason is described as amorphous and unpredictable. Finally, the author endorses a method propounded in Caldera v. Microsoft by the Supreme Court for it anticipates consumer demand while providing guidance and predictability.
"Code or Contract: Whether Wal-Mart’s Code of Conduct Creates a Contractual Obligation Between Wal-Mart and the Employees of its Foreign Suppliers"
By Katherine E. Kenny
In the face of ever growing globalism, MNCs like Wall-Mart draft internal codes of conduct to self-regulate itself for public relations purposes and labor rights. This article discusses the recent lawsuit filed by International Labor Rights Fund against Wall-Mart for violation of its own Code of Conduct. After summarizing the U.S. court's treatment of similar isssues, the article argues that Wall-Mart's Code of Conduct was not a binding contract because the Code of Conduct was not a promise clear enough to constitute an offer. Finally, the article states that legislation rather than litigation is a better method of enforcing labor rights.
"Western Unionizing the Hawala?: The Privatization of Hawalas and Lender Liability"
By Smriti S. Nakhasi
Hawala, a system of banking originating and predominantly used in South Asia and the Middle East, consists of transactions based entirely on trust and serves as a means for both legal and illegal transactions. Its unregulated nature has created gaps in available economic information and has become a viable alternative for money launderers, resulting in proposed approaches to curtail the illegal uses of this system. In light of these conflicts with the modern banking structure and law enforcement, the most prominently proposed solution is the "western unionizing" of the hawala system, which still falls short of consumer expectations and poses a risk to corporate entities. A viable solution must consider consumer incentives and the mechanisms currently in place to regulate the hawala system.
"Hedge Fund Regulation: What the FSA Is Doing Right and Why the SEC Should Follow the FSA’s Lead"
By Lartease Tiffith
The burgeoning field of hedge funds has led to a need for greater regulation and security. Limited regulation of hedge funds was initially important to allow the funds to flourish. But although hedge fund managers continue to insist upon self-regulation, the surge of fraudulent fund managers and market manipulation indicates that self-regulation has been inneffective at maintaining market efficiency. The stricter regulations promulgated by the SEC and FSA are a step in the right direction. However, the SEC has limited its regulation to the problem of investor fraud. This narrow view of regulation is simply insufficient at this stage of development in the hedge fund market. The SEC should follow the FSA's lead and focus its attention on signficant concerns such as market risk, liquidity risk, the lack of capital requirements, and excessive economic leverge.
SYMPOSIUM
International Energy Law
By David Van Zandt
"The Legal Hurdles to Developing Wind Power as an Alternative Energy Source in the United States: Creative and Comparative Solutions"
By Adam M. Dinnell & Adam J. Russ
The United States' dependency on oil and petroleum threaten's the nation's future development. Investing in new energy sources, such as wind power, is more imporant than ever. Ironically, however, the expansion of wind power has been frequently blocked by environmentally friendly legislation. By relying on international examples of effective environmental policy, Congress can pass legislation that lays an effective framework for the growth of wind power in tandem with federal objectives. A simpler statutory scheme would also effectively expand the wind sector's domestic market by attracting new investors.
"Arbitration of International Oil, Gas, and Energy Disputes in Latin America"
By Alexia Brunet & Juan Agustin Lentini
Latin America, which is a major source of crude oil and petroleum products for the U.S., has traditionally limited foreign investment in the energy sector by adhering to resource nationalism. Even for Latin American countries which welcome foreign investment, legal policies such as rules governing international arbitration was been an obstacle in investment. The "Calvo Doctrine" was traditionally used to reject ceding jurisdictional control to arbitration tribunals. Acknowledging the importance of foreign investment as a source of economic development, countries have enhanced the protection of foreign investment in the energy sector, but international arbitration in Latin America still contains many problems. This article discusses the historical development of international arbitration in Latin America, the difficulties involved in developing international arbitration in Latin America, and the future of international arbitration in relation to energy security.
"From "North-South Divide" to "Private-Public Debate": Revival of the Calvo Doctrine and the Changing Landscape in International Investment Law"
By Wenhua Shan
The Calvo Doctrine which emphasizes non-intervention and equality of foreigners with nationals has been resurfacing in Latin America and other parts of the world. While in the past, international investment law-making process has been focused on the developing states pushing for a neo-liberalist agenda and developing states resisting such an agenda, the recent debate has shifted to private interests of foreign investors and the public interests of host states. This article argues that the revival of the Calvo Doctrine and the shift of tension in international investment law indicate progress. The article also discusses major factors, including the increased awareness of the general public of the need to regulate foreign investment, that have contributed to this shift of tension on international investment law-making.
"Beyond Enron: Regulation in Energy Derivatives Trading"
By Alexia Brunet & Meredith Shafe
The collapse of Enron, coupled with the crisis in the California wholesale power markets, fundamentally altered the U.S. energy trading industry. Those experiences illuminated critical risks to the viability of the development of competitive wholesale and retail power markets in the United States, including regulatory uncertainty caused by inconsistent legal standards governining energy trading practices. Resulting distrust and loss of confidence in the energy trading industry continues to influence industry issues and regulatory debates. Nonetheless, the CFMA's regulatory scheme has succeeded in facilitating growth and competition across the energy derivatives industry. The result: an energy derivatives market that has become stronger and more efficient than ever.
"Addicted to the Pump"
By Shaneka Reese
The need for innovation in the American auto industry is greater than ever as major domestic auto manufacturers strive to keep up with the success of foreign manufacturers. While many domestic automakers oppose the Kyoto Protocal as a hindrance to development, this article explores how the ratification of the Kyoto Protocal may actually help U.S. automakers stay competitive. With the market moving in the direction of more fuel efficient vehicles, lobbying for the Kyoto Protocal will allow the auto industry to increase its presence in the hybrid and fuel-efficient automobile market and potentially bridge the expanding gap between foreign and domestic manufacturers.
"Methanex v. United States: The Realignment of NAFTA Chapter 11 with Environmental Regulation"
By Kara Dougherty
The 1999 case of Methanex v. United States highlights two unintended structural shifts in the jurisprudence of Chapter 11 of NAFTA. Firstly, economic interests of private parties have been elevated to the same status as public policy concerns. Secondly, foreign investors have greater rights under NAFTA than their domestic counterparts. This article argues, that in order to reverse these trends, the NAFTA FTC should adapt the Methanex tribunals "relating to" and "like standards" test. Additionally, it argues that the parties should amend NAFTA to include an equivalent to summary judgment and a requirement that claimants must surrender their rights in domestic courts when filing a Chapter 11 Claim.