BUS706 International Business Law and Ethics Assignment

Case 2

Answers:

1. The United States District Court, Eastern District of Pennsylvania gave the verdict to the case on 29, August 2000. 

2. This is the United States federal court, which is a International forum 

3. The petitioner belongs from the Country United States of America and the defendant or the opponent based from the Country of Italy. 

4. The exclusive distribution agreement defined as an agreement, entered between two or more parties for sale of goods and services. Herein the agreement entered between the appellant and the defendant. Exclusive distribution is where the seller who supplies goods herein referred to as “Farnese FiniS.r.l” grants the distributor “Viva Vino Import Corporation” exclusivity for such sale of goods and services as per the contract entered within a specific group of customers. The distributor in return agrees to sell the goods and services of the seller (Ajibo, 2013) 

5. As per the above case, the petitioner wanted the Pennsylvania law or the United Nations Convention on Contracts for the International Sale of Goods (CISG), which shall apply to all the issues that the petitioner claims. 

6. The parties to the case are the signatories of the CISG Treaty.CISG governs the contract where there is agreement between two or more parties for sale of goods and services whose has business and is operating from two different Countries unless otherwise mentioned in the contract. The two foreign nations in the agreement are USA and Italy. The agreement was entered betweenViva Vino Import Corporation an U.S. corporation and Farnese FiniS.r.l an Italian company. The agreement entered where the distributor was to supply wines in the United States. There was a disagreement before the performance of the contract and US company filed a suit against the Italian Company for promissory estoppels, breach of contract and tortuous the interference with such business relations. On reply the defendant also counter claimed for the breach of contract (Chirelstein 2013) 

7. CISG does not apply to tort claims therefore the rules of CISG does not apply to the above case. In this case, the petitioner lodged a complaint against the Italian Company who sells wine to the petitioner; there was a disagreement between them, which set forth for claims for torts. The petitioner claim for tort, is not applicable to business relations. CISG is not applicable for exclusive distributorship agreement wherein the agreement between the parties did not provide for specific quantity of goods sold for a particular stated price value. The Court said that the CISG does not govern the non-contractual claims (Islam 2013) 

8. The petitioner wanted the (CISG) or Pennsylvania law to apply to all issues or claims set out by the petitioner whereas the defendant contended that the Italian law should apply to their claims. 

9. Pennsylvania Choice of law clause allows the parties to bind themselves with the available laws. To Both the parties should review the choice of law clause together with the choice of forum clause, as Pennsylvania courts look to both provisions to determine whether to adjudicate the claim and what law to apply. Under Pennsylvania's choice of law analysis, the Court must first determine whether a false or true conflict exists between the competing forum. A false conflict exists where "only one jurisdiction's governmental interests would be impaired by the application of the other jurisdiction's law" or if there are no difference between the laws of the jurisdictions. If there is no false conflict, deemed true conflict and Courts must determine which jurisdiction has the greater interest in the application of its law (Llewellyn 2016) 

10. The United States District Court, Eastern District of Pennsylvania Court, which decided the case, is of the view that, Pennsylvania has higher interest in the above case, therefore judgment or order refers to Pennsylvanian law and not of the United States’ law (Schroeder 2013) 

11. Pennsylvania's choice of law analysis gives the court whether a false or true conflict exists between the competing parties in the forums. If there exist a false conflict where "only one jurisdiction's governmental interests would be impaired by the application of the other jurisdiction's law" or if the laws of the jurisdictions are not different then there is no false conflict. Deemed a true conflict and Courts must determine which jurisdiction has the greater interest in the application of its law. In the above, case which presents a true conflict with respect to both the contract and tort claims at issue. The Court came to a conclusion that Pennsylvania has the greater interest thus to apply the law accordingly (Roosevelt 2012) 

12. For determination of the jurisdiction which has greater interest in the dispute,

1. The place of contracting of the agreement is Pennsylvania
2. The appellant belongs from USA and the defendant belongs from Italy. The negotiation of contract can either inPennsylvania or in Italy.
3. Place of performance is Pennsylvania. The defendant argued that the place of performance of the contract was in Italy since the wines shipped at FOB therefore the defendant would not be responsible after the wines delivered for shipping. The whole thing affects liability issues but it does not alter the performance of the contract. Thus, we can conclude that the performance of the agreement entered in Pennsylvania (Saunders and Rymsza2015)
4. The location from where the subject matter of the contract entered is Pennsylvania
5. The appellant company incorporated in thePennsylvania Corporation and its permanent place of business, residency and nationality of the business of Viva Vino Import Corporation is at United States whereas the defendant company incorporated in Italy. Farnese ViniS.r.l is an Italian based company having its permanent place of business, residency and nationality is at Italy

The Civil Court chooses the law in order to determine the validity and enforceability of the contract in order to set out rights and obligations. Choice of law is different and chosen according to the jurisdiction, nationality, domicile, residence, contracting and negotiating place and the contract may expressly select different law and jurisdiction, or a different jurisdiction determined by statute or international convention. In order to select, the law we need to know the jurisdiction, which affects the governing law, forum, practice and procedural rules and enforcement. In tort law, the rule is that the place of the tort is the governing law (Schaffer 2012) 

13. This foreign law is useful to get some information but one should not be dependent on the foreign law. The Court concludes based on the law of the own Country and not on International law. Tort law applies to a jurisdiction where the action has occurred. However, in case of disputes arising where parties belong from different Countries, choice of law and jurisdiction are important for tort, when this tort rule may be replaced by statute, or governing law where the tortuous act is governed by statute or international convention(Viscasillas,2011)   

References to case 1:

Ajibo, K., 2013. Facing the truth: An appraisal of the potential contributions, paradoxes and challenges of implementing the United Nations conventions on Contracts for the International Sale of Goods (CISG) in Nigeria. Journal of Sustainable Development Law and Policy (The), 2(1), pp.175-189.

Chirelstein, M., 2013. Chirelstein's Concepts and Case Analysis in the Law of Contracts, 7th (Concepts and Insights Series). West Academic.

Islam, S., 2013. The Negative Effects of Ill-Advised Legislation: The Curious Case of the Evolution of Anti-Shara Law Legislation into Anti-Foreign Law Legislation and the Impact on the CISG. Howard LJ

Llewellyn, K.N., 2016. The common law tradition: Deciding appeals (Vol. 16). Quid Pro Books.

Schroeter, u.g., 2013. Special topics under the cisg: defining the borders of uniform international contract law: the cisg and remedies for innocent, negligent, or fraudulent misrepresentation. Vill. L. Rev., 58, pp.553-869..

Roosevelt, K., 2012. Choice of Law in Federal Courts: From Erie and Klaxon to CAFA and Shady Grove.

Saunders, K.M. and Rymsza, L., 2015. Contract Formation and Performance Under the UCC and CISG: A Comparative Case Study. Journal of Legal Studies Education, 32(1), pp.1-46.

Schaffer, J.K., 2012. The boundaries of transnational democracy: alternatives to the all-affected principle. Review of International Studies, 38(2), pp.321-342.

Viscasillas, P.P., 2013. Applicable Law, the CISG, and the Future Convention on International Commercial Contracts. Vill. L. Rev., 58, p.733   

Case 2 

1. Council on Hemispheric Affairs is a non-profit independent research organization established to promote the common interest of the hemisphere (Western, the American based countries), raise regional cooperation,

The COHA works with the main objective of promoting better inter-American ties. Concentrating more on formulating, better U.S policies towards the Latin countries. 

2. The COHA (Council on Hemispheric Affairs) has a principle of promoting common interest and cooperation between USA and the Latin American countries. The Petrobras scandal came down as a problem not only in the business sphere but also on the common interest as well, thus prompting the COHA to carry out a research work and publish an article directed towards public awareness. The organization also in a way highlighted to the U.S regarding trade policies that are require formulation with care in relation to the Latin country. The other factor being that the company listed in the New York Stock Exchange, thus it will inevitably affect American investors, in a way for the protection of the investors in America and Brazil, the report will act I a proper manner (Bishop,Clegg&Hoefte 2017). 

3. On basic grounds, three chief entities playing the roles were, 1: politicians, 2: Businesspersons, 3: Petrobras employees. Businesspersons such as Marcelo Odebrecht (CEO Odebrecht company), Otavio Azevedo (CEO, Andrade Gutierrez), Jose Aldemario Pinheiro Filho (CEO, OAS group.), Dalton Avancini (CEO, Camargo Correa), Ricardo Pessoa (CEO, UTC), Gerson Almada (CEO, Engevix) in nexus with the ruling, opposition party members and Petrobras employees. Played a vital part in the entire scandal that financially created doubts in the minds if the people of Brazil. 

4. The government owns a majority of 54% of Petrobras, making it a semi public, government organization whereby majority votes lie in the hands of the government. This is the major legal connection the Brazilian government has with the company. Contributing an overall of 13% of the GDP, the company is one of the major business houses in Brazil (Schwartsmann 2016) (Romero 2015).

5. The contract will be under the domain of Private international laws because public international laws generally concentrate on state-to-state relations regarding treaties, legal issues and criminal cases. A contract between the two companies does not deal with any such issues related to public international laws, thus it will automatically be within the circumference of the private law domain. 

6. The legal issues in question here include two of the major problems that affected a majority of not only investors but also the economy on a whole. The company heavily linked with embezzlement and bribery in the management structure of the company, were the two centerpieces of the puzzle in the company. Several construction companies were involved in a scandal where, the companies ended up creating a cartel, thereby preventing competitor’s entry in acquiring the construction contracts, generally overpriced, causing a major problem to Petrograd’s bottom line. The investors adversely affected because of an immediate drop in share prices, putting a burden on their financial prospects. The Petrobras fraud involved many criminals, who were responsible in laundering money, chief among them being Alberto Youssef, who confessed to the crime, dragging many individuals in the matter. Ethically the politicians and the company people are questionable, whereby they took a lot of bribe to pass projects, which lies against the ethics of an individual who discloses or acts in partiality against company interest. Brazil lies at the heart of income inequality, where the acting of politicians in such an unethical manner jeopardizes the economic conditions of the individuals of that country. The fraud heavily based upon these legal and ethical issues (da Silveira 2015). 

7. If a company holds the majority of a market, then it solely controls the production of a particular product on a large scale, giving way to corruption that slowly creeps into the system, thereby causing unprecedented problems. The Petrobras case is an example, where market dominance led to illegal favoritism as well as the evils of bribery to affect the allocation of lucrative contracts, which directly affected company finances. The free competition market on the other hand distributes the production to different business houses, reducing the corruptive practices, as one wrong move could prove fetal for the future of the organization.  Scandals have checking chances if there remains competition but anything totalitarian can prove fatal. 

8. The Petrobras scandal came down heavily on the economy where a common lot of investors affected heavily by the scandal, losing a lot of money because of falling stock prices. Petrobras contributed to 10 % of the nation’s economy, the corruption caused a drop in the GDP by 15%, thereby affecting livelihood and income. The fraud remains a principle reason of increasing unemployment in the construction sector, where the defaulting companies affected the others to that extent that getting involved in the constructions became difficult for the trust of the people. The direct result of this scandal came in the form of economic decline, political unrest, uncertainty and drastic cuts in public expenditure that directly affected the lives of the people (LemaSeverich 2016). 

9. The corruption entered the political sphere, when high-level public officials got heavily involved in getting recruited in top posts of the company, normally as directors which became easier for them to influence government contracts in return of bribery that slowly built up to fuel the corruption. The officials were thus a direct link between the illegal cartel and the corruption, who acted quite helpful in the entire process (Terra 2016). 

10. The offshore companies were generally involved with laundering money, especially of the people who were directly involved with the scandal including the construction companies and the high officials, involved in taking heavy bribery from the companies and the political sphere.

Offshore companies classified into two categories, where one part says that, they are companies registered in an offshore financial center that normally acts as a tax heaven or it may be a company involved in off shoring manufacturing or business services. In this present scenario that first one applies, whereby the corrupt people involved, laundered their money to offshore companies, freeing themselves of the taxing process entirely. 

11. Petrobras though being a Brazilian company listed in the New York, Madrid and Buenos Aries stock exchange gives the company a more global touch. The involvement of its branches in many countries in oil extraction has many investors involved in the finance of the company, thus a scandal will have a far-reaching approach (Schwartsmann 2016)

12. The executive are often comprised of politicians who are monetarily and power driven, thus putting them in the ground of possibilities of using their positions wrongly in executing their own personal agenda. The Judiciary on the other hand is justice driven people who should free from the purview of the corrupt executive. Increasing indulgence will in adversely affect the most important branch of any democracy, thus keeping the judiciary free from interference should be the motive of any democratic system (Fausto 2015). 

13. Bribery in itself is an evil that effects the reputation of not only a concern but also the country from which they hail. A future trust issues may affect the further prospect of business in the other country where the bribery scandal will unfold. In this case, Petrobras, though still being a major oil giant in the Brazilian market but it has lost credibility in the areas of operation in other different countries where its branches spread. It is actually the public image of a country that affected, whereby harsh steps are taken by the company’s parent country to ensure such an occurrence neglected in the future.  

References for case 2: 

Bishop, M.L., Clegg, P. and Hoefte, R., 2017. Hemispheric reconfigurations in Northern Amazonia: the ‘Three Guianas’ amid regional change and Brazilian hegemony. Third World Quarterly, 38(2), pp.356-378.

da Silveira, A.D.M., 2015. Ten Adverse Outcomes When Managers Focus onCreating Shareholder Value: A Review. Browser Download This Paper.

Fausto, S., 2015. After Tight Elections, Brazil Faces Hard Choices. Issue Brief, (03.30. 15).

LemaSeverich, N., 2016. The Fall of Petrobras and its Impact on the Brazilian Economy.

Melo, M.A., 2016. Crisis and integrity in Brazil. Journal of Democracy, 27(2), pp.50-65.

Romero, S., 2015. Brazil’s oil scandal: Public malaise, institutional resilience.

Schwartsmann, G.B., 2016. Petrobras’ challenges in the development of the PreSalt reserves: is it the time for Brazil to adopt the International Energy Charter?. Revista de DireitoEconômico e Socioambiental, 7(1), pp.164-178.

Terra, C., 2016. Brazil: self-inflicted pain. Browser Download This Paper.

Vile, M.J.C., 2012. Constitutionalism and the Separation of Powers. Liberty Fund.