Laws and International Trade

Intrenational Business Governing Language Governing Law and Forum Selection Arbitration Boilerplate Language in International Contracts USA-Brazil Trade: Rules of Trade Other Important Agreement and Laws Governing U.S. and Brazilian Trade Comparison of Arbitration in South Carolina and Brazil Conflicts arising out of contracts between international trading parties are on the increase with the rise and increase in international business and international trade.

The courts that would hear and decide matters related to business conflicts between trading partners would look to the express terms of the contract as well as the applicable law within which the contracts have been formed and agreed upon by the two parties belonging to two different countries when one party considers the other party's actions to be a breach of the contract.

The legal contract and the contents of the contract would be the basis on which courts would decide in arbitration cases and in cases of business dispute. However given the context of international trade and the proliferation of bilateral as well as universal international trade and commerce laws and regulations, the arbitrators and the courts deciding on business conflicts would also consider and interpret international contracts and international trade laws along with bilateral trade agreements between the two countries where the companies originate (Boundy).

For any contract the actual meaning and relevance lies in the fine print or what is written in the contract. Therefore it can be apt to say that the "the devil is in the details" when it comes to contracts and the devil is in the boilerplate language. Such boilerplate language in a contract essentially is standard language that is used universally and is generally found at the end of every contract.

Clauses relating to governing language, governing law, forum and dispute resolution and arbitration limitations would be found in the form of clauses. However in the presence of international laws and bilateral trade agreements, using standard boilerplate language can have undesired consequences. This paper would deal with the contract formation, arbitration and conflict resolution for the company based in South Carolina in the U.S. and a company based in Brazil.

Governing Language One of the important things for formation of contracts with a Brazilian company is to decide on the language of the contract. English is the preferred language when contracts are formulated between a Brazilian company and an American company to be negotiated and not in Portuguese, which is Brazil's national language. However in cases where the power of arbitration lies with a Brazilian court or arbitrator, it would be necessary to translate the contract into Portuguese.

The English version will still need to be translated into Portuguese by a sworn translator even if the contract states that the English version of the contract will prevail. In cases where the Brazilian courts arbitrate matters, the officially translated English version of the contract would be used to resolve issues (Bahmani-Oskooee, Harvey and Hegerty).

Governing Law and Forum Selection For a company based in South Carolina, it is only obvious that the company would try to select, impress and include governing law and forum selection clauses relevant to South Carolina. This is a common practice in international trade that the parties to include governing law and forum selection clauses that are more favorable to the party that drafts the contract.

Therefore in this case at hand it is important that the while drafting the contract, the South Carolina-based company would include the clause that would state that the governing law will be the law of the State of South Carolina and the forum for disputes will be a particular city within the legal jurisdiction of the state of South Carolina.

While both of the parties are free to choose the governing law and forum in international contracts, parties would tend to choose a particular forum or governing law which would be more favorable to them. This is a decision that the parties would have to decide for themselves no matter what the forum chosen. Therefore in this case the South Carolina-based company would choose some forum and arbitrator regulations within the U.S. and if favorable, within the state of South Carolina.

Arbitration To create an alternative method of dispute resolution, many a times, the contracting parties tend to include certain specific arbitration clauses in the contract. It is said that arbitrations are handled faster and at a cheaper rate than court cases and battles and those in the U.S., particularly in the case of international contracts. Therefore the South Carolina-based company can opt to select a Brazilian court area or arbitrator body to be the arbitrator in case of business conflicts (Berger).

There are some important considerations about arbitration that need to be kept in mind while formulating a contract. These considerations include answers to questions like how many arbitrators will there be, who will be the arbitrator(s), who will pay for the arbitration, what language will the arbitration be conducted, will the arbitration award be final, where will the arbitration be held among others.

Boilerplate Language in International Contracts While the Brazilian and American contract laws have a lot of similarities and about the manner they are applied, however important details in the contract's boilerplate language should not be overlooked under the influence of the apparent similarities (Berger). USA-Brazil Trade: Rules of Trade Trade laws and regulations are essential to create a level playing field for all parties in a global marketplace where there is presence of unequal partners.

While the primary laws and regulations are formulated by the World Trade Organization (WTO) and these laws primarily define and determine the international trade rules. These rules were negotiated and ratified with the aim to promote and expand trade among the 153 member nations of the WTO. The rules were so formed that every member of the organization is able to achieve economic growth and prosperity.

The first law or rule that would govern any contract or instances of arbitration or litigation would be governed by the rules and regulations that are formed by the world trade organization as both the United States and Brazil are members of the international trade body. The South Carolina-based company as well as a Brazilian company would have to agree to and adhere to the General Agreement on Tariffs and Trade (GATT) for goods as formulated by the WTO.

The other rules and regulations and conventions that would govern the contract between the two companies include the General Agreement in Trade in Services (GATS) and the Trade Related Aspects of Intellectual Property Rights (TRIPS). There are also other agreements and conventions that govern the contract and the litigation mitigation clauses between the two companies (Ahmadi and Ahmadi). As an overall watchdog of the international trade disputes, the WTO Secretariat in Geneva, Switzerland, serves as watchdog.

This body administers and monitors the application of agreed rules, reviews trade policies and helps in settlement of disputes between member countries. In this context the U.S. based company would be governed by the agreements of the WTO that the U.S. had agreed to follow and adhere to. For example, in June 2008, Brazil claimed that U.S. agricultural subsidies on upland cotton were illegal under the WTO Agreement on Agriculture. The WTO intervened and granted Brazil $147.4 million in sanctions for Fiscal Year 2006.

The WTO also arbitrated that this amount would determine the compensation to be paid to Brazil in the subsequent years (Ridley and Devadoss). There are many other conventions and regulations and bilateral agreements that govern trade with the Brazilian company as well as the arbitration and conflict settlement. One such regulation or trade guidance is the UCC - Sales departs from the regular American statutes in as much it is a very comprehensive code.

Contract formation, parties' obligations, warranties, methods of payment, title, performance, breach and remedies are the aspects of international trade that are indicated and governed by this code and which is applicable for the South Carolina-based company while it negotiates and does trade with the Brazilian company. The governments of the United States and Brazil have engaged in a number of bilateral agreements and set up bodies and institutions comprising of representatives from both sides to facilitate trade and commerce between the two countries as well as reduce trade barriers.

One such example is the establishment of the Brazil-United States Commission on Economic and Trade Relations through the Agreement on Trade and Economic Cooperation between the Government of Brazil and the United States. This body has the onus of facilitation and liberalization of bilateral trade and investment and enhancement of cooperation on shared objectives in the World Trade Organization. The commission would also increase cooperation in the United States -- Brazil Consultative Committee on Agriculture, sanitary and phytosanitary and identify and remove technical barriers to trade.

The commission is also entrusted with the upholding of intellectual property rights and the identification and decision making on regulatory issues that affect trade and investment. And finally the commission would also look into and intervene in trade and services between the two countries and in any matters as the commission may decide and deem fit to be intervened.

Therefore for the South Carolina company, this commission can be a possible boy whom it can approach to resolve conflicts, if any, that might rise with the Brazilian company (Devereaux, Lawrence and Watkins).

Some other pertinent bilateral agreements that would affect the trade and commercials relations between the South Carolina-based company and the Brazilian company include the Statement of Cooperation Regarding Cooperation in the Medical Device Single Audit Program, the Memorandum of Understanding on Cooperation with respect to Tobacco Products, the Memorandum of Understanding Concerning Labor Cooperation, the 04/09/12 -- Memorandum of Understanding to Improve Institutional Capacity Through Technical Cooperation on Environmental Management and the Memorandum of Understanding to Support State and Local Cooperation. Other Important Agreement and Laws Governing U.S.

and Brazilian Trade One of the more important laws that has assumed importance in U.S. -- Brazil trade and commerce is the U.S. Foreign Corrupt Practices Act. While this affects the South Carolina-based company, this act also affects the Brazilian company. This act was formulated to prevent any corrupt practices that any or both the companies might engage in during trade and business. The U.S. has, in recent years, aggressively implemented this act and even for companies with only minimal ties to the United States.

With fines totaling billions of U.S. dollars, the U.S. regulators have more actively pursued and investigated possible FCPA violations since the economic recession of 2008. Many of the foreign companies also are of the impression that the FCPA act only applies to companies of U.S. origin whereas this perception or misunderstanding of the law has often proved to pose serious risks to companies that engage in cross-border commercial activity. Therefore the Brazilian company should be aware about this so that it does not entangle itself in this law.

The South Carolina-based company can take recourse in this law to in case the Brazilian company uses foul means to place the U.S. Company in a disadvantageous position. The regulators stress that culture, compliance and cooperation are the three aspects that can help companies in mitigating the risks associated with violations of the FCPA (Oh, Taek Rim). The U.S.

Securities Litigation and International Arbitration of Corruption is another law that the South Carolina-based company can take recourse to in cases of conflict in business and in cases if arbitration is needed. This act in tandem with other laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934 provide the scope of liability and how damages are calculated and the respective statutes of limitation and repose.

These acts identify and attach the liabilities that are associated with issuers and others for material misstatements or omissions in the sale, offering and trading of securities. In case of any fraud and misrepresentation by the Brazilian company, the South Carolina-based company can take help of this law under U.S. securities laws. There are enough bilateral agreements between the U.S. and Brazil where the Brazil police would conduct investigations of allegations made by the U.S. company against the Brazilian company (Rotunda).

One such examples is the issues and the numerous lawsuits that were filed against Petrobras, Brazil's state-controlled oil giant for alleged fraud and misrepresentation under U.S. securities laws. The Brazilian Federal Police had heavily investigated the company for more than one and half year. There were allegations that the directors and officers and its underwriters and its auditors for alleged misstatements in its financial statements due to the company's purportedly corrupt dealings with its suppliers.

In international and national arbitration forums, there is a growing body of international law being applied. One such international law is the international anti-corruption conventions. In cases of conflicts the South Carolina-based company can also take help of this convention. Comparison of Arbitration in South Carolina and Brazil There was a shift in public policy from a negative view of arbitration to one that favors the enforceability of arbitration agreements in South Carolina during the twentieth century.

Specific circumstances have been identified by the South Carolina Supreme Court where it will resist the strong presumptions that exist towards arbitration and have refused to enforce some arbitration clauses. Since the mid-1990's, there has been a growing prevalence and inclination in the United States to use arbitration as a method of dispute resolution. South Carolina's courts were against arbitration for many years like many other courts in the United States.

The South Carolina Supreme Court have developed a body of case law adopting strong policies in favor of arbitration after the adoption of the Federal Arbitration Act ("FAA") and the South Carolina Uniform Arbitration Act ("SCUAA"). Some of the more important cases that were resolved in arbitration include Aiken v. World Fin. Corp. of S.C., 373 S.C. 144, 644 S.E.2d 705 (2007); Simpson v. World Fin. Corp. of S.C., 373 S.C. 178, 644 S.E.2d 723 (2007); Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 644 S.E.2d 663 (2007);Chassereau v.

Global-Sun Pools, Inc., 373 S.C. 168, 644 S.E.2d 718 (2007) (Nelsonmullins.com). The Uniform Arbitration Act, S.C. Code Ann. § 15-48-10, et seq. and the Federal Arbitration Act, 9 U.S.C. § 1, et seq forms the basis of the arbitration agreements in South Carolina. Since the application of the state act on arbitration is impacted by the federal act, therefore the South Carolina Supreme court has recognized this link between the SCUAA and FAA.

Therefore the arbitration agreements in South Carolina's courts are influenced and examined under the applicability of the FAA (Nelsonmullins.com). In Southern Carolina, the agreement and the regulations governing arbitration is still developing and the body of case law interpreting arbitration statutes and enforcing agreements has an influence on arbitration in South Carolina. The Brazilian government claims that the process of arbitration has developed as a successful out of court resolution for disputes in the last ten years.

The laws in the country have recently been modified to support and accommodate arbitration to a greater degree. The Brazilian.