Commercial Law International

By: Ainsley Brown

The safety of the people is not the supreme law

While terrorism, terror financing and constitutional principles such as the rule of law and Parliamentary supremacy are not the usual subjects covered here at Commercial Law International, this seeming break from tradition is in fact not such a stretch.

As our moniker indicates Commercial Awareness is Global – it is important to note and as will soon become clear, coverage of this case in no way departs from this.

This landmark ruling is instructive for the “normal” subjects covered on this blog because it illustrates the legal limits imposed on the state – read the government – as it pertains to its ability to interfere with the assets of an individual (natural or juridical). These limits are even justified, as their Lordships have ruled, when combating the scourge of international terrorism. As the Deputy President of the Court, Lord Hope of Craighead, put it: “Even in the face of the threat of international terrorism, the safety of the peoples is not the supreme law.” In other words the government of the day only has as much power as Parliament has allowed it to have; the will of Parliament being express of course in the laws its passes.

The offending powers struck down by their Lordships are the Terrorism (United Nations Measures) Order 2006 and the Al-Qaeda and Taleban (United Measures) Order 2006. The Orders were issued by the then Chancellor of the Exchequer and now Prime Minister Gordon Brown in response to United Nations (UN) Resolutions passed in response to the September 11th attracts. The Resolutions sought global co-operation on combating the financing of international terrorism.

Unlike in many other countries the United Kingdom under its UN obligations did not pass legislation in order to give effect to the Resolutions. Instead, the Chancellor issued these Orders, empowering Her Majesty’s Treasury (Treasury) to seize the assets of suspected terrorist, Al-Qaeda and or Taleban members or supporters. The seizures could take place on mere suspicion without an hearing and would not be under scrutiny of the courts through judicial review.

The case was the first to be heard in the newly minted Supreme Court when it opened last year. The appeal was brought by five men whom successfully argued their case in the High Court that the Orders were unfair and breached their fundamental right guaranteed by the laws of Britain; however, they were later over turned by the Court of Appeal.

The question before their Lordships though a simple one was non the less a profound one. And it was this when Parliament empowered the Treasury to make orders did it in turn give the Treasury the power to “interfere so profoundly with individuals fundamental rights without parliamentary scrutiny[?]”

With word such as “oppressive,” “paralysing” and “draconian” peppering the decision, their Lordships answered the question with a resounding NO!

In a nation such as Britain, with a “unwritten constitution” it must always be remembered that Parliament is supreme and it is only through Parliament that the government has the exercise power. Moreover, when such power involves the interference with an individual’s basic rights such authorization cannot be implied but must be explicit. In any democratic-capitalistic society access to the courts and property rights are sacrosanct. As Lord Phillips of Worth Matravers, the President of the court put it: “Access to the court to protect one’s rights is the foundation of the rule of law.” And without the rule of law there can be no liberal-democracy.

For those that would say that this ruling is just another example of judges legislating from the bench in breach of Parliamentary supremacy, Lord Philips has a stern rebuke. His Lordship countenanced with “on the contrary it upholds the supremacy of Parliament in deciding whether or not measures should be imposed that affect the fundamental rights of those in this country” without explicit grant by Parliament.

It is important to not that Supreme Court are not saying that these laws are in and of themselves illegal – not at all. However, what their Lordships are saying is that if the government of the day wants exercise such extensive powers they much first seek and then be granted Parliamentary approval. Lord Hope put it best: “If the Executive considers that such far-reaching measures are necessary or expedient for combating terrorism or honouring the United Kingdom’s international obligations it must obtain approval for them form Parliament.”

In response to the judgment the Gordon Brown’s is rushing through Parliament the Terrorism Asset-Freeze (Temporary) Provision Bill which is expected to have retrospective effect and by and large mirror the quashed Orders. If all goes to plan the Bill will become law some time this week.

Jan 29, 2010

Ainsley Brown, a contributor here at Commercial Law International, has been called to the Bar of Ontario, Canada.

He is now a Barrister and Solicitor in that jurisdiction.

By: Ainsley Brown

When it comes to the hype around a new product no body does it better than Apple. In fact you could even say that Apple has made the hype surrounding a new product a large part of its advertising and marketing campaign.

However, the key to such marketing is maintaining such levels of secrecy that would make the CIA proud. This same approach was taken with all its “i” products – the iPod, the iPhone and now the iPad. With the importance of secrecy such high levels of secrecy it’s only a matter of time before the lawyers get involved.

And yes, they did get involved.

In the lead up the release of the iPad this week, Apple’s lawyers Orrick, Herrington & Sutcliffe LLP sent out a stern warning letter to a website that offered a cash bounty to any one that could produce pictures of the then unnamed iPad. The Silicon Valley gossip website, Valleywag received the warning after it offered $10,000 for a photo, $20,000 for a video and $50,000 for a video with Apple co-founder/CEO Steve Jobs holding the iPad.

Now if this was simply a joke by Valleywag, and I don’t know if it was or wasn’t, Apple and their lawyers certainly weren’t laughing. In the letter to Valleywag, Orrick, Herrington & Sutcliffe warned: “While Apple values and appreciate vibrant public commentary about its products, we believe you and your company crossed the line by offering a bounty for the theft of Apple’s trade secrets. Such an offer is illegal and Apple insists that you immediately discontinue the Scavenger Hunt.”

There is no word of if Valleywag was moved by the warning but it is important to note that the iPad was released without incident to the joy of Apple.

By: Ainsley Brown

Canada now joins a score of other nations, including Brazil, Japan, Norway, India and Turkey, as third parties in a World Trade Organization (WTO) panel on China’s export restrictions on certain raw materials.

A WTO panel is the third step established under the Dispute Resolution Understanding (DSU) – the DSU being the lynchpin that transformed the General Agreement on Tariffs and Trade (GATT) in to the WTO – to settle disputes between member states. The first step being the complaint-consultation stage, where a member or members make a formal complaint to the WTO’s Dispute Settlement Body (DSB) and request consultations with another member state or member states that they believe have violated WTO rules or specific commitments.

The complaint-consultation stage allows members to attempt to reach a negotiated settlement while at the same time gearing up for the panel stage, if no settlement can be reached. Basically, in this stage of the dispute settlement both parties learn of the policy reasons and choices that underlie both the complaint and the alleged violation that lead to it.

The United States, the European Union and Mexico moved very rapidly out of the complaint-consultation stage to the next two phases of dispute resolution. Under the DSU once the  second stage complaint-consultation stage fails to resolve the dispute within 60 days the complaining party may move to the second stage by requesting the establishment of a panel. This request must specifically identify the measures complaint of  or are so intimately connected with one or more measure as to sufficiently give notice to the other party or parties, otherwise it will be excluded from consideration by the panel.

The third stage is the actual establishment of a panel and this is where we fin ourselves. The panel was establish on Dec 21, 2009 and at issue is China’s export restrictions (export quotas and duties) on particular raw materials, including zinc, magnesium, bauxite, manganese and coke. These export restrictions, it is alleged, distort world markets in these commodities and therefore not violate WTO export restrictions rules but China’s specific export duty commitments  on joining the WTO.

Canada for its party is not a party to the dispute but because some of the commodities in question are key Canadian exports it does have a interest in the outcome of the case in so far that it wishes to see the distortions in markets for these commodities eliminated. As a third party Canada’s rights in the case are very restricted. It has no right to any part of an award, if one is awarded and as a third party it only has the  right to make written  but  not oral submissions before the panel. The however has a duty to take Canada’s and other third party views into account its its report.

Finally, Canada, as a third party,  as no right of appeal before the Appellate Body (AB) – the AB being the WTO’s “court” of last resort –  however, it does have the right to make further written submissions before the AB if a party does appeal.

For a full out line of all the stages of the WTO dispute resolution process click here.

By: Ainsley Brown

The Russian central bank, the Bank of Russia, announced today that it will begin to further diversify its foreign currency reserves by buy Canadian dollar dominated deposits and securities.

The move is in response to the falling value of the US dollar and the appreciation of commodity based currencies such as the Canadian and Australian dollars. While it was not disclosed by the Russians what percentage of the Canadian dollar would make up their reserves, the move could have a significant impact on the international money trading market generally and in particular the Canadian dollar.

With the third largest foreign currency reserve in the world can anyone deny the power of the Russians to affect the market?

By: Ainsley Brown

India has needs to improve its corporate governance regime; so says, the Hong Kong based advocacy group, Asian Corporate Governance Association (ACGA).

The ACGA’s report comes in the wake of the Satyam Computer Services scandal where the companies head admitted to defrauding the company for many years. The scandal helped expose so of the obvious as well as not so obvious weaknesses in the Indian corporate governance regime.

The report, which will be presented to government officials, the Securities and Exchange Board of India (India’s securities regulator) and stock exchanges, points out several areas in need of reform. Four such areas in need of reform are:

1. Related-Party Transactions – this is an issue in India as many companies are either owned or controlled within one family and companies are sometimes run like personal fiefdoms.
2. Corporate disclosures – India needs to improve corporate transparency in a major way given for example as the report points out the misuse and abuse of warrants in India.
3. Shareholder voting rights –many investors are rob of a chance to air their views at annual meetings as annual meets are often held in far off places,  with relatively little notice.
4. The Auditing profession – the highly fragmented nature the profession in India and regulations mostly geared to insure the survival of small firms often over improvements in quality and service has done a tremendous disservice to what ought to be a cornerstone in any corporate regulatory regime.

The question that remains will law makers, regulators and corporate insiders accept or reject the reports findings and recommendations?

Remember The Greater Commercial Interest...Don't Get Crushed By Your Own Litigation

First posted on Law is Cool on Jan 9, 2010.

This is a blog post by current University of Western Ontario third year law student and Law is Cool blogger, John Magyar that I just had to share. It is a perfect illustraion of why here at Commercial Law International we say that: Commercial Awareness Is Global.

The story featured in the post is not gobal in the geographic sence but rather in the sense of being all encompassing. It illustrates very nicely why persuing a cliam or legal right while making perfect legal sense may not make much business sense. It gives a stark warning to current and future lawyers and their cleints for that matter to have  a Global-Big Picture outlook by examining how the best interests of the client are served; especially when considering persuing litigation. 

Enjoy:

According to an article by Canadian Press, Loblaws has seen the light and will no longer sue the man ‘deemed to be at fault’ for a collision involving a Loblaws truck that caused the death of the man’s wife and 6 teenage boys.  The legal action had been a lingering PR disaster that motivated outraged communities to push for a boycott.

Having spent all of 4 minutes considering the matter, I am struck by the lack of circumspect. This accident was a highly publicized tragedy that made front-page national news. Prime Minister Harper sent a letter of condolence to the school that the teenagers attended, according to CBC news, and no where in the coverage was the driver blamed.

This man was a basketball coach.  He was driving a van that carried the basketball team plus his wife and daughter.  It was winter and the road conditions were not good when the van fish-tailed on a highway and unspeakable tragedy ensued. This man might have been driving too fast, and his negligence might have caused damage to a Loblaws truck, however, from where I sit, public backlash seems a likely outcome of litigation. He made a horrible mistake and paid very dearly for it:  He lost his wife, he could have lost his daughter.  Many families in the community lost a son. Meanwhile, amidst all of this loss of life, Loblaws wants to recover for a damaged truck and lost inventory.  This looks cold-hearted to say the least.

There is lesson to be learned here.  As we graduate from law school and become involved in that financial bloodsport called litigation, we should remember that law suits do not occur in a vacuum.  Even though the law says you can, and even if you’re impervious to emotional reactions to sympathetic defendants, you should consider the potential for public outcry.  The client likely values his or her public profile more than money, and this applies whether the matter is civil, family or criminal.

From where I sit this seems so obvious …  but maybe things look different after swimming in shark-infested water for a few years.  Perhaps the real lesson is to remember what things look like from the outside when your on the inside.

By: Ainsley Brown

It is now official the Banana Wars are now at an end.

The protracted – 16 years – trade dispute over bananas between the European Union (EU), Latin American countries and the United States is now officially over. The Banana Wars, as they have come to be known even if somewhat inaccurately because while banana are the principle tropical fruit involved it is not the only one, is of personal interest for me. As previously covered on this site, the Banana Wars, was a direct reason why I wanted to become a lawyer.

According to the terms of the agreement the EU will cut tariffs on imported bananas from Latin America, currently at €176 per tonne to €114 per tone over the next seven years. Additionally, the will be a very generous initial reduction of €148 per tonne. In exchange for these reductions the Latin American nations and the US have agreed to drop their World Trade Organization (WTO) case against the EU. This part of the agreement contains a peace clause between the parties where the Latin Americans and the US agree not to initiate further WTO cases as soon as the agreement is sign rather than wait until the tariff changes are registered with the WTO. The formal registration – certification – with the WTO could take months or even years depending on if other WTO members challenge the tariff changes.

The ACP (Africa Caribbean and Pacific) nations are the real losers here. It must always be remembered that the preferential market access granted to the ACP, largely due to their former colonial connections to Europe, was at the heart of this trade row. Please don’t get me wrong, this is a deal that had to be done, I simple mean to point out the potentially devastating impact this could have on certain already struggling ACP economies.

However, the ACP has not been left entirely out in the cold. The EU as agreed to a €200 billion aid package to lessen the impact of the loss of preferential market access. The EU has still to make clear how this money will be doled out amongst the many different ACP nations with their varying economic conditions, interest and priorities.

To end on a positive note, ending the Banana Wars could have a positive impact on trade discussions between the EU and Latin American countries and inject new life into the stalled Doha Round of WTO talks.

By: Ainsley Brown

“Old pirates, yes they rob I.”

The opening words to Redemption Song are as hard hitting now as they were when first bellowed by the iconic musical legend – Bob Marley - years ago. These words however may be taking on a new meaning in this era digitization and globalization where information is king. This era is all about IP – Intellectual Property – and the right to access, control and exploit for ones own benefit the concepts encapsulated within creativity.

As a matter of course the Brand – how you package and sell your IP, in fact branding itself becomes a form of IP – in this era becomes of great import. In fact one could argue that brand is not the everything but is the only thing. Consumers no longer simply buy a product or service – no, no – rather they are buying a brand.

Now this brings me to the House of Marley. The heirs of Bob Marley – the holders of the exclusive rights to the reggae superstar’s image – are drawing clear battle lines in the IP war on whom can access, control and exploit Marley’s iconic status. They have enlisted the aid of Canadian private equity firm Hilco Consumer Capital to package, manage, market, sell, monitor and protect the IP that is Bob Marley through the products sold under the new House of Marley brand.

Rather than attack the hawkers of existing wears, which would result in a multiplicity of protracted legal battles spread-out across the globe, Hilco and the House of Marley have instead embarked on a branding campaign. It is quite simple, the House of Marley will be authentic and all other comers will only be imitators – a potentially very lucrative strategy, if it can be pulled off.

According to reports, the Marley brand – name, sound and image – are estimated to generate $USD 600 million in a year and this is on the bootleg side alone. On the legal side, the brand generates a profitable but substantially smaller $USD 4 million a year.

With numbers like those no wonder the Marley heirs sought out and gained a partner like Hilco with a proven reputation in IP generally and branding specifically?

While I applauded this new venture, I can’t help but how long will it be before we see a court case or two? Maybe a few Anton Piller orders – best described but somewhat inaccurately as a civil search warrant, that feature so prominently in IP cases – or maybe the odd Mareva injunction – a court order freezing assets -?

The reason why I am thinking this is that it is impossible to escape the fact that branding – intellectual propertization – eventually means not only the allocation of exclusive rights but also the enforcement of those rights.

By Charles Wanguhu

A lot of column inches have been taken up trying to dissect the emerging Sino-African relations. In Africa more and more Chinese goods as well as people are visible. The Africa -West relationship has been largely characterized as an aid relationship or “carrot stick diplomacy”. Experimental policies such as the structural adjustment programmes have been imposed on African governments as well as the push for democratization of the 90’s are still seen by many as the defining moment of the relations.

 Africa was therefore used to the branding associated with Aid projects with big signs in infrastructure projects proclaiming “the construction of this road has been made possible by the funding received from the European Union”. Similarly foods received in humanitarian aid labeled “aid by the American people” were all common features.

The Chinese were viewed as subtle in their approach and were said to have a non-interference policy which many in Africa viewed as a corruption conduitfor the already crooked governments. However, It is now not rare to run across trucks labeled China Yu carrying out road construction works around the country. On the major road to the Jomo Kenyatta International airport a highway constructed by a Chinese company now appears a big metal structure spanning the entire road proclaiming China and Kenya with a big handshake with a love heart. Signs of a long relationship???

Well the Chinese exploration of oil in north eastern Kenya if it yields commercial viable deposits will be a key milestone in Sino-Kenyan relations. Managing the expectation of the surrounding community as well as the whole country is crucial. A discovery of oil will not change the country fortunes overnight and will not eradicate poverty with one masterstroke.

With its growing economies need for resources there shall be increased activity by the chinese in Africa. The so called “resource curse” will eventually shape the Sino-African relations.