ChinaLat Law : China and Latin America Litigation Lawyer & Attorney : Diaz, Reus, Rolff & Targ Law Firm : Trade, Business, Dispute Resolution

Under Title 31 USC and Title 26 “US persons” now have until this July 2^nd, 2009, unless extended, to file TD F 90-22.1 which requires reporting of all foreign bank, securities, derivatives, or financial product accounts over which the US person has “signatory authority” (read ‘dispositive power’) even if the person has zero financial or economic benefit. Disclosure is required if the balance is over $10,000 at any point in time for the last six calendar years ending in 2008. The balance is “best evidence” and not necessarily ends of month.

TD F 90-22.1, long required, but tepidly enforced is now subject to an IRS ‘amnesty’ program and at the same time, the IRS promises to prosecute non filers vigorously. 

Taxpayers can now complete the TD Form for each of the past six years and pay-up 20% of the maximum balance in the account as ‘penalty’. The 20% penalty may be abated if taxpayer shows “reasonable cause”. If the IRS is already in possession of the taxpayer’s name, then he or she is not eligible for the amnesty (so conversely the taxpayer would fall under the vigorous prosecution subset). 

Disclosure is mandated for US persons in ‘control’ of offshore partnerships, LLC’s or other entities; US officers of US based multinationals especially if CFC disclosures have not been made or required in the past; and, US income and remainder beneficiaries of foreign trusts must report. Liability attached at the individual not the entity level and so several individuals may report the same account for the same offshore entity or structure.

Also, current “offshore structures” for US persons may run afoul of the currency reporting provisions and need to be revised. The term US persons extend under Title 31 to persons ‘doing business in the US’ albeit these are not currently targeted.

Kindly feel free to contact the undersigned at: mmuina@diazreus.com or telephones (305) 375-9220.

                                                                                                Margarita P. Muina, J.D., LL.M.

                                                                                                                Board Certified in International Law

                                                                                                                Board Certified in Taxation                               

                                                                                                                mmuina@diazreus.com

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Sheikh Abdullah bin Zayed, the Minister of Foreign Affairs, thanked Germany and Austria, previously rivals, for their eventual support of the UAE bid. Hesham Marey for The National

SHARM EL SHEIKH // Abu Dhabi triumphed yesterday in its hard-fought bid to host the headquarters of the International Renewable Energy Agency (Irena).

At a summit of the body’s 136 members, Germany and Austria, the UAE’s rivals to host the headquarters, agreed to withdraw their bids just moments before a vote was due to take place. Bonn and Vienna will instead each house a satellite centre for the agency.

The headquarters, which will be housed in rent-free offices in Masdar City, on the outskirts of Abu Dhabi, will make Irena the first international organisation to be based in a developing country.

After the victory, Sheikh Abdullah bin Zayed, the Minister of Foreign Affairs, pledged the Government’s full support to the agency.

“I would start by thanking Germany and Austria for their support for the UAE today, it certainly shows a lot of interest in our bid,” he said.

“Because of the very fair, frank competition, we had very strong bids from all three countries.”

The Government had aggressively pursued its bid, believing success would raise the country’s global profile. It has also said that the agency would help the development of Masdar, which is planned to be the world’s first carbon-neutral city.

As delegates gathered yesterday for an afternoon vote in this Egyptian resort town, Irena officials announced that the three rivals had reached a compromise.

Austria will host a liaison office to help Irena co-ordinate policy with other international organisations in Europe, while Germany will host an “innovation centre” to help the body’s work in developing countries.

The German government pledged €4 million (Dh21m) to set up the centre, and €2m-€3 million annually to cover its operating costs.

Roy Lee, a professor of environmental law at Yale University in the US, said the win represented an important moment. “That is a very big victory for the UAE and that’s very important particularly for the developing countries,” he said.

“It’s the first time I have observed that developing countries were able to defeat the Western European countries.”

Michael Schrören, a spokesman for the German environment ministry, said his country had first proposed the compromise on Sunday night to avoid a contentious vote.

“Irena doesn’t need friction, it needs common sense and common efforts,” he said.

“We knew that the south/north split would be like a sword over everyone, which we wanted to avoid.”

As the decision was announced, the 55 UAE delegates leapt to their feet with cheers and embraces. The win followed a long diplomatic campaign by senior ministers.

Sheikh Abdullah said that in the past two months he and other ministers had visited 90 countries to garner support. He said that as the vote approached, Austria and Germany had recognised that the UAE bid would have the support of between 92 and 101 member countries.

“The UAE’s hosting of Irena is an indicator and a clear evidence of [our] continuing investment in renewable energy,” he said.

He said that in the past two months he and other government ministers have visited 90 countries for the purpose of garnering support for the UAE’s bid.

“This will boost this network of countries to enhance our relationship with them in other levels.”

Sultan al Jaber, the chief executive of Masdar, said: “This is a historic agreement, we’re very proud.”

He said the decision was made in the few hours before the announcement was made.

“There was pressure by all of the participant countries that there was no need for voting, because it is very clear the UAE deserves it.

“There was a consensus and agreement among them that the UAE is most qualified.”

The next step would be executing the project, he said.

The agency will be housed in temporary buildings in the capital for two and a half years until the Masdar City HQ is completed.

Officials have said it will be the first “energy positive” office building, with rooftop solar panels that produce more electricity than it consumes.

The new director general of Irena was expected to be named late last night.

Source: The National

Date: June 30, 2009

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Miami-based law firm Diaz Reus & Targ has expanded its practice to Sao Paulo, Brazil, under an international partnership with Brazilian firm Guimaraes & Vieira de Mello Advogados.
 

The partnership will help expand Diaz Reus’ international practice in Latin America. The firm already operates in Caracas, Venezuela, and has a joint venture in Bogota, Colombia.
 

Both law firms will jointly seek international investors for Brazil. Diaz Reus’ Shanghai and Dubai offices are in discussions with potential investors interested in funding oil exploration with a Brazilian company in marginal fields.

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One remarkable trait of the current economic crisis is the perplexity of the social sciences, which are supposed to shed light on its causes, effects, and solutions. In fact, the whole episode has been, notably for economists, a long binge of humble pie. We simply know little about the way the crisis is likely to unfold. This is particularly true about the political implications of the downturn at the global, regional and national levels. So far, the political repercussions of the crisis have received scant attention when compared to its economic consequences.

In Latin America, where the slightly twisted pride of not being the culprit of the collapse led to a prolonged denial of its magnitude, the political implications have hardly been discussed at all. This is surprising, given the fact that the downturn happens to coincide with a region-wide election cycle in 2009-2010. Not just that. A region with historically fragile democratic practices ought to care about the potentially deadly consequences of sharp economic downturns for democratic regimes, consequences that are well established empirically. Inter-war Europe comes to mind. Hence, engaging in some reflection about the political aspects of the current conjuncture in Latin America seems appropriate. Four issues merit attention to begin the discussion.

To read the full text, click here Download file.

By Kevin Casas-Zamora

Senior Fellow
The Brookings Institution
Washington, D.C.
June 25, 2009
__________________

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China’s Ministry of Commerce recently (March, 2009) enacted Measures to better facilitate China’s outbound investments.  The previous regulatory regime was considered vague and led to some confusion.  The new Measures bifurcate approval authority between the Beijing National office level and the local level (provinces, municipalities, and other governmental units) with each level obtaining specific criteria to acquire jurisdiction.  Some see obtaining approval outside Beijing as easier and requiring less time and so it is preferable to re-structure the deal in order to avoid Beijing. 

In 2008, China overseas investment doubled to $52.2 billion, and 2009 has already outpaced that figure, according to China's Ministry of Commerce.  China's direct outbound investment should exceed US$60 billion by 2010, according to Assistant Minister of Commerce Chen Jian.  For comparison, U.S. direct investment abroad, was $333 billion in 2007 and $241 billion in 2006, according to the U.S. Department of Commerce.

The Measures create the Overseas Investment Management System (OIMS) allowing Beijing and all other governmental units to centralize application processing.  It is expected that this system will reduce processing times.  Though the new Measures give the local level approval authority, Beijing still must approve the lower level decision and the OIMS will reduce processing times.

The goal for Chinese entities (and their overseas beneficiaries) is to receive an Enterprise Overseas Investment Certificate (“Certificate”) allowing the Chinese legal entity to proceed with the outbound investment.  With the Certificate, the Chinese legal entity should receive full support from all other China organs (tax, customs, foreign exchange) as well as from banking intermediaries.

In order to avoid Beijing’s jurisdiction, a potential overseas investment needs to make sure that it involves none of the following:

1. Overseas investment in a country which has not established diplomatic relations with China [There are about 23 of these countries.  Generally, it is those countries that maintain diplomatic ties with the Republic of China (Taiwan).  The top three countries in terms of GDP in which this applies are the Dominican Republic (75th), Guatemala (80th), and El Salvador (91st)];

2. Overseas investment in a specific country or region identified by the Ministry of Commerce in conjunction with the Ministry of Foreign Affairs and other relevant departments [Though this list has not yet been published, investment in the United States and the United Kingdom were not allowed to be approved at the local level as of 2004 in MoC’s Order No. 16.  This recent Measure, though, has abolished that Order];

3. Where the Chinese party invests USD 100 million or more;

4. Overseas investment which involves the interests of multiple countries or regions; or

5. Setting up a special-purpose company overseas [The Measures defines this term as an overseas company directly or indirectly controlled by the Chinese legal entity for the purpose of listing on a foreign exchange with the rights and interests actually owned by the Chinese legal entity].

If the investment falls outside one of these five categories, then it can apply for the Certificate at the local level where the chances of approval and expediency are probable.

While drafting an agreement related to a potential deal with a Chinese entity, it is probably beneficial to include a provision shifting the burden of China government approval to the Chinese side.  They are, after all, in the better position to get the Certificate. 

One should be wary of the possibility of rejection because of “national interest” policies.  The Measures provide for this.  Any investment that “endangers the state sovereignty, national security and public interests of China; violates a law or regulation of China; or damages the relationship between China and a relevant country or region” then it shall be rejected.  It is suggested to make sure the Chinese side is responsible for avoiding such a designation.

Adam Ehrlich

Chief Representative

Diaz Reus & Targ LLP

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金融危机带来的不仅是锐减的订单，还有频发的国际商事纠纷，用国际仲裁速战速决正成为许多中国企业的选择

　　“已经在上海港码头‘蹲’了三个星期了。”何焕伟无奈地抽着烟，越来越发愁。
　　作为一家化工原料产品的企业老板，他三个星期前听说价值几千万元的货压在上海港就急忙赶了过来，“对方不收货，因为经济危机，价格在一天天地降，谁收了货谁就等于砸在了自己手里。”何焕伟所说的“对方”是一家爱尔兰企业，他们之前有着多年合作关系。
　　“这样的事情现在频繁出现，我们做国际仲裁的律师都忙坏了。”君和律师事务所的陈贵阳律师告诉记者，因为全球经济不稳定，我国的外贸出口企业又很多，在经济不景气的时候，资金链都很紧张，所以类似的国际商事纠纷越来越多。要想尽快解决，它们大多数都涉及到要仲裁，而且是去国外仲裁。“在这个关键的时候，就看出了仲裁条款乃至协议签订的规范有多重要，甚至涉及到企业的生死存亡。”陈律师说。
 
仲裁条款埋下的隐患
　　仲裁，作为一种争端解决机制的另一种途径，拥有传统诉讼所不具备的优势，比如高效、快速和终局性。达瑞律师事务所董事合伙人迈克尔·迪亚斯非常推荐国际贸易企业在签订国际贸易和国际商事合同的时候对于纠纷的解决选择仲裁，“仲裁往往比诉讼更加快速，且‘一审终审’，这非常适合现在的企业需求，否则打官司，‘拖都被拖死了’”，而且仲裁案件不公开审理，能够有效地保护当事人的商业秘密和商业信誉。
　　但现实情况是，很多中国公司都不重视合同中仲裁条款的签订，结果为以后的纠纷埋下了很大隐患。因此，如何签订一个日后发生纠纷时对自己有利的仲裁条款非常重要。
　　事实上，仲裁条款的独立性是指仲裁条款作为主合同的一个条款，尽管其依附于主合同，但其仍然可以与主合同的其他条款分离，独立于它所依附的主合同而存在，即仲裁条款不因主合同的无效、终止或被撤销而无效，也不因主合同的变更而受到影响。当主合同发生无效、终止、变更等情形时，合同的当事人依然可以依据合同中的仲裁条款向仲裁机构申请仲裁，由仲裁机构对他们之间的争议作出裁决。
　　在何焕伟与那家爱尔兰公司签订的合同中规定，一旦发生纠纷，双方去香港仲裁。但是仲裁条款中并没有规定其他仲裁细节。
　　“这就为我们马上要打的官司埋下了隐患。” 何焕伟聘请的法律顾问说，“一些看似非常清楚的仲裁条款，实际上却存在着许多致命伤。”达瑞律师事务所的合伙人卡洛斯也认为，“一些看似完备的仲裁条款，实际上没有写清楚仲裁适用什么法律，这是非常重要的。还有的条款虽然说清了仲裁地但是没有写清如何仲裁，这都是由于他们的条款在适用仲裁法和程序规则上缺乏具体性造成的。”
　　因此，一个完整的仲裁条款中必备的条款包括：仲裁地、仲裁语言、仲裁法、适用仲裁规则、适用的实体法、仲裁庭的组成、仲裁裁决和确认仲裁地的管辖地的同意。
　　另外，律师提醒，还有一点应该注意，仲裁协议应是书面的。国际商事仲裁示范法中规定，仲裁协议如载于当事各方签字的文件中，或载于往来的书信、电传、电报或提供协议记录的其他电讯手段中，或在申诉书和答辩书的交换中当事一方声称有协议而当事他方不否认即为书面协议。在合同中提出参照载有仲裁条款的一项文件即构成仲裁协议，如果该合同是书面的而且这种参照足以使该仲裁条款构成该合同的一部分的话。
　　
“公司印章”效力不抵“亲笔签名”
　　马上就要去香港打官司了，何焕伟的心里还是没有底。但是他仍做出了一个决定：找一家有海外办事处，并且有经验的律师事务所。
　　“这点非常重要，个别公司常常因追求低成本而误大事，选错人，因为错误的理由聘请那些对国际仲裁缺乏实践经验的律师。这种错误观点，从长远来看，因为代理律师缺乏经验，在仲裁中失败，往往给公司带来更大的损失。其次，企业所聘请的律师要用国际仲裁的思维方式行事，而不是国际诉讼。”路伟律师事务所仲裁专家林文杰举了一个例子：有的律师常常因为对方代理人没有当事人的“公司印章”，而质疑对方代理人的授权问题。然而大部分的国际仲裁法庭往往不会简单地认可公司印章的效力，一个高级经理的亲笔签名反而是更有效的授权证据。这就是仲裁和诉讼对取证环节的明显不同。
　　另一方面，一些中方企业有时候很难理解国际仲裁庭对证据适用的要求。在整理何焕伟公司的一些证据时，律师建议中国企业一定不要依靠证人的直接口头证词或者传闻，一定要看重书面证据，汇编和组织文件都非常重要，因为在缺乏书面或其他形式的同类证据时，非中方仲裁员通常会怀疑中国证人证词的准确性。
　　“在国外打官司或者仲裁，对案情书面陈述或证人陈述的细节要求与国内的诉讼和仲裁的要求是完全不同的。中国的当事人常常没有遵循国外的规则，提交没有针对性或不认真起草的陈述。在听讼阶段，这就直接导致了中国当事人常常要求对陈述内容进行纠正，显然，这将遭到仲裁庭的拒绝，因为所有的观点证据都必须在听证之前出示完毕，不得修改。”林文杰说。
 
提起反诉需要为对方付费
　　对于国际仲裁的案子，大多数企业恐怕最关注的还有打官司的费用了。
　　“如果企业到国际商会、伦敦国际仲裁院和香港国际仲裁中心去仲裁，他们会发现在中国内地看不到的两个特点：第一，仲裁庭会命令败诉方支付部分或全部胜诉方的仲裁费（包括律师费）。第二，在进入仲裁程序以前，原告可能被要求为对方的律师费支付保证金。”林文杰说：“尤其是第二个特点，常常被中国企业忽视。如果中国企业在仲裁中成为被告，他常常要求他们的律师提起反诉，比如对方提起1000万美元的诉讼请求时，中国企业常常会在反诉中提出多一倍的反诉请求。
　　中国当事人会惊喜地发现，他们的反诉很多时候居然被接受，但麻烦随之而来，因为对方应对反诉还需支付律师费用，中国当事人就必须为这笔费用支付保证金。”此外，企业需要知道的是，商事合同当事人解决其争议的方式多种多样，但是，只有诉讼判决和仲裁裁决才对当事人具有约束力并可强制执行。仲裁裁决不同于法院判决，仲裁裁决不能上诉，一经作出即为终局，对当事人具有约束力。“也就是说仲裁裁决不论在何国境内作出，均应承认具有约束力，而且经向主管法院提出书面申请，即应予以执行。”陈贵阳律师说。仲裁裁决虽然可能在裁决作出地被法院裁定撤销或在执行地被法院裁定不予承认和执行，但是，法院裁定撤销或不予承认和执行的理由是非常有限的，在涉外仲裁中通常仅限于程序问题。

来源: 中国经营报

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Michael Diaz Jr. and Arti Sangar of Diaz Reus & Targ LLP take a look at how the DIFC's new international arbitration centre has become an efficient and well managed arbitration institution.

Published in Asian - Counsel United Arab Emirates Special Report, Vol 7, Issue 4, May 2009

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China-based Shandong Airlines was recently awarded a temporary restraining order against a Florida flight training school in an international contract dispute. The airline had engaged CAPT, LLC, a school owned by Flight Training Services International (FTSI), to provide flight training to 24 of its Chinese pilot cadets over 52-weeks at the school’s Florida facilities. According to the airline’s Complaint, CAPT had sent a letter to Shandong in March 2009 stating it considered the contracts “to be null and void” and requesting that additional training money be paid to it would withdraw sponsorship of all Shandong student visas.

Legal representatives for the airline, Diaz Reus LLP argued that Shandong Airlines had met all terms of the contract and successfully applied for a temporary restraining order to prevent CAPT from unilaterally terminating its contract, withdrawing sponsorship of the cadets and selling, transferring or otherwise disposing of its training equipment. U.S. District Judge Timothy J. Corrigan granted the temporary restraining order on the school on the basis that Shandong had shown “a substantial likelihood of success on the merits of its complaint for breach of contract”. A hearing has been set in the US District Court on whether to issue a permanent injunction against the school, with the court determining to award a preliminary injunction forbidding the flight school from taking any action that might endanger the students’ immigration status until such time they were able to obtain new visas from a new sponsor.

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Beijing and Shanghai are the top two cities attracting foreign tourists coming to mainland China. They were the top choices for foreign investors as well. In 2006, 80% of the fortune 500 companies with offices in China had their offices in Shanghai or Beijing. Only a few had a presence in second- or third- tier cities. But this is not the case anymore. 

Recent statistics showed a decrease in the percentage of FDI contribution towards GDP in Shanghai and Beijing. Meanwhile, more and more multinational giants are increasing their investment in less developed cities: IBM set up its global service center in Chengdu in 2007; GM spent $550 million last year in establishing its second factory in Shenyang; Pfizer will complete its $300 million manufacturing center in Suzhou by 2010; also in Suzhou is Samsung`s $150 million LCD panel factory that just started construction a half year ago; Intel has pledged $2.5 billion in establishing its chip factory in Dalian by 2010; and Airbus will setup an assembly line in Tianjing with potential total investment reaching $1.4 billion with the assembly line delivering its first A320 by the end of this year.

These second- and third tier- cities are generally cities with efficient government, a clear development strategy, a well-connected transportation system, easy access to high quality labor, and most of them have already attracted major domestic companies that are industry leaders.

The economy of these cities is generally domestic-oriented and less dependent on foreign trade when compared to cities like Beijing or Shanghai. As a result, they were minimally affected by the recent financial tsunami. In addition, these cities are the largest beneficiaries of the $600 billion stimulus package and the recent rural land reform. A majority of the stimulus fund will go to infrastructure construction, which is already very well developed in first tier cities, thus, the fund will undoubtedly improve the business and living environment of the second and third tier cities. The recently announced rural land reform will also play an important role in accelerating the development of those lower tiered cities, as most of these cities are surrounded by rural lands. The reform will cause an increasing amount of rural residents to sell or lease their land to develop business, which will greatly boost the urbanization process of those areas as well as their economic growth.

One of the most recent examples is Hangzhou City, a world-famous tourist attraction located in the Yangtze River Delta. Hangzhou has a population of 7.5 million and is just 100 minutes by car from Shanghai, a city with over 18 million people.

Within one of Hangzhou’s districts (Yuhang District), the government has initiated a plan to transform, in the next 5 to10 years, a 38-square mile area with a current population of 200,000 into a “China Silicon Valley”. Within 5 years, they expect the population to grow to 700,000. The area is known as XiXi Sci-Tech Island (“Island") and is adjacent to a 4-square mile National Urban Wetland Park which is just 15 minutes by car from downtown Hangzhou.

The Island has recently been designated a National Hi-Tech Industrial Zone. With 41 colleges and universities around Hangzhou, and more than 650,000 students graduating every year, the government claims that it can provide a high quality work force for those companies investing on the Island.  Nokia was impressed enough to choose Hangzhou when it was hunting for locations in China to set up its R&D Centers in 2002 and cooperated with the Zhejiang University, one of the top five universities in China.

So far, the Island is still in its early stage of development, but it has already attracted attention of the Chinese IT giant Alibaba, which has decided to invest $200 million to build a center for Taobao, its online trading platform (the Chinese equivalent of Ebay).

Recently, the government has begun construction of a Shanghai-Hangzhou high speed train. After its completion, travel time between the two cities will be shortened to 38 minutes. After this news came out, the Island attracted more attention from investors from all over the world. Currently, multinational companies that have decided to invest on the Island include major players in IT, service outsourcing as well as the tourism industry.

Xixi Sci-Tech Island is just one of over 6,600 special zones designated by the National Government.Most of these special zones are within the second or third tier cities. As competition grows between them, and the cost of business becomes higher in the first tier cities, it might be wise for foreign investors to give the second and third tier cities a look. They are bound to find more opportunities with less costs.

Joe Zhang

Attorney

Diaz Reus

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