Business Law Chapter 24 Homework Thus a judgment under Section 1610(g) in favor of a plaintiff

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CHAPTER 24

INTERNATIONAL AND SPACE LAW

ANSWER TO CRITICAL THINKING QUESTION

IN THE FEATURE

ETHICS TODAY—CRITICAL THINKING

Imported beer is not the only product whose labeling may be misleading. For instance,

although BMW is a German brand, most BMW X3s and X5s purchased in the United

States are actually manufactured in South Carolina. Are there any legal or ethical issues

ANSWERS TO QUESTIONS

AT THE ENDS OF THE CASES

CASE 24.1—LEGAL REASONING QUESTIONS

1. Could Bank Melli have successfully argued that Section 1610(g) does not permit the

attachment and execution of the assets sought by the Bennetts because those assets are

owned by Visa and Franklin, not the bank? No, Bank Melli could not have successfully

maintained that Section 1610(g) does not permit the attachment and execution of the assets

2 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS

2. Why did Congress create an exception from immunity under the FSIA for foreign state

sponsors of terrorism? It is clear that Congress’s intent in adding Section 1610(g) to the FSIA

3. The Treaty of Amity between the United States and Iran requires that the United States

respect the legal status of Iranian companies, protect their property in accord with

international law, and not discriminate against them. Does this treaty conflict with

CASE 24.2—CRITICAL THINKING

LEGAL ENVIRONMENT

Would Plaza have been bound to the forum-selection clause if it had signed the

subscription agreement as Moonmouth’s director but had no other relation to the

agreement? Discuss. If Plaza had signed the subscription agreement as Moonmouth’s

CHAPTER 24: INTERNATIONAL AND SPACE LAW 3

CASE 24.3—CRITICAL THINKING

LEGAL ENVIRONMENT

What are the consequences for Daimler of the decision in this case? Daimler AG was not

exonerated by the decision in this case, but the corporation did avoid liability under the Court’s

GLOBAL

If the Court had adopted the plaintiffs’ argument, how might U.S. citizens have been

affected? If the Court had adopted the plaintiffs’ argument in the Daimler case, the decision

would have provided the plaintiffs—foreign citizens (Argentinians)—with a cause of action

ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER

1A. Foreign Sovereign Immunities Act

Because the armed forces of Honduras contracted to purchase weapons from a U.S. company

2A. Act of state doctrine

The act of state doctrine provides that the judicial branch of one country will not examine the

validity of public acts committed by a recognized foreign government within its own territory.

4 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS

3A. Doctrine of deference

The principle of comity is a doctrine of deference. Under this principle, one nation will defer and

give effect to the laws and judicial decrees of another country, as long as those laws are

consistent with the law and public policy of the accommodating nation. The principle of comity

4A. Doctrine to collect damages

Under the principle of comity, one nation will defer and give effect to the laws and judicial

decrees of another country, as long as those laws are consistent with the law and public policy

ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE

AT THE END OF THE CHAPTER

The U.S. federal courts are accepting too many lawsuits initiated by foreigners that

concern matters not relevant to this country. Our federal courts are already overwhelmed by

normal lawsuits that concern purported wrongs committed on U.S. soil that involve residents of

this country. Why should we become the preferred jurisdiction for lawsuits that involve human

rights issues in other countries? Why should we become the preferred jurisdiction for purported

employment discrimination that might have taken place outside of the U.S.? We are not the

world’s conscience.

The U.S. has one of the best-run and most fair federal judiciaries in the world. We still

CHAPTER 24: INTERNATIONAL AND SPACE LAW 5

ANSWERS TO ISSUE SPOTTERS

AT THE END OF THE CHAPTER

1A. Café Rojo, Ltd., an Ecuadoran firm, agrees to sell coffee beans to Dark Roast

Coffee Company, a U.S. firm. Dark Roast accepts the beans but refuses to pay. Café Rojo

sues Dark Roast in an Ecuadoran court and is awarded dam ages, but Dark Roast’s as

sets are in the United States. Under what circumstances would a U.S. court enforce the

judgment of the Ecuadoran court? Under the principle of comity, a U.S. court would defer and

2A. Gems International, Ltd., is a foreign firm that has a 12 percent share of the U.S.

market for diamonds. To capture a larger share, Gems offers its products at a below-cost

discount to U.S. buyers (and inflates the prices in its own country to make up the

difference). How can this attempt to undersell U.S. businesses be defeated? The practice

described in this problem is known as dumping, which is regarded as an unfair international

ANSWERS TO BUSINESS SCENARIOS

AT THE END OF THE CHAPTER

24-1A. Doing business internationally

An alternative to exporting is the establishment of foreign manufacturing facilities, which

Macrotech does not want to do in this problem. A U.S. firm can also manufacture goods in other

countries by licensing, franchising, and investing in a wholly-owned subsidiary or joint venture.

Licensing is an attractive alternative to establishing a foreign production facility when a process

or product has been patented, because the patent protects against the possibility that the

6 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS

24-2A. Dumping

Yes, it is a reasonable approach to rely on the producers’ financial records, which are

reasonably reflective of their costs because their normal allocation methodologies were used for

a number of years. These records are historically relied upon to present important financial

24-3A. Sovereign immunity

The court denied the motion to dismiss. The doctrine of sovereign immunity immunizes foreign

nations from the jurisdiction of U.S. courts. The Foreign Sovereign Immunity Act (FSIA) of 1976

codified this doctrine. A nation is not immune if it has waived its immunity or if the action against

it is based on a “commercial activity carried on in the United States.” The court recognized that

whether the commercial activity exception applies depends on two factors. “First, the lawsuit

must be based upon commercial activity of the foreign state defendants. Second, that activity

must be carried on in the United States.” A particular act qualifies as commercial activity “when

ANSWERS TO BUSINESS CASE PROBLEMS

AT THE END OF THE CHAPTER

24–4A. Dumping

Dumping is the sale of imported goods at “less than fair value.” “Fair value” can be determined

from the price of the goods in the exporting country. (The goal is to undersell the businesses in

the importing country to obtain a larger share of its markets.) In the United States, an added

CHAPTER 24: INTERNATIONAL AND SPACE LAW 7

24–5A. Sovereign immunity

No, a U.S. court does not have jurisdiction in the Santivanez case. When applicable, the

doctrine of sovereign immunity shields a foreign nation from the jurisdiction of a U.S. court. In

such a case, individuals who own (or owned) property overseas generally have little legal

protection against government actions with resp3ect to their property in those countries. The

federal Foreign Sovereign Immunities Act (FSIA) exclusively governs the circumstances in

which an action may be brought in the United States against a foreign nation, including attempts

to attach a foreign nation’s property. Under the law, a plaintiff generally has the burden of

24–6A. BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Import controls

Yes, an antidumping duty can be assessed retrospectively (retroactively). But it does not seem

likely that such a duty should be assessed here.

In this problem, the Wind Tower Trade Coalition (an association of domestic

manufacturers of utility-scale wind towers) filed a suit in the U.S. Court of International Trade

8 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS

24–7A. The principle of comity

Yes, the principle of comity supports the defendants’ request to dismiss the plaintiffs’ claims.

Under the principle of comity, one nation defers to and gives effect to the laws and judicial

decrees of another country when those are consistent with the laws and public policy of the

accommodating nation.

In the fact of this problem, Holocaust survivors and the heirs of other Holocaust victims

filed a suit in a federal district court in the United States against a variety of entities based in

Hungary—the national railway, the national bank, and several private banks—alleging that the

24–8A. International law

No, the validity of the assignment of the Stolichnaya mark by the Russian Federation to FTE is

not a question to be determined by a U.S. court. Under the international act of state doctrine, the

judicial branch of one country does not review the validity of public acts committed by a

recognized foreign government within the latter’s own boundaries.

Here, the Soviet Union made and sold Stolichnaya vodka, and licensed its trademark for

use in the United States. After the Soviet Union collapsed, the state enterprise that had

24-9A. A QUESTION OF ETHICS—Terrorism

(a) The doctrine of sovereign immunity, which is codified in the Foreign Sovereign

Immunities Act (FSIA), generally provides foreign states with immunity from suit in U.S. courts.

This statute includes a “state–sponsored terrorism exception,” which abrogates a foreign

state’s immunity for personal injuries caused by terrorist acts committed by a state’s officials or

agents. Under this exception, a foreign state is subject to suit if (1) the U.S. Department of State

designated it as a “state sponsor of terrorism” before the incident out of which the suit arises; (2)

(b) The contention that the plaintiffs’ claims should be barred by the settlement

between the defendants and the other plaintiffs “is unavailing,” according to the court in the

10 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS

ANSWERS TO LEGAL REASONING GROUP ACTIVITY QUESTIONS

AT THE END OF THE CHAPTER

24–10A. Globalization

(a) Factors to consider when expanding operations into another country by advertising

online include (1) business costs such as Web site design and maintenance; (2) marketing

considerations such as which business model to use; (3) security concerns such as the safety of

(b) A partnership in another country typically requires local participation—nationals of

the other country must own a specific share of the business. Of course, if the partnership

dissolves, the firm’s technology and other expertise may fall into in the hands of a foreign

(c) Problems that may arise when a domestic business company decides to

manufacture its products in a foreign location include the costs and other considerations in