国际商法第五版第五章-ray·august著

CHAPTER5FOREIGNINVESTMENT5-1CHAPTER5

FOREIGNINVESTMENTTopicsforthischapter:ForeignInvestmentLawsandCodesSupervisionofForeignInvestmentSecuritiesRegulationsEnforcementofSecuritiesRegulationInternationally5-2ForeignInvestment

LawsandCodesWhatisforeigninvestment?Ownershipbyonepersonof10percentofmoreofthecontrollinginterestinanenterprisenotlocatedintheperson’shomecountry.Somestateshavegeneralinvestmentlawsthatlimitthetype(jointventures)orpercentageofforeigninvestment.Othercountriesputrestrictionsoninvestmentinspecificsectors,suchasagriculture,technology,ormedia.Someoftheselawsareincorporatedintobilateralinvestmenttreaties(BITs).5-3BITsMostoftenbetweenadevelopedstateandthatstate’sfavoreddevelopingstates.ManyBITscontaininternationaldisputesettlementprovisions.BITsconstitutethemostimportantprotectionofinternationalforeigninvestment.5-4TypicalTermsinBITsBITsusuallydefineforeigninvestmentandtheconditionsunderwhichinvestorsfromonestatecaninvestintheotherstate.Oftenprovidefairandequitabletreatmentclausesandcompensationguaranteesforexpropriation.ManydesignatetheWorldBank’sInternationalCenterfortheSettlementofInvestmentDisputes(ICSID)asthearbitralbody.5-5NationalForeign

InvestmentPoliciesPurposeofforeigninvestmentregulations:Promotinglocalproductivityandtechnologicaldevelopment,Encouraginglocalparticipation,andMinimizingforeigncompetitionineconomicareasalreadywellservedbylocalbusinesses.5-6PoliciesforRegulatingInvestmentApplicationsToachievethesepurposes,investmentlawsestablishbasicpoliciesforscreeningandregulatingforeigninvestmentapplications.Thesegenerallyfallintothreecategories:Toencourageinvestmentthroughincentivesandminimalregulations.Touseinvestmentincentivesbutalsotorequirelocalparticipationquotas.Toallowforeigninvestmentsubjecttolocalscreeningandsupervision.

5-7RegionalInvestmentPoliciesNationsinaparticularregionmayagreetogeneralstandardsforinvestmentintheirregion.OnesuchregionistheAssociationofSoutheastAsianNations(ASEAN).Thisregionisaleadingrecipientofforeigndirectinvestment(FDI).ASEANcountriesactindividuallyandcollectivelytoattractinvestment.Exhibit5-3showsasampleoftheinvestmentincentivesimplementedbyASEANcountries5-8ASEANInvestmentIncentives5-9ScreeningForeign

InvestmentApplicationsMostcountriesrequiretheforeigninvestortoregisterwiththegovernmentandobtaingovernmentapprovaloftheventure.Inmanycountries,foreigninvestorsregisterwithasinglecentralagencysetuptofacilitateforeigninvestments.Itsinternalstaffmayevaluateproposals.Inothercountries,suchasIndiaandMexico,thecentralagencyonlycoordinatesotherspecializedagenciesanddepartments.Insomecountries,suchasBrazil,theevaluationishandleddirectlybyvariousdepartmentsandagencies.5-10ScreeningInvestmentProposalsTherearemanyvariedcriteriabywhichcountriesscreenproposals.Someexamplesofproposalsthatwillbescreenedinclude:Proposalsseekinginvestmentincentives.(Brazil)Thosewithacertainpercentageofforeignownership.(40%inPhilippines)Thosethatexceedacertainamountofcapital.($5Mormajorityownershipforeign-Argentina)Presidentialapprovalneededforacquisitionofmajorityinterestinlocallyownedcompanyworthmorethan$10M.(Argentina)

5-11TieredScreeningandSpecialScreeningofProposalsInsomecountries,onepersonordepartmentwilldothescreeningiftheinvestmentisunderacertainamount.InFrance,investmentsofmorethan10millionfrancsarescreenedinParis.Ifless,theyarescreenedlocally.Specializedagenciesscreeninvestmentsinnaturalresource-basedindustries:HydrocarbonsMineralsForestry

5-12InformationThat

MustBeDisclosedForeigninvestorsmustsupplyscreeningagencieswithdetailedinformation,suchas:TheindustrytobeestablishedAfinancialplanAproductionschemeshowingannualvolumeandvalueoftheproductionAservicesschemeshowingwhatserviceswillbecreatedTheowners,themanagementstructure,andtherelativeshareoflocalandforeigncontrol…5-13EvaluationCriteriaCriteriajudgeconformitywithcountry’snationaldevelopmentobjectives.Thecriteriavarygreatly,butgenerallyinclude:TheimpactonthebalanceofpaymentThenumberofjobscreatedTheimpactoftechnicalknow-howandthetrainingprogramforindigenousemployeesTheimpactonthelocalmarket5-14EvaluationCriteria(cont.)ThecontributiontothedevelopmentoflesseconomicallydevelopedzonesorregionsTheratiobetweenforeignandnationalcapitalcontributionTheexportdiversificationandstimulationTheuseofnationalinputsandcomponentsinthemanufactureoftheproductTheeffectonpricelevelsandthequalityoftheproduct5-15FormalandInformal

ApplicationProcessTheinvestmentapplicationsubmittedbyaforeigninvestormustdemonstratetwothingstothelocalauthorities:Theproposedinvestmentfitstheguidelinesoftheinvestmentlaw,andThattheinvestmentagreeswiththeinvestmentphilosophyofthehostcountry.Reading5-1demonstrateshowfailuretounderstandtheinvestmentphilosophyinthehostcountrycanleadtomistakesbyaninvestor.5-16ApprovalofForeign

InvestmentApplicationsApprovalordisapprovalofanapplicationwillbedonebyaninformalletterunlesstheinvestorasksforanincentiveortheinvestorisaskedtomakeaconcession.Ineithercase,aformalinvestmentagreementisneeded.Agreementwillbegovernedbythehoststate’scontractlaws.Disputeswillberesolvedinhoststateunlessthepartiesagreeotherwise.5-17Case5-1

ArabRepublicofEgyptv.SouthernPacificProperties,Ltd.etal.SouthernPacificProperties(SPP)enteredintocontractswithanEgyptianstate-ownedcorporation(EGOTH)andtheEgyptiangovernment,representedbytheministeroftourism.Egyptbackedoutofthecontractsthatprovidedforarbitration.Courtsetasidejudgmentagainstgovernmentbecausetourismministerhadnoauthoritytobindgovernment.Burdenfelloninvestortomakesurethatproperapprovalhadbeengivenfortheinvestment.E.G.O.T.H..eg/en/Index.htm5-18BusinessFormsInternationalinvestorsmaybelimitedbythehostcountryinthekindsofbusinessformstheyareallowedtouse.Moststateswantforeigninvestorstousebusinessesthat:HavelocalparticipationFullydisclosetheiractivitiestothepublicLocalparticipationusuallymeansajointventureorganizedasapartnership,LLC,orpubliclytradedstockcorporation.Percentageoflocalownershipusuallydetermineswhatincentivesareavailable.Whenpublicdisclosureishighlyvalued,itusuallyrequiresapublicstockcorporationtobesetup.5-19LimitationsonForeignEquity

Foreigninvestmentlawsfrequentlylimitthepercentageofequitythatforeignersmayholdinlocalbusinesses.InIndia,thelimitis40%.InMexico,itis49%.Exceptionsareusuallyallowedtoattractinvestors.ForeignInvestmentPromotionBoard(FIPB)screensallapplicationsforforeigninvestmentinIndia.

5-20SectoralLimitationsForeigninvestmentiscommonlyrestrictedbyparticulareconomicsectors.Investmentlawsusually:Reservecertainsectorsoftheeconomyforexclusiveownershipbythestateoritsnationals.Permitalimitedpercentageofforeignownershipincertainsectors,orDefinecertainsectorswherefullormajorityforeignownershipisallowed.

5-21ClosedSectorsMoststatesdonotallowforeignownershipincertainsectors.Sectorsthatareoftenclosedare:PublicutilitiesVitalorstrategicindustriesEx:Francereservesbroadcasting,telecommunications,railroads,gas,andelectricitytostateagenciesorstate-ownedcompaniesIndustriesthataresufficientlydevelopedEx:FlourmillinginIreland/leatherproductioninJapanMediumorsmall-scaleindustriesthatcanbedevelopedbynationals.5-22RestrictedSectorsRestrictedSectors–stateslimitpercentageofforeigninvestmentallowedinthesesectors.Thisisdonetolimitforeigninfluenceindomesticpolitical,economic,andsocialaffairs.Ex:Australialimitsradioandtelevisionownershipto20%.Ex:Korealimitsownershipintelecommunicationsto49%.5-23ForeignPrioritySectorsSectorsofastate’seconomyinwhichforeignersareencouragedtoinvest.Localresourcesmaybelackingortheinvestmentmayhelpcreatejobs.Ex:InBangladesh,thegovernmentinvitesinvestmentinmanysectors,including:Electronicequipment,agro-basedindustry,cement,rayon,computersoftware,chemicalsandpetrochemicals,frozenfoods,andpaperEx:SouthAfrica’sprioritysectorsinclude:Automotiveindustry,marine,rail,andaerospace,capitalequipment,chemicals,clothingandtextiles,mining,andtourism

5-24GeographicLimitationsAfewcountrieslimitthegeographicareasinwhichforeigninvestorsmayconductbusiness.Argentina–restrictsforeignownershipoflandandbusinessesadjacenttooceanfrontiers.Belize–forbidsforeigncommercialfishinginsideitsbarrierreef.Thailand–Restrictsthepurchaseoflandbyforeigners.Chile–Doesnotallowforeignerstoengageincoastaltrade.Therightofastatetorestrictinvestmentincertaingeographicareasisrespectedbyotherstatesinaccordancewiththestate’ssovereignauthority.5-25Case5-2

Bradyv.BrownBradyandCardwell(BC)wantedtoacquirecoastallandinMexico.Foreignerswereforbiddenfromowningpropertywithin50kilometersoftheshore,Mexico’s“ForbiddenZone.”BChiredBrown,whocreatedcontractsunderwhichBCinvestedinproperty.AttorneyBrownmanipulatedthetransactionsbyformingcorporationswithhisfamilymembersasmajoritystockholders.5-26Bradyv.BrownBrownaskedU.S.courttoapplycomityandfindthatcontractswerevoidunderMexicanlaw.CourtfoundthatactionforfraudwasnotpreventedbycomitysinceBCwereinnocentinvestorsandhadbeengivenimproperadviceaboutlegaltrusts.5-27FreeZonesFreezonesaregeographicalareaswhereingoodmaybeimportedandexportedfreefromcustomstariffsandinwhichavarietyoftrade-relatedactivitiesmaybecarriedon.Theyareusedbystatestoencouragemultinationalenterprisestoinvestintheireconomiesbymakingdirectinvestment.Freezonesarecharacterizedbygeographicalsizeandbythetypeofactivitiesthatmaybecarriedonwithinthezone.5-28FreeZones

CharacterizedbySizeFreezonesvarygreatlyinsize:Fromlargemultistateregions(e.g.NAFTA)Tosmallsubzoneslocatedinabuilding.Thelargestarecalledfreetradeareas(FTAs).

Comprisedoftwoormorestatesthathaveagreedtoleteachother’senterprisescarryontradeacrosstheirbordersfreeoftariffsandrestrictions.NAFTAisafreetradearea.5-29FreeZones

CharacterizedbySizeStatemayopenupitsentireterritoryorallitssectors(e.g.Singapore).Mayopenupcertainregions(e.g.China’sSpecialEconomicZones).Theoldesttypeofzoneisthefreecity,anentireportcitythathasbeenopenedtointernationaltrade(e.g.HongKong).Thefreetradezone(orforeigntradezone)isadesignatedsmallerareanearaport.TheForeignTradeZoneBoardapprovesFTZsintheUS.TheUShasmorethan180FTZsand256subzones.5-30Case5-3

NissanMotorMfg.Corp.,U.S.A.v.UnitedStatesNissanimportedmachineryintotheUStobeinstalledandusedinitsassemblyplantthatwasaFTZ.U.S.Customssaidthattheequipmentwasnotmerchandiseandwasthereforedutiableintheamountof$3M.Nissanarguedthatmerchandiseenteredintoazonebecomessubjecttodutyonlyifthemerchandiseisthereaftersent“intothecustomsterritoryoftheUnitedStates.”5-31NissanMotorMfg.Corp.,U.S.A.

v.UnitedStatesNissan’sargumentthatdutiescannotbeimposedonanyarticlebroughtintoaforeigntradezoneunlessoruntilitissentintothecustomsterritoryoftheU.S.wasrejected.Courtruledthatequipmentisoutsidethedefinitionofmerchandiseifitisinstalledandoperatedasopposedto“stored,sold,distributed,graded,cleaned,mixedwithforeignordomesticmerchandise,orotherwisemanipulated,or…manufactured,”asdefinedinsection3oftheForeignTradeZonesAct.5-32FreeZoneCategories

byActivitiesThetypeofactivitiesthattakeplacewithinafreezoneinclude:StorageDistributionManufacturingRetailingThefullrangeofactivitiesareallowedinanFTZ,butmayberestrictedinasubzone,suchasasingleretailbuilding.5-33FreeZoneCategories

byActivitiesExportprocessingzones(EPZs)arefreezonesinwhichmanufacturingfacilitiesprocessrawmaterialsorassemblepartsimportedfromabroadandthenexportthefinishedproduct.Forcustomspurposes,thematerialsandpartsaretreatedasiftheyneverenteredthehostcountry.Notariffsordutiesareimposed.5-34FreeZoneCategories

byActivitiesFreeretailzones(duty-freezones)areareasininternationalairportsandharborswheretravelerscanbuygoodsfreeoftaxes.Bondedwarehouse–locatedataportofentry,shipperscanstoregoodsuntiltheyclearcustoms.5-35ForeignInvestmentGuaranteesHostcountriesprovideguaranteestoforeigninvestorstoattractinvestment.Someimportantguaranteesinclude:CompensationintheeventofnationalizationRepatriationofproceedsuponsaleoftheenterpriseRepatriationofprofitsanddividendsRepatriationforcurrentincomeRepatriationofprincipalandinterestfromloansNondiscriminatorytreatmentStabilizationoftaxesandregulationsConvertibilityoflocalcurrency5-36ForeignInvestmentGuaranteesConstitutionalprovisionsusuallydealwithcompensationdueforeigninvestorsintheeventof:Nationalization–acquisitionbyastateofpropertypreviouslyheldbyprivatepersonsorcompanies,usuallyinexchangeforconsideration.Expropriation–deprivingapersonorcompanyofprivatepropertywithoutcompensation.

Mostcountries’lawsrequirethatthetakingbeinthepublicinterestandthat“fair,”“just,”or“full”compensationbepaidtotheowner.

5-37ForeignInvestmentGuaranteesForeigninvestmentlawsprovideguaranteesinadditiontoconstitutionalprovisions:Repatriationguarantees–theassuranceofahoststategovernmentthatforeigninvestorswillbeabletotakeoutofthestateboththeinvestmentcapitaltheybroughtinandtheprofitstheyearned.Nondiscriminationguarantees–theassuranceofahoststategovernmentthatforeigninvestorswillbetreatedthesamewayaslocalinvestors. Stabilityclauses–promiseforeigninvestorsthatthehostgovernmentwillnotchangeitstax,foreignexchange,orotherlegalregimeforacertainperiodoftime.5-38Case5-4

ArbitrationBetweenWintershallAGetal.andtheGovernmentofQatarInvestmentlawsandagreementsrequirethatthehoststateactingoodfaithonrequestsformodifications.Facts:QatarenteredintoanExplorationandProductionSharingAgreement(ESPA)withfiveforeigncompanies.Timelimitswerebuiltintotheagreementwithrelinquishmentprovisions.5-39Case5-4

ArbitrationBetweenWintershallAGetal.andtheGovernmentofQatarFacts:(cont.fromslide5-39)Claimantsdidnotfindoil,buthadnotbeenallowedtodrillinareacalledStructureAduetoaborderdisputebetweenQatarandBahrain.

Qatarwouldnotacceptanalternativeproposalrelatingtonaturalgasproductionbaseduponlackofeconomicfeasibility.5-40Case5-4

ArbitrationBetweenWintershallAGetal.andtheGovernmentofQatarIssues:Claimantsarguedthat:QatarbreachedESPAandexpropriatedtheclaimants’rightsandinterestsbyDenyingthempermissiontoexploreforpetroleuminStructureA,andByfailingtoagreewithclaimantsoncontractualarrangementsforutilizationofnaturalgasdiscoveredbyclaimants.5-41Case5-4

ArbitrationBetweenWintershallAGetal.andtheGovernmentofQatarArbitralTribunalfindings:TherewasnobreachoftheESPA.Qatarhadnegotiatedingoodfaith.Ithadnodutytoacceptthenaturalgasproposals.Therewasnoexpropriationofclaimants’contractualrightsforfailingtoacceptnewproposalsforareasoutsidetheContractArea.Thenoticeofrelinquishmentwasineffective.Theclaimants’hadyettobeallowedtoexploreStructureAandQatarhadfailedtoinformthemoftheBahraindispute.5-42ProtectionofSubsidiariesSubsidiaryfirmsaresubjecttosameobligationsaslocalfirms.Theyarealsosubjecttospecialregulationstopreventthemfromabusing:TheirlocalsubsidiariesTheirsubsidiaries’employeesTheirsubsidiaries’creditors5-43ProtectionofSubsidiaries:

DisclosureofInformationAllfirmsaresubjecttobasisdisclosureobligationstoprotectofthepublicfromfraudandmisrepresentation.Twobasicsetsofdisclosurerules:InitialororganizationaldisclosurePeriodicreportstoreportchangesFirmsmustregistertheirorganizationaldocumentsandpublishtheminagazetteornewspaperofgeneralcirculation.Annualreportsareeitherpublishedorfiledwithacentralagencydependinguponthestate’slaws.5-44ProtectionoftheSubsidiarySeveralcountriesprovidesomeprotectionforsubsidiariesfromthedisadvantageousdecisionsoftheirparentcompany.Theseprovisionsaremeanttopreservethecapitalbasisandfinancialviabilityofthesubsidiary.Somecountries,likeGermany,treattheparentandsubsidiarylikeacombinedcompany,requiringtheparenttocompensatethesubsidiaryforanydisadvantageouseffectsofitsdecisions.5-45ProtectionoftheSubsidiaryIftheparentandsubsidiaryenterintoacontractofdomination:Thesubsidiarymustsetupaspecialreserve,Theamountofprofitsthatcanbetransferredtotheparentarelimited,andTheparentcompanymustassumetheannuallossesofthesubsidiary.5-46ProtectionofaSubsidiary’s

MinorityShareholders

Corporatelaws,securitiesregulations,orstockexchangeRulesgrantminorityshareholdersappraisalrights.Appraisalright–Therightofadissentingshareholdertorequirethecompanytopurchasehisorhersharesattheirfairmarketvalue.Insomecountries,theminorityshareholdercaninitiatelegalactionagainstdecisionsimposedonthesubsidiarythatarecontrarytothesubsidiary’sinterests.

5-47ProtectionofaSubsidiary’sCreditorsParentcompaniesaresometimesheldresponsibleforthedebtsoftheirsubsidiaries.Intheeventofliquidationofthesubsidiary,theparent’sclaimsagainstthesubsidiary’sassetsareoftensubordinatedtothoseofothercreditors.Creditorsareoftenentitledtobringactionstokeepasubsidiaryfromcomplyingwiththeinstructionsfromaparent.Thehoststatemayintervenebyappointinganadministratortooperatethesubsidiarytoprotecttheinterestsoftheminorityshareholdersandlocalcreditors.5-48ProtectionofaSubsidiary’s

TortVictimsAhoststatemayactonbehalfofinjuredpersonswhenasubsidiarycausesinjury.Remediesmaybepursuedinlocalcourtsandforeigncourts.TheBhopalcasefromIndiasetsforththisright.5-49Case5-5

TheBhopalCaseCharanLalEnormousamountsoflethalgasleakedfromastoragetankafteranemployeeaddedwatertoitataUnionCarbideIndiaLtd.PlantinBhopal,killingmorethan3,800people.CaseswerefiledinU.S.courts.TheIndianParliamentpassedtheBhopalGasDisasterLeakAct,whichauthorizedtheIndiangovernmenttotakeovertheclaimsofthevictims.ThegovernmentofIndiabroughtsuitonbehalfofthevictimsintheDistrictCourtofBhopal.ThevictimsfiledpetitionschallengingtheconstitutionalityoftheBhopalAct.

5-50Case5-5

TheBhopalCaseCharanLalThecourtappliedthedoctrineofparenspatriaethatallowsthestatetoactasaguardianofpersonsunderdisabilities.ThecourtheldthatthegovernmenthadasovereigninterestinsecuringforitscitizensalltherightsguaranteedbytheIndianConstitution.Naturaljustice(dueprocess)isoneofthoserights.

5-51SecuritiesRegulationsNationalgovernmentsregulatesecuritiestransactions.Thisincludes:DefiningtheformthatsecuritiestakeOverseeingthemarketsinwhichsecuritiesaretradedEstablishingdisclosurerequirementsAdoptingclearanceandsettlementproceduresLimitinginsidertradingRegulatingtakeovers5-52SecuritiesAsecurityisAshare,participation,orotherinterestinanenterpriseorotherpropertyorAdebtobligation.Stockisashareintheownershipofacompanythatentitlesitsownertorightsinthecompany.Abondisacontractualobligationofacompanytorepaytheholderhisoriginalinvestmentplusinterestatafuturedate.5-53SecuritiesSecuritiescantakeseveralforms:Certificatedsecurity–Asecuritythatisintheformofanegotiableinstrumentofthetypecommonlydealtinonsecurityexchanges.Registeredsecurity–Acertificatedsecuritymadeouttoanamedownerandregisteredonthebooksoftheissuer.Bearersecurity–Acertificatedsecuritymadeoutto“bearer.”Itisnotregisteredonthebooksoftheissuer.

5-54SecuritiesRegisteredsecuritiesaretransferredbyEndorsementdirectlyonthecertificateandDeliveryofthecertificateThenewownersendsthecertificatetotheissuerforregistrationandtoobtainanewcertificate.5-55SecuritiesAbonafidepurchaserofabearersecurityacquiresownershipevenifthetransferorwasnottheowner(i.e.,stolen).Abonafidepurchaserissomeonewhobuysasecurityingoodfaith,paysvalue,andisunawarethatthetransferorisnottherightfulowner.5-56SecuritiesSecuritiesdonothavetobeinatangibleform.Companiescanissueanuncertificatedsecuritywhoseownershipisrecordedonlyonthebooksoftheissuer.Whethercertificatedoruncertificated,stockcertificatesmuststateaminimumparvalueontheirface.Thisistheminimumpriceatwhichtheissuercansellthestock.5-57SecuritiesExchangesSecuritiesbrokersanddealersgrouptogethertoformsecuritiesexchanges:Marketplaceswherememberbrokersanddealersbuyandsellsecuritiesonbehalfofinvestors.5-58IssuanceofSecuritiesInordertoissuesecurities,thecorporationmustprepareandregisteraprospectus.Thisisaprintedstatementgiventoprospectivesecuritiesinvestorssettingouta“full,true,andplaindisclosureofallmaterialfacts”relatingtothesecuritiesandtheissuer.TheprospectusmustbesignedbytheofficersanddirectorsoftheissueranypromotersandunderwritersItmustberegisteredwiththesecuritiesexchangeorappropriateagency.5-59ClearanceandSettlementProceduresClearanceandsettlementistheprocedurebywhichabuyerturnsoverthepurchasepriceandthesellerturnsoverthesecuritiesinasecuritiestransaction.TheNationalSecuritiesClearingCorporation(NSCC)handlesclearanceandsettlementforallsecuritiestradedonAmericanexchanges.Thereareclearinghousesforinternationaltradesandtradesinvolvingemergingmarkets.5-60DepositoryReceiptsTofacilitateforeigntradinginshares,brokeragefirmsusedepositoryreceipts.Adepositoryreceiptisanegotiableinstrumentissuedbyabankthatrepresentsaforeigncompany’spubliclytradedsecuritiesandthat,inturn,istradedonalocalsecuritiesexchange.Itiscreatedbyabrokerpurchasingacompany’ssharesi