CHOOSING JURISDICTION AND APPLICABLE LAW IN DISTRIBUTION CONTRACTS: STRATEGIES AND RECENT TRENDS...

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CHOOSING JURISDICTION AND APPLICABLE LAW IN DISTRIBUTION CONTRACTS:

STRATEGIES AND RECENT TRENDS

LITIGATING IN CRITICAL COUNTRIES:中国 (CHINA),

РОССИЯ (RUSSIA), INDIA

Paul Jones, Toronto (China)Vladimir Lobastov, St. Petersburg (Russia)

Avninder Singh, New Delhi (India)

IDI Annual MeetingJune 14, 2013 München, Deutschland

Introduction• The People’s Republic of China (“PRC”) and the

Russian Federation are civil law jurisdictions

• Both are modeled on Germany

• India is a common law jurisdiction modeled on English law

Introduction – PRC Courtroom

Introduction – Russian Courtroom

Introduction - India

Going to Court around the World

Enforcement of Contracts –

• World Bank – www.doingbusiness.org/EconomyRankings

• Based on procedures, time and cost

• Germany - 5th

• United States – 6th

• France – 8th

• Hong Kong – 10th

• Russian Federation – 11th

• Australia – 15th

• Australia– 15th

• People’s Republic of China– 19th

• Canada – 62nd

Going to Court around the WorldEnforcement of Contracts –

• Canada – 62nd

• Brasil – 116th

• India - 184th 11

FACT SITUATION – Sloppy Sally• Sloppy Sally Inc. based in New York

• entered into a franchise agreements and a area development agreements in the PRC, Russia and India

• no disclosure document was given 12

FACT SITUATION – Sloppy Sally• Franchisees signed U.S. standard form of

franchise agreement

• defaulted

• not following standards regarding cleanliness,

• using an unauthorized trademark in the system,

• not submitting reports and

• not paying royalties

FACT SITUATION – Sloppy Sally

• governing law is that of New York State

Disputes, except those involving intellectual property, shall be resolved by arbitration in New York City

• Intellectual property disputes shall be resolved by the exclusive jurisdiction of the courts of the Southern District of New York.

• The franchisor retains the option of using the local courts for all disputes.

FACT SITUATION – Sloppy SallyInhouse counsel:

• How best to terminate the franchisees?

• arbitration in New York tales about 3 months to a year; costs about $50,000 to $100,000 USD

QUESTIONS – Sloppy Sally

1. How long would it generally take to obtain an initial court decision in your jurisdiction? What would it cost?

2. How long would it generally take to obtain court recognition for an arbitral award in your jurisdictions? What would it cost?

3. What evidence would be required with respect to the claim about each of the issues and what formalities would be required:

• The cleanliness issue and the local standards defense?

• The use of the unauthorized trademark?

• The failure to file reports?

• The failure to pay?18

4. Would a court in your country accept jurisdiction if Sloppy Sally exercised its option to use the local court?

5. Would there be enforcement of any interim measures with respect to the trademark issue, or any other issues, in arbitration or in court?