Monthly Archives: March 2014

What Impacts will the Crimea Crisis Have on Businesses?

The world stood absolutely shocked when Russia invaded the territorial sovereignty of Ukraine this late February staking claim to the Ukrainian Territory of Crimea, a peninsula in the Black Sea with no land border with Russia. All reasons aside, Crimea is now faced with a massive change: time zone, flag, anthem, water and power supply, laws, currency, and military. These aren’t the things that an international business or a former Ukrainian business turned into an international business because of contracts and business activities carried out in Crimea will be worried about. These businesses need to know how the life of the business will continue and whether or not the Russian courts will continue to honour their business contracts.

Many countries have issued sanctions and as the situation develops, it is a near certainty that more sanctions will be issued. In more specific cases, some countries and its citizens have essentially embargoed 18 individuals that the EU has determined to be deeply rooted in the cause of the occupation. The US has issued visa bans for 20 individuals involved in the crisis. Export licenses have been suspended for military equipment or equipment to be used internally to continue the suppression.

For impacted businesses it is essential to continually monitor the situation. The divorcing of a country and remarrying of another is a painstakingly difficult process and will take a long time, especially with overseeing groups such as the European Union and the United Nations. Exchange controls will be imposed to prevent a runaway with the currency, a business can prepare for this. Whilst the negotiations will take place in the background of the developing law, the courts will find one voice. Russia stands in the face of major worldwide opposition to its actions and will almost certainly make decisions now to make Crimeans happy. If a business is currently involved in products used for military or suppressive purposes then exportation limitations will have to be managed for the meantime. If a business is involved with any of the sanctioned and restricted individuals, a further limitation will be imposed. As negotiations continue and more things are resolved, then some of these important and burning questions about businesses will take place. In the meantime, finding a professional to help guide a business through this transition period will make a very real difference.

If you or your business has been impacted by the Russia takeover of the Crimea Peninsula and you require assistance or more information about what this means for you and your business, how to proceed or whether or not you must just let go, please contact us immediately as swifter actions can make a difference.

New Australian Privacy Laws for Businesses: The Highlights.

Privacy has been a hot topic as of late all over the world. Legislation is often years behind changes in technology and in the case of privacy this is definitely the case. Two weeks ago, Australia’s new amendments for its privacy law came into effect updating the law to the impacts of today’s technological advancements. The original Privacy Act (1988) is being reformed and updated to protect Australians in the digital revolution. Not only will Australian businesses be making changes to be compliant but certain international organisations and businesses will also have to do the same or face steep fines. The first thing either organisation will have to consider is how it collects, uses, discloses, and handles personal information data. Without this information, determining whether or not the organisation is compliant with the amendment is impossible.

Australian Organisations. A key change in the Act is the addition of the Australian Privacy Principles (APPs) replacing the National Privacy Principles and the Information Privacy Principles. The thirteen APPs apply to organisations and agencies doing business in Australia with over AU$3-million in revenue. These entities will certain have big changes to implement if preparations had not been made before the effective date of the amendment. The biggest changes are how to deal with unsolicited personal information, using previously obtained information for direct marking purposes, obligations in regards to international data sharing, and increased protection and security for holding data.

International Organisations. As mentioned previously, this amendment not only applies to Australian businesses but to agencies and organisations doing business in Australia with over AU$3-million in revenue so many international businesses and organisations will be impacted. One very important change relates to personal information collected in Australia leaving the country. Now, if this particular information leaves Australia, the disclosing entity must take reasonable steps under the circumstances to assure that the receiving entity applies the thirteen APPs. There are some exceptions to this rule and an international organisation that is compliant with privacy laws in the EU and the US, for instance, should not think that they would be compliant in regards to Australia. The amendments are similar to other countries but tend to come out stronger in practice.

If your business is located in Australia, is an international business impacted by this amendment, or you just aren’t quite sure, please don’t hesitate to contact us for help in tackling this change for your organisation. We can help with determining if this amendment impacts you, how to avoid its impact or how to avoid fines and be compliant if you are impacted including but not limited to drafting new privacy policies, amending complaint procedures and being more transparent.

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Protecting Your Business from Social Media Risks.

Engaging with customers via social media is a cheap option for businesses and thus an attractive one to take advantage of. As with all things, there are risks that must be examined and planned for when choosing to use social media as a tool for your organisation.

Key to effective consideration of risks is developing a carefully deliberated social media strategy. This plan should examine three different categories of social media usage as they will apply to the organisation:

  • the individual employee’s personal use of social media,
  • the organisation’s advertising, marketing and internal use of social media, and
  • the organisation’s and individual employee’s professional use of social media for building connections, hiring personnel and networking

Following consideration of the different categories of social media that your organisation would or could allow within their strategy there are five different areas of legal risk that the strategists need to be aware of: legislative risks, contractual rights, non-contractual obligations, non-contractual rights and dispute risks. Within these legal risks, consideration of trademark and copyright laws, advertising, fair trade and ethical standards, employment contracts, protection of confidential information, product disparagement, patent infringement risks and prevention of defamation, to name a few, should be examined and managed.

Having a trained professional lead your organisation’s formation of the social media strategy can help set at ease any lingering concerns about missing an important legal risk that must be mitigated.

By taking the time to either re-evaluate your social media strategy or take control of the employee’s social media usage by drafting a strategy, your organisation can prevent the more typical impacts of social media risks to the more extreme impacts, such as major damage to the organisation’s reputation leading to embarrassment or heavy costs due to court-ordered damages. Having some control over social media usage within the organisation will also help set at ease any worry about these risks not being managed.

If your organisation is considering drafting and social media strategy or requires guidance in re-evaluating or updating the strategy in the face of ever changing legislation and international standards, please contact us for our help.

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Defamation and Social Media: Guarding Your Business’ Online Presence.

Social media has blossomed into almost every person’s life on earth. The effects of social media, however, seem to be that those who choose to express themselves online do so with a bit more bravado than they would do in person. The result has been a rise in cyber-bullying and the like and a reduction in privacy expectations by many. Internet defamation is a growing tort heard by judges the world over. With the near limitless reach of the Internet, the expectation is that Internet defamation cases will be costing people and businesses big money.

Countries around the world are hearing the first social media defamation cases: Australia, South Africa, the US, and more. In the UK, a New Zealander brought an Indian to answer for a defamatory tweet which will cost him £90.000 in damages and around £1-million in attorney’s fees.

Online defamation isn’t limited to social media. Posters should be wary of blogs and comments to blog postings, chat rooms and comments made on any site where the option is given. While most victims of online defamation would look to the defamer for resolution, it has not been uncommon for them to look to website hosts and Internet Service Providers for restitution. In the US, a federal law called the Communications Decency Act protects this group.

Product Defamation. Just as individuals tend to feel more shielded online, so do businesses. Online unsubstantiated claims made about a competitor’s goods or services are landing businesses in trouble in court. Those who hide behind some type of online alias wont be spared having to answer for defamatory conduct online. Attorneys work with Internet Service Providers and private detectives to uncover the true identities of those who are defaming businesses. A business’ online presence must guard against defamation, trademark infringement and consumer fraud. It is extremely important for businesses to coach those in charge of the business’ online contributions, website and social media about the dangers of online defamation and product defamation.

If you or your business has been defamed or is accused of being defamed, please reach out to us for assistance. We can also help with laying the ground rules to avoid defamatory conduct online.

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Why Incorporate in the British Virgin Islands.

When founding a registered business, be it a partnership or a corporation, the beginning stages are exciting and often less focused on the business aspects and more on the sales, advertising or innovation sides of the table. This can in the long run be detrimental to the business’ future needs, such as confidentiality and expansion. Many such start-ups will simply form their entity in the location that they operate in from the get-go; however, the start-ups that have good advisors may choose offshore financial centres as the perfect place to grow their business. The most popular offshore financial centre, with good reason, is the British Virgin Islands (hereinafter “BVI”).  The BVI has over 800,000 incorporated businesses and one of the most modern and progressive company laws in the world, the BVI Business Companies Act of 2004.

Choosing the BVI. As with many offshore financial centres, the BVI offers those who incorporate within its borders many benefits. A start-up would find the speed and cost associated with incorporation to be less compared to other options, that there is a wealth of legal, business and accounting experts to be had, a tax neutral environment, and no requirement that any of the directors reside in the BVI. Moreover, there is a huge decree of freedom with decision-making, whether the directors or the shareholders make the decisions. Many of the provisions in the BVI Business Companies Act can be disapplied in the Articles or Memorandum creating the opportunity for more control. There are of course, many more advantages with being incorporated in the BVI but these are just a few.

Recordkeeping Requirements. A few recent changes in legislation have altered the way BVI businesses need to keep records and supporting documentation. Under the BVI Business Companies Act of 2004, a BVI business must keep records to show and explain its transactions which enable the financial position of the company to be determined within reasonable accuracy at any time. This not only extends to corporations but also to limited partnerships. The terms required to keep these records is five-years. Whilst there is no requirement that the records be kept in the BVI, the registered agent must be apprised of the location and notified within two-weeks of any change to the location.

If you are considering founding your business in an offshore financial centre, the BVI or are already incorporated in the BVI and need to review your recordkeeping policies, please contract us and we’ll be glad to advise you further.

England and Wales Reform the Defamation Laws.

As more and more opinions are shared online all over the world, the risk of being brought to answer for a defamatory statement increases. Not only does this risk apply to the author of the statement but website operators can also be brought to answer for the defamatory statements of another published on their site. In England and Wales (hereinafter “the UK”), recent reform of the libel and slander standards in the form of the Defamation Act of 2013 has changed things up a bit, generally making it more difficult for a defamation suit to be brought. It is important to note, however, that Northern Ireland has not adopted this Act so the old rules still apply and Scotland has it’s own law and there are no talks to reform it as of now. The Defamation Act of 2013 came into effect in England and Wales on 1 January 2014.

The reasons for the reforms were to make it more difficult to bring a defamation suit by changing some of the defences, heightening the standard of injury that the complainant must prove for success and relaxing to whom the defences apply. The court system in England and Wales has been clogged up for years now by trivial complaints and libel tourism, in which many international complainants would bring suit in the UK rather than the more appropriate venue to take advantage of archaic common law standards that had placed the burden of proving the offending statement correct on the statement’s author.  With the reform, the complainant must prove the statement is defamatory in nature, in other words, they must prove that the statement is false. Moreover, when it comes to the question of injury, the statement must have or will seriously injury the complainant.

Website Operators. When a defamatory statement is being published online, website operators must be cautious as they can be held liable for defamation as much as the author of the statement. Under the reformed laws, a website operator will notify the author immediately of complaints regarding their statement. The author will then have five-days in which to outlining whether they consent to the removal of their content. Beyond the five-day period, the website operator will have two-days to remove the comment if no response has been given by the author. If there is a response, the author may or may not have to furnish their contact details with the operator to hand over to the complainant.

If you operate a website that publishes your content or the content of others, then please contact us to be certain that you understand all of the international defamation laws and application. Moreover, we can recommend safety features that can protect you from libellous statements published on your site.

Data Protection: Where does “Processing” Occur?

The EU Data Protection Directive, implemented by individual member states, is to be applied even where the data controller is located outside the EU, but uses equipment located within the EU to process that personal data.  The High Court of Berlin has been reviewing a case brought against Facebook by the Federation of German Consumer Organisations.  The group claimed that Facebook was in breach of German data protection law by sending emails to non-users without their consent through use of the “Friend Finder” feature.

Most significantly, the High Court placed particular importance on the use of cookies.  Holding that Facebook, as a data controller, used “equipment” in Germany when it placed cookies on the devices of German users, regardless of whether they were Facebook users.  This is significant since Facebook, a US company argued that any German data was controlled and processes from its operations in Ireland and therefore, Irish data protection laws applied to it.  Yet the High Court held that Facebook did not provide sufficient evidence to demonstrate that its Irish operations actually made the decisions expected from a data controller, rather the US operations was the decision maker.

This ruling is contrary to that handed down by the Schleswig-Holstein Administrative Court of Appeals last year,  which ruled that Facebook was not subject to local  (German) data protection laws.  The Administrative Court of Appeals did not address the question of whether the Irish or US operations controlled the processing of German users’ personal data.  Rather found that the Irish operation’s participation of the blocking of anonymous accounts was sufficient to render a decision.

This most recent decision is important since most online advertising companies use cookies to track consumer preferences in order to more specifically target relevant advertising materials.  Should this decision stand it is likely that characterizing the placement of cookies onto a consumer’s device as using equipment would subject US companies, in particular, to much closer scrutiny by many countries.

Need assistance? Please contact us and see how we can help.

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