Category Archives: International Business Expansion

International Business Expansion


Global business means global contracts.  Each of the parties are resident or domiciled in different countries.  As laws and legal language differs from country to country contracts need to reflect language that accommodates and clarifies provisions that might not be familiar in that foreign jurisdiction.  In addition, the cost of litigating in a foreign jurisdiction can exceed all expectations and thus is difficult to quantify.

The choice of law can be dictated by the contract itself, yet the choice of law can also be different than the place chosen for resolution of the dispute.  Thus, a foreign court could be in the position of, for example, an English court interpreting U.S. law.  In this example, parties before an English court are permitted to present experts to assist the court in interpreting U.S. law.  This can become a battle of the experts. 

Where a standard form is used, which is meant to provide a uniform interpretation providing some certainty, however, foreign courts are not necessarily familiar with such universal interpretation and may alter the operation and effect of the underlying agreement.

Contracts provide certainty in business.  Such potential alteration eliminates this certainty and creates risk that is difficult to quantify.  With regard to specific provisions, U.S. courts generally takes a broad view and interpretation of contract provisions and are willing to imply provisions, for example, good faith.  Yet courts in other jurisdictions are not willing to imply what is not spelled out by specific language.  Interpretations also varying with regard to specific legal concepts.  “Gross negligence” is a well-recognized legal concept in U.S. law, however, in England for example, there is no concept of gross negligence, rather this concept is replaced by a notion of serious error or conduct falling significantly short of expectations. 

Whenever possible, check with a lawyer in the foreign jurisdiction to ensure the differences are fully understood and clarified wherever possible.  If possible carefully draft provisions keeping in mind a foreign court may be interpreting the terms should a dispute arise.





Non-disclosure, confidentiality, and/or proprietary information agreements are one of the most frequently used agreements in business today.  Businesses entering into a new relationship or extending the scope of an ongoing relationship with clients, vendors or customers will often require a formal agreement between the parties outlining the use and further disclosure of confidential information.

Confidential information can include a myriad of information from intellectual property, source code, financial information, trade secrets, employee names and/or salary data, client names, methodologies or any information which is not publicly available.  These agreements are widely required prior to the disclosure of such information by a disclosing party, and can be one-sided or mutual.   The term usually extends for some period of years beyond the end of the relationship.

Customary provisions include:

  1. the purpose of the disclosure of confidential information;
  2. the type of information being disclosed;
  3. restrictions regarding onward disclosures;
  4. permitted use of information disclosed;
  5. restatement of ownership and whether disclosure grants a license;
  6. standard of care;
  7. disclaimer as to the accuracy;
  8. term and termination;
  9. return or destruction of confidential information in tangible form; and deletion if disclosure was in intangible form;
  10. consequences for breach;
  11. general clauses regarding assignment, choice of law etc.

Among the most controversial provisions is what happens in the event of a breach.  What happens when, for example, confidential information is made public or misused by a receiving company?  First, here’s an example of a typical provision regarding breach:

  ” A breach of any of the promises or agreements contained herein will result in  irreparable and continuing damage to Discloser for which there will be no adequate remedy at law, and Discloser shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate).”[1]

The purpose of injunctive relief and/or specific performance is to halt further disclosures or misuse of confidential information.  Monetary damages, on the other hand, go to the heart of the harm, the purpose of which is to compensate the disclosing company for the loss suffered by any prohibited disclosure.  There are two types of monetary damages, direct and indirect.  Direct damages are reasonable and ordinary damages that may be expected from a breach; while indirect damages compensates for the unexpected damages, including lost profits, lost use, reduction in value of the confidential information, loss of goodwill or customer business.  The indirect or consequential damages represents a much higher value damage since they are difficult to predict and, more importantly, to quantify.

Disclosing parties want to keep indirect damage provisions in the non-disclosure agreement and receiving parties want them out.  Best practice would be to define “direct damages” to include some of the types of damages that a disclosing party might expect from a prohibited disclosure or misuse.  This way some indirect damages might be re-characterized as direct damages.  The more closely damages can be quantified the more likely an agreement will be reached.  In addition, a receiving party may insist on a shorter term by which it is bound to hold the information confidential, or waive the need for a bond if seeking injunctive relief.

In the current business climate, non-disclosure agreements are frequently used, but standard versions no longer adequately protect both parties, each use should be reviewed and tweaked to suit the purpose.  As this is one of the most important agreements used every day by many businesses it deserves a bit more attention to the detail.


[1] This is a very general example, and the language will vary depending on the parties, the information disclosed and a number of other factors.


South Africa and U.S. Sign Agreement over Tax

Earlier this month, South African Finance Minister and the U.S. Ambassador to South Africa signed an inter-governmental agreement between the two nations that brought South Africa into the many jurisdictions that exchange information with the IRS under the Foreign Account Tax Compliance Act (hereinafter “FATCA”).

FATCA, enacted by the U.S. Congress in 2010, attempts to cast more transparency over the foreign accounts of U.S. citizens living in foreign countries. With this agreement made with South Africa, no longer will individual banking institutions have to make agreements for exchanging information with the U.S. government.

The impact for Americans living in South Africa will be that their banking information will be shared with the IRS and, as the agreement signed by the nations is reciprocal, the banking information of South Africans living in the U.S. will also be shared back with the South African Government and the Tax Office. The U.S. Ambassador noted upon signing: “The signing of these agreements is an important step forward in the collaboration between the United States and South Africa to combat tax evasion.”

If you are an American living or banking in South Africa or a South African living or banking the U.S. and require more information about the impact of the signing of this agreement, then please feel free to contact us for more information specific to your situation.



China’s New Trademark Law

China revamped their Trademark Law and it has been in effect now since May of this year. With so many counterfeit and imitation goods coming out of China, many people across the world struggle with giving China creditability when it comes to respecting trademarking but their new trademarking laws will give them back some of the lost credibility. Not only will trademark infringement be taken more seriously, but misuses of the system will no longer be tolerated. The aim with the new law is to increase the protection against piracy, shorten the prosecution times, strength the well-known mark protection, increase fines, compensation and statutory damages for infringers. Additionally, the legal standing for oppositions and invalidations has been narrowed, sound marks and multiple class trademark applications have been made available and now challenged marks will proceed through the registration process more easily.

China has been a hotbed for trademark squatting for years. International businesses coming to China in the past would often have found that they’re mark had already been spoken for. With the revision of the trademark law, there has been a crack down on trademark privacy and registrations made in bad faith. Additionally, misuses of well-known mark status through fake litigation will come to an end. Moreover, opposition and invalidations will only be allowed to be brought by prior rights holders or interested parties thus reducing the arbitrary and bad faith oppositions to mark registration.

In terms of filing, e-filing is now allowed but is really only available domestically at the moment for standard goods items. It seems that the early hype about original powers of attorney and trademark applications being signed by the applicant have fallen away as the China Trademark Office has reverted back to the old filing requirements as set forth before the revised trademark laws.

If your business is considering registering their mark in China or already has a registered mark in China, it is best to review the new laws. We can help with any confusion and can assist in getting your trademark through the process of registration and recordal. Please don’t hesitate to contact us if you require more information.



Post-Data Breach Notifications and Disclosures.

You are a business that holds the personal information of employees and customers and the worst has been released: there has been a data breach.

Depending on where your business, employees and customers are located, there are different requirements on how to handle such a breach.

For those jurisdictions that have laws governing this area, there will be notice and disclosure requirements.

But what happens if the breach goes unnoticed? How can your business be sure that they are keenly aware of all data breaches? Many data breaches aren’t even discovered for months. Are all data breaches created equally? What sort of breach must be reported? We hope this posting will clear up some of the questions that your business may have regarding data breaches and required action if not put your business on the right track to data security.

There are ways in which companies can monitor if breaches have happened or if any strange behaviours are happening that would suggest that they have been hacked. Still, sixty-two percent of breaches take months to be discovered.

Almost every state has requirements that in at least some cases, data breaches, once discovered, be subjected to a risk of harm analysis and parties and the Attorney General be notified. Some industries require that there be notifications made. Some suggest that all data breaches should be paired with a notification and some press about what the company is going to do in the future to prevent such events from happening.

It is important to know what the standards are for not only the jurisdiction your business is located in but the jurisdictions for every person’s data that you hold, as residency of the person’s data is the standard that must be followed to meet the standards of most state laws in addition to the industry standards.

If you have more questions about data breaches and notification and disclosure requirements more specific to your business or jurisdiction then please don’t hesitate to contact us for more personalised information. Even questions about how to get started are welcomed.

We also can suggest purchasing a copy of our e-book, Data Privacy: A Practical Guide, available at:



Update: FATCA Compliance

The push by the IRS to persuade countries around the world to get onboard with the Foreign Account Tax Compliance Act (“FATCA”) has been quite successful. As part of the Hiring Incentives to Restore Employment Act of 2010, FATCA requires bank and financial institutions to disclose U.S. assets being held outside the U.S. on behalf of U.S. taxpayers. Currently, over 70 countries and 77,000 banks and financial institutions have now registered under FATCA. Banks and financial institutions that fail to comply may be frozen out of U.S. markets since a 30% withholding tax penalty will be imposed on payments of U.S. source income to these foreign institutions.

Foreign holding companies formed as an integral part of global structuring strategies may be declared a foreign financial institution, based on private equity investments, and therefore would be required to register and comply with disclosure requirements. Each foreign financial institution will be required to comply with FATCA even if it has no U.S. investors or invests in U.S. markets. FATCA Regulations obligates the foreign financial institution to identify its investors or account holders, and if any are “specified U.S. persons” defined as U.S. citizen, U.S. resident, domestic corporation, or trust. As a U.S. taxpayer with investments in foreign financial institutions, including possibly foreign holding companies, you will no doubt have received a request for completion of a declaration, whether from a foreign financial institution or from the holding company local registered agent.

The information required to be disclosed includes, account numbers, balances, and identification of the U.S. taxpayer. The U.S. taxpayer with a foreign bank account with a value of over $10,000 must also disclose the particulars of the account and any assets held each year.

U.S. taxpayers can still comply with FATCA regulations by participating in the Offshore Voluntary Disclosure Program and be willing to reopen up to 8 previous tax years, paying taxes, interest and penalties. Foreign banks, including Credit Suisse and UBS are still recovering from steep fines and penalties for failure to disclose assets held by U.S. taxpayers. Foreign banks and foreign registered agents will be expected to disclose to remain in compliance with FATCA or face increased scrutiny, fines and penalties, potentially closing off the market to U.S. customers. Moving forward foreign banks and foreign financial institutions will have more stringent due diligence requirements to open accounts, form companies and purchase assets.



Cayman Islands Companies.

For those wishing to form an offshore business, the Cayman Islands is probably the first place considered, and for good reason. One of the most well known major offshore financial centres, the Cayman Islands, a British Overseas Territory attracts businesses and individuals trying to take advantage of the island’s tax policy. For some companies incorporated in the Cayman Islands, there is no corporate income tax. For this reason, many others top businesses list their address with the Securities and Exchange Commission as George Town, Cayman Islands. So many companies find it advantageous to be incorporated in the Cayman Islands, in fact, that there are more registered companies in Cayman than there are people!

The biggest benefit to incorporating in the Cayman Islands shouldn’t be thought of as tax avoidance, but rather as raising capital and becoming a global business. If a business is able to take the money that would have gone to taxes and invest in their business, there is an obvious benefit. For years, the US government in particular, has been trying to find a way to get these clever companies to pay taxes in the US and has painted them as unpatriotic and tax-avoiding, but it is completely legal.

If you are interested in incorporating your business in the Cayman Islands, then please contact us. Not only do we have years of experience on the Island but retain many contacts that can prove helpful during the incorporation process. Please, don’t hesitate to contact with questions.


Small to Medium-Sized Business with Data Security Worries?

Data security is not something that only large businesses and corporations need to be worried about. Any business with an online presence must be even more worried about it. However, securing customer and employee data is something that is either passed on to a third party to deal with or is largely ignored because businesses are unaware of their obligation to do protect the data or because it is just too overwhelming and confusing. It is true that data protection regulation and legislation can be confusing especially when having to meet the standards of both domestic and international legislation. A breach in data security could range from the system being hacked and held for ransom or a retired employee’s access not being closed by mistake. The result of misuse, loss or theft of data could be a lawsuit, loss of reputation and business or fines. Whilst these may not be devastating for a large business or corporation such as Google, a repeat offender, to a small to medium-sized business, the result could mean closing the doors.

Owing to these problems faced by the small to medium-sized businesses and even some of the newer larger businesses, two of our top consultants of Interstice Consulting have gathered together their valuable insight to help guide businesses through the process of setting up data security measure to meet the stringent requirements of legislation. Data Privacy: A Practical Guide examines global trends in data security and data privacy, analyses in depth the larger jurisdiction’s legislation and how to be in compliance, touches on business-to-business issues as well as data breach insurance, informs on what to do in the case of a data breach and provides ways to be continually updated. There is no to wait for your book to arrive in the mail because it is available immediately as an e-book only.

This guide will give small to medium-sized business not only the information they need to set up their data protection scheme but will also give them to confidence to be able to reach out to the authors should they have a more specific question or assistance in a jurisdiction not covered by this guide. By starting on the right path to data security for your business, you can assure your customers that they made the right choice to continue their business relationship with you.

To purchase your copy of Data Privacy: A Practical Guide, please follow this link:



Need-to-Know: International Arbitration.

Arbitration is often a choice made by those who find the court systems to be too out of their control and costly. In arbitration, those who are having the unsettled dispute can either test their case before heading to court with non-binding arbitration or forgo the court system entirely and agree to binding arbitration. For these reasons and more, arbitration clauses are written into many business contracts leading those who are forming the contract to believe that they will have more control of the process if an unresolvable dispute or breach of contract is to occur. Whilst choosing arbitration for domestic business contracts may make sense, in cases where arbitration is chose by businesses located in or operating in different countries, it is often more complex and governed by more sets of laws than one would have anticipated.

Whilst almost all contracts contain an express choice of law clause in the case of a contractual dispute, the parties often fail to choice a seat of arbitration. Many will think that the express choice of law clause will cover the entirety of the contract, including the arbitration clause, but this is not the case. The arbitration clause is read as a contract on its own and therefore must also have the seat of arbitration defined. The seat of arbitration determines the procedural law of the arbitration. Procedural laws of arbitration differ from country to country and can be researched by examining the national arbitral laws of each given state. National arbitral laws can override procedural laws set out in contract, so choosing and agreeing upon the seat of arbitration is important for retaining the idea of arbitration that was agreed upon.

In the UK, the courts have given guidance as to what to do when determining where the seat of arbitration is to be. The court determined that there are three ways in which the seat of arbitration can be found: 1) it is expressed in the arbitration clause in the contract, 2) it is implied or 3) the system of law with which the arbitration agreement has the closest and most real connection. The court will consider the express choice of law clause as the evidence of the intention of the parties but it is not decisive.

If your business is contracting with a foreign business and you require assistance in drafting contracts, please contact us for help.



Africa Takes a Stand Against Base Erosion and Profit Sharing.

Africa has historically been a place where foreigners come and take; take people, take land, take resources and opportunity. Unfortunately, even as we progress into modern times, Africa is still a place where foreigners come and take advantage. Tax avoidance is not unique to Africa or other developing countries, but African nations recently banded together to take a stand against tax avoidance by foreign nationals and domestics as part of a worldwide new global tax agenda action plan set out by the Organisation for Economic Cooperation and Development (hereinafter “OECD”).

The OECD’s 15-point action plan was recently considered in a historic meeting by the council of the African Tax Administration Forum (hereinafter “ATAF”).  The ATAF joined twenty-nine African nations to deliberate the action plan assuring Africa’s participation in the new rules of the global tax agenda.

High on the list of matters discussed by at the ATAF conference was the developing nations’ struggle with base erosion and profit shifting (hereinafter “BEPS”). BEPS is a practice usually associated with large, multinational corporations where taxable income is shifted to other low-tax locations thus eroding the taxable base of the country. This practice has resulted in overall lower prices for natural resource in Africa paired with tax incentives to multinational corporations working in those industries. The result is that African nations are robbed of good prices for their resource wealth, and taxes they would have been able to collect if profit shifting had not been occurring, thus keeping them as developing nations always reaching for developed status.

South Africa, in particular, has come up with three measures to defend against foreign tax evasion. The first, transfer pricing rules to ensure that any foreign debt is introduced at a reasonable interest rate and that the capitalisation of the local company does not rely too heavily on that debt. Second, an interest withholding tax that will impose a tax rate of 15-percent on non-resident South African earnings. Finally, a new rule applying to interest earned by non-residents where the debtor in the arrangement is a connect person to the creditor and where the non-resident creditor is not subject to South African tax on the interest earned. There may be a specific exemption for the non-resident depending on the double tax agreements between their country and South Africa.

If you are involved with a multinational corporation with ties to Africa or specifically South Africa and would like more information about these changes and their coming impact, then please contact us for help navigating the ever-changing domestic and global tax agenda.