“Bridging” Common Law & Civil Law

TTIP: Public Report Of The 14th Round of Negotiations Issued. From July 11-15, 2016, the 14th Round of negotiations for the transatlantic Trade and Investment Partnership (TTIP) between the US and the EU took place in Brussels. The Report is now available. Read more …

Italian official interest rate – never so low. With a piece of legislation of last November (D.M. 11.12.2015, Official Journal n. 291/2014), the official interest rate indicated in Article 1284 Italian Civil Code has been lowered from 0.5% (as it was in 2015) to 0.2% a year. The new rate is in force from January 2016 Read more …

U.S. State Taxation – A Primer for Foreigners Choosing Where to Start a Business. This is Part Four of four blogs discussing which American jurisdiction is the best to form a legal entity?). In these four blogs I discuss several factors that you might consider when you choose where to form a business (read Part One, Part Two, Part Three): 1) Situs of Business; (2) “Choice of law”; (3) Ease and cost of formation; (4) Privacy/confidentiality; (5) liability protection for members/shareholders; (6) Personal liabilities of members/shareholders and directors; (7) state taxation. There are many other factors – which we do not discuss – that might be relevant when you choose where to incorporate: financial factors (e.g., such as cost of production, labor cost, etc.), condition of infrastructure, connectivity, business climate, relationship with other foreign investors, and possibly others. Here we deal with factor no. 7, the tax factor. We discuss state taxation (as opposed to federal taxation). In fact, when you form an entity in the U.S., you should also consider federal taxation (which is the biggest part of your tax bill) – we do not discuss it here because federal taxation is the same in every jurisdiction, so that it is not an element relevant for the choice. International taxation considerations are also important for foreigners, but they are beyond the scope of this blog. Read more …

Which American state is the best to form a legal entity? An overview for foreigners – Part Three. We have seen in Part One how the jurisdiction in which you do business is the first factor to consider in the choice of the jurisdiction where to form an entity. In addition, the selection of the jurisdiction of formation also triggers the application of that jurisdiction’s corporate and contract law, which is also something to be considered. In Part Two we have seen how the requirements and costs of formation are similar but not identical (with some unexpected extra costs in certain jurisdictions) — so that this is also a factor that can guide your choice. We have also discussed the privacy expectation that you should have in the several jurisdictions. Part Three deals with other two factors: liability protection for members/shareholders (i.e., whether or not they are protected from losing their interest for personal debts) and personal liability of shareholders/members and directors (i.e., whether they might be forced to pay for the entity’s debts or for malpractice). Read more …

Which American state is the best to form a legal entity? – An overview for foreigners – Part Two. We give here some additional insights on the choice of the jurisdiction where to form your entity. In Part One (here in Italian), we have seen how the choice of jurisdiction is important because it triggers the application of that jurisdiction’s corporate and contract law. We have also seen how a “foreign entity” is subject to qualification statutes in the jurisdiction/s in which it does business; as a consequence, except for specific reasons, it is advisable to consider first the jurisdiction in which you conduct business as a place of formation. In other words, the jurisdiction in which you do business should be the first factor to consider in the choice of the jurisdiction where to incorporate. Read more …

Which American state is the best to form a legal entity? – An overview for foreigners – Part One. After having decided that forming a new entity (as opposed for example to buying an existing business) is the best solution to do business in the US, a businessman is confronted with the decision of where (i.e., in which jurisdiction) to form a business. This is an important decision because the choice affects which law is applicable to your entity and corporations and company law vary from jurisdiction to jurisdictions. Read more …

If you buy shares of an Italian limited liability company, obtain a guarantee for the equity value of the company if you want to recover for contingent liabilities. A Milan court held that in a share transfer agreement, a transferor is only liable for contingent liabilities arising after the closing, if transferor guaranteed the equity value or acted fraudulently.  Read more …

Material for program Martial Arts Ethics: Offensive and Defensive Techniques. I would like to share my speaker material for the program “Martial Arts Ethics: Offensive and Defensive Techniques” (April 29, 2015 ABA SIL Spring Meeting 2015 in Washington). Read more …

Milan Court held awards from informal arbitration (arbitrato irrituale) on share ownership to be filed with the Register of Enterprises. If the parties had agreed that the claims concerning the ownership of shares must be decided through an informal arbitration (arbitrato irrituale, i.e. an arbitration not according to the procedure specified in the civil code), the awards must still be filed with the Italian Register of Enterprises, the Registro delle Imprese, in which decisions concerning the ownership of the shares are registered pursuant to section 2470, Italian Civil Code. Tribunale di Milano, February 21, 2015. More on this decision (in Italian) here. For more information: Francesca Giannoni-Crystal

Subsidiary’s right to hold parent company liable for violation of principle of proper management (Milan court) – On March 24, 2015 the court of Milan held that per article 2497 Italian Civil Code (ICC), the parent company that acts in violation of the principles of proper management (“corretta gestione societaria e imprenditoriale”) is liable also to the subsidiary, which has standing to sue the parent company pursuant to article 2497 ICC. Read more …

Milan court decides which are the consequences of violation of a bylaws right of first refusal. The shareholders entitled to a bylaws right of first refusal, who were not informed of the share transfer, have a right to damages. However, they are not entitled to obtain a preventive seizure of the transferred shares from the third party. While the violation of the right of first refusal has effects on the third party’s position (because the share transfer is ineffective vis-a-vis the company), the shareholders whose rights were violated have no right to redeem the shares from a third party. Hence, no right to obtain a specific injunction (available to one who might have a property interest). Read more …

Preliminary contract of the preliminary contract. On March 6, 2015, the Italian Cassazione held that parties can validly enter into a “preliminary contract of a preliminary contract”, provided that the two contracts are not simple a reiteration of the same agreement. Read more …

Transatlantic Trade and Investment Partnership (TTIP): European Commission publishes TTIP legal texts as part of transparency initiative.    Read more …

Lost in Translation Issues that Can Hurt Your Deal
Do you remember “Lost in Translation”, the movie directed by Sophia Coppola, starring Bill Murray and Scarlet Johansson? Murray plays the role of an American actor who is in Japan to shoot a liquor commercial, while Scarlet Johansson … Well, sorry, Johansson is off topic here; let’s stay focused on Murray. While in Tokyo for the shooting, he is surprised by many local features and cultural differences, just to name one, the shower in his hotel room, which he discovers being “leetle” shorter than he is accustomed to. All this triggers quite humorous scenes. Read more …

“Bridging” (liaison) activities for clients. Managing relationship with foreign counsel is more difficult than clients generally think.  Since clients are not familiar with  foreign systems, they may be unable to ask the right questions to their counsel and since foreign counsel may not know business operations in the home countries of clients, they are often unable to understand the clients’ concerns, to plan according to their expectations, and to provide practical solutions. With a “bridge”, i.e. with a lawyer who is acquainted with both legal systems, clients can have a more productive relationship with their foreign counsel, can save time and expenses, and enhance the value of their transaction.

“Bridging” (liaison) activities for lawyers.  Interacting with foreign clients or with local co-counsel is difficult, not only because of language barriers but also because of legal and cultural differences.  Unrecognized – and therefore dangerous – gaps in communication may exist. We can call this the “lost in translation” problem.  In transactions a “bridge” — i.e. with a lawyer who is acquainted with both legal systems — can help lawyers transfer information to their foreign clients or to local co-counsel and can clarify the relevant legal framework. In addition, a “bridge” can help make sense of – and effectively make use of – the information supplied by local co-counsel. A “bridge” can find inventive solutions that are viable in both two legal systems.  For an interesting explanation of the hidden traps of foreign transactions, see the report “Cross-Cultural Legal Transactions Can Easily Get Lost in Translation,” lecture given on Aug. 5, 2011, by Olga M. Pina at the ABA Annual Meeting 2011 (available at http://www.abanow.org/2011/08/cross-cultural-legal-transactions-can-easily-get-lost-in-translation/). In litigation a “bridge” can support lawyers in both pre- and post-judgment activities in connection with lawsuits abroad or domestic proceedings involving foreign clients. For example, a “bridge” can help in service of process abroad according to the Hague Convention, or with gathering of evidence abroad, with privacy or blocking statute issues, and with enforcement of judgment. A “bridge” is also effective to explain a foreign client the peculiarity of domestic procedure in a way that the foreign client can understand. Some examples of differences Common Law and Civil law in the slide presentation “Lost in Translation”: Tidbits of Comparative Law