Latin American Blog : Hispanic Latino Business Lawyers & Attorneys : Sheppard Mullin Law Firm : Cross Border Transactions, Government Contracts

By Gabriel Matus

On March 1, 2013, the U.S. Court of Appeals for the Second Circuit ordered Argentina to submit its proposal for the terms on which it is prepared to make payment on approximately $1.3 billion of unpaid debt obligations stemming from the country’s $95 billion debt default a decade ago. The court’s ruling is the latest milestone in the marathon court battle between the Republic of Argentina and NML Capital Ltd., a vulture fund affiliate of the hedge fund firm Elliott Associates, run by billionaire Paul Singer.

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The Fifth Circuit recently upheld a Texas Bankruptcy Court’s refusal to enforce non-debtor third party releases in the Mexican reorganization proceeding (known as a concurso mercantil) of Mexican glass manufacturer Vitro SAB de CV. As a result of this decision, Wall Street and the capital markets will breathe a sigh of relief and will likely continue to extend credit to Mexican corporations with some confidence that guaranties will be enforced.

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By Alan Feld

In a widely followed dispute, the Fifth Circuit Court of Appeals will soon render a decision on the appeal of a Texas Bankruptcy Court’s refusal to recognize non-debtor third party releases in the Mexican reorganization proceeding (concurso mercantil) of Mexican glass manufacturer Vitro SAB de CV. Wall Street and the capital markets will be watching this appeal closely as a reversal of the Bankruptcy Court would likely make lenders and bondholders extremely nervous about extending future credit to Mexican corporations.

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By Curtis Dombek

Earlier this year Mexico became a member of the Wassenaar Arrangement for multilateral military and dual-use controls. The Wassenaar Arrangement is a group of 41 countries that cooperate in the export control of dual-use goods and technology, items that pose a risk if trade is uncontrolled because of their potential for use in military systems and terrorist activities.

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By Curt Dombek and Mark Jensen

President Obama’s visit to the Summit of the Americas produced an important development for business in the United States and Colombia. During an April 15 press conference, President Obama and Colombian President Juan Manuel Santos jointly announced that the U.S.-Colombia Free Trade Agreement (CFTA) will enter into force on May 15, 2012. The enactment of the CFTA creates significant opportunities for both U.S. and Colombian businesses involved in international transactions. In order to take advantage of these opportunities, it will be important for parties to understand key parameters of the agreement, including what qualifies goods as originating in the United States or Colombia.

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By Jerry Gumpel

 

In February, Mexico's President Felipe Calderon approved a decree establishing new incentives for the film industry in Mexico. Mr. Calderon announced the incentives at a special ceremony held March 9, 2010 at Baja Studios in Rosarito, Mexico (www.bajastudios.com), where major motion pictures like Titanic and Master and Commander were filmed. (Readers should note that Baja Studios is a client of Sheppard Mullin.) The highlight of the new incentive program is a proposed refund of up to 7.5% of amounts spent by filmmakers in Mexico for movie productions with expenditure of at least $70,000,000.00 Pesos. When added to available state incentives and the refund of value added tax upon "export" of a movie, the total value of an incentive package could be approximately 28% of the amount spent in Mexico for production (Note: state incentives vary on a state by state basis.). In addition, President Calderon announced that ProMexico (the government's agency in charge of promoting foreign investment) would be charged with responsibility to provide special assistance to the movie industry to expedite the paper work involved in the production of movies in Mexico. This assistance would include expediting the import of goods and the prompt processing of the refunds under the incentive program. The President stated that the new incentives should serve to put Mexico back on the map of the world of film. Mexico hopes to use its proximity to Hollywood, relatively low labor costs, and new tax incentives to lure major productions back to the country.

For further information, please contact Jerry Gumpel at (858) 720-8965.

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By Keith Gercken

U.S. persons are generally required to file an annual information statement with the U.S. Internal Revenue Service (IRS) disclosing any beneficial interest in, or signatory authority over, bank or other financial accounts located outside the U.S. This information statement is filed on Form TD F 90-22.1, and is generally referred to as an "FBAR" (Foreign Bank Account Report").
 

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By Robert Magielnicki

There are three laws which a foreign company contemplating an acquisition of a United States corporation or other business should be familiar with because they can have a significant impact upon the proposed acquisition. These statutes are:

(1)   Section 7 of the Clayton Act;

(2)   The Hart-Scott-Rodino Antitrust Improvements Act of 1976, and

(3)   The Exon-Florio Amendment to the Defense Production Act of 1950.
 

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By Lazaro Pena Ruiz, PricewaterhouseCoopers, S.C.

Preliminary Considerations

Like most Civil Law systems that are descendants of the Roman system, the Mexican legal system bases its functionality in the codification of its laws and at the same time grants more weight to the form in which legal acts are carried out than does the Common Law system. Mexican Commercial Law does not entirely escape this tradition. Although it is governed by a “lack of formalities” principle, there are several legal acts which must be carried out with determined formality otherwise “neither binding obligation nor legal action will be produced.”[1] Consequently, the formalism in Commercial Law is constrained mostly to written form, formal  ratification or execution before a public attester, and lastly to recording the act before the Public Registry of Commerce.
 

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By David Sands and Gabriel Matus

With the uncertainty surrounding the long term effects of the current credit crunch, buyers and sellers in M&A transactions are pondering how to best protect themselves. The traditional guard against the unforeseen is the material adverse change clause – also known as a “MAC.”[1] As highlighted recently by the Accredited Home Lenders acquisition and the abandoned Sallie Mae deal, buyers may seek to use MAC clauses when economic conditions worsen to escape deals or to exert leverage to renegotiate terms. Recent market events pose the question of whether a global credit crunch can trigger a MAC and allow the buyer the option to terminate the transaction. A review of standard MAC clauses and case law suggests that in most cases it would not.
 

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By Polly Towill and Olivier Theard

Introduction

Latin American companies have had relatively open access to the market in the United State and sell billions of dollars of merchandise to U.S. consumers every year. While enjoying the fruits of this trade, Latin American companies should be aware of the potential pitfalls if the goods they sell to U.S. consumers are somehow defective or cause injury. The U.S. provides its consumers with specific legal protections against harmful products. Latin American companies need to know these laws if they want to protect themselves, while continuing their profitable relations with U.S. buyers.
 

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By Luis F. Martinez Serna, Basham, Ringe y Correa, S.C.

Summary

This essay will discuss a North American Free Trade Agreement (“NAFTA”) shortcoming that results in the unfair payment of import duties, fines, interest, and antidumping duties.   Many times, funds for payment come from United States or Canadian companies with operations in Mexico. NAFTA´s flaw lies mainly in not contemplating legal-cultural differences between Mexico, the United States and Canada, which results in Mexican customs officials invalidating NAFTA certificates of origin for formalistic reasons. These certificates of origin are often completed by United States or Canadian company officers with practical, good-faith, business-oriented minds who are not accustomed to stringent formalistic interpretations of the law.

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