Question I – Megatron, Inc. and the FCPA

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and their agents from bribing foreign officials to obtain or retain business. However, it doesn’t prohibit all interactions with foreign officials. Here are three examples of actions Megatron can take to benefit its international growth without violating the FCPA:

1. Lobbying and Advocacy: Megatron can engage in legitimate lobbying efforts to influence policy decisions in foreign countries. This includes hiring local consultants or law firms to represent its interests before foreign governments. For example, Megatron could advocate for changes in regulations that would make it easier for the company to import its products or operate within the foreign market. This is permissible as long as the activity focuses on policy changes and does not involve offering anything of value in exchange for specific decisions.

2. Providing Training and Educational Programs: Megatron can offer training or educational programs to foreign government officials related to its industry or products. For example, if Megatron manufactures specialized equipment, it could offer training on the safe and effective use of that equipment. This benefits both Megatron (by promoting its products and building relationships) and the foreign officials (by enhancing their knowledge and skills). The key is that the training should be genuinely educational and not a disguised form of bribery. Reasonable expenses associated with such programs (travel, accommodation, materials) are generally permissible.

3. Inviting Officials to Site Visits and Demonstrations: Megatron can invite foreign government officials to visit its facilities in the U.S. or other countries, or to attend product demonstrations. This allows the officials to see firsthand Megatron’s operations, technology, and commitment to quality. These visits should be for informational purposes and not lavish entertainment trips. Reasonable and customary expenses associated with such visits (meals, accommodation, travel within reason) are usually acceptable, provided they are properly documented and transparent.

Question II – Choice of Law in Cowboy, Inc. Dispute

Determining whether American or French law will be used in settling the dispute between Cowboy, Inc. and Beret, Inc. depends on several factors, as the contract is silent on the issue (i.e., there is no “choice of law” clause). Here’s a breakdown:

• International Contract Law Principles: In the absence of a choice of law clause, courts typically look to international contract law principles to determine the applicable law. A key principle is the “most significant relationship” test. This test considers various factors to identify which jurisdiction has the strongest connection to the contract.

• Factors Considered: Courts will likely consider factors such as:

  • Place of Performance: Where was the contract performed? In this case, the manufacturing occurred in France, which suggests French law.
  • Place of Negotiation: Where was the contract negotiated and signed? If negotiations primarily took place in the U.S., this would favor American law.
  • Domicile/Place of Business of the Parties: Cowboy is in the U.S., and Beret is in France. This is a neutral factor.
  • Subject Matter of the Contract: The contract involves the production of goods. While the goods are intended for the U.S. market, the production itself happened in France.
  • Currency Used: The currency used for payment could be a factor, but isn’t specified here.
  • Intention of the Parties (if ascertainable): Even without an explicit clause, if the parties’ actions or communications clearly indicated an understanding about which law would apply, that could be persuasive.

• Likely Outcome: Given that the manufacturing (the core performance aspect of the contract) took place in France, a court is more likely to apply French law. The fact that the hats were intended for distribution in the U.S. is less directly related to the breach of contract (failure to meet specifications) than where they were made.

• Important Note: This is a complex legal question, and the specific facts of the case will ultimately determine the applicable law. It is crucial for Cowboy, Inc. to consult with an attorney specializing in international contract law to get a definitive answer.