Legal Implications of the BP Deepwater Horizon Disaster
5 Ways Corporations Can Avoid International Liability
1. Florida Bar Continuing Legal Education Committee International Law Section of the Florida Bar
Santiago A. Cueto, Esq.
Board Certified International Attorney
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2. Top 5 Areas of International Liability Risk
1. 1. Employment Laws
2. 2 Privacy and Data Laws
3. 3. Products Liability
4. 4. Alien Tort Claims Act
5. 5. Import/Export Control Laws
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3. Sources of International Liability
for U.S. Companies:
Extraterritorial application of U.S. Law
Application of Foreign Law
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4. U.S. Law Presumes No
Extraterritorial Application Unless
Congressional Intent as Reflected in
Plain Meaning of Statute.
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5. Many U.S. laws have extraterritorial application
that may apply if your business:
• Employs U.S. citizens abroad;
• Has subsidiaries or affiliated organizations operating abroad;
• Enters into contracts to supply products with international parties;
• Exports goods or services; or
• Has business operations that could implicate human rights issues.
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6. Extraterritorial Application of U.S.
Employment Law
1. Title VII of 1964 Civil Rights Act
2. Americans with Disabilities Act
3. Age Discrimination and Employment Act
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8. Threshold Question
How many employees employed by employer?
ADEA--- 20 or more
Title VII and ADA --- 15 or more.
Count = total employed in U.S and Foreign Branches
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9. Still Must Meet Several Factors
1. Employer incorporated in U.S. or foreign branch of
U.S. company.
2. Not incorporated in U.S. but sufficient minimum
contacts.
3. Non U.S. company controlled by a U.S. Company
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11. 1st Way to Avoid International Liability:
Comply with U.S. Employment Laws
Overseas.
• Educate
• Establish Written Policies for nondiscrimination
• Set-up Complaint Handling Mechanism
• Investigate complaints
• Review Employment Agreements
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12. Foreign Privacy/Data Laws
Countries across the world have a variety of data protection laws, in
the form of secrecy laws, privacy statutes and blocking statutes.
Commercial secrecy laws typically protect corporate and banking data.
Privacy statutes typically protect consumers and their personal
information. Blocking statutes have typically been enacted for the
express purpose of frustrating U.S. discovery.
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13. European Union Privacy Laws
Privacy laws in the European Union derive from EU
Directive 95/46/EC and protect personal data from
disclosure in virtually all cases.
Switzerland, France and the United Kingdom, for
example, have enacted blocking statutes that restrict
discovery of information meant for disclosure in a foreign
jurisdiction.
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14. E European Union Privacy Laws
Two important ways to legitimize the release of data in in the EU:
1. Data may be released if the data subject gives their unambiguous consent.
2. Data may be released if necessary to comply with a “legal
obligation.” Although this provision is strictly interpreted, a US court order
directing a company to produce data from a European subsidiary would most
likely constitute a legal obligation. This may vary among EU member states.
France, for example, has demonstrated an unwillingness to authorize the release
of data pursuant to a foreign court order.
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15. Other Data Protection Laws Affecting
U.S. Companies
China: The State Secrecy Law is implicated when any information is deemed by the Chinese government
to be a state secret, which may include civil matters when the government is involved (e.g., as an owner).
The Unfair Competition Law is for the protection of commercial secrets.
Hong Kong: The Personal Data (Privacy) Ordinance of 1995 has a provision for the onward transfer of
personal data that requires that there be a reasonable belief that any personal data transferred outside
Hong Kong without consent is transmitted only to a recipient operating under similar privacy laws. Bank
secrecy is contractual instead of statutory.
Japan: The Personal Information Protection Act of 2003 protects personal data and does not allow un-
consented transfers of personal data to third parties, with the exception of certain outsourcing companies
(e.g., payroll processing). It also has notice and opt-out provisions. Japan protects commercial secrets under
the Unfair Competition Prevention Act.
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16. 2nd Way to Avoid International Liability:
Comply with Foreign Privacy/Data Laws.
For example, one often overlooked mechanism to streamline issues concerning
the exchange of data in the EU is the US-European Union Safe Harbor
Framework. The Framework offers a more simple and efficient means of
complying with the adequacy requirements of EU privacy laws, which should
particularly benefit small and medium enterprises.
The Framework applies only to US companies and allows for transfers of data
without prior approval. A certification form can be found at the U.S. Department
of Commerce’s Safe Harbor Self-Certification website.
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17. U.S. Liability for Foreign-Made Goods
Managing suppliers and preventing supply-chain failures is
critical for U.S. manufacturers because of the potential risk
that many products pose to their end-users.
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18. U.S. Liability for Foreign-Made Products
Generally, anyone in the chain of commercial distribution of a consumer product,
including manufacturers, importers or other intermediate distributors, and retail
sellers, may be liable if the product is defective and injures someone .
U.S. companies that provide product design specifications to foreign
manufacturers or that put their own name on a foreign-made product so that it
appears to consumers that the importer is actually the product’s manufacturer
face additional risk potential.
Because U.S. companies potentially bear the burden of litigation, they may be
importing liability along with the products they receive from foreign suppliers.
Even if no lawsuit, result in substantial expense for U.S. importers.
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19. 3rd Way to Avoid International Liability:
Take Control of Your Global Supply Chain
• Improve Supplier Qualification Practices.
• Expand the Use of Audit Procedures.
• Verify Supply Chain Integrity and Safety.
• Shifting Risk Back to the Supplier.
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20. International Liability under
the Alien Tort Claims Act
Enacted by the First Congress in 1789 as part of the original
Judiciary Act.
The statute simply provides that “[t]he district courts shall have
original jurisdiction over any civil action by an alien for a tort
only, committed in violation of the law of nations or a treaty
of the United States.”
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21. Alien Tort Claims Act
Foreign citizens are increasingly targeting US companies in lawsuits
which claim that the company acted in concert with foreign
governments, or rogue elements within a foreign country, to commit
torture, rape, murder, genocide or a host of other human rights
violations.
Current circuit split will likely lead to a continued increase in ATCA
filings against corporations in the U.S. courts for events having no
conceivable relation to the corporations’ primary business activities or
to the United States.
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22. 4th Way to Avoid International Liability:
Use Strategic Contract Language
Limit exposure to "aiding and abetting liability" claims by including contractual
language that:
• expressly defines the duties of each party;
• puts in place limitations on liability, and, where appropriate,
• states that the US company has no authority to direct, supervise or otherwise
control any actions of any foreign government employee; and
• mandates that all parties shall comply with all applicable domestic and
international laws.
These same contractual provisions should be included in agreements with foreign
contractors that US companies hire.
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23. Import/Export Control Laws
Most countries impose some form of legal control
on the export of goods from within their
jurisdiction and on the import of physical goods
into their jurisdictions.
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24. Import Requirements
Duties
All imports into the US are subject to customs duty unless specifically exempted by law as
determined by their classification under the applicable items in the Harmonized Tariff
Schedule of the US unless otherwise exempted.
Other Regulations
• Labeling & marking regulations, e.g. country of origin.
• Products Standards
• Anti-dumping actions
• Textiles
• Toys
• Electrical Product Standards
• Food
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25. Export Regulations
The core distinction between the rules that govern exports is whether
the controlled product or service is “commercial” or “defense-related.”
May also be classified as “dual use.”
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26. Export Regulations
The consequences of violating the EAR may be severe. Violators may be
subject to both criminal and administrative penalties.
Administrative penalties may also include denial of export privileges.
Not only will you be prohibited from export activities, but also others
may not participate in an export transaction with you as a “denied
person.”
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27. 5th Way to Avoid International Liability:
Comply with Import/Export Control Laws
Imports
Duties, Product Standards, other Regulations
Exports
Commercial, Defense, Dual-use, End User
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28. Summary: 5 Ways U.S. Corporations Can
Limit Their International Liability.
1. Comply with U.S. Employment Laws Overseas.
2. Comply with Foreign Data/Privacy Laws.
3. Take Control of the Supply Chain.
4. Use Strategic Contract Language.
5. Comply with Import/Export Control Laws.
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29. THANK YOU
Santiago A. Cueto, Esq.
Board Certified International Attorney
4000 Ponce de Leon Blvd., Suite 470
Coral Gables, FL 33146
+1 305 777 0377
sc@cuetolawgroup.com
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