Business Law International January 2012

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Some Difficult Aspects of Pre-Incorporation Contracts in South African Law and Other Jurisdictions

Maleka Femida Cassim

It is trite that under the general principles of agency law, an agent may not contract on behalf of a non-existent principal and that the principal, once it comes into existence, may not ratify such a contract. In recognition of the importance of pre-incorporation contracts in commercial practice, a statutory exception is made in many jurisdictions in respect of companies that are yet to be formed. This article discusses the new South African approach to pre-incorporation contracts under the new Companies Act 71 of 2008, its difficulties and likely problems. The focus is on the ratification by companies of pre-incorporation contracts and the liability of the agent in the event of non-ratification. A comparative approach is adopted, that takes into account inter alia Australian, New Zealand, Canadian and UK law. Aspects of the stipulatio alteri, or contract for the benefit of the third party, are also discussed.

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New Global Standards for Business and Human Rights

Andrea Shemberg

On 16 June 2011 the United Nations Human Rights Council endorsed a set of Guiding Principles for managing the risk of business activities having significant adverse impacts on human rights. This marks the first time the United Nations has laid out what the expectations are of States and companies with respect to human rights in the context of business activity. Even before their endorsement, important elements of the Guiding Principles have been adopted and integrated into other relevant multilateral institutional contexts. This article considers the Guiding Principles and their likely impact.

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OECD 50th anniversary: the updated OECD Guidelines for Multinational Enterprises and the new OECD Recommendation on Due Diligence Guidance for conflict-free mineral supply chains

Lahra Liberti

In 2011, governments from 42 countries adhering to the Declaration on International Investment and Multinational Enterprises adopted the amendments to the Guidelines for Multinational Enterprises (the Guidelines) as well as the amendments to the Decision on the OECD Guidelines for Multinational Enterprises on the implementation of the Guidelines. On the same day, 41 governments also adhered to the new OECD Council Recommendation on Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Due Diligence Guidance), which provides complementary and detailed recommendations on responsible supply chain management tailored to the minerals sector. This article considers both the updated Guidelines and the Recommendation.

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Overview of Umbrella Clauses

Gregorio Salatino

Until very recently, issues relating to umbrella clauses were unknown in jurisprudence: only scholars had dealt with such matter, and the arbitral tribunal that first examined an umbrella clause, unaware of its effects, considered it completely meaningless. This scenario changed after the SGS/Pakistan and SGS/Philippines cases. Both tribunals, after relying on a deep examination of umbrella clauses, came to opposite conclusions: according to the SGS/Pakistan decision, umbrella clauses must be interpreted in a narrow way; on the contrary, the SGS/Philippines decision, contesting the opposite view, stated that such clauses must be interpreted in a broad way.
As the two above approaches still today continue to be debated, the matter of umbrella clauses has turned into one of the most contentious in the field of international investment law.

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Odds: Gambling, Law, and Strategy in the European Union

Dr Anastasios Kaburakis and Dr Ryan M Rodenberg

Using law and policy as a sustainable competitive advantage source is a recent research stream. This paper illustrates how legal and policy research contributes to firms’ strategy in the regulated gambling industry, defined by legislation and jurisprudence. The gambling sector has been a microcosm of European integration and harmonisation challenges, as well as promising opportunities. Research on European Court of Justice case law in the period 1990–2010 and on recent policy developments yields significant findings for firms wishing to compete in the gambling industry, in which entry barriers have traditionally been high due to restrictive regulation. Following the latest European Court of Justice decisions in September 2010 and the ensuing policy impact across Europe, gambling operators are prudent to invest in litigation, lobbying, continuous legal and policy monitoring, and establishment of regional gambling sites in jurisdictions they would have been pre-empted from pursuing heretofore.

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CASE NOTE Residence and taxation: the Gaines Cooper case

Jennifer Wheater

The case of R (on the application of Gaines-Cooper) v Commissioners for Her Majesty’s Revenue & Customs [2011] UKSC 47 (the “Gaines-Cooper case”) attracted considerable industry and press attention during its progression through the UK courts. The Supreme Court decision, released on 19th October 2011, has brought the UK process to a close, but the ramifications of the decision and, indeed, the future path of the case itself, remain open to speculation and comment. This article considers the decision and its likely impact.

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CASE NOTE Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Ltd [2011] UKSC 38

Timothy Cleary

The insolvency of Lehman Brothers in September 2008 reignited interest in a principle of English insolvency law which has come to be known as the anti-deprivation principle. In July 2011, the Supreme Court handed down its decision in Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Ltd. The decision was keenly anticipated in legal and structured finance circles. Yet the decision was something of a disappointment. Despite the complexity of the issues involved, the majority in the Supreme Court took a rather simplistic approach to the anti-deprivation principle. This note will analyse some of the key issues arising from the decision.

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Book review

Principles of International Financial Law

Colin Bamford
Oxford University Press (2011)

384 pages; £95 (hardback); ISBN: 978 0 19 958930 2

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