International Law

For many years international law was practiced primarily by those attorneys located in branch offices of large U.S. firms in major financial centers, such as London, Hong Kong, Tokyo, or Singapore. But with the increasing globalization of the world's economies, that has changed. Now, increasing numbers of U.S.-based attorneys practice international law. Attorneys who once dealt only with domestic laws regarding taxes, securities, labor, intellectual property, and other concerns today are often required to understand the equivalent laws in other countries. The international expansion of U.S. law firms has been driven by client demand-clients want seamless representation throughout the world as their financial transactions and acquisition activities are no longer restricted to a single country or even a single continent.

As the global economy grows, ventures in countries outside the U.S. raise numerous issues in a variety of areas of law. For example, attorneys assist their clients in resolving issues of ownership and sharing of intellectual property rights relating to technology, as well as product names and trademarks. Construction of an electric power plant requires acquisition and ownership of real estate and can also raise issues of environmental permitting and local government utility regulation. The appropriate corporate structure for joint ownership or lease of real estate and intellectual property rights can also involve consideration of tax consequences in the local country, as well as for the parent corporation in its residence country. As a result, U.S. attorneys must work closely with their colleagues in other countries to provide the necessary advice to complete such a project or transaction.

The growth in international law practice has been driven by the increased number of international corporate mergers and acquisitions and the reliance of businesses on international capital markets for their financial needs. For example, the automobile industry recently saw the merger of Germany's Daimler-Benz Corporation with America's Chrysler Corporation, as well as affiliations between companies such as Ford and Mazda. Attorneys assisting with such transactions must be aware of the impact of the laws on various issues throughout the world. For example, the Daimler-Chrysler merger potentially had far reaching antitrust implications with regard to the various suppliers, customers, and markets of these two companies in the U.S., Europe, Asia, and even Latin America. Daimler-Benz was listed on a European stock exchange, while Chrysler was listed on a U.S. stock exchange, presenting potential difficulties for both companies in meeting the various accounting and disclosure requirements of the securities laws of different countries. The relations between each company and its various unions as well as the dramatic differences in executive compensation, including employee benefits, retirement plans, and stock options, presented numerous issues with regard to employment and labor law as well as employee benefits law.

Even mergers between two U.S.-based companies can present international legal issues. The merger in the petrochemical industry between Exxon and Mobil required antitrust and regulatory approval in petroleum exploration, refining, distribution, and the gasoline retail industry. Antitrust issues arose with regard to overlap or concentration in market power in the gasoline retail industry in some U.S. states, such as California, as well as the concentration in market power in certain oil field exploration ventures in Asia. The merger between Kimberly-Clark Corporation and Scott Paper required divestiture of certain paper product business lines in Europe as a result of European Union regulatory concerns. In these types of transactions, U.S. attorneys must work closely with their counterparts in Europe and Asia to provide advice with regard to the impact of the transaction on legal issues arising both in the U.S. and abroad. While U.S. attorneys are licensed to practice law only in the United States, their advice to their clients may be impacted by the laws and regulations, as well as the customs and cultures, of many other countries.

Financial transactions also have been a primary force in the internationalization of the practices of many U.S. firms. Companies in the U.S. are increasingly turning to the international capital markets for raising capital. For example, a group of New York-based financial institutions might undertake the purchase and securitization of millions of dollars of mortgages owned by a group of Japanese banks. Those mortgage-backed securities might then be offered for sale through exchanges in other international markets. Such a transaction might be based on New York law, Japanese law, or a combination of both.

Developing countries also seek large investments of capital for infrastructure development, or project finance. For example, construction of electric power plants in India, highways in China, or a new airport in Bangkok, is often financed by arrangements between the governments of those countries as well as investors from inside those countries and around the world. These financial instruments, whether they are bonds or commercial loans, are then sold to raise capital. U.S. attorneys may be involved in these project finance transactions, representing investors, construction companies, financial institutions, or even the local governments. (See the Corporate Law chapter and the Municipal Finance chapter for more information on project finance.)

In making investments in developing countries, companies will often seek joint venture partners, which may be local or based in other neighboring countries. For example, U.S. companies seeking to build a manufacturing plant in China might choose to team with a local Chinese company or to work with another Asian-based company, such as a Japanese or Korean company. Such a joint venture between companies from two or more countries, with the intention of undertaking a project in a third country, can raise issues of law in all of the involved countries. In this situation U.S. attorneys may be intimately involved on behalf of U.S. or foreign-based companies in the negotiation and documentation of the partnership arrangement for such a transaction.

Reproduced from The Official Guide to Legal Specialties with permission. (c) 2000 Thomson Reuters/West. For additional information on this publication please visit http://west.thomson.com/products/law-students. Copyright granted via e-mail by Donna Gies, September 16, 2008.