Methods of Engaging in Int'l Business & Dispute Resolution and Commercial Liability

Which method is an informal settlement attempt, with or without attorneys?

(A) Negotiation (B) Arbitration (C) Mediation (D) Litigation

A. Negotiation — Negotiation = informal settlement attempt; no neutral involved.

Which method uses a neutral third party as a go-between to help reach resolution, and is usually NOT binding?

(A) Litigation (B) Negotiation (C) Mediation (D) Arbitration

C. Mediation — Mediator facilitates; may be judge-ordered or agreed by parties.

Which is NOT a typical advantage of arbitration?

(A) Broad, liberal pretrial discovery (B) Arbitrators chosen by the parties (C) Neutral third-country forum (D) Private proceedings with limited public record

A. Broad, liberal pretrial discovery — Arbitration discovery is faster and MORE LIMITED than U.S. litigation.

What treaty makes arbitral awards favorably enforceable in over 160 countries?

(A) The Restatement (Second) of Conflict of Laws (B) The New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) (C) The Hague Evidence Convention (D) The Vienna Convention on the Law of Treaties

B. The New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) — Foreign courts generally have NO obligation to enforce U.S. court judgments.

Which are the two main reasons companies insert arbitration clauses in international contracts?

(A) Automatic appeals and punitive damages (B) Neutral forum and maximizing enforceability of the decision (C) Unlimited discovery and public hearings (D) Free attorney fees and jury trials

B. Neutral forum and maximizing enforceability of the decision — Source: Hughes Hubbard article + slide 18.

What is a 'memorial' in international arbitration?

(A) A written pleading that sets out claims/defenses and attaches all evidence, witness statements, expert reports and authorities (B) A settlement offer (C) A court-issued subpoena (D) A written apology to the tribunal

A. A written pleading that sets out claims/defenses and attaches all evidence, witness statements, expert reports and authorities — Written advocacy matters more; U.S. litigation uses piecemeal submissions.

What is 'cost shifting'?

(A) Splitting the arbitrator's fee 50/50 always (B) Moving a case to a cheaper court (C) An arbitrator awards the prevailing party some or all of its legal costs, including attorneys' fees (D) Transferring the dispute to another country

C. An arbitrator awards the prevailing party some or all of its legal costs, including attorneys' fees — LCIA rules make cost shifting the default.

Which rule says each side pays its own attorneys' fees regardless of who wins?

(A) The LCIA Rule (B) The Restatement Rule (C) The Bremen Rule (D) The American Rule

D. The American Rule — Cost shifting is nearly non-existent in U.S. court litigation.

What is a BINDING arbitration decision described as in the slides?

(A) Appealable (B) Final and unappealable (C) Advisory only (D) Subject to jury review

B. Final and unappealable — Non-binding = appealable.

Which is NOT one of the four preliminary questions in Eazy Electronics (Convention arbitration)?

(A) Has an arbitration award already been issued? (B) Does the agreement arise out of a commercial relationship? (C) Is there a written agreement to arbitrate? (D) Is the arbitration in a country that is a Convention signatory?

A. Has an arbitration award already been issued? — 4th question: foreign parties or reasonable relationship with a foreign state.

What was Disney's tactic in Piccolo v. Ragland Road Irish Pub and Disney?

(A) Moving to compel arbitration based on a streaming-service agreement, then waiving arbitration before the court ruled (B) Settling through mediation (C) Filing a deposition request (D) Arguing forum non conveniens

A. Moving to compel arbitration based on a streaming-service agreement, then waiving arbitration before the court ruled — Illustrates that arbitration clauses are everywhere (cell phone, gym, streaming).

What is discovery?

(A) A clause choosing the applicable law (B) The court's power to hear a case (C) A type of damages (D) Pre-trial exchange of evidence between parties (documents, interrogatories, depositions)

D. Pre-trial exchange of evidence between parties (documents, interrogatories, depositions) — Broad in the U.S.; restricted in many civil law countries.

What is the Hague Evidence Convention?

(A) A treaty enforcing arbitral awards (B) A U.S. statute on subject matter jurisdiction (C) A choice of law clause (D) A treaty used to obtain evidence in signatory countries

D. A treaty used to obtain evidence in signatory countries — Limited to signatories; procedures are specific and often lengthy.

What are letters rogatory?

(A) A formal request from a court in one country to a court in another for assistance obtaining evidence, used when no treaty applies (B) A letter offering settlement (C) A type of arbitration award (D) A U.S. long-arm statute

A. A formal request from a court in one country to a court in another for assistance obtaining evidence, used when no treaty applies

What does 28 U.S.C. § 1782 allow?

(A) Punitive damages abroad (B) Foreign courts to seize U.S. assets (C) Parties in a foreign or international tribunal to request U.S. federal court help obtaining documents or testimony (D) Enforcement of arbitration clauses

C. Parties in a foreign or international tribunal to request U.S. federal court help obtaining documents or testimony

Which jurisdiction is a court's power over individuals or corporations, requiring 'minimum contacts' with the forum?

(A) In personam (personal) jurisdiction (B) Territorial jurisdiction (C) In rem jurisdiction (D) Subject matter jurisdiction

A. In personam (personal) jurisdiction — Case-by-case in U.S. courts: presence, business activities, fairness.

In Collett v. Olympus, what two requirements must be met for personal jurisdiction over a nonresident?

(A) Federal statute AND treaty (B) Long-arm statute satisfied AND no violation of Fourteenth Amendment Due Process (C) Forum clause AND arbitration clause (D) Diversity AND in rem jurisdiction

B. Long-arm statute satisfied AND no violation of Fourteenth Amendment Due Process

What was the outcome of Collett v. Olympus Medical Systems?

(A) Case dismissed for forum non conveniens (B) Case transferred to Japan (C) Arbitration compelled (D) Motion to dismiss for lack of personal jurisdiction was DENIED

D. Motion to dismiss for lack of personal jurisdiction was DENIED — Court warned against a manufacturer selling 'everywhere but nowhere in particular'.

What is a forum selection clause?

(A) A clause requiring mediation only (B) A contract clause identifying the court where future disputes will be brought (C) A clause choosing which country's law applies (D) A clause limiting damages

B. A contract clause identifying the court where future disputes will be brought — Example: exclusive courts of Johannesburg, South Africa.

What is a choice of law clause?

(A) A clause naming the court (B) A clause requiring arbitration (C) A clause on liquidated damages (D) A provision specifying which jurisdiction's law governs interpretation/enforcement of the contract

D. A provision specifying which jurisdiction's law governs interpretation/enforcement of the contract — Generally upheld if there is a reasonable relationship to the chosen jurisdiction.

Which case is the leading authority that forum selection clauses are enforced unless 'unreasonable under the circumstances'?

(A) Colorado River v. United States (B) M/S Bremen v. Zapata Off-Shore Co. (C) Burger King v. Rudzewicz (D) Gulf Oil v. Gilbert

B. M/S Bremen v. Zapata Off-Shore Co. — Also cited in Noble House.

Which is NOT one of the four ways to overcome a forum selection clause (Noble House)?

(A) The forum is far from the plaintiff's home (B) Enforcement contravenes strong public policy of the forum state (C) Fraud or overreaching in incorporating the clause (D) Party deprived of day in court due to grave inconvenience or unfairness

A. The forum is far from the plaintiff's home — 4th real factor: fundamental unfairness of chosen law deprives plaintiff of a remedy.

What was the Fifth Circuit's decision in Noble House?

(A) Affirmed dismissal; the foreign forum selection clause was enforceable (B) Compelled arbitration (C) Remanded for jury trial (D) Reversed; clause unreasonable

A. Affirmed dismissal; the foreign forum selection clause was enforceable

Why did the court reject Noble House's time-bar argument?

(A) Texas has no statute of limitations (B) English courts are corrupt (C) It would create a loophole letting parties wait out the foreign statute of limitations and then sue at home (D) The clause was permissive

C. It would create a loophole letting parties wait out the foreign statute of limitations and then sue at home — Party 'occasioned its own predicament' by failing to timely file.

What is a statute of limitations?

(A) A rule on jury size (B) A treaty on evidence (C) A legal deadline for filing a claim (D) A limit on damages

C. A legal deadline for filing a claim — Important in international deals because deadlines differ by country and can bar claims if you miss them.

What is forum non conveniens?

(A) A clause choosing the forum (B) A doctrine letting a court decline a case, even with jurisdiction, because another forum is more convenient (C) A court's power over property (D) A lack of personal jurisdiction

B. A doctrine letting a court decline a case, even with jurisdiction, because another forum is more convenient — Focus: practicality and efficiency.

What are the two threshold questions for forum non conveniens (Lee v. Young Life)?

(A) Is there an adequate alternative forum, and does foreign law apply? (B) Was there a forum clause, and was there fraud? (C) Is there injury, and is there negligence? (D) Is there a jury, and is there discovery?

A. Is there an adequate alternative forum, and does foreign law apply? — If either answer is no, the doctrine does not apply.

Who bears the burden of proof on all elements of forum non conveniens?

(A) The plaintiff (B) The judge (C) The foreign court (D) The defendant

D. The defendant — Sinochem v. Malaysia Int'l Shipping (2007).

Which is a PRIVATE interest factor in forum non conveniens?

(A) Local interest in localized controversies (B) Familiarity of the forum with governing law (C) Burden of jury duty on the community (D) Availability of compulsory process for witnesses

D. Availability of compulsory process for witnesses — Others: ease of access to proof, cost of willing witnesses, view of premises, practical problems.

Which is a PUBLIC interest factor in forum non conveniens?

(A) Cost of obtaining willing witnesses (B) Ease of access to sources of proof (C) Possibility of viewing the premises (D) Burden of jury duty on a community with no connection to the case

D. Burden of jury duty on a community with no connection to the case — Others: court congestion, local interest, familiarity with governing law.

What was the decision in Lee v. Young Life?

(A) Motion denied; case stays in Colorado (B) Dismissed for forum non conveniens; case better heard in British Columbia (C) Arbitration compelled (D) Case transferred to Idaho

B. Dismissed for forum non conveniens; case better heard in British Columbia — H.L. drowned at a camp in British Columbia.

Why did the U.S. court dismiss the Bhopal (Union Carbide) case under forum non conveniens?

(A) The plaintiffs consented to arbitration (B) Union Carbide had no U.S. assets (C) India had better ability to determine liability, most witnesses/evidence, likely Indian law, and substantial interest (D) A forum selection clause required India

C. India had better ability to determine liability, most witnesses/evidence, likely Indian law, and substantial interest

What is forum shopping?

(A) Trying to find more favorable laws or sympathetic juries by choosing or resisting forums (B) Drafting choice of law clauses (C) Consenting to a neutral forum (D) Selecting an arbitrator

A. Trying to find more favorable laws or sympathetic juries by choosing or resisting forums — Motives: jury trials, class actions, liberal discovery, larger damage awards.

How does international abstention differ from forum non conveniens?

(A) Abstention applies only to arbitration (B) Abstention focuses on jurisdictional fairness/judicial administration; FNC focuses on practicality and convenience (C) FNC focuses on jurisdictional fairness (D) They are identical

B. Abstention focuses on jurisdictional fairness/judicial administration; FNC focuses on practicality and convenience — Abstention is the exception; U.S. courts usually keep cases.

For CONTRACTS, courts identify the 'center of gravity' using which factors?

(A) Damages and appeal rights (B) Place of injury and place of conduct (C) Place of contracting, negotiation, performance, subject matter location, and parties' domicile/residence/nationality/place of business (D) Amount in controversy and jury availability

C. Place of contracting, negotiation, performance, subject matter location, and parties' domicile/residence/nationality/place of business — Five factors.

For TORTS, courts use which test?

(A) Center of gravity (B) Most significant relationship (place of injury, conduct, parties' domicile, where relationship is centered) (C) Minimum contacts (D) Strict liability

B. Most significant relationship (place of injury, conduct, parties' domicile, where relationship is centered) — Four factors.

Which damages give the non-breaching party the 'benefit of the bargain'?

(A) Nominal damages (B) Reliance damages (C) Compensatory (expectation) damages (D) Punitive damages

C. Compensatory (expectation) damages — The core damages type.

Indirect losses like lost profits or third-party liability, if foreseeable, are:

(A) Restitution (B) Direct damages (C) Consequential (special) damages (D) Nominal damages

C. Consequential (special) damages

Which damages reimburse wasted expenditures incurred in reliance on the contract?

(A) Liquidated damages (B) Restitution damages (C) Reliance damages (D) Expectation damages

C. Reliance damages — Returns party to pre-contract position.

Pre-agreed contract sums for specific breaches (must be a genuine pre-estimate, not a penalty) are:

(A) Nominal damages (B) Moral damages (C) Punitive damages (D) Liquidated damages

D. Liquidated damages

Which damages punish egregious conduct, generally not for simple breach of contract but possible in torts like fraud?

(A) Punitive (exemplary) damages (B) Restitution damages (C) Reliance damages (D) Compensatory damages

A. Punitive (exemplary) damages

Which damages address non-material harm like reputation, goodwill or personal affront, especially in investment disputes?

(A) Liquidated damages (B) Nominal damages (C) Moral damages (D) Direct damages

C. Moral damages

Which is NOT one of the four elements of negligence?

(A) Breach of duty (B) Duty of care (C) Causation (D) Intent to harm

D. Intent to harm — 4th element: actual damages.

What is strict liability?

(A) Liability for damages or injury without proving negligence or fault (B) Liability limited to punitive damages (C) Liability only for contract breach (D) Liability only for intentional acts

A. Liability for damages or injury without proving negligence or fault — Applies to inherently dangerous (ultra-hazardous) activities.

Which defect occurs when a rogue unit departs from its intended design (e.g., a faulty batch of brake pads)?

(A) Design defect (B) Manufacturing defect (C) Jurisdictional defect (D) Marketing/warning defect

B. Manufacturing defect — Motorcycle example: production glitch causing specific brakes to fail.

Which defect means the ENTIRE product line is inherently unsafe (e.g., Ducati Scrambler with flawed throttle design)?

(A) Marketing/warning defect (B) Manufacturing defect (C) Negligent defect (D) Design defect

D. Design defect

Which defect involves inadequate warnings or instructions (e.g., helmet maker fails to warn helmet doesn't meet safety standards)?

(A) Strict defect (B) Design defect (C) Marketing (warning) defect (D) Manufacturing defect

C. Marketing (warning) defect

What is 'foreign direct liability'?

(A) Suing a subsidiary only in the host country (B) Holding parent companies accountable in their home courts for torts committed by overseas subsidiaries (C) Liability without damages (D) Liability limited to arbitrators

B. Holding parent companies accountable in their home courts for torts committed by overseas subsidiaries

A dispute arises between a Singaporean manufacturing company and a Mexican distributor over an alleged breach of contract. The agreement contains an arbitration clause. The distributor ignores the clause and files a lawsuit in a Mexican municipal court. How should the Singaporean manufacturer respond under standard international dispute resolution principles?

Move to stay or dismiss the court proceedings and compel arbitration pursuant to the contractual arbitration clause.

A domestic company that sells products directly to foreign buyers while assuming full responsibility for most export functions is participating in _____.

Direct exporting

In Tarbert Trading, Ltd. v. Cometals, why did the court dismiss both the complaint and the counterclaim regarding the sale of Kenyan red beans?

The fraudulent certificate of origin made the contract illegal and contrary to public policy

A contract clause that excuses a party from performance due to extraordinary, unforeseeable, and unavoidable events (such as natural disasters or government action) is known as a:

Force majeure clause

Indirect exporting typically requires a manufacturer to hire full-time internal export managers rather than using third-party intermediaries.

False

Which method of alternative dispute resolution involves a neutral third party acting as a go-between to help the parties reach an unbinding resolution?

Mediation

When a host country requires a foreign company to partner with a local entity or include domestic labor or capital in its operations, it is enforcing: 

Local participation requirements

Which Foreign Direct Investment (FDI) structure is a separate legal entity incorporated under host country laws that provides a limited liability shield to the parent company?

Foreign subsidiary 

In Dayan v. McDonald's Corp., why was McDonald's permitted to terminate the franchisee's exclusive Paris franchise agreement?

Dayan violated operational standards by failing to meet Quality, Service, and Cleanliness (QSC) requirements

A force majeure clause can automatically be invoked when an international contract becomes more expensive for the seller to perform.

False

What is a primary strategic risk associated with licensing intellectual property to a foreign entity?

Potential loss of quality control and creating a future competitor (the "apprentice risk")

A government-imposed total or near-total ban on trade with a specific foreign country is known as a(n):

embargo

An ad valorem tariff is:

a customs duty or tax charged as a fixed percentage of the total financial value of imported goods.

Under the doctrine of forum non conveniens, as illustrated by Lee v. Young Life and the Bhopal Gas Plant disaster litigation, a court may refuse to exercise jurisdiction when:

Private and public interest factors favor resolving the matter in an adequate alternative foreign forum

The federal agency within the U.S. government that offers services to promote U.S. exports and defend domestic business against unfair trade practices is the International _________ Administration.

Trade

Which professional agent acts on behalf of importers to handle customs documentation, arrange duty payments, and clear goods across national borders?

Customs broker

"Neither Party shall be liable for any failure or delay in performance hereunder due to events beyond its reasonable control, including but not limited to Acts of God, war, terrorism, government orders, strikes or natural disaster." This statement is an example of a(n) _____ clause.

force majeure

Which mechanism is used to obtain evidence from a foreign court when no applicable treaty exists between the nations?

Letters Rogatory

If a contract between two parties contains a choice of law clause, a court will generally uphold it if there is a reasonable relationship between the transaction and the chosen jurisdiction. 

True

A multi-million dollar cross-border commercial dispute arises. The parties enter into non-binding mediation with a neutral go-between. After three days of negotiations, the mediator proposes a compromise settlement. Which statement accurately reflects the legal effect of this proposed compromise?

The mediator's proposal becomes legally binding on the parties only if both sides voluntarily execute a written settlement agreement.

A U.S.-based medical device manufacturer wants to expand into a high-barrier foreign market with strict local ownership regulations and complex national regulatory approval processes. The U.S. firm wishes to share capital investment risks and leverage local governmental relationships while maintaining a direct presence in the target market. Which entry strategy best fits these objectives?

Joint venture