17 Mar 11 New Legislation Regulating Online Gambling and Betting Services
On April 6, 2010, the French Parliament passed new legislation to regulate online gambling and betting services. This new law consists in ending the state monopoly on on-line gambling thus enabling private operators to offer their online poker, sports and horse racing betting and gambling services through a licensing procedure. The main purpose of this law is to have transparent, reputable and honest operators providing players with a safe and secure online gambling and betting experience.
Although this e-gaming law was referred to the French Constitutional Council on April 13, 2010 for a control of its constitutionality, the French Constitutional Council upheld the entire law in a decision dated May 12, 2010, considering that (i) it was not competent to assess compliance of the new law with EU rules; (ii) the opening up to competition of on-line gambling services is regulated since it is subject to a prior licensing procedure carried out by a regulating authority; (iii) the prohibition, exception and exclusivity principles justifying the state monopoly on on-line gambling are not fundamental principles acknowledged by French republican laws that could be raised as grounds to the unconstitutionality of the law; and that (iv) the law does not disregard public interests since a regulating authority shall grant licenses and that measures have been adopted to hunt down misdemeanours, combat gambling addiction and money laundering, and regulate advertising on the legal offer of on-line gambling.
Following this decision, the e-gaming law was promulgated on May 12, 2010. The implementing decrees as well as a ministerial order approving the required specifications issued by the regulating authority in view of the private operators’ applications for the license were also all published on May 12 and 14, 2010. Therefore, the legal framework necessary for the opening up to competition of on-line gambling services is now set, although some e-gaming actors regret that the new law seems to ignore the cross border nature of the market forcing well-established EU operators to comply with French requirements and constraints and exposing players to unregulated non-EU operators.
The new law entered into force just in time before the launch of the FIFA World Cup in South Africa on June 11, 2010. To date, about a dozen applications have already been filed.
For more information please contact Bertrand Liard (bliard@whitecase.com) or Clara Hainsdorf (chainsdorf@whitecase.com).
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17 Feb 11 The SEC Puts on Hold its Proxy Access Rules
On September 29, 2010, the Business Roundtable and the US Chamber of Commerce filed a lawsuit challenging the final rules issued by the US Securities and Exchange Commission (SEC) on proxy access. The plaintiffs also requested that the SEC stay the effectiveness of the rules pending determination of the case.
On October 4, 2010, the SEC granted that stay. As a result, even if the US Court of Appeals for the DC Circuit court acts quickly and upholds the rule, the proxy access regime is unlikely to be in effect for the upcoming proxy season. In granting a stay of its rules pending judicial review, the SEC stated that “under all of the circumstances of this matter, a stay of Rule 14a-11 and related rule amendments is consistent with what justice requires [because] a stay avoids potentially unnecessary costs, regulatory uncertainty, and disruption that could occur if the rules were to become effective during the pendency of a challenge to their validity.”
The challenged rules, adopted on August 25, 2010, afford shareholders of public companies that have held more than a three percent stake for at least three years the right to use the company’s proxy materials to nominate their own candidates to the board of directors. The rules were to have become effective on November 15, 2010 and would have impacted the upcoming 2011 proxy season for many public companies. The stay applies to new Rule 14a-11 as well as to the amended Rule 14a-8, which would have allowed investors to submit for inclusion in a company’s proxy statement proposals that seek more permissive access procedures “because the amendment to Rule 14a-8 was designed to complement Rule 14a-11 and is intertwined, and there is a potential for confusion if the amendment to Rule 14a-8 were to become effective while Rule 14a-11 is stayed.”
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28 Jan 11 NTA Amends Transfer Pricing Guidelines
The National Tax Agency has amended its transfer pricing guidelines to issue to its transfer pricing examiners concerning the implementation of Japan’s new transfer pricing documentation rules as well as examinations of transactions involving joint venture companies.
The guidelines continue to instruct the examiners to determine whether there are transfer pricing issues by reviewing various described documents, which now include the documents listed in the pertinent finance ministerial order as of April 1, 2010.
The guidelines also continue to remind examiners that if a taxpayer does not submit the required documents without delay, it shall be possible to apply the presumptive taxation rules or the similar enterprise investigation provisions (which can lead to the application of secret comparables) and they are required to explain these potential consequences to the taxpayer and record such explanations and the subsequent submissions.
However, the amended guidelines now instruct the examiners to request submissions by determining deadlines within a scope recognised to be necessary, and they are to allow for the time ordinarily necessary to prepare the submission based upon listening to the opinions of the taxpayer.
The amended guidelines state that, if the taxpayer itself has computed the arm’s-length price, the examiners are to study whether it is possible to calculate the arm’s-length price based upon the documents used by the taxpayer and to decide whether it is necessary to request the submission of additional documents. This suggests that, if the taxpayers’ original submissions are considered to be insufficient, the examiners should request additional submissions, rather than just decide that there has been a lack of compliance.
The amended guidelines also require the examiners to determine whether it is possible to calculate the arm’s-length price by studying the submitted documents comprehensively. This suggests that examiners are to evaluate the submitted documents on an overall basis to determine if it is possible to determine arm’s-length prices, rather than to immediately conclude that any failure to submit a document automatically results in a lack of compliance.
However, it is not clear how the above instructions will be applied in practice by particular examiners.
If examiners decide that it is not possible to calculate the arm’s-length price based on submitted documents and the presumptive taxation rules or similar enterprise audit provisions apply, the guidelines require that they explain the reasons to the taxpayer.
The guidelines also note that, in a case in which submitted documents were prepared based upon factors such as inaccurate information, the submission does not satisfy the requirements. In such case, the examiners are to request the submission promptly of documents prepared based upon accurate information. Inaccurate information is not defined, so this is left to examiners to determine.
For joint venture companies, the guidelines instruct examiners to sufficiently study the process by which prices were determined in negotiations based upon considering a number of situations. They note that when a taxpayer or its foreign related person had been established by two or more persons, in some cases a person other than a party to the foreign related transaction, such as an investor, was a party to the negotiations. In these situations, the negotiations may have been carried out taking into account the arm’s-length principle. However the guidelines also instruct examiners that the existence of certain described facts such as intense negotiations or participation by a third party does not constitute a basis for concluding that a foreign related transaction has been conducted on conditions the same as those as an unrelated person transaction.
White and Case LLP is a leading international law firm with lawyers in 36 offices in 25 different countries. With a global presence the firm provides counsel and representation to a wide range of clients from state governments to multinational businesses and firms from construction companies to investment banks. White and Case law firm have years of expertise and represent in almost all areas of law from international arbitration and cross – border transactions to local US and English laws.
Tags: global law firm, International arbitration, International Law Firm
06 Jul 10 LCIA India: A New Dawn for Indian Arbitration
The absence of credible, efficient Indian arbitral institutions has long been perceived to be a major drawback to arbitration in India. In April 2009, the London Court of International Arbitration (LCIA) launched its India centre in an attempt to plug this gap. ‘LCIA India’ seeks to provide world-class administration of arbitrations in India in an accessible manner and at competitive rates. Located in New Delhi, LCIA India is incorporated in India, and is staffed with a local registrar and counsel. The rates—both for arbitrators and administration—are not yet available, but are expected to be lower than those charged by the LCIA in London.
Its opening is a positive development, not least because there has been an urgent need for arbitral institutions to play a greater role in expediting the conduct of arbitrations within India. The centre should help enhance the credibility of institutional arbitration in the eyes of the Indian judiciary and among arbitration users in India. Although not an immediate solution to all of the problems encountered when arbitrating within India, it is certainly a step in the right direction.
Pitfalls associated with Indian arbitration
Given the endemic delays associated with Indian courts, litigating in India has never been an attractive option for corporate entities seeking speedy resolution of their disputes. At present, there is a backlog of almost 30 million cases in the Indian judicial system. As a result, arbitration is increasingly seen as the preferred option for resolving disputes between Indian and foreign parties. That too, however, has been fraught with difficulty.
First, most arbitrations in India are conducted on an ad hoc basis i.e., not administered by an arbitral institution. Such arbitrations tend to resemble the very Indian court proceedings which they are meant to substitute by being procedurally cumbersome and excessively time consuming.
Second, Indian courts have adopted an interventionist approach towards the conduct of arbitration proceedings. In particular, Indian courts have assumed the power to set aside awards that they consider to be contrary to Indian law.
All in all, as the Indian Law Minister himself succinctly acknowledged in his address at the launch of LCIA India, “arbitration in India is not done well.”
How could LCIA India help?
LCIA India will likely provide a direct solution to the first problem and, one hopes, over the longer term, go some way towards addressing the second problem.
Ad hoc arbitrations are popular in India for two reasons: (i) the absence of a well-established and popular local arbitration institution; and (ii) the perception that they are generally less expensive than institutional arbitrations. By making an internationally recognised brand such as the LCIA available at the doorstep of Indian parties, and (presumably) at competitive rates, LCIA India should address the long-held concerns of Indian entities about institutional arbitration.
With respect to intervention by Indian courts, LCIA India does not eliminate this problem. It could, however, provide a long-term solution. In the absence of a credible institutional framework within India, Indian courts have tended to view ad hoc arbitrations with some scepticism, often perceiving them to be unreliable or unfair. The hope is that LCIA India will enhance the credibility of institutional arbitration within India. A well-run, transparent, impartial and reliable administrative institution such as LCIA India could be the necessary catalyst in reviving the Indian judiciary’s confidence in the arbitral process, and encourage the courts to take a less interventionist approach towards arbitrations.
A new dawn?
It would be premature to suggest that the opening of LCIA India will, in and of itself, eradicate overnight all problems associated with arbitration in India. The current approach of the Indian courts means that losing parties in an arbitration can still obstruct the enforcement of awards by asserting spurious challenges in courts. Arbitral awards can still be overturned, and intervention by Indian courts in the arbitral process is more likely than not.
It is therefore likely that parties wishing to minimise the scope for Indian judicial intervention (in particular, foreign investors) would continue to prefer to arbitrate outside India. What LCIA India does, however, is to offer a credible institutional alternative to parties who wish to arbitrate within India. It remains to be seen whether LCIA India can make the transition from this and become the arbitral institution of choice for India-related disputes. Much will depend upon its actual performance, and it is too early to make any predictions.
Indian arbitration has seen many false dawns. The Arbitration and Conciliation Act 1996 based on the modern UNCITRAL Model Law and enacted with great expectations was one such example. For several reasons, the legislation did not deliver on its promise. It is hoped that LCIA India will buck the trend and provide a much needed fillip to Indian arbitration.
The White & Case International Disputes Quarterly is prepared for the general information of our clients and other interested persons. It should not be acted upon in any specific situation without appropriate legal advice.
This article may include links to websites other than the White & Case website. White & Case LLP has no responsibility for any websites other than its own, and does not endorse the information, content, presentation or accuracy, or make any warranty, express or implied, regarding any other website.
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11 Jun 10 Hong Kong’s Legislature Considers Arbitration Bill
On July 8, 2009 Hong Kong’s draft Arbitration Bill, which abolishes the distinction between international and domestic arbitration, was read for a second time. The draft Bill is still being considered by the Legislative Council.
This update sets out the progress of the Bill, and describes an amendment made to the Bill since it was last reported on in the Spring 2009 issue of IDQ. The Bill has had a long gestation. In 1992, a committee of the Hong Kong International Arbitration Centre was invited to consider whether amendments to the Arbitration Ordinance were required. The 1996 report prepared by the Committee recommended that the Ordinance be completely redrawn in order to apply the UNCITRAL Model Law equally to domestic and international arbitrations and recommended interim measures to minimize the differences between domestic and international arbitration.
In 1998, a Committee on Hong Kong Arbitration Law was established to follow up on the 1996 report. This Committee issued its report in 2003. In 2005, the Department of Justice set up a Working Group with a view to implementing the recommendations in the 2003 report. The Department of Justice issued a consultation paper and the draft Bill in December 2007. The consultation period closed in June 2008, and the amended draft Bill was introduced into the Legislative Council a year later, in July 2009, with largely minor changes. The Department of Justice has published a document that includes the views of consultees on various issues, and its decisions on those issues.
A Bills Committee was formed and has met on six occasions. It is expected that the new Arbitration Bill will come into force during the Summer of 2010.
Open Court for Proceedings Under the Draft Arbitration Bill?
Various technical changes have been made to the draft Bill following the consultation, but one particularly contentious issue is the extent to which court proceedings under the Arbitration Bill (for example, an application to set aside an arbitral award) should be held in open court. The arguments both for and against open court are well known. On the one hand, courts should administer justice as transparently as possible, since they carry the coercive power of the state behind them. On the other hand, parties often choose arbitration over litigation for its confidentiality, so an over-eager desire for open justice may discourage international parties from arbitrating in Hong Kong.
The existing law provides that proceedings under the Arbitration Ordinance in Hong Kong must be held in private if any party to the proceedings so desires. In the Consultation Paper, the Working Group proposed that there should be a presumption that proceedings would be held in open court, but that if any party asked for them to be held in private they would be, unless the court was satisfied that they ought to be held in open court.
The Hong Kong Bar Association and the Hong Kong Institute of Arbitrators argued that it is more logical to start with the presumption that court proceedings be held in private unless either party requests otherwise (or the court decides on its own initiative) and the court is satisfied that the proceedings ought to be so heard. This would reduce the expense of parties as they would not have to make an application in each case. Some practitioners argued that the move to open court would be seen by international businesses and advisers as an undesirable erosion of arbitral confidentiality.
The Department of Justice has endorsed the consultees’ views in the amended draft Bill. If the Bill is passed in its current form, the courts will have a new discretion to order hearings on arbitration matters to be held in public, even when the parties want the hearing to be held in private.
The White & Case International Disputes Quarterly is prepared for the general information of our clients and other interested persons. It should not be acted upon in any specific situation without appropriate legal advice.
This article may include links to websites other than the White & Case website. White & Case LLP has no responsibility for any websites other than its own, and does not endorse the information, content, presentation or accuracy, or make any warranty, express or implied, regarding any other website.
This article is protected by copyright. Material appearing herein may be reproduced or translated with appropriate credit.
About White & Case:
White & Case LLP an international law firm with experience in five continents and over a century of legal practice. The pioneering International Arbitration Group is a recognised global leader in the field of international arbitration law, with over 160 practitioners around the world.
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