PONTIFICIA UNIVERSIDAD

CATOLICA DE CHILE
International Contracts
(SESSION 2)
Ignacio Garca P.

Investment Systems
Bilateral investment protection BITs/Investment
chapters in FTAs
National Treatment
MFN
Performance requirements
Transfers
Expropriation

Options for foreign investment

Create a local subsidiary
Acquire shares or interest rights in existing local
entity (directly or indirectly)
Acquire assets
Invest in securities (Law 18.657)

Vehicles to bring investment

SA
SRL
SPA
Branch
JV / Consortium (construction)

International sales systems

International Agency Agreements (Rep Office)
Main elements (Business promotion, independence;
terrritorial assignment)
Occasional elements (Exclusivity; representation;
termination indemnity)
Liability: in the name and on the account of principal
Problems of rep office in Chile (taxable PE, labor
recharacterization)
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International sales systems

Distribution contract
Autonomy/independence: Distributors own name and
account
No post sales obligations (not a concessionaire)
No freedom to decide destination of merchandise
Clients: retailers
Product promotion under own name, not brand
promotion
Issues: antitrust, labor, termination
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International sales systems

Dealer/concessionaire

Exclusivity with principal

Post sales warranty and services
No freedom to decide destination of merchandise
Clients: final consumers
Brand promotion

International sales systems

Commercial Franchise
Brand license; know-how & industrial secret transfer; Supply;
Control; suport and training; fee structure (entry fee, royalty,
training, etc.); Territory
Business group integration vs. Structural independence:
International or Direct Franchising internacional vs. SubFranchising or
Master Franchising (Local presence)

International Franchise Guide (Unidroit)

http://www.unidroit.org/english/guides/2007franchising/a
nnex.htm

International sales systems

Technology Transfer and know how contract
Elements (design; production assistance; general
consulting)
Software agreements (source codes not transferred
except when custom made; copyright stays with
supplier)

International Financing
International loans facilities; different currencies; club
deal; bank syndication; participation (sale of credit
position; international financial factoring and leasing
(see Unidroit Conventions)
http://www.unidroit.org/english/conventions/mobi
le-equipment/mobile-equipment.pdf
Stock / bond issuance (preferences)
Capital markets; Investment funds
ADR, GDR (US$), IDR (Euros)
Derivatives value based on underlying assets
(futures, options; forward, swap)
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International Contracts
DRAFTING EXERCISE
3 GROUPS
GROUP 1: DESCRIBE RIGHTS AND
OBLIGATIONS OF FRANCHISOR
GROUP 2: DESCRIBE RIGHTS AND
OBLIGATIONS OF FRANCHISEE
GROUP 3: DRAFT DISPUTE RESOLUTION
CLAUSE
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