►ARIAS FABREGA & FABREGA Advises KPMC in Minority Stake Acquisition of Minera Panama ►CAREY Y CIA Acts for Canada Pension Plan Investment in 49.99% Stake of Grupo Costanero ►CLAYTON UTZ Advises NEXTDC on 41.39 million Placement ►FRASER MILNER CASGRAIN Northland Resources Completes Offerings ►GIDE LOYRETTE Warsaw Finalises Acquisition of Chain Supermarkets by Maxima Grupe ►HOGAN LOVELLS Advises Knology, Inc. on Its $1.5 Billion Acquisition by WOW! ►KING & WOOD Aokang Co., Ltd. Successfully Lists on Shanghai Stock Exchange ►NAUTADUTILH Assists NASDAQ in its Acquisition of BWise ►RODYK Acts in Global Offering and Listing of Vision Fame ►TOZZINIFREIRE Maquina de Vendas SA Acquires Lojas Salfer ►WILSON SONSINI Microchip Technology to Acquire SMSC for $939 Million

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P R A C M E M B E R N E W S

►Arias & Munoz Names Partner in Guatemala ►Baker Botts Trio of Energy Lawyers Join Firm ►Clayton Utz Boosts Corporate Team in Melbourne ►Davis Wright Tremaine Elects Exec Committee Chair and Vice Chair ►Hogan Lovells Adds Preeminent Insurance Lawyer ►McKenna Long Welcomes Former US Senator Gary Hart ►NautaDutilh Adds Competition Expert ►Wilson Sonsini Expands IP Counseling & Patents Practice ►ARGENTINA President Sends Congress Bill to Expropriate YPF ALLENDE & BREA ►AUSTRALIA Convergence Review Recommends Major Changes to Media Ownership Rules CLAYTON UTZ ►BRAZIL Brazilian Senate Approves Interstate Single Rate for the ICMS TOZZINI FREIRE ►CANADA Supreme Court of Canada Sends Dispute to Arbitration Despite Defense on Merits FRASER MILNER CASGRAIN ►CHINA The Recall System of Defective Automobiles KING & WOOD MALLESONS ►HONG KONG Arbitrations Awards Made Enforceable in India HOGAN LOVELLS ►INDONESIA Obligation to Process Minerals For Holders of Mining Business Permits ABNR ►MEXICO Regulations To The Federal Law For Protection Of Personal Data In Possession Of Individual SANTAMARINA y STETA ►SINGAPORE Competition Alert RODYK ►TAIWAN Attorney Fees Incurred During the Third Instance Are Not Included In Damages Caused By Improper Preliminary Injunction LEE & LI UNITED STATES ►After Morrison District Court Denies Motion to Dismiss SEC s Investment Advisers Act Claim Where US Advisor Advised Foreign Fund BAKER BOTTS ►Washington State Adopts New Form of Corporation That Allows Companies to Combine Profitability DAVIS WRIGHT TREMAINE ►State of the States - Update Health Insurance Exchanges McKENNA LONG & ALDRIDGE ►California Labor Commission Changes the Wage Notice Template and Issues Another Set of Revised FAQs WILSON SONSINI GOODRICH & ROSATI

P R A C T O O L S T O U S E

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April 2012 PRAC 51st International Conference - Houston Hosted by Baker Botts LLP

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Page 2 P R A C M E M B E R N E W S

A R I A S & M U N O Z N A M E S P A R T N E R I N G U A T E M A L A

Arias & Munoz is pleased to announce that Luis Pedro Del

Valle has been named partner.

After 5 years in the firm, it is a pleasure for Arias & Muñoz

to announce that Luis Pedro Del Valle has been promoted to

a partnership in the Guatemala office.

Luis Pedro has proven an exceptional commitment and

professionalism while providing the best client service. He

has ample experience in mergers & acquisitions, corporate

law, reorganizations, financial and securities regulations. He

also has knowledge and experience in the fields of

Telecommunications as well as Information Technology Law.

He obtained his Law Degree at the Universidad Francisco

Marroquin Law School, where he also obtained his degree

as Attorney and Notary Public. He obtained a LLM in

Information Technology Law at Stockholm University in

Sweden. In addition, he actively participates in the academic

sector as a professor for the Law Schools at two different

private universities in the country.

For additional information visit www.ariaslaw.com

B A K E R B O T T S T R I O O F E N E R G Y L A W Y E R S J O I N F I R M

Trio of Energy Lawyers Join Baker Botts L.L.P; Bolster

Firm’s Reputation as ‘Go-To’ Law Firm for Energy

Industry

HOUSTON, May 10, 2012 -- A trio of leading energy

lawyers has joined Baker Botts L.L.P. in New York and

Houston, bolstering the firm’s reputation as the go-to law

firm in the energy industry for resolving complex legal

problems.

William S. Lamb and Michael W.E. Didriksen of New York

and Thomas J. Moore of Houston have managed major

matters for energy clients around the world at their

previous firm, Dewey & LeBoeuf LLP, including mergers and

acquisitions, project development and divestitures.

"Adding Tom, Bill and Mike to our firm shows that we are

committed to offering the best legal talent to our clients,”

said Baker Botts Managing Partner Andrew M. Baker. “Our

energy platform is also a strong complement for Tom, Bill

and Mike to continue to develop their respective practices.”

Lamb, who was co-chair of Dewey's Utilities, Power and

Pipelines Global Industry Sector Group, is counsel to The

AES Corporation in its sale of two gas-fired generating

plants. He advises both public and private companies in

mergers, acquisitions and divestitures, as well as

financings. He represents bidders and targets in both

negotiated and unsolicited mergers and acquisitions.

Didriksen, who was a partner in Dewey’s U.S. Energy and

Utilities Practice Group, represents major energy industry

companies and other large corporate clients, primarily on

project development, mergers and acquisitions and

divestitures. His experience includes structuring transac-

tions for both regulated and unregulated companies in the

electric power and gas industries.

Moore, who served as co-chair of the energy mergers and

acquisitions practice at Dewey, leads the representation of

the Angola LNG project that is designed to eliminate flaring

of natural gas produced in Angola’s offshore oil production.

Also, he led the representation of RWE in its acquisition of a

50 percent interest in Excelerate Energy, a U.S.-based

international LNG trading and infrastructure company.

For additional information visit www.bakerbotts.com

C L A Y T O N U T Z B O O S T S C O R P O R A T E T E A M I N M E L B O U R N E

Page 3 P R A C M E M B E R N E W S

Melbourne - In a significant boost to its Corporate Advisory and M&A capability in Melbourne and nationally, Clayton Utz

has appointed Stephen Moulton as a partner with effect from 1 June 2012.

Stephen joins Clayton Utz from PricewaterhouseCoopers, where he has been a partner for the past 3 years. Prior to joining

PwC, Stephen was the chairman of partners and a former managing partner at another firm, and founded its Corporate

practice. Stephen is also a director of the Carlton Football Club Ltd (since 2006) and O'Brien Foundation Ltd (formerly Mi-

crosurgery Foundation Ltd, since 2000).

Clayton Utz's national Corporate practice head, Graham Taylor, said Stephen's appointment marked a further boost to the

firm's Corporate / M&A offering in Melbourne as well as nationally. "Stephen brings to Clayton Utz diverse experience in

acting for a range of high-profile corporate clients over many years. His experience in founding and growing a Corporate

practice and the strong relationships he has within the market make him an excellent fit for Clayton Utz and our clients."

Clayton Utz Chief Executive Partner Darryl McDonough said Stephen's appointment reflected the firm's commitment to grow

its Melbourne office organically and through strategic acquisition. "The addition of Stephen to the Melbourne team continues

the positive momentum that has been built over the last 12 months with the hires of partners including Michael Linehan

(Corporate Advisory / M&A), Dan Trindade (Workplace Relations and Safety), and Stuart Pill (Workplace Relations and

Safety) and their teams."

For additional information visit www.claytontuz.com

MAY 2, 2012 –Sharon L. Schneier, a partner in the New York office of Davis Wright Tremaine LLP, has been named chair

of the Executive Committee, the firm’s main policy-making body.

Ms. Schneier, who was previously New York partner-in-charge, has a successful commercial litigation practice, with a par-

ticular focus on complex matters.

"I am thrilled to have Sharon working with me to lead the Executive Committee," said Dave Baca, DWT’s managing partner.

"She has been a tremendous leader in the firm for many years, and her vision and focus will serve us well as we execute on

our strategic plan."

"I’m looking forward to working with my partners to continue to expand Davis Wright’s legacy as a premier national law

firm that is valued by its clients for its legal counsel and service," said Ms. Schneier.

Ms. Schneier received her B.A. from the State University at Albany and her J.D. from Brooklyn Law School.

Mark Berry, the partner-in-charge of Davis Wright’s Bellevue, Wash., office, has been named vice-chair of the Executive

Committee.

For more information, visit www.dwt.com.

D A V I S W R I G H T T R E M A I N E E L E C T S E X E C U T I V E C O M M I T T E E C H A I R A N D V I C E - C H A I R

Hogan Lovells Welcomes Preeminent Insurance Lawyer James A. FitzPatrick, Jr. as Head of U.S. Corporate

Insurance Practice

NEW YORK, 14 May 2012 – Hogan Lovells announced today that James A. (Tony) FitzPatrick, Jr. has joined its New York

office as Head of the U.S. Corporate Insurance Practice. FitzPatrick joins Hogan Lovells from Dewey & LeBoeuf LLP.

“Tony FitzPatrick is widely recognized as a preeminent corporate insurance practitioner in the United States, and his

addition is a significant milestone in Hogan Lovells’ strategy to build out our full suite of U.S.-based corporate and

regulatory insurance capabilities,” said Stuart Stein, Global Co-Head of Hogan Lovells’ Corporate Practice Group. “Hogan

Lovells is recognized as a leading global practice in these areas, and Tony’s high-profile credentials and experience provide

our U.S. and international clients the capability they need for their U.S. operations and transactions.”

“We are very pleased that Tony chose to join Hogan Lovells and lead the corporate insurance practice in the United

States,” said Hogan Lovells Co-CEO Warren Gorrell. “The practice and our clients both will benefit significantly from the

addition of a practitioner of his caliber.”

"With his reputation in the industry as a go-to advisor on insurance and reinsurance transactions and regulatory matters,

Tony is an excellent enhancement to Hogan Lovells’ transatlantic capabilities in these areas,” said Tim Goggin, Head of

Hogan Lovells’ Corporate and Regulatory Insurance practice, which has over 120 lawyers internationally and is widely

recognized as one of the world's leading teams advising the insurance industry on corporate, financial, and regulatory

matters. “Our team across Hogan Lovells’ global platform very much looks forward to working closely with Tony.”

FitzPatrick represents public and private companies and their boards of directors in transactional matters such as the

formation of new business ventures, private and public capital raising, purchase and sale of assets, reinsurance transac-

tions, mergers and acquisitions and reorganizations and restructurings, as well as general corporate, insurance regulatory,

and corporate governance matters.

“Hogan Lovells’ growing strengths in the corporate and insurance arenas in the United States—in New York and on the

West Coast especially—and its global reach make it the ideal place for me to advise clients on their critical operations and

transactions,” said FitzPatrick.

For additional information visit www.hoganlovells.com

Page 4 P R A C M E M B E R N E W S

H O G A N L O V E L L S A D D S P R E E M I N E N T I N S U R A N C E L A W Y E R

Page 5 P R A C M E M B E R N E W S

M C K E N N A L O N G & A L D R I D G E W E L C O M E S F O R M E R U . S . S E N A T O R G A R Y H A R T

DENVER, CO (May 1, 2012) — Former U.S. Senator Gary Hart has joined McKenna Long & Aldridge LLP (MLA) in Denver as

a senior strategic advisor. Sen. Hart will advise clients on entering and expanding in foreign markets, drawing on years of

international experience in Europe, Asia, Latin America and the Middle East while in public service and later as a business

advisor.

“We are honored that Senator Hart has chosen to join McKenna Long & Aldridge,” said firm Chairman Jeff Haidet. “He brings

tremendous political and leadership experience to our firm. His bipartisan work on national security issues throughout a

remarkable career in both the public and private sectors will be of great value to our clients in Denver, as well as nationally

and internationally.”

MLA Denver Office Managing Partner Mark Meagher noted, “Senator Hart will add a new dimension and experience to the

Denver office and enable us to better serve a range of Colorado clients with overseas activities.”

“I am pleased to have this affiliation with McKenna Long & Aldridge,” Sen. Hart said. “I look forward to assisting the firm’s

clients in their strategic planning, especially regarding international business.”

Sen. Hart represented Colorado in the Senate for 12 years, serving on the Armed Services Committee, the Environment &

Public Works Committee, the Budget Committee, and the Select Committee on Intelligence. During his Senate years, he

played a leadership role in military reform initiatives, environmental and conservation legislation, efforts to advance the

information revolution and in foreign policy.

After completing his service in the Senate, Sen. Hart resumed his law practice and devoted himself to a variety of civic

activities and to writing on politics and defense policy and penning four novels. He was a co-chair with former Senator

Warren Rudman (R-NH) of the U.S. Commission on National Security for the 21st Century. The Commission produced the

most comprehensive review of national security since 1947, predicted the terrorist attacks on America, and proposed a

sweeping overhaul of U.S. national security structures and policies for the post-Cold War era and its dominant threat:

terrorism.

Sen. Hart chairs the American Security Project and the Defense Department’s Threat Reduction Advisory Council, is a

member of the Council on Foreign Relations and serves on the boards of the Council for a Livable World and the Truman

Project. Through many of these activities he continues to pursue the goal of recreating a bipartisan center in American

national security and foreign policy.

Before entering congressional service, Sen. Hart was an attorney for the U.S. Department of Justice and was a special

assistant to the solicitor of the U.S. Department of the Interior. He is a graduate of the Yale Law School and earned a

D. Phil. from Oxford University.

MLA is a nationally-recognized leader in the complex field of public policy and regulatory affairs, providing its clients with a

broad range of legal and political experience. The firm’s bipartisan government affairs team is comprised of attorneys and

advisors. In Denver, Sen. Hart joins MLA Senior Strategic Advisor and former U.S. Congressman, David Skaggs, from the

2nd Congressional District of Colorado, and MLA Litigation partner and former Denver City Attorney, David Fine.

For additional information visit www.mckennalong.com

Page 6 P R A C M E M B E R N E W S

N A U T A D U T I L H A D D S C O M P E T I T I O N E X P E R T

Barbara Nijs joins NautaDutilh’s competition team

Amsterdam, 1 May 2012 - Barbara Nijs has joined

NautaDutilh’s competition team as counsel. She is a lawyer

specialised in European and Dutch competition law. She has

extensive experience of cartels and reporting mergers and

acquisitions to the Netherlands Competition Authority (NMa)

and the European Commission.

Previously, Nijs worked for Clifford Chance in Amsterdam

and London, from where she was also seconded to Shell.

Before that, she worked for the NMa and then the European

Commission, where she was national expert in competition

law. Nijs publishes regularly in professional journals and is

editor of the journal Tijdschrift Mededingingsrecht in de

Praktijk. She is also a regular speaker and teaches on

courses such as the Advanced Training Course for Young

Lawyers on Competition Law for the Dutch Practice.

NautaDutilh is delighted with this new impetus for its

competition team.

For additional information visit www.nautadutilh.com

W I L S O N S O N S I N I E X P A N D S I P C O U N S E L I N G & P A T E N T S P R A C T I C E

Hires Interference and Reexamination Expert

Michael T. Rosato --

PALO ALTO, CA (May 1, 2012) - Wilson Sonsini Goodrich

& Rosati, the premier provider of legal services to technol-

ogy, life sciences, and growth enterprises worldwide, is

pleased to announce that Michael T. Rosato has joined the

firm as a partner. Rosato brings substantial expertise in

intellectual property protection and counseling related to

medical devices and biotechnology, with particular experi-

ence in U.S. Patent and Trademark Office (USPTO) interfer-

ences and reexaminations. He will be based in the firm's

Seattle office.

"Among many other accomplishments, Mike's impressive

track record of successfully representing clients in contested

proceedings before the USPTO truly sets him apart," said

Doug Clark, WSGR co-managing partner. "This specialized

skill makes him a valuable addition to our highly regarded

IP counseling and patents team, and we are very pleased to

welcome him to the firm."

Rosato's experience includes advising domestic and interna-

tional companies at all stages of development in a wide ar-

ray of medical technology fields, including minimally inva-

sive surgery, electrosurgical and ablation systems, orthope-

dic devices, medical imaging, orthodontics, cardiology, and

diagnostics. A considerable portion of his practice is devoted

to representing clients in interferences, reexaminations, and

other contested proceedings before the USPTO, often as

lead counsel. He also has handled dozens of appeals before

the Board of Patent Appeals and Interferences.

Prior to joining the firm, Rosato was an IP partner in the

Seattle office of Kilpatrick Townsend & Stockton (formerly

Townsend and Townsend and Crew). He began his legal

career at DLA Piper and previously worked as a patent

agent for microfluidics device manufacturer Micronics. He

received his J.D. in 2002 from the University of Washington,

where he also earned an M.S. in toxicology in 1999; he re-

ceived a B.S. in biochemistry from Rutgers University in

1996.

For additional information visit www.wsgr.com

Page 7 P R A C M E M B E R N E W S

A R I A S F A B R E G A & F A B R E A A D V I S E S K P M C I N M I N O R I T Y S T A T E A C Q U I S I T I O N O F M I N E R A P A N A M A

Panama, May 2012. ARIAS, FABREGA & FABERGA acted as

local counsel for Korea Panama Mining Corp. (KPMC) in its

successful acquisition of a 20% interest in Minera Panama

S.A. (MPSA). The latter is the owner and developer of

Cobre Panama, a large open-pit copper development project

in Panama.

ARIFA assisted lead counsel in successfully structuring and

negotiating the shareholder agreement and closing

requirements for KPMC. This allowed the Korean entity to

acquire its 20% stake in MPSA from lone shareholder Inmet

Mining Corp., of Canada, for US$169 million. Inmet Mining is

now the majority shareholder.

Cobre Panama, which total investment is projected at more

than US$5billion over the life of the project, will produce an

average of 255,000 tons of copper annually during its

lifetime, which is expected to be more than 30 years. The

project also produces a considerable amount of gold,

molybdenum and silver.

KPMC is a joint venture between LS-Nikko Copper Inc., a

leading world copper smelters, and Korea Resources

Corporation (KORES).

Key attorneys who handled the matter:

Ricardo M. Arango, partner; Cecilio Castillero, senior

international counsel; and Andrés N. Rubinoff, international

associate

For additional information visit www.arifa.com

Carey acted as counsel to Canada Pension Plan Investment

Board (CPPIB) in the acquisition of 49.99% stake of

Grupo Costanera, Chilean unit of Italian motorway

Operator Atlantia. Grupo Costanera owns five toll roads in

Chile: Vespucio Sur, Radial Nororiente, Costanera Norte,

Litoral Central and AMB (access to the airport).

Carey advised CPPIB through a team led by partners

Claudio Lizana and Francisco Ugarte, and associates Mariana

Gómez and Juan Turner.

For additional information visit www.carey.cl

C L A Y T O N U T Z A D V I S E S N E X T D C O N $ 4 1 . 3 9 M I L L I O N P L A C E M E N T

Brisbane, 10 May 2012: Clayton Utz has advised ASX-

listed company and data centre services provider NEXTDC

on the successful completion of a fully underwritten place-

ment of $41.39 million, announced to the market on 20

April, and a Share Purchase Plan offer to existing

shareholders which closes on 16 May 2012.

Clayton Utz Brisbane Corporate partner Tony Lalor led the

transaction for NEXTDC, with support from Corporate

partner Tim Reid and solicitor John Whitehill.

The non-underwritten Share Purchase Plan is aiming to

raise a further $10 million from existing shareholders of

NEXTDC.

NEXTDC is delivering next generation data centres across

the country, with locations in Brisbane, Melbourne,

Canberra, Perth and Sydney. The capital raised will be used

to fund the acceleration of the fit-out in various of

NEXTDC’s data centres and associated costs, additional

working capital and other strategic opportunities.

Clayton Utz has acted for NEXTDC from inception, including

in its successful IPO and ASX listing in 2010 and further

capital raising rounds in April and August 2011.

Corporate partner Tim Reid said the firm was proud to

have established a long-term relationship with NEXTDC.

"It is satisfying to be a part of a client's growth story, and

support it in achieving its commercial objectives. We are

pleased to have worked alongside NEXTDC on this latest

capital raising."

For additional information visit www.claytonutz.com

C A R E Y Y C I A A C T S F O R C A N A D A P E N S I O N P L A N I N V E S T M E N T I N

F R A S E R M I L N E R C A S G R A I N N O R T H L A N D R E S O U R C E S C O M P L E T E S O F F E R I N G S

Page 8 P R A C M E M B E R N E W S

Northland Resources S.A. announced the closing of an offering of new shares in Canada, Europe and the United States for aggregate gross proceeds of approximately US$325,000,000. The shares issued under the offering are listed on the Toronto Stock Exchange and on the Oslo Børs. The offering closed on February 23, 2012. On March 7, 2012, Northland Resources S.A. announced that its subsidiary Northland Resources AB completed the offering of senior secured bonds in an amount equivalent to US$350 million.

The Company intends to use the net proceeds from the equity and bond offerings towards funding of capital and operating expenditures at the Kaunisvaara project, including the logistics solution for the transportation of iron ore concentrates, the Hannukainen Definitive Feasibility Study, repayment of the bridge financing provided by Standard Bank Plc, exploration expenditures in Sweden and Finland, working capital and general corporate purposes.

Pareto Securities AS acted as Global Coordinator and Sole Bookrunner in connection with the equity and bond offerings. Haywood Securities Inc. acted as Canadian Lead Agent in connection with the equity and bond offerings.

Haywood Securities Inc., on matters pertaining to the offering, and the Global Coordinator and Haywood Securities Inc., on matters of diligence, were represented by Fraser Milner Casgrain LLP with a team including, in Canada, Sander Grieve, Linda Misetich, Jamie Au and Denise Williams (Securities) and Zahra Nurmohamed and Matt Peters (tax). For additional information visit www.fmc-law.com

09 May 2012 The Warsaw office of Gide Loyrette Nouel advised Maxima Grupe, a Lithuanian group operating in the retail

sector, on the acquisition of a chain of supermarkets located in the south-east of Poland (Aldik supermarkets). Maxima is

the best known retail brand and the largest retail chain in the Baltic states (the group is present in Lithuania, Latvia, Estonia

and Bulgaria).

At Gide Loyrette Nouel, the negotiation process was supervised by Sergiusz Kielian, legal advisor in the Mergers &

Acquisitions department.

For additional information visit www.gide.com

On April 26, 2012, Aokang Co., Ltd. (AoKang) successfully listed on Shanghai Stock Exchange. The shares were priced at

CNY 25.5 per share, raising approximately CNY 2 billion capital.

Aokang is one of the largest shoe producers and retailers in China, It was a leather product supplier to the 2008 Beijing

Olympic Games and the exclusive Paralympic Games. Aokuang's main business involves the design, development,

manufacturing, distribution and retail of shoes and other leather products. Aokang is one of the five brands it owns.

King & Wood Mallesons (China) provided legal advice to the issuer. The project was led by partners Zhang Mingyuan and

Zhang Yi.

For additional information visit www.kingandwood.com

G I D E L O Y R E T T E N O U E L F I N A L I S E S A C Q U I S I T I O N O F S U P E R M A R K E T C H A I N B Y M A X I M A G R U P E

K I N G & W O O D M A L L E S O N S A O K A N G C O . L T D S U C C E S S F U L L Y L I S T S O N S H A N G H A I S T O C K E X C H A N G E

WASHINGTON, D.C., 19 April 2012 – Hogan Lovells announced today that it has been advising the Transaction Committee

of the Board of Directors of Knology, Inc. on the definitive merger agreement under which a subsidiary of WOW! Internet,

Cable & Phone (WOW!) has agreed to acquire Knology in an all-cash transaction valued at approximately $1.5 billion.

Knology is a leading provider of interactive communications and entertainment services in ten markets in the southeastern

United States and three markets in the midwestern United States. WOW! is a competitive provider of residential and

commercial high-speed Internet, cable television, and telephone services.

“We are pleased to have provided M&A counsel to the Transaction Committee throughout the course of this deal,” said

Corporate M&A partner Joe Gilligan, Hogan Lovells’ lead lawyer on the transaction. “This transaction demonstrates the

comprehensive capabilities offered by Hogan Lovells’ Corporate M&A practice.”

The transaction was announced on 18 April 2012. Under the terms of the agreement, WOW! will acquire all of the

outstanding shares of Knology for $19.75 per share in cash.

The Hogan Lovells team representing the Transaction Committee of the Board of Directors of Knology, Inc. was led by Joe

Gilligan and Steve Kaufman with assistance from Paul D. Manca, Joseph G. Connolly, Jr., Kevin K. Greenslade, Christopher

H. Schott, and Todd M. Aman (Corporate M&A); William L. Neff (Employee Benefits); Daniel M. Davidson (Tax); Michele S.

Harrington (Antitrust); and Gordon C. Wilson (Lending).

For additional information visit www.hoganlovells.com

May 4, 2012 - Nautadutilh assisted The NASDAQ OMX Group, Inc. as lead counsel in its acquisition of BWise, a global leader

in enterprise governance, risk management and compliance (GRC) software.

BWise's premium GRC platform will be available through NASDAQ OMX Corporate solutions, a NASDAQ OMX software

technology business dedicated to helping public and private companies minimize risk, maximize efficiency and increase

transparency with a suite of governance, investor relations and public relations products. BWise has offices in the

Netherlands, the United States, Germany, France and the United Kingdom. The purchase price has not been disclosed.

The NautaDutilh team involved in this transaction was lead by New York based partner Ruud Smits and included amongst

others Rogier Stevens (associate Corporate) and Sophie van Sadelhoff (associate Employment & Pensions).

For additional information visit www.nautadutilh.com

H O G A N L O V E L L S A D V I S E S K N O L O G Y , I N C . O N I T S $ 1 . 5 B I L L I O N A C Q U I S I T I O N B Y W O W !

Page 9 P R A C M E M B E R N E W S

N A U T A D U T I L H A S S I S T S N A S D A Q I N I T S A C Q U I S I T I O N O F B W I S E

Page 10 P R A C M E M B E R N E W S

R O D Y K & D A V I D S O N A C T S I N G L O B A L O F F E R I N G A N D L I S T I N G O F V I S I O N F R A M E

Rodyk acted as Legal Advisers to the Company as to

Singapore Law in the global offering and listing of Vision

Fame International Holding Limited on the Mainboard of the

Stock Exchange of Hong Kong.

Corporate partner Valerie Ong led the Rodyk team, assisted

by partner Au Yong Hung Mun and associate Justin Tan.

For additional information visit us at www.rodyk.com

U P C O M I N G P R A C E V E N T S

T O Z Z I N I F R E I R E M A Q U I N A D E V E N D A S S A A C Q U I R E S L O J A S S A L F E R

TozziniFreire assisted Máquina de Vendas S.A in the

acquisition of Lojas Salfer. The deal is completed and its

value is confidential.

With this deal, Máquina de Vendas, retail group formed by

Insinuante, Ricardo Eletro, City Lar and Eletro Shopping,

became the largest electronic retail chain in Brazil, with

1,078 stores.

About Máquina de Vendas Máquina de Vendas owns and

operates approximately 900 electronic retail stores.

About Lojas Salfer One of the largest eletronic and

furniture retail chain in the South of Brazil.

TozziniFreire Partners Mauro E. Guizeline, Francisco Eumene

Machado de Oliveira Neto and Fernando Cinci Avelino Silva

and associates Gabriela Cais Burdmann and Bruna Luiza

Tarnovski acted in the transaction.

For additional information visit www.tozzinifreire.com.br

Attention

Member Firm Delegates Attending following Events:

PRAC @ IBA Dublin 2012

PRAC Members Gathering

PRAC Buenos Aires Conference 2012 -

October 20-23

Hosted by Allende & Brea

PDAC March 5 Toronto 2013

PRAC Members Gathering

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PRAC Members Gathering

PRAC Washington, D.C. Conference 2013

September 28 - October 1

Hosted by HoganLovells

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Page 11 P R A C M E M B E R N E W S

W I L S O N S O N S I N I M I C R O C H I P T E C H N O L O G Y T O A C Q U I R E S M S C F O R $ 9 3 9 M I L L I O N

On May 2, 2012, microcontroller, analog, and Flash-IP

solutions provider Microchip Technology announced that it

has signed a definitive agreement to acquire Standard

Microsystems Corporation (SMSC), a smart mixed-signal

connectivity solutions developer, for $37.00 per share in

cash. The acquisition represents a total equity value of about

$939 million. Wilson Sonsini Goodrich & Rosati is

representing Microchip in the transaction.

The acquisition has been approved by the boards of directors

of each company and is expected to close in the third quarter

of 2012, subject to approval by SMSC stockholders,

regulatory approvals, and other customary closing

conditions.

The Wilson Sonsini Goodrich & Rosati team that represented

Microchip in the matter was led by corporate/M&A partners

Rob Ishii, Denny Kwon, and Rob Suffoletta, and included

employee benefits and compensation partner Roger Stern

and tax partner Eileen Marshall.

For additional information visit www.wsgr.com

A L L E N D E B R E A T O H O S T P R A C 5 2 N D I N T E R N A T I O N A L C O N F E R E N C E

October 20—23, 2012

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Register online at www.prac.org

Page 12 P R A C M E M B E R N E W S

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PRAC e-Bulletin is published monthly.

Member Firms are encouraged to contribute articles for

future consideration.

Send to editor@prac.org.

Deadline is 10th of each month.

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The Pacific Rim Advisory Council is an international law firm association with a unique strategic alliance within the global legal community providing for the exchange of professional information among its 30 top tier independent member law firms.

Since 1984, Pacific Rim Advisory Council (PRAC) member firms have provided their respective clients with the resources of our organization and their individual unparalleled expertise on the legal and business issues facing not only Asia but the broader Pacific Rim region.

With over 12,000 lawyers practicing in key business centers around the world, including Latin America, Middle East, Europe, Asia and North America, these prominent member firms provide independent legal representation and local market knowledge.

ARGENTINE PRESIDENT SENDS CONGRESS BILL TO EXPROPRIATE YPF, BIGGEST LOCAL ENERGY CORPORATION

Argentine President Cristina Kirchner announced her submission of a bill for Congress to declare hydrocarbon self-sufficiency and upstream-downstream activities to be in the country's national interest to guarantee the economic and sustainable development of local provinces and regions.

To enable the fulfillment of these goals, it would instruct the expropriation of a 51% controlling stake of YPF held by Spain’s Repsol, that would be acquired by the federal state (51%) and the hydrocarbon-producing provinces (49% pro rata their individual hydrocarbon production and proven reserves).

Despite a public federal and provincial controlling ownership of the company, the bill would open a call for joint ventures and other forms of association with domestic and international players as a way to make the aforementioned goals possible, promoting the incorporation of new technology, industrialization and marketing models.

A Federal Council of Hydrocarbons formed by the Ministers of Finance, Planning, Labor and Industry and with the participation of the provinces would be created in order to guarantee compliance with the purposes stated in the bill and setting forth the national hydrocarbon policy.

Should a bill be passed and the expropriation be made, Repsol would keep 6.4% of YPF’s stock while the Argentine Eskenazi family’s 25.5% portion and the floating 17% share listed in Buenos Aires and New York would remain untouched. The company would continue to be a private corporation governed by Argentine Companies’ Law.

The project would call for Repsol’s stake to be priced at a value to be determined by the Federal Appraisal Tribunal.

Notably, YPF’s bylaws require making an offer for all outstanding shares even if the intention of the purchaser were to acquire a 51% stake only.

Since the process for actually passing the bill, appraising YPF’s shares value, completing payment and takeover would take time, the bill invokes the Expropriation Law No. 21,499 enabling the “Temporary Occupation” of the company in the meantime. In other words, this tool grants the federal state the ability to run the company with immediate effect as a response to an abnormal and exceptional situation as that qualified by the President.

A bill would likely be approved because the government’s party has control of both houses of Congress.

Along these lines, in her speech given today the President announced the enactment of a Necessity and Urgency Decree intervening YPF, appointing the Minister of Federal Planning trustee and the Deputy Economy Minister as Trustees for them to run YPF day-to-day operations until the bill is passed into law.

As background information it is worth mentioning that YPF produces a third of the country's 570,000 barrels of oil per day, almost a quarter of its 125 million cubic meters per day of natural gas and has a approximately 55% of fuel sales on a national basis. Oil and gas reserves in Argentina have dropped sharply in the recent years causing the country to start importing energy after it had reached self-sufficiency in the 1990s. Energy imports amounted to more than $9 billion in 2011. The President indicated that YPF will focus on boosting exploration and production of both conventional and very promising unconventional hydrocarbons. For additional information visit www.allendebrea.com.ar

01 May 2012

Convergence Review recommends major changes to media ownership rules Australia's media ownership rules would be significantly overhauled, if the Convergence Review's recommendations are accepted by the Australian Government.

Based on a principle of technology neutrality, the Report's recommendations focus on the regulation of content service enterprises, which would be limited to only the most substantial and influential entities delivering professional content which they also control.

Media ownership – minimum number of owners + public interest

The Convergence Review recommends removing the:

the "75 per cent audience reach" rule; the "2 out of 3" rule; the "two-to-a-market" rule; the "one-to-a-market" rule;

and replacing them with a test of the minimum number of owners plus the public interest. A new communications regulator would be able to block mergers that are deemed not to be in the public interest. What is to be regulated is the content rather than the platform from which it is delivered.

It also recommends local media ownership be regulated through the minimum number of owners rule, and the 4/5 rule be updated to take into account all entities that provide a news and commentary service and have a significant influence in a local market.

A new communications regulator

In addition to regulating media mergers, a new communications regulator would be able to set media competition rules, and content standards, except for news and commentary. Unlike the Finkelstein Report, the Convergence Review recommends that the latter be regulated through an independent self-regulatory news standard body. Serious or persistent breaches of the media code could however be referred to the communications regulator.

Australian content quotas

There would be a new uniform content scheme applying to free-to-air and subscription TV.

Instead of a minimum expenditure obligation, content service enterprises would be required to spend a percentage of their total revenue from professional television-like content on Australian content. If this isn't practicable, the money could go to new converged content production fund.

As for radio, the music quotas applying to analogue radio would be extended to digital radio.

Spectrum allocation and management, and the new sixth channel

The Convergence Review recommends a common approach to the planning, allocation and management of both broadcasting and non-broadcasting spectrum. This would include:

a market-based pricing approach for the use of spectrum, and one that provides greater transparency when spectrum may be used for public policy reasons; spectrum planning mechanisms that explicitly take into account public interest factors, and social and cultural objectives currently reflected in the Broadcasting Services Act 1992; giving the Minister the power to reserve and allocate spectrum to achieve policy objectives; and certainty for spectrum licence holders about licence renewal processes.

Commercial broadcasting licensees should also have the flexibility to trade channel capacity within their spectrum.

As for the sixth planned television multiplex, channel capacity should be allocated to new and innovative services that will increase diversity. Existing commercial free-to-air television broadcasters and the ABC and the SBS should be precluded from obtaining capacity on the sixth multiplex.

What happens now?

The Australian Government will consider the Convergence Review's report, along with the Finkelstein Report, but has not set a date for this, so we shall have to wait and see – watch this space!

You might also be interested in...

Convergence Review moves ahead with five new discussion papers Media codes and tech advances: Government releases more details of its independent media inquiry

Disclaimer Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states or territories.

26 de abril de 2012 - Nº 12/2012 www.tozzinifreire.com.br

BOLETINS ANTERIORES

Senado Aprova Alíquota Interestadual Única de ICMS

Notícias Relevantes

Alterações nas Regras de Preços de Transferência no País

Margem de Preferência nas Licitações

Tax

Brazilian Senate Approves Interstate Single Rate for the ICMS

On April 24, 2012, the Brazilian Senate approved the application of a single rate for the State Value-Added Tax (“ICMS”) levied on interstate transactions with imported goods and products that apply more than 40% of imported raw materials during the manufacturing process. The single rate of 4% will be applicable as from January 1, 2013, and intends to mitigate the so-called “war of the ports”, in an attempt to eliminate the practice of some States of granting tax benefits on imports carried out through their ports. The new rule approved by the Brazilian Senate excluded products without a Brazilian similar, and also products and goods subject to basic productive processes (minimum national content), such as those produced in the Manaus Free Trade Zone and those covered by the Information Technology Law. The National Council of Tax Policy (“CONFAZ”) will regulate the criteria and procedures to be applied in the process of Import Content Certification (“CCI”). The new Senate rule (whose final wording is not available yet) still needs to be published in the Official Gazette to become effective.

Ana Cláudia Utumi Partner - São Paulo

autumi@tozzinifreire.com.br

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jabreu@tozzinifreire.com.br

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mchapinoti@tozzinifreire.com.br

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cbastianello@tozzinifreire.com.br

Marco Antonio Ruzene Partner – Campinas

mruzene@tozzinifreire.com.br

Gustavo Nygaard Partner - Porto Alegre

gnygaard@tozzinifreire.com.br

Rafael Mallmann Partner - Porto Alegre

rmallmann@tozzinifreire.com.br

Este boletim tem circulação limitada e é destinado exclusivamente aos nossos clientes.

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© 2012 Fraser Milner Casgrain LLP 

 

Focus onAlternative Dispute Resolution

MAY 2012 

 1 Supreme Court of Canada Sends Dispute 

to Arbitration Despite Defence on Merits  

2 Contact Us 

 

Supreme Court of Canada Sends Dispute to Arbitration Despite Defence on Merits By Thomas P. O’Leary and Taylor L. Armfield  The Supreme Court of Canada (“SCC”) recently considered whether a party had waived its right to rely on contractual arbitration and forum selection clauses by defending an Ontario action on the merits. In Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2012 SCC 9, the SCC unanimously affirmed an Ontario Court of Appeal ruling that a defence on the merits did not amount to a waiver of contractual arbitration and forum selection clauses. However, the Court left considerable uncertainty about what would amount to such a waiver.  

Background The dispute involved the Ottawa Rapidz, a professional baseball team, owned by subsidiary companies of Momentous.ca, who played in the Can‐Am League at a stadium owned by the City of Ottawa. Prior to entering the League, the team signed agreements that included arbitration and choice of forum clauses indicating that all disputes would be resolved by arbitration and enforced in North Carolina. Due to financial losses, the baseball team applied under the League’s by‐laws to withdraw voluntarily. The League rejected their application, terminated the team’s membership and drew down a letter of credit the team had been required to post to secure its financial obligations. The team sued the League, its principals, and the City of Ottawa.  

The team filed a Statement of Claim in January 2009 and all of the defendants delivered pleadings in April 2009 which defended the action on the merits. The Can‐Am defendants also 

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pleaded and relied upon the contractual arbitration and choice of forum provisions. In August 2009, the Can‐Am defendants brought a motion pursuant to Rule 21.01(3)(a) of the Ontario Rules of Civil Procedure seeking to have the action dismissed or stayed for lack of jurisdiction based on the arbitration and choice of forum clauses. This rule does not limit when a defendant must bring such a motion. At common law and in some other jurisdictions, such motions are restricted to the period before a defence on the merits.  

The Courts Below The motions judge found that although the Can‐Am defendants had defended the action on its merits, they had simultaneously raised a jurisdictional argument and, therefore, had not waived the arbitration and choice of forum clauses in their agreements, and had not attorned to the jurisdiction of Ontario. The action was dismissed. 

The Ontario Court of Appeal disagreed with the motions judge and held that the Can‐Am defendants had attorned to the jurisdiction of Ontario by defending the action on its merits. Nevertheless, the Court of Appeal ruled that the Court possessed residual discretion and refused, despite the attornment, to exercise jurisdiction over the dispute on the basis that the parties' agreement to arbitration and choice of forum clauses should take precedence. A “strong cause” is needed to displace these clauses and the attornment and delay in bringing the stay motion were not sufficient to meet the “strong cause” standard. Attornment was said to establish jurisdiction simpliciter, but to have little or no relevance to whether a court should exercise its discretion to accept this jurisdiction.   

The SCC Decision The SCC did not address attornment, merely stating that the parties did not contest the finding of the Court of Appeal on the issue.  Nor did the SCC deal with when “strong cause” to ignore choice of forum and arbitration clauses might 

exist in favour of a jurisdiction based on attornment. Instead, the SCC’s short decision focused on the narrow issue of whether the Ontario Rules of Civil Procedure permitted dismissal of the action based on the arbitration and forum selection clauses, notwithstanding the delivery of a statement of defence. The SCC held that the relevant rules did not limit the time during which the motion could be brought. In effect, the lack of such restriction was held to displace any inferred waiver of the arbitration and choice of forum clauses that might exist at common law. In this context, the SCC found that a statement of defence that specifically pleads a foreign forum selection clause does not amount to consent that the courts of Ontario assume jurisdiction so as to preclude consideration on the merits of whether to enforce the clause. Accordingly, the appeal was dismissed, ending the Ontario action. 

Resulting Uncertainties The Momentous decision begs a number of important questions. First, it does not account for the provisions in Ontario’s International Commercial Arbitration Act (“ICAA”) (which incorporates the UNCITRAL Model Law) which deal specifically with when a party must elect jurisdiction. Except for Quebec, all provinces and territories in Canada have adopted similar legislation. Where signatories to a commercial arbitration agreement have their places of business in different countries, the ICAA governs the question of whether a court can stay proceedings in favour of the dispute resolution method specified in the agreement. Article 8 of the UNCITRAL Model Law provides that a defendant is entitled to a stay of proceedings no later than filing its first statement on the substance of the dispute. This provision might have defeated the jurisdictional challenge but was not referred to by any level of court in Momentous. It’s impact or significance is therefore unclear. 

Further, the SCC did not comment on the recent and potentially contradictory decision of the 

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British Columbia Court of Appeal in Larc Developments Ltd. v Levelton Engineering Ltd, 2010 BCCA 18, which held that the common law principles of attornment apply in the arbitration context. The Court of Appeal noted that, at common law, any step taken which invokes the jurisdiction of the court results in attornment even if the party has reserved or is pursuing a challenge to jurisdiction. In Larc, a demand for particulars was held to be a step in the proceedings and therefore a stay under the provincial arbitration act was no longer available. While Larc may be distinguishable from Momentous on its facts, there remains at least an appearance of inconsistency.  

Momentous also leaves uncertainty as to whether and when defendants served with a claim must attempt to enforce an arbitration or choice of forum clause. Must they bring a motion disputing jurisdiction immediately, or can they merely raise the jurisdiction issue in their statement of defence and bring a motion disputing jurisdiction some time later?  If a defendant can “wait in the weeds”, how long can it wait?  What amount of delay will amount to “strong cause” to justify a court refusing to enforce arbitration and choice of forum clauses? 

Conclusion The Momentous case clearly reinforces that Canada is an arbitration‐friendly jurisdiction that will give strong deference to arbitration and choice of forum clauses in commercial agreements. However, the questions left open in the wake of Momentous remain difficult and could pose hazards for unwary parties who seek to enforce arbitration and choice of forum clauses in commercial agreements in Canada.   

A team from FMC Ottawa, including Susan M. Brown, K. Scott McLean and James M. Wishart, represented the appellant. 

 

 

 

Contact Us 

For further information, please contact a member of our National Alternative Dispute Resolution Group.  

 

金杜律师事务所 : ChinaBulletin

Home > Publications > China Bulletin > China Bulletin | April 2012 中文

The Recall System of Defective Automobiles

by Guan Feng and Cui JieI.

Overview

Since China implemented the defective automobile recall system in 2004, the frequency and number of defective automobile

recalls have increased gradually (see Figure 1 & Figure 2). In 2009, the number of vehicles subject to defective automobile

recalls passed one million for the first time. 2010 was even dubbed "the Year of the Automobile Recall" as the number of recalls

set a record of 115 recalls. Statistics show that from the official implementation of the Provisions on Administration of the Recall

of Defective Automobile Products (the "Recall Provisions")(1) in 2004 to the end of 2010, AQSIQ had initiated a total of 326

defective automobile recalls and recalled 3,957,830 defective vehicles. The recalls continue to increase in 2011. AQSIQ has

issued 55 recall announcements and recalled 1,790,150 defective automobiles till October 2011, exceeding 1,364,820

automobiles in 2009 and 1,177,000 in 2010.

中国法律期刊

金杜律师事务所 : ChinaBulletin

Defective automobile recalls in China, although showing a general upward trend, are still in an early stage of development

compared to developed countries. In the United States for instance, the National Highway Traffic Safety Administration (NHTSA)

implemented 778 defective automobile recalls with 22.2 million vehicles involved in 2008. In China, automobile sales reached

18.06 million in 2010 and ranked first in the world, while the number of recalled automobiles was about one million.(2) For a long

time, imported automobiles were recalled more frequently than domestic automobiles in China, and thus the automobile recalls in

China is dominated by imported automobiles. In the last two years, the domestic automobile recalls continued to rise in both

frequency and quantity, but defective automobiles were mainly recalled by domestic joint-venture brands rather than solely

Chinese-owned brands. In 2010, for example, the number of recalled defective automobiles was 1.177 million, including 176,000

imported cars, 962,000 joint-venture brands domestic cars, and only 39,000 domestic cars made by solely Chinese-owned

brands.

In light of the above features of automobile recall, on one hand, foreign automobilemanufacturers have a strong awareness of

recalling defective automobile due to a longer tradition of product safety laws, which leads to more frequent recalls; By contrast,

China's defective automobile recall system has been implemented in a relatively short period of time with incomplete regulations,

and thus less attention may have been paid to defective automobile recall by domestic automobile manufacturers.

That said, due to the incomplete recall system in China, foreign automobile manufacturers may also often ignore Chinese market

when conducting global recalls.Some scholars believe these omissions may be attributed to the relatively light penalties in

China's recall system relative to developed countries. The Recall Provisions provides, for instance, that manufacturers who fail to

execute an obligation to recall defective automobiles shall be fined from RMB 10,000 to 30,000. By contrast, the penalty for

manufacturers who refuse to recall defective automobiles in the United States is USD 15 million. If a manufacturer hides serious

defects or important facts, fines can range from 15 million to billions of dollars, and the responsible official may be sentenced to

15 years in prison.(3)

Seven years after the implementation of the defective automobile recall system in China, several rules have become outdated

and have been subjected to modification. AQSIQ issued the Draft Recall Regulations to the public on July 2, 2010 to modify the

scope, management and liability concerning defective automobile recalls. Compared to the Recall Provisions, the Draft Recall

Regulations further specify the following issues: broadening the scope of defective automobile recalls, strengthening supervision

over automobile manufacturers, and increasing penalties for noncompliance.

II. The Legal Framework for Automobile Recalls in China

金杜律师事务所 : ChinaBulletin

The Recall Provisions, which has been in effect since October 1, 2004, implemented defective automobile recalls for the first time

in China. It provides for the scope, management and procedures for defective automobile recalls, obligations of operators and

other relevant parties, and sanctions against noncompliance. The promulgation and implementation of the Recall Provisions

ensured the legitimacy of procedures for defective automotive recalls, and served as the main legal basis for the defective

automobile recall system. In addition, the Tort Law of the People's Republic of China (the "Tort Law")(4), implemented since July

1, 2010, expanded defective product recall obligations of manufacturers and sellers under product liability principles. This

provision of the Tort Law legally established the obligation of manufacturers to recall defective automobiles.

A. Expanding the Scope of Recalls

The Recall Provisions only regulate the recall of the entire automobile. Recall of individual car accessories has occurred only

once in China, when Kumho Tire Co., Ltd ("Kumho") recalled its tires on April 2, 2011. Some media outlets had reported that

excessive use of recycled rubber may cause performance degradation and lead to safety hazards. For this reason, Kumho

submitted a public recall announcement to AQSIQ, stating: "in conjunction with Beijing Hyundai Motor Co., Ltd, Great Wall Motor

Co., Ltd, Dongfeng Yueda Kia Motor Co., Ltd, and Kumho Tire Co., Ltd (Tianjin) and in accordance with the Recall Provisions, we

hereby recall some batches of tires (manufactured in 2008, 2009, 2010 and 2011) from April 15, 2011, involving 302,673 tires in

total." This is the only publicly-announced recall related to car accessories.Along with Kumho's announcement, AQSIQ published

a risk warning on its official website noting that some tires made by the Hankook company had problems with bulging and

exploding. Instead of submitting a public recall announcement to AQSIQ, Hankook stated it would recycle and abandon the

problem tires under the guidance of AQSIQ. In subsequent media interviews, Hankook denied that the recycling program was an

official recall on the basis that they did not submit a recall report to AQSIQ.Hankook's denial is legal as car accessories are not

included in the scope of automobile recalls.

Although the car accessories are not included in the scope of automobile recalls, according to AQSIQ reports, 30% of automobile

recalls are caused by defective car accessories. It is thus necessary to bring car accessories into the scope of recall. As a

consequence, the Draft Recall Regulations finally broaden the scope of recall to involve both whole-car and important car

accessories.

B. Procedures for Initiating and Supervising Recalls

The Recall Provisions divide recalls into voluntary and mandatory recalls. Voluntary recalls (see Figure 3) refer to automobile

manufacturers voluntarily conducting recalls after the discovery of automobile defects: (1) by the manufacturer; (2) through

information systems within the enterprise; (3) or by complaints and reports of sellers, repair shops, car owners or other related

parties; (4) or through notices of the competent authorities. Mandatory recalls (see Figure 4) refer to manufacturers passively

conducting recalls under the supervision of competent authorities if it is found the manufacturers have attempted to ignore or hide

the known defects, or coped with the defects in improper ways.

金杜律师事务所 : ChinaBulletin

Among the two types of recalls, voluntary recalls are common in China. The report of AQSIQ's annual meeting (2008) of

automobile recall management indicates that there have been no mandatory recalls until 2008. That said, however, some

voluntary recalls are essentially conducted under the supervision of the Defective Product Administration Center of AQSIQ (the

"Administration Center") after the Administration center gathered sufficient evidence concerning the defects through in-depth

investigation. Statistics of AQSIQ show that there were 57 automobile recalls in 2009 with 1,364,820 automobiles involved,

24.37% of which are initiated after investigation by the Administration Center(5).

There is no mandatory recall yet for the procedural reason that recalls implemented before receiving a mandatory recall

notification from authorities are deemed as voluntary recalls.

In contrast with Recall Provisions, the Draft Recall Regulations do not differentiate between voluntary and mandatory recalls. The

Draft Recall Regulations combine these two types of recall implementation and replaces the concept of "mandatory recall" with

"order recall". Article 23 of the Draft Recall Regulations provide that competent authorities should order the manufacturers to

implement recalls and notify local management authorities to take corresponding measures when certain goods ‘should have

been recalled' by the manufacturer. One potentially frustrating issue is that in practice there is still no specific definition for

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金杜律师事务所 : ChinaBulletin

"should have been recalled." The Draft Recall Regulations do however clarify specific responsibilities of related authorities, e.g.

the State Certification and License Administration Department is responsible to order certification authorities to suspend or

withdraw compulsory certification of automobile products; Customs enforcement should stop processing import declaration

formalities; police should suspend automobile registration; and the traffic and transport administrative departments should force

the violators to stop operating.

The Recall Provisions roughly describe what survey measures administrative departments can take in implementing a recall.

Based on the Recall Provisions, the Draft Recall Regulations further stipulate that administrative departments are entitled to

initiate the investigation upon finding defects, That is, administrative departments can initiate defect investigations when they are

informed of possible existing defects or there is evidence indicating the necessity to initiate a defect investigation. Administrative

departments also have the right to enter the business place of producers, importers, or domestic agents, seller, repair shops of

foreign producers to make on-site investigations, review or copy relevant documents and records, seal up or detain defective

automobiles if necessary, and collect information from the relevant units or individuals and solicit opinions from the public. The

aforesaid provisions of the Draft Recall Regulations highlight both the scope of authority of the administrative departments and

the need for automobile producers to be aware their new rights and obligations.

C. Penalties for Noncompliance

The Recall Provisions stipulates that the automobile producers who fail to fulfill the recall obligations of defective automobiles will

be fined RMB10,000 to RMB30,000. The Draft Recall Regulations increase the penalty and stipulates that automobile producers

will be fined 20% to 50% of the products' value which are illegally produced, sold and imported. The Draft Recall Regulations also

add penalty provisions if automobile producers fail to cooperate with a defects investigation, fulfill a recall obligation, submit a

recall report, carry out a recall order, file an information record; or cooperate with the investigation. If a case constitutes a crime,

criminal responsibility shall be investigated according to the criminal law. Obviously, compared to the Recall Provisions, the Draft

Recall Regulations increase penalties for producers' failure to perform recall obligations of defective automobile.

III. Consumer Compensation and other Open Questions

Both the Recall Provisions and the Draft Recall Regulations are silent on compensation to customers after the recall

implementation. Currently, customers can only claim damages (such as transportation expenses, lost working time, etc.) based

on the General Principles of Civil Law(6), the Protection of the Rights and Interests of Consumers(7) and the Contract Law(8). In

some cases, customers can also receive compensation according to local customer protection regulations. For example, in

March 2010, the Toyota automobile company implemented recalls on defective RAV4 automobiles. The buyers of the defective

cars claimed compensation for economic loss. The Hangzhou Administration for Industry and Commerce and Customer

Protection Commission conducted an investigation and then filed a rights protection filing according to the Catalogue of Three

Guarantees in Zhejiang Province and Measures of Implementation of PRC Protection of the Rights and Interests of Customers in

Zhejiang Province.Toyota eventually promised to provide the customers with home recall service, loan automobiles and other

compensation. The customers eventually received compensation and Toyota eventually extended recall compensation

nationwide. This was the first known case of consumer automobile recall compensation in China.

Apart from recall compensation, if an automobile defect causes personal or property damage, a customer is entitled to claim for

compensation according to the General Principles of the Civil Law, the Tort Law, the Product Quality Law and the Law on the

Protection of Consumer Rights and Interests, etc. However, currently most automobile recall events occurring in China do not

金杜律师事务所 : ChinaBulletin

involve personal or property damage compensation. For example, in 2009 there were 57 automobile recall events in China and

only three events had compensation claims. Among those recalls was a well-publicized recall in which Guangzhou Toyota

recalled 259,119 vehicles of CAMRY for brake vacuum booster defects with 1,249 compensation claims. In 2010, there were 95

recall events in China and 5 events involved claims of compensation.Those recalls included a recall in which Tianjin FAW Toyota

recalled 134,234 CROWN and REIZ vehicles for rear brake caliper defects. In that case there were 7,951 compensation claims

but no casualty or accident reports.

IV. Conclusion

The automobile recall system in China bears the characteristics of both public and private law.(9) On the one hand, automobile

producers have obligations as a civil subject to recall defective automobiles. On the other hand, government agencies serve as

critical regulators in the recall implementation because the public interest is involved. As such, automobile producers shall obey

both public and private laws in the automobile recalls. When an automobile producer fails to fulfill the recall obligation,

administrative penalties and civil liabilities might be separately or jointly imposed on the producer.Producers must obey not only

the administrative regulations for defective automobile recalls but must also consider their civil rights and obligations in the recall

implementation.

(This article was originally written in Chinese, and the English version is a translation.)

Notes:

1、The Provisions on Administration of the Recall of Defective Automobile Products were jointly promulgated by the State

Administration of Quality Supervision, Inspection, and Quarantine, the National Development and Reform Commission, Customs

General Administration, and the Ministry of Commerce on March 12, 2004, and became effective on October 1, 2004.

2、21 Century Network：http://www.21cbh.com/HTML/2011-1-11/0NMDAwMDIxNTQ0NQ.html.

3、China News Network：http://www.chinanews.com/auto/auto-yj/news/2010/06-24/2359658.shtml.

4、The Tort Law of the People's Republic of China was adopted at the 12th session of the Standing Committee of the11th

National People's Congress on December 26, 2009, and shall came into force on July 1, 2010.

5、Defective Products Administration Center of AQSIQ：http://www.dpac.gov.cn/xwzl/gnxw/201002/t20100223_60024.html.

6、The General Principles of the Civil Law of the People's Republic of China was adopted at the 4th Session of the 6th National

People's Congress, and promulgated by Order No. 37 of the president of the People's Republic of China on April 12, 1986, and

became effective on January 1, 1987.

7、The Protection of the Rights and Interests of Consumers was adopted at the Fourth Meeting of the Standing Committee of the

Eighth National People's Congress on October 31, 1993, and became effective on January 1, 1994.

8、The Contract Law of the People's Republic of China was adopted at the Second Session of the Ninth National People's

Congress on March 15, 1999, and came into force on October 1, 1999.

9、Zhu Xiaocong，Legal Construction on China's Defective Product Recall System-A Case Study of Defective Automobile

Recall, Legal System and Society, (2011) 9.

Guan Feng is a partner in King & Wood Mallesons’ Litigation and Arbitration Group, Shanghai Office.

Cui Jie is an associate in King & Wood Mallesons' Litigation and Arbitration Group, Shanghai Office.

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"Newsflash: Hong Kong Arbitration Awards Made Enforceable in India." Hogan Lovells, 25 April 2012 Chris Dobby, Timothy Hill, Allan Leung, Mark Lin, Damon So On 19 March 2012 the Indian government declared that the People's Republic of China is to be recognised as a territory to which the benefits of the New York Convention are to be granted in India. The effect of this is that arbitration awards published in the PRC, including Hong Kong, are now enforceable in India in the same way as domestic Indian judgments. India's position on the New York Convention has long been considered anomalous. Under the Indian Arbitration and Conciliation Act 1996, a list of the territories which are considered to provide reciprocity is set out in the official Gazette. At present, less than one third of signatories to the New York Convention are contained on this list. It is questionable whether an award published in a state which is not a gazetted state would be enforced, despite the accession of India and the state concerned to the New York Convention. Hong Kong was previously a notable absence from India's official list owing to its importance as an international arbitration centre and the similarities between the Hong Kong and Indian legal systems. The recognition by India of arbitral awards granted in the PRC is therefore welcome news in Hong Kong. Its effect is likely to be significant given Hong Kong's importance as an arbitral seat and the rapidly increasing levels of bilateral trade between the PRC and India. Further, Hong Kong can now be seen as a viable alternative to Singapore as a neutral venue for arbitration of agreements involving an Indian party.

NEWS DETAIL 09/05/2012 OBLIGATION TO PROCESS MINERALS FOR HOLDERS OF MINING BUSINESS PERMITS The Indonesian Minister of Energy and Mineral Resources has issued the implementing regulation for the realization of the obligation of Holders of Mining Business Permits to process or refine domestic mining products for the purpose of increasing the minerals’ added value (“MEMR Regulation”), as set forth in Article 96 and Article 111 of Government Regulation No. 23 of 2010 regarding Implementation of Mineral and Coal Mining Business Activities (GR 23/2010). The MEMR Regulation basically regulates the manner and procedure for the minerals’ added value increase; the obligations of holders of the Operation Production Mining Business Permit (IUP Operasi Produksi) and holders of Operation Production Special Mining Business Permit (IUPK Operasi Produksi) for processing and refining; and the administrative functions for non compliance of the obligation. Holders of IUP Operasi Produksi and IUPK Operasi Produksi who are economically incapable to process and/or refine the minerals themselves may cooperate with other parties who hold a Mining Business License in the activities. These IUP and IUPK holders may also build processing and refining facilities jointly with other business entities, and conduct research and studies in mineral processing and refining in cooperation with research institutions and universities. The MEMR Regulation was enacted on 6 February 2012 and became effective on the same date. (by: Isabella Cynthia Edgina)

© ABNR 2008 - 2012

LEGAL UPDATE

January 4, 2012

REGULATIONS TO THE FEDERAL LAW FOR PROTECTION OF PERSONAL DATA IN POSSESSION

OF INDIVIDUALS On December 22, 2011, became effective the Regulations to the Federal Law for Protection of Personal Data in Possession of Individuals, published in the Official Gazette of the Federation on December 21, 2011 (Reglamento de la Ley Federal de Protección de Datos Personales en Posesión de los Particulares - the “Regulations”), which has the purpose of regulating the Federal Law for Protection of Personal Data in Possession of Individuals (Ley Federal de Protección de Datos Personales en Posesión de los Particulares – the “Law”), Following please find a general description of the most relevant aspects of the Regulations.

General Provisions1 The Regulations are of general compliance to all the personal data recorded on physical and/or electronic hardware kept in any of the following forms: numeric, alphabetic, graphic, photographic, acoustic or of any other kind, concerning an identified or identifiable individual. Bear in mind that the Regulations are applicable to the processing of personal data when (i) it is carried out in an establishment of the controller located in the Mexican territory, (ii) it is carried out by a processor notwithstanding its location, on behalf of a controller established in the Mexican territory; (iii) the processor is not established in the Mexican territory but it is bounded by the Mexican laws, as a consequence of an agreement or in terms of international laws, and (iv) the controller is not established in the Mexican territory and uses resources located in such territory, except if such resources are only used with transfer purposes, that not involve processing personal data. In this case, the controller shall appoint a representative with presence in Mexican territory or put into effect a mechanism that enables to comply with the legislation applicable to the controllers that process personal data. For purposes of the aforementioned, the Regulations clarify that in the case of individuals their establishment is the main office of their business, the one used to carry out their activities or their home. In the case of legal entities their establishment is the place where the main administration office of their business can be found, in the case of legal entities residing abroad, their establishment is the place where the main administration office of their business can be found in Mexican territory, the one appointed by them or any regular premises that allows the real and effective execution of an activity. Please note that the Regulations are not applicable to the information of (i) legal entities; (ii) individuals when acting as businessman or professionals and (iii) individuals that render services to a legal entity or to a businessman, when the information is related to their: name, last name, activities or position, address, email, telephone and facsimile; provided that such information is used for purposes of representing its employer or independent contractor. 1 Articles 2, 3, 4, 5 6 and 7 of the Regulations.

2

In another matter and in connection with Article 2 of the Law it is important to note that the Regulations establish that it will not be considered as “personal use” the processing which purpose is to fulfill obligations under a legal relationship. Following please find certain important definitions contained in the Regulations aside to those contained in the Law:

a) Identifiable Individual: Any individual which identity can be determined, directly or indirectly, by means of any information, provided that a long period of time or disproportionate activities are not required;

b) Remittance: Communication of personal data between the controller and the processor, within or outside of the Mexican territory;

c) Electronic Hardware: Storage device which can only be accessed by the use of an equipment with electronic circuits that processes its content to examine, amend or store personal data, including microfilms; and

d) Physical Hardware: Storage device intelligible at plain sight that does not need the use of any equipment to process its content to examine, amend or store personal data.

The Regulations consider as sources of public access, among others, the remote or local communication media, either electronic, optic or by means of any other technology, when the site where the personal data is stored has the purpose of providing information to the public and it is available to general consultation, telephone books, newspapers, gazettes and/or official bulletins, and mass social media, provided that its consultation can be carried out by any person without any limitation imposed by a law, or without further requirements different than the payment of a quote, fee or tariff. The processing of personal data obtained from these sources shall observe the reasonable expectation of privacy.

Personal Data Protection Principles Below it is a brief reference to the most relevant matters provided in the Regulations in connection with the personal data protection principles.

Consent Principle2. The consent shall be prior to the processing of personal data if such is collected personally or directly from the data subject, or indirectly if the purposes of the processing are different to those previously approved by the data subject. The privacy policy shall include a mechanism that allows the data subject to refuse to the processing of its personal data for those purposes that are different to those necessary or that gave origin to the legal relationship with the controller. Article Second of the Transitory provisions of the Regulations establishes that it is not necessary to obtain the consent from the data subject when the personal data treated was collected prior to the effectiveness of the Law, provided that the privacy policy is made available to the data subject or a compensatory measure is adopted. The obtainment of the implied or express consent of the data subject shall be: a) Free: without error, deceit, bad faith, violence or false conduct, that may affect the

manifestation of the will by the data subject;

b) Specific: related to one or various determined purposes that justify the processing; and

c) Informed: the data subject shall know the privacy policy and the consequences of granting its consent.

2 Articles 12, 14, 16, 18, 20 and 21 of the Regulations.

3

In addition, the express consent can be granted either verbally or written, but in either case it shall be “unmistakable“, considering that the existence of elements that evidence, without doubt, its granting are necessary. The controller shall prove the obtainment of the express consent. The controller shall make available simple and free means to express the consent only in those cases where the express consent is required by any law or regulation. The withdrawal of the consent can be brought by any data subject or its representative, at any time, through simple and free means.

Information Principle3. The privacy policy shall be simple, with the necessary information, clear and

understandable and with structure and design that facilitate its understanding, and shall be delivered by the controller through physical, electronic, oral forms or with any other technology. In the event that the personal data is collected indirectly and it is impossible to notify the privacy policy or it requires disproportionate efforts, bearing in mind the number of the data subjects and the oldness of the data, the controller may use compensatory measures in accordance with the general criteria issued by the Federal Institute for Information Access and Data Protection (Instituto Federal de Acceso a la Información y Protección de Datos Personales en Posesión de los Particulares - “IFAI”) or otherwise upon the authorization of the IFAI. The general criteria shall be issued by the IFAI no later than 3 months from the effectiveness of the Regulations.

Quality Principle4. The personal data shall be accurate, complete, relevant, correct and updated. It is presumed that this principle is fulfilled when the personal data is obtained directly from the data subject and until the data subject declares or proves otherwise, or, the controller has in its possession contradictory evidence. The personal data shall be kept only for the necessary time to comply with the purposes of the processing. The controller shall establish and record the proceedings to preserve and, if applicable, block or erase the data and shall demonstrate that these proceedings are according to the Regulations or to the cancellation request.

Purpose Principle5. The purposes provided in the privacy policy shall be specific regarding the purpose of the processing (certain). The controller shall distinguish the purposes that are necessary and that give origin to the legal relationship (“Necessary Purposes”), from those that are not (“Secondary Purposes”). The data subject may deny or revoke its consent and oppose to the processing of its data in connection with the Secondary Purposes, without terminating the processing regarding the Necessary Purposes. The processing for purposes that are different to those compatible or analogous to those provided in the privacy policy shall be valid upon the existence of a law or a regulation or the obtainment of a new consent.

Loyalty Principle. The personal data shall be processed favoring the protection of the interests of

the data subject and the reasonable expectation of privacy. Therefore, no misleading or fraudulent means shall be used to collect or process personal data, such as, deceit, bad faith or negligence in the information provided to the data subject about the processing of the personal data.

Proportionality Principle. The controller shall only process the personal data that is necessary,

adequate and relevant in connection with the purposes of its collection.

Responsibility Principle6. The controller shall take care and will be accountable for the processing of the personal data that is under its custody or possession or for the one that was transferred to a processor. Therefore it shall adopt measures to guarantee its adequate processing, such as, drafting privacy policies and programs, carrying out training programs, establishing an internal and external surveillance system, among others.

3 Articles 24, 25 and 32 of the Regulations. 4 Articles 36, 37, 38 and 39 of the Regulations. 5 Articles 40, 41, 42 and 43 of the Regulations. 6 Articles 47 and 48 of the Regulations.

4

Processor7

The processor is the public or private individual or entity, national or foreign, that is not related with the controller and which relation to it is governed by an agreement or any other legal instrument that defines its activities and which proves the existence, scope and content of such relationship. The processor shall have certain obligations, among which we emphasize (i) processing only the personal data following the instructions of the controller; (ii) implementing security measures and (iii) keeping as confidential the personal data. The processor may subcontract services for the data processing upon previous authorization by the controller. The subcontractor will assume the same obligations of the processor and will carry out the processing on behalf of the controller.

Security Measures8 For purposes of Chapter III of the Regulations it will be understood that security measures are the control or group of controls of security to protect the personal data. The controller and the processor shall establish and keep the security measures (administrative, physical or technical) to protect the personal data independently to the processing system. The security measures will be adopted considering, among others, the following factors (i) the inherent risk to the personal data; (ii) the sensitivity of the data and (iii) the possible consequences to the data subject. To establish and maintain the security of the personal data the controller shall consider to implement, among others, the following actions (i) drafting of an inventory of the personal data and the processing systems of personal data; (ii) establish the functions and obligations of the persons that process personal data and (iii) training of the officers that will carry out the processing. The Regulations consider as security breaches the following unauthorized activities (i) loss or destruction; (ii) theft, misplace or copying; (iii) use, access or processing or (iv) damage, alteration or amendment. In the event that a security breach may materially affect the financial or moral rights of the data subject, the controller shall at least inform him/her (i) the nature of the security breach; (ii) the personal data involved; (iii) the recommendations on the measures that can be taken to protect its interests, (iv) the corrective actions carried out immediately and (v) the means through which further information may be obtained. The controller shall comply with the provisions contained in Chapter III (Security Measures) no later than 18 months from the effectiveness of the Regulations.

Transfer of Data9 The transfer involves the communication of personal data to a person different from the data subject, the controller or the processor. The controller and the receiving party shall demonstrate that the transfer was carried out in accordance with the Law and Regulations. All the transfers, either national or international, shall be informed to the data subjects, shall be subject to their consent by means of the privacy policy, save for the exceptions referred to the in the Law, and shall be limited to the purposes provided in such policy. National transfers shall be carried out provided that the aforementioned requirements are met that the recipient receives the privacy policy and the purposes applicable to the personal data received. On the other hand, international transfers will require that the recipient assumes the same obligations assumed by the controller, by means of an agreement or any other legal instrument.

Self-Regulatory Commitments10

7 Articles 49, 50, 51, 53 and 54 of the Regulations. 8 Articles 57, 60, 61, 63, 64 and 65 of the Regulations. 9 Articles 67, 68, 69, 71, 74 and 75 of the Regulations. 10 Articles 79, 81, 82, 83 and 84 of the Regulations.

5

Individuals or entities may agree among them or with civil or governmental organizations, national or foreign, schemes of self-regulatory commitments that complement the Law, the Regulations and any provisions issued by a governmental agency. The adhesion to and compliance with self-regulatory commitments shall be taken into consideration by the IFAI to mitigate penalties and to grant other incentives. These schemes shall take into account the parameters issued by the Secretariat of Economy (the “Secretariat”) and may include the certification of the controllers in personal data protection matters, certification which will be granted by a third party authorized to grant such certifications in accordance with the parameters which shall be issued by the Secretariat no later than 6 months from the effectiveness of the Regulations.

ARCO Rights11 The exercise of an ARCO right shall no exclude the possibility of exercising any of the others, and shall not constitute a requirement to exercise any other right, and shall be exercised either by the data subject or its representative through the means established by the controller. The exercise of the ARCO rights shall be simple and at no cost, except for those costs associated with the delivery, reproductions and, if applicable, certifications of the documents. The controller shall respond to all the requests of ARCO rights within the term of 20 days established by the Law, same which will be counted as from the day of the reception of the request. The controller may request for additional information, for one time and within the term of 5 days following to the reception of the request, when the information provided is not sufficient or is incorrect to attend the request or the documents referred to in the Law are not enclosed. The response to the data subject shall only comprehend the data referred to in the request. The controller shall justify its denial to attend the exercise of ARCO rights and shall inform the right that the data subject has to initiate the protection data proceeding before the IFAI. The Regulations establishes that the right to cancel may be exercised when the data subject considers that the controller is not fulfilling the principles and obligations provided in the Law and Regulations and shall be brought regarding the totality or only a portion of the personal data kept in a database. The data subject may oppose to the processing of its personal data or shall demand the cease of the processing (i) when a legitimate cause and an specific situation requires so, same which shall be justified that even when the processing is legal, such shall cease to prevent that its persistence causes a damage to the data subject or (ii) to prevent the processing of personal data for certain purposes.

Decisions without the Intervention of Human Judgment The controller shall notify the data subject of the processing that is carried out without the intervention of an individuals’ judgment to allow such subject to exercise its ARCO rights, if applicable.

Protection of Rights Proceeding

The request to start the protection of rights proceeding shall be filed before the IFAI by the data subject or its representative, either by means of a writ, the forms approved by the IFAI or the system put in place, within the term established in the Law. The steps of the protection of rights proceeding are: (i) Filing, (ii) Admission, (iii) Service of Process, (iv) Admittance or Dismissal of Evidence, (v) Hearing, (vi) Pleadings, and (vii) Resolution. A conciliation procedure may be started at any moment of such proceeding.

11 Articles 87, 90, 93, 95, 96, 97, 100, 106 and 109 of the Regulations.

6

Verification Proceeding

The IFAI, with the purpose of confirming the compliance of the Law or of the regulations that may result from it, may begin a verification proceeding without a third party request (“de oficio”) or at the request of an interested party (“a petición de parte”), by means of an accusation filed before the IFAI upon the terms of the Regulations.

Determination of Penalties

Penalties may be imposed as a consequence of the protection of rights proceeding or the verification proceeding. The official resolutions issued by the IFAI may be challenged by means of an annulment action carried out before the Federal Court of Tributary and Administrative Justice. For further information, please contact your principal Firm representative or one of the lawyers listed below. Mexico City Office: Mr. Jorge León-Orantes, jleon@s-s.mx (Partner)

Ms. Paola Morales, pmorales@s-s.mx (Associate) Tel.: (+52 55) 5279 54 00 Fax: (+52 55)5280-7840

Monterrey Office: Mr. César G. Cruz, ccruz@s-s.mx (Partner)

Mr. Diego Acosta, dacosta@s-s.mx (Associate) Phone: (52 81) 8133 6000 Fax (52 81) 8368 0111

APRIL 2012

:: CONTACT ::

Gerald SINGHAM Partner Corporate gerald.singham@rodyk.com +65 6885 3644

COMPETITION LAW ALERT

Freight Forwarding Companies fined 169 Million Euros by the European Commission for Price-Fixing

European competition law regulator has fined 14 freight forwarding companies that violated EU antitrust rules. The freight forwarders colluded on surcharges and charging mechanisms on important routes on the Europe-to-U.S. and China/Hong Kong-Europe trade lanes. Price Fixing Cartel: The European Commission1 (“Commission”) imposed a 169 million Euros fine to 14 freight forwarding companies that participated in four differentcartels between 2002 and 2007, which aimed at fixing prices and othertrading conditions on international freight forwarding services. Article 101 ofthe Treaty on the Functioning of the European Union prohibits cartels andrestrictive business practices. The Commission in its press release statedthat, four types of cartels were operated during a five year period – the new export system cartel, the advanced manifest system cartel, the currencyadjustment factor cartel and the peak season surcharge cartel. Thecartelists established and coordinated different surcharges and chargingmechanisms which formed component elements of the final price billed tocustomers for freight forwarding services.

Code Names: According to the Commission, the cartelists took specific measures toconceal their anti-competitive conduct. In the new export system cartel, code names based on names of vegetables such as asparagus and babycourgettes were used while fixing prices. The participants of the cartelswere fully aware of the illegal nature of their activities, and used specificmeasures to conceal their behaviour which included using non-professional email boxes to engage in anti-competitive discussions.

NES & AMS Cartels: According to the Commission the freight forwarders involved in the “new export system” (NES) cartel, fixed surcharges according to the size of the customer, to combat the introduction of the electronic declaration of exportsin 2003 by UK. In 2003-2004, a group of forwarders agreed to introduce a surcharge for the "advanced manifest system" (AMS) which refers to aregulatory requirement by the US customs to provide advance informationon goods to be shipped to the US. Both the NES and AMS cartels related toexports from Europe to the rest of the world and from Europe to the US.

CAF & PSS Cartels: Some of the freight forwarders agreed in shifting the currency of thecontracts from USD to RMB (following the appreciation of the Chinese

currency) against the USD in 2005. In the event the shift was not possiblethe forwarders had agreed on the introduction of a “currency adjustment factor” (CAF) surcharge and on its level. With respect to the “peak season surcharge” (PSS) cartel the freight forwarders agreed on the introductionand timing of a PSS, to be charged during the peak season transport periodin the run up to Christmas (from September to December). Suchdiscussions between the freight forwarders were a part of the "BreakfastMeetings" held in Hong Kong where the cartelists discussed the level of thesurcharge. Both the CAF and PSS cartels related to the imports of goodsfrom China/ Hong Kong to Europe.

Fines & Companies: The Swiss logistics firm Kuehne & Nagel will have to pay the highest finesamounting to a total of 53.67 million Euros. Other cartel participants thatwere fined include well know freight forwarders such as United ParcelService Inc. (UPS), Panalpina World Transport Ltd, Nippon Express (China)Co Ltd., Expeditors International of Washington, Inc, UTi Worldwide Inc,Beijing Kinetsu World Express Co Ltd. and other companies.

DHL’s parent company Deutsche Post (including its subsidiaries DHL and Exel) received full immunity from fines for its cooperation and for informingthe regulator about the cartel. Deutsche Bahn AG, Schenker AG, SchenkerChina Ltd, Ceva Freight Shanghai Limited, Agility Logistics Limited (HongKong) and Yusen Shenda Air & Sea Service (Shanghai) Co. received finereductions for co-operating with the regulators.

Appeal: The Commissions’ decision is open for a possible appeal from the companies that have been fined.

Singapore is a major trade centre in Asia Pacific, owing to its well developed infrastructure and location in Asia. Several international freight forwarders operate out of Singapore and handle significant amount of goods; this decision is of significant importance to such freight forwarders who may wish to review their business practices to ensure they are compliant with Competition Law in Singapore. In Singapore, the Competition Commission of Singapore offers the Leniency Program to businesses that are part of a cartel agreement or concerted practice or trade associations that participate in or facilitate cartels. Businesses participating in cartel activity may violate Section 34 of the Competition Act (Chapter 50 B) in Singapore and are likely to incur sizable financial penalties. If your business has been is a part of a cartel and wishes to notify the matter, and be entitled to immunity from financial penalties (subject to fulfilling certain conditions) do get in touch with our Competition Law Team.

1Press Release; European Commission, Commission imposes €169 million fine on freight forwarders for operating four price fixing cartels.

Competition Law

Rodyk's Competition Law Practice represents clients across various industries in notifying mergers and acquisitions, joint ventures and anti-competitive agreements before the Competition Commission of Singapore (CCS). The Practice is led by senior partners drawn from across various practice groups thus providing our clients with a full spectrum of competition law services. Read more

This e-newsletter is for general information purposes only. Its contents are not intended to be legal or professional advice and are not a substitute for specific advice relating to particular circumstances. Rodyk & Davidson LLP does not accept responsibility for any loss or damage arising from any reliance on the contents of this article. If you require specific advice or have any questions, please contact the contact partner(s).

© Rodyk & Davidson LLP 2012. Limited Liability Partnership Registration No. T07LL0439G.

ATTORNEY FEES INCURRED DURING THE THIRD INSTANCE ARE NOT INCLUDED IN DAMAGES CAUSED BY IMPROPER PRELIMINARY INJUNCTION◎Hsiu-Ru Chien

In addition to bringing a civil suit for patent infringement, a patent holder who discovers infringement such as from manufacturing or selling can also petition for a preliminary injunction to temporarily bar said infringement until conclusion of the litigation. Such a preliminary injunction may force the accused infringer to stop all business, thereby causing tremendous impact on its operations.

According to the Code of Civil Procedure (CCP) and current court practice, upon appeal filed by the accused infringer against a preliminary injunction, if the appeal court decides that the lower court erred in granting the injunction and revokes the lower court's ruling of the injunction, the accused may claim from the patent holder damages caused by the improper injunction. Such claim is not contingent upon the patent holder's intentions or negligence in petitioning for the preliminary injunction.

The scope of the aforementioned damages should be limited to injury suffered by the accused patent infringer during the preliminary injunction. However, the CCP does not offer clear guidance with regard to whether attorney fees incurred in the appeal procedure could be considered part of the "suffered injury."

Under the current system, an attorney must be retained to represent a party pursuing a third-instance proceeding. Therefore, only the attorney fees for the third instance are considered part of the court costs (after litigation concludes, the court costs shall be borne by the losing party or shared between the parties in accordance with the court's decision). Further, the law provides an upper limit on third-instance attorney fees to be included in the court costs. However, the question remains in the case of preliminary injunction: can the accused patent infringer claim damages from the patent holder for the attorney fees incurred during the third-instance appeal against the injunction?

This issue was discussed by the Supreme Court in its Judgment No. 2011-Tai Shang-1505 rendered in September 2011. In this case, the accused patent infringer revoked the injunction through the appeal proceedings, and subsequently filed a civil suit against the patent holder to claim damages for patent misuse. In addition to the losses suffered by its business during the effective period of the injunction, the accused infringer also requested the attorney fees incurred in the third-instance appeal. Although such request was accepted and recognized by the IP court, the Supreme Court took a different view in this respect. The Supreme Court held that the

attorney fees for the third-instance appeal could not be considered part of the damages caused by the preliminary injunction, so the patent holder could not be held liable for them.

Lee and Li Bulletin_2012 Issue

Copyright © Lee and Li, Attorneys-at-Law, All rights reserved.

For more information, please contact: Yasho Lahiri* +1.212.408.2515 To learn more about our Hedge Funds Practice, please click here. *Yasho Lahiri would like to thank law clerk Kelsey Dow for her assistance with the preparation of this article.

CORPORATE UPDATE - MAY 15, 2012

After Morrison — District Court Denies Motion to Dismiss SEC’s Investment Advisers Act Claim Where U.S. Advisor Advised Foreign Fund On May 9, 2012, Judge Robert Sweet of the United States District Court for the Southern District of New York denied the defendant’s motion to dismiss in SEC v. Gruss.1 In Gruss, the SEC brought claims for aiding and abetting violations of the anti-fraud provisions of the Investment Advisers Act of 19402 against Gruss, a New York-based hedge fund manager’s chief financial officer, for improperly transferring funds between on- and offshore accounts, misappropriating cash from an offshore fund for repayment of an onshore fund’s credit facility, withdrawing management fees from clients’ accounts early, and misusing onshore and client funds to purchase an airplane. Gruss moved to dismiss the SEC’s complaint on the basis, among other things, that the Investment Advisers Act did not apply with respect to his conduct regarding the offshore fund.3 In denying Gruss’s motion to dismiss, the court upheld the applicability of the Investment Advisers Act to Gruss, distinguishing the Supreme Court’s Morrison v. National Australia Bank, Ltd.4 decision of the prior term. In Morrison, the Court had articulated a transactional test for private civil actions under Rule 10b-5, which it applied to determine that foreign plaintiffs’ claims against foreign issuers based upon foreign conduct could not give rise to private civil liability under Rule 10b-5. Alleged Violations From March 2004 to October 2006, Gruss was employed as the Chief Financial Officer of D.B. Zwirn & Co., L.P., a now defunct New York-based unregistered investment adviser. D.B. Zwirn & Co. managed several hedge funds, both on- and offshore. As Chief Financial Officer, Gruss allegedly instituted no written accounting policies, and instead had a de facto policy of requiring his own approval of all cash transfers. Gruss is alleged to have approved at least 85 transfers totaling $576 million from D.B. Zwirn & Co.’s offshore fund to the onshore fund or to third parties who funded onshore fund investments, and the use of $273 million from the offshore fund to repay the onshore fund’s revolving credit facility. These inter-fund transfers were purportedly not subject to interest or governed by loan documents, but resembled loans in that the money was eventually repaid. These transfers were allegedly necessary to avoid severe constraints on the onshore fund’s liquidity. The SEC alleges that the partnership would have overdrawn its operating account by nearly ten million dollars by March 2006 had these transfers not been completed. Gruss is additionally alleged to have improperly withdrawn money from client accounts and the onshore fund to fund the purchase of an airplane, and to have improperly withdrawn $22 million in management fees from client funds to cover cash shortfalls. Although D.B. Zwirn & Co.’s accountants allegedly raised questions about Gruss’s practices and asked him to keep “all the partners/top mgmt in the loop,” Gruss did not inform other employees at D.B. Zwirn & Co. of the inter-fund transfers.5 Applicability of Morrison Standard In 2010 the Supreme Court affirmed a district court’s grant of motion to dismiss claims under Section 10(b) of the Securities and Exchange Act of 1934.6 In Morrison, a group of Australian plaintiffs owned shares in an Australian bank publicly traded in Australia. When the bank’s acquisition of an American company and allegedly fraudulent misstatements about the company’s success resulted in a plummeting of share and American Depositary Receipt prices, the plaintiffs brought suit in New York alleging violations of Section 10(b)-5 of the Securities and Exchange Act of 1934. The Supreme Court overturned long-standing Second Circuit precedent, precedent which had also been adopted in other circuits, concluding that “Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.”7 Morrison overturned the previous application of a “conduct and effects” test.8 In denying Gruss’s motion to dismiss, the District Court distinguished Morrison on several grounds. The court emphasized three differences between the cases:

First, in Morrison all of (i) the plaintiffs, (ii) the defendant, and (iii) the securities transactions there in issue were foreign, creating what was termed a “foreign-cubed” case. In Gruss, however, the cause of action, the defendant, and a significant portion of the conduct at issue were all domestic. Further, the plaintiff was not a

simple private citizen, but a federal agency tasked with enforcement of the statute at issue. Second, the Gruss court distinguished the purposes of the Exchange Act and the Investment Advisers Act. As the Gruss court saw it, the purpose of the Exchange Act was to regulate and control “transactions in securities commonly conducted upon securities exchange and over-the-counter markets”9 in the United States. The SEC in Gruss, however, sought to enforce the Investment Advisers Act, the purpose of which is to “prevent fraudulent practices by investment advisers”10 based in the United States, such as Gruss’s employer. Third, although both the Exchange Act and section 206 of the Investment Advisers Act are silent as to extraterritorial application, other textual and contextual evidence of legislative intent in the passage of the Investment Advisers Act point to a legislative intent to apply the Investment Advisers Act to advisers in the United States. That the offering memoranda and fund documents in Gruss described the offshore funds as Cayman Island entities could not overcome the fact that, as pled in the complaint, nearly all decisions were reached in New York by Gruss.

Finally, the court looked to the Dodd-Frank Act, which incorporated recommendations made by a study mandated by Congress after Morrison was handed down. Section 929P of the Dodd-Frank Act, “Strengthening Enforcement by the Commission,” restores and even expands the SEC’s and Department of Justice’s powers to commence enforcement actions extraterritorially.11 In pointing to the Dodd-Frank Act as a sign of congressional intent, the court in dicta further observed that the Dodd-Frank Act may even have “restored the Second Circuit’s ‘conduct and effects’ test for actions brought by the SEC or Department of Justice.”12 Conclusion Gruss is one of at least two broadly similar cases pending in the Southern District of New York which raise issues as to the extraterritorial application of the Investment Advisers Act. As a result, it is perhaps likely that the Second Circuit, at a minimum, may well have the opportunity to resolve the question as to the extent of extraterritorial SEC civil jurisdiction in the Investment Advisers Act context in the relatively near future. 1 SEC v. Gruss, No. 11 CV 2420 (S.D.N.Y. filed May 9, 2012). 2 Investment Advisers Act of 1940, Aug. 22, 1940, ch. 686, Title II, 54 Stat. 847 (current version at 15 U.S.C. § 80b-1-80b(18)(c)). 3 There are additional grounds raised in the motion to dismiss outside the scope of this update. 4 Morrison v. National Australia Bank, Ltd., 130 S.Ct. 2869 (2010). 5 Complaint for Petitioner at 7, SEC v. Gruss, No. 11 CV 2420 (S.D.N.Y. April 18, 2011) (quoting one of the accountants in an e-mail to Gruss). 6 130 S. Ct 2869 (2010). 7 130 S. Ct 2869, 2888 (2010) (emphasis added). 8 SEC v. Berger, 322 F.3d 187, 192-93 (2d Circ., 2003). 9 Gruss at 22, quoting Securities Exchange Act of 1934, June 16, 1934, Title I, Section 2, 48 Stat. 881 (1934); codified as amended in scattered sections of 15 U.S.C. 10 SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195 (1963). 11 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, section 929P(b) (2010). 12 Gruss at 28.

The materials in this document are made available by Baker Botts L.L.P. for informational purposes only and are not legal advice. The transmission and receipt of information contained in the document do not form or constitute an attorney-client relationship. If these materials are inconsistent with the rules governing attorney communications in a particular jurisdiction, and the materials result in a client contact in such jurisdiction, Baker Botts may be prohibited from assuming representation of the client contact. Under the rules of certain jurisdictions, this communication may constitute ‘Attorney Advertising’. Unsubscribe: If you do not wish to be a member of this mailing list, please click here.

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Washington State Adopts New Form of Corporation That Allows Companies to Combine Profitability with Broader Social Purpose

05.07.12

By John Reed and Ame Wellman Lewis

With increasing frequency, companies are seeking to build social values into corporate identities. Starting June

7, 2012, Washington state will recognize social purpose corporations, a new form of for-profit corporation.

While the primary objective of a traditional business corporation is to create economic value for its

shareholders, the social purpose corporation now gives companies the latitude to also promote one or more

broader goals of social responsibility, such as environmental sustainability or committing to improve other

aspects of the local, national, or world communities.

Background

On March 30, 2012, Governor Christine Gregoire signed HB 2239 into law, establishing the framework for the

social purpose corporation as a new corporate entity. DWT partner John Reed chairs the Corporate Act

Revision Committee, the 13-member Washington State Bar Association committee that developed the

proposed legislation. The committee, which also included DWT partner Jonathan Michaels, worked for nearly

two years to shape the proposed bill that was presented to the Washington Legislature. The committee studied

similar legislation that had been adopted in a handful of other states that authorizes formation of an entity

referred to as a “benefit corporation.” The benefit corporation statutes generally require that: (a) a benefit

corporation include in its articles of incorporation and pursue as part of its mission all of the “benefits”

specified in the statute; (b) its board of directors and officers consider the impact of every corporate decision

they make on the prescribed societal and environmental benefits; and (c) the benefit corporation adopt third-

party standards against which the board is required to measure its achievement of the prescribed societal and

environmental benefits.

After considerable deliberation, the Corporate Act Revision Committee crafted legislation in Washington

creating a slightly different version of this type of corporation which will be known as a “social purpose

corporation.” The social purpose corporation statute is intended to provide more flexibility to the socially

responsible entrepreneur than that which is afforded by the comparable benefit corporation statutes. It does not

attempt to legislate corporate behavior. Rather, it will enable each social purpose corporation to determine

what corporate behavior is applicable to it by so stating in its articles of incorporation. In turn, the social

purpose corporation’s board and officers will be permitted to attach such weight to the corporation’s social

purposes in making corporate decisions as they determine is appropriate and cannot be found liable simply

because they made a corporate decision that subordinated shareholder economic value in favor of pursuit of

one of the corporation’s social purposes.

 

Features of the social purpose corporation

The social purpose corporation will be provided for in a new chapter of the Washington Business Corporation

Act, Chapter 23B of the Revised Code of Washington. Starting June 7, entrepreneurs will be able to form new

entities as social purpose corporations and shareholders of existing business corporations will be able to

convert them to social purpose corporations upon the approval of two-thirds of the outstanding voting shares of

the shareholders. The principal features of the social purpose corporation are described below.

Articles of incorporation

The chapter sets forth a number of new provisions for the governing documents of a social purpose

corporation. A handful of the new provisions are mandatory, but the majority will be left to the discretion of the

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shareholders or prospective shareholders of the corporation and their individual preferences and goals.

The mandatory elements of the articles of incorporation generally promote transparency of the corporation’s

social purpose or purposes. The requirements include:

A statement in the articles of incorporation that the entity is organized as a social purpose corporation.

Having a corporate name that contains the words “social purpose corporation” or “SPC.”

Being organized to promote the positive short-term or long-term effects of, or to minimize the adverse short-

term or long-term effects of, the corporation’s activities upon any or all of the following general social

purposes: (1) the corporation’s employees, suppliers or customers; (2) the local, state, national or world

community; or (3) the environment and setting forth the selected general social purposes in the articles of

incorporation.

A statement in the articles of incorporation providing that “[t]he mission of this social purpose corporation is

not necessarily compatible with and may be contrary to maximizing profits and earnings for shareholders, or

maximizing shareholder value in any sale, merger, acquisition, or other similar actions of the corporation.”

The new chapter also sets forth numerous optional provisions that the shareholders of a social purpose

corporation may include in their articles of incorporation. For example, the shareholders or prospective

shareholders may require that:

Directors and officers consider the impact that each corporate decision will have on the social purposes of

the corporation.

Directors provide a periodic assessment to the shareholders of the corporation’s performance against a

selected third party standard.

By adding the foregoing optional provisions to its articles of incorporation, a social purpose corporation will

look like the more prescriptive “benefit corporation” described above, and should qualify for certification by third

party standards organizations like B Lab, a nonprofit corporation that has actively promoted socially and

environmentally conscious corporate responsibility nationally.

Directors’ and officers’ standard of conduct

In the traditional corporation, directors are vulnerable to potential liability for breach of the statutory standard of

conduct caused by taking actions intended to further a social purpose at the expense of maximizing the

economic value of the shareholders’ investment in the enterprise. The statutory standard of conduct set forth in

the new chapter addresses this concern by providing that, in discharging the director’s duties, the director may

consider and give weight to the corporation’s stated social purpose or purposes as the director deems

relevant. In addition, the director will be deemed to have satisfied the statutory standard of conduct if the director

reasonably believes that an action the director took or the director’s failure to take an action was intended to

promote one or more of the social purposes of the corporation.

Stock certificates

Stock certificates must include a legend containing language specified in the chapter that identifies the

company as a social purpose corporation.

Alteration or elimination of the social purposes

The social purpose or purposes selected by the shareholders will be anchored to the corporation’s charter and

will remain part of the corporation’s “DNA” unless shareholders holding two-thirds of the outstanding voting

shares of the social purpose corporation vote to alter or eliminate any of the designated social purposes,

whether through amendment of the articles of incorporation, sale, merger or otherwise.

Reporting requirements

In order to make a social purpose corporation’s efforts to promote its stated social purpose transparent to its

shareholders, the corporation is required to post to its website annually a social purpose report that describes

the corporation’s efforts to promote its social purposes. The report may include a discussion of the specific

actions taken during the prior year to achieve the company’s social purpose or purposes, the actions to be

taken in the coming year and the standards used to evaluate its performance in furthering such social

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purposes.

A social purpose corporation may also elect to formalize in its articles of incorporation a requirement that the

corporation furnish to shareholders an assessment of the overall performance of the corporation with respect

to its social purpose or purposes that is prepared according to a third-party standard.

Uses of the social purpose corporation

Although it is too early to tell what kinds Washington businesses will adopt the social purpose corporation form

in which to conduct their business, possibilities include those desiring to:

Promote environmental stewardship and sustainability.

Use renewable or low-impact sources of energy whose marginal cost may be higher to the corporation than

other options.

Provide certain “quality of life” benefits to employees that it considers central to the corporate identity.

Select international suppliers whose practices are consistent with the company’s values for worker

conditions.

Create a taxable affiliate of an existing nonprofit corporation whose social purposes are consistent with the

nonprofit’s mission.

Commit to donating a certain percentage of the corporation’s profits to charity.

The flexibility of the new social purpose corporation statute will accommodate all companies that want to

combine pursuing a social mission and pursuing profits, ranging from those corporations that desire a more

prescriptive structure, similar to the B Lab-inspired “B Corporation”, to those that desire a different model.

Socially responsible or sustainable business entrepreneurs, “green” companies, and certain family

businesses may wish to consider forming, or converting to, a social purpose corporation.

DWT regularly advises companies on corporate formation and governance issues. Please contact any

member of our business transactions group for more information about social purpose corporations and other

services we provide to our business clients.

Disclaimer

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to

inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a

substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding

particular situations.

State of the States—Health Insurance ExchangesAn MLA National Government Affairs Advisory

MAY 11, 2012

This Week in the States: After various states took steps last week to move forward with exchange legislation, this week some states that were moving ahead with exchange legislation have now slowed their pace.

Yesterday, just after the clock struck twelve, Governor Chris Christie (NJ – R) vetoed legislation (A2171/S1319) that would have created a health exchange. His veto was not unexpected. Governor Christie was clear he wanted to wait for the Supreme Court to rule on the ACA before proceeding with an exchange. However, bill supporters had been holding out hope that last minute pressure would spare A2171/S1319 from a veto. New Jersey’s health exchange legislation now returns to the legislature, where it will be reevaluated and possibly modified.

New Jersey was not the only state to halt plans for creating a health exchange this week. In Illinois, lawmakers announced that they were tabling a bill (HB 4574) to create an exchange until after the Supreme Court’s decision. In both the House and the Senate, legislative leaders were concerned about calling for a vote when they did not believe they had bipartisan support. Republican leaders in the House and Senate hadbeen adamant that there was little GOP support for passing the bill before the Supreme Court rules. This delay increases the likelihood that Governor Pat Quinn (D) will use an executive order to create an exchange. An outspoken supporter of health exchanges, Governor Quinn has been considering issuing an executive order ever since there were signs in February that exchange legislation may not pass.

Then in Alabama, exchange legislation that had passed the House is now running out of steam in the Senate in the face of a looming veto threat from Governor Robert Bentley (R) and over concerns that the proposed legislation would primarily benefit Blue Cross Blue Shield of Alabama. Language added to the bill requires that insurers on the exchange offer coverage in all counties of the state, a provision that critics argue would make Blue Cross Blue Shield of Alabama the main carrier on the exchange. According to Mike O'Malley, executive director of the Alabama Association of Health Plans, only Blue Cross Blue Shield of Alabama meets that criterion. A study by the Kaiser Family Foundation found that 86 percent of the individual and 96 percent of the small group market in Alabama was served by Blue Cross Blue Shield of Alabama.

In Connecticut, a bill that would have increased the number of board members of the Connecticut Health Insurance Exchange by five, failed to be called for a vote on the Senate floor after passing in the House. The bill would have added four additional consumer and small business representatives to the Exchange’s board of directors, as well as giving voting rights to State Health Care Advocate Victoria Veltri.

QUICK LOOKExchange Bill/

Executive Order Status(as of May 11, 2012)

State-run exchange operating (pre-PPACA):

MA, UT

Exchange established by law (post-PPACA):

CA, CO, CT, HI, MD, NV, OR, VT, WA, WV

New exchange bill filed for 2012 session:

AL, GA, FL, IA, ID, LA, MO, NE, NM, OH, VA, VT, WI

Exchange established by executive order/action:

IN*, MS, RI, NY

Exchange analysis/ planning law passed (2011):

IL, ME, ND, VA, WY

In committee(2012):

AK, AL, FL, GA, IA, ID, IL, LA, MI, MN, NC, NE, NH, NJ, NM, OH, PA, RI, SC, VA

Dead for 2012: AK, AR, AZ, ID,IN, MO, MS, MT, NY, OK, SD, TX, WI

No exchange legislation filed (2011-2012):

DE, KS, KY, TN

*Indiana’s exchange is provisional at this point.

On Wednesday, the Office of the Alabama Health Insurance Exchange released a long-anticipated RFP for the exchange’s IT system. In its wide-ranging solicitation, Alabama envisions its exchange IT solution serving both the individual marketand SHOP. Alabama also included web portal development in its RFP and expects the vendor to develop tailored web portals for individuals, small businesses, navigators and insurance providers. Responses are due by June 11 with the Department expecting to award the contract a month later on July 11.

Wyoming also released an RFP for a Health Insurance Eligibility and Enrollment System for Medicaid and the Children’s Health Insurance Program. While this procurement is not for a health insurance exchange, what makes it noteworthy is the RFP acknowledges that the new eligibility system will have to integrate with an insurance exchange. Wyoming has made little progress preparing for an exchange. Compared to other states, Wyoming has only received an $800,000 federal Exchange Planning grant and with the legislature already adjourned for 2012, it makes it very unlikely that the state will make strong progress before the federal deadline.

Legislative Status of Exchange Legislation

State Exchange Existed Prior to ACA

Legislation Enacted Post ACA

Exchange Established by Executive Order

No Legislative Activity to Date

2012 Legislation Pending / Tabled / Rejected

States With Upcoming and Recently Closed RFPs, RFIs for Exchanges Servicesas of May 11, 2012

New additions are highlighted in Yellow

State Due DateAward Date

(Est.)Type Category Details

California 3/5/2012 4/17/2012 RFPIT Support & Development

CalHEERS IT development

New Mexico

3/8/2012 5/1/2012 RFPIT Support & Development

Developing Exchange Web Portal and Exchange subsidy and Medicaid eligibility.

Arizona 3/14/2012 5/30/2012 RFP Business Services

Plan Management, Plan Selection, SHOP Administration, Financial Management, Consumer Support

California 3/21/2012 4/24/2012 RFP Project ManagementProject Management and Technical Support Consulting for CalHEERS system

Nebraska 3/27/2012 4/16/2012 RFPProvide RFP/RFI technical writing

Provide RFP/RFI technical writing services for Exchange RFPs

New Mexico

3/29/2012 4/23/2012 RFP Exchange Planning

Propose a strategic plan and implementation activities; assist HSD with Level II grant application; assist with developing rules & policies for governing the Exchange, assist with preparing reports for HHS review

Arkansas 4/20/2012 N/A RFPDeveloping Navigator Program

Delivering, installing and configuring a comprehensive State-wide Navigator Program

Nevada 4/27/2012 N/A RFPBusiness Services for Individual and SHOP Exchanges

To provide a Software as a Service (SaaS) solution, develop required interfaces, provide ongoing hosting and operation of the Exchange IT solution

Nebraska 5/3/2012 N/A RFIIT Support & Development

Gathering information on IT platforms, components and services related to planning a Health Insurance Exchange

Tennessee 5/7/2012 N/A RFI SHOP Planning SHOP IT Design

Rhode Island

5/30/2012 6/20/2012 RFPIT Support & Development

Unified Health Infrastructure Project

Alabama 6/11/2012 7/11/2012 RFPIT Support & Development

Developing the Exchange IT system for the SHOP and Individual markets. RFP also includes Web Portal design

Effective January 1, 2012, California LaborCode Section 2810.5 requires employers toprovide a notice that contains very specificinformation, including details about rate(s) ofpay, the company’s workers’ compensationpolicy, and how to contact the employer, toevery new non-exempt employee inCalifornia. On April 12, 2012, the CaliforniaLabor Commissioner’s office issued a revisedtemplate for employers to use to comply withthe wage notice requirement, along with yetanother revised version of its frequentlyasked questions (FAQ) document relating tothe wage notice requirement. The revisedwage notice template and FAQs addresscertain industry questions and concernsexpressed to the Division of Labor StandardsEnforcement (DLSE) regarding the newrequirement. Going forward, employers will want to use the revised wage noticetemplate, which can be found athttp://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf. Employers also will want toconsult the revised FAQs, available athttp://www.dir.ca.gov/dlse/FAQs-NoticeToEmployee.html.

On October 14, 2011,1 and January 102 andJanuary 26, 2012,3 Wilson Sonsini Goodrich &Rosati issued alerts providing background andinformation on the wage notice requirementand the Labor Commissioner’s various

templates and multiple versions of the FAQs.The links to the template and FAQs includedin the previous WSGR Alerts remain activeand will bring up versions of the documentscontaining the April 12 revisions.

The revised wage notice template addressesconcerns raised by employers about theprevious version. Noteworthy changes to therevised wage notice template include thefollowing:

• Employers are no longer required toidentify “any other business or entity”that the company uses to “hireemployees or administer wages orbenefits.” Employers with multiplebenefits providers were concerned aboutthe burden of listing and updatinginformation for all of their providers. Therevised template only requiresinformation about the hiring employerand, if the hiring employer is a staffingagency, information about the employerfor whom the employee will performwork.

• Obtaining an employee’s signature onthe wage notice is now optional.Technology companies and otherenvironmentally conscious employerswere concerned about the lack of clarity

regarding if and when electronicsignatures and copies of the notice wereacceptable. While obtaining employees’signatures on the notice still may begood practice, employers now candetermine a balanced technologicalsolution that addresses potential futureevidentiary needs as well as logisticalbusiness realities.

• The language regarding whether theemployment agreement is written or oralhas been removed. Instead, employersnow only need to specify whether awritten agreement exists providing therate(s) of pay.

• The ambiguous term “Hire Date” hasbeen replaced with the clearer term“Start Date.”

• Much of the extraneous text regardingthe wage notice requirement has beenremoved from the beginning and end ofthe document.

Many of the revised FAQs provide additionalguidance regarding the new changes to thewage notice template. FAQs Nos. 26-30 arecompletely new, and FAQs Nos. 10, 19, 20,21, and 23 have been revised. A helpfuladdition, FAQ No. 27, makes it clear that an

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WSGR ALERT

APRIL 2012

CALIFORNIA LABOR COMMISSIONER CHANGES THE WAGE NOTICE TEMPLATE AND ISSUES

ANOTHER SET OF REVISED FAQS

1 The October 14, 2011, WSGR Alert titled “New Changes to California Employment Laws Signed by Governor Brown” can be found athttp://www.wsgr.com/WSGR/Display.aspx?SectionName=publications/PDFSearch/wsgralert-california-employment-law-changes.htm.

2 The January 10, 2012, WSGR Alert titled “Wage Notice Requirement Effective January 1, 2012: Labor Commissioner Issues Controversial Template” can be found athttp://www.wsgr.com/WSGR/Display.aspx?SectionName=publications/PDFSearch/wsgralert-wage-notice-requirement.htm.

3 The January 26, 2012, WSGR Alert titled “California Labor Commission Issues Another Revised Set of FAQs Concerning New Controversial Wage Notice Requirement” can be found athttp://www.wsgr.com/WSGR/Display.aspx?SectionName=publications/PDFSearch/wsgralert-wage-notice-requirement-FAQ.htm.

Continued on page 2...

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California Labor Commissioner Changes . . . Continued from page 1...

This WSGR Alert was sent to our clients and interestedparties via email on April 25, 2012.

To receive future WSGR Alerts and newsletters viaemail, please contact Marketing at

wsgr_resource@wsgr.com and ask to be added to our mailing list.

This communication is provided for your information onlyand is not intended to constitute professional advice as toany particular situation. We would be pleased to provide

you with specific advice about particular situations, if desired. Do not hesitate to contact us.

650 Page Mill RoadPalo Alto, CA 94304-1050

Tel: (650) 493-9300 Fax: (650) 493-6811 email: wsgr_resource@wsgr.com

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© 2012 Wilson Sonsini Goodrich & Rosati, Professional Corporation

All rights reserved.

employer that previously has provided the wage notice to new hires need not issue a newnotice based upon the DLSE’s revised template unless and until there are substantivechanges in the provided information.

While the revised wage notice template and FAQs are improvements, all employerconcerns were not addressed completely and compliance issues remain. Getting it right isessential, as the Labor Commissioner and plaintiffs’ bar undoubtedly will be on thelookout for employers that do not comply with the new requirement.

In addition to using the revised FAQs as a guide, employers should feel free to contactWilson Sonsini Goodrich & Rosati for assistance in completing the wage notice template.The firm is actively following developments related to the wage notice requirement, andour attorneys are ready to provide guidance to employers regarding appropriatecompliance strategies. For more information on this or other employment issues, pleasecontact Fred Alvarez, Ulrico Rosales, Marina Tsatalis, Charles Tait Graves, Laura Merritt,or another member of the firm’s employment and trade secrets litigation practice.