tag:blogger.com,1999:blog-63324742330287020742024-03-13T15:14:08.796-07:00YLH & Co, Advocates and SolicitorsYLH&Co is a Lahore-Pakistan-based full service law firm committed to law and information about the law. The primary practice area of the law firm is internet law, information technology law, telecom law and cyberspace laws and security.
Contact:
For details contact Mr. Yasser Latif Hamdani, Attorney at Law. Email: yasser.hamdani@gmail.com; or Call: +92 300 555 2232YLH&Cohttp://www.blogger.com/profile/05164241602850192499noreply@blogger.comBlogger333125tag:blogger.com,1999:blog-6332474233028702074.post-57301906110064561392016-02-16T03:03:00.001-08:002016-02-16T03:03:52.440-08:00Enforcement of foreign decrees Part 2<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "Times New Roman",serif; font-size: 12pt;">Question Presented<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt;">We have been asked
to opine on whether there are reciprocal enforcement agreements between
Pakistan and England under Pakistani law; and how difficult enforcement of a
monetary/costs judgment in Pakistan is in light of the processes that need to
be undertaken. The background, briefly, is that our partner law firm in United
Kingdom is acting for a defendant in a litigation and intends to apply for an
order for security against costs presumably under 25.13 of the Rules and
Practice directions of the Civil Procedure Rules in the United Kingdom. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "Times New Roman",serif; font-size: 12pt;">Short Answer<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt;">Under Pakistani
law, Section 44-A of the Code of Civil Procedure 1908 (the “CPC”) caters
specifically to the question of judgments passed by “superior courts” in
reciprocating states and especially the United Kingdom (which reciprocates
through Foreign Judgments Reciprocal Enforcement Act 1933). Section 44-A of the
CPC however is subject to Section 13 of the CPC which sets out the broad exceptions
to such enforcement. This makes the execution process cumbersome and time
consuming. Case law also has ousted the operation of Order XXI Rule 23-A of the
CPC which provided for decretal amount to be deposited as security for filing
of objections against such execution. <span style="mso-spacerun: yes;"> </span>It
may also be stated that Pakistan is not a signatory to any of the conventions
specifically mentioned under 25.13 of the Civil Procedure Rules, Rules and
Practice Directions in the United Kingdom. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "Times New Roman",serif; font-size: 12pt;">Discussion<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt;">At the outset it
must be stated the aforesaid Section 44-A of the CPC defines “Superior Court”
in reference to United Kingdom as “High Court in England, Court of Sessions in
Scotland,<span style="mso-spacerun: yes;"> </span>High Court in Northern
Ireland, the Court of Chancery of County Palatine of Lancaster and the Court of
Chancery of County Palatine of Durham.”<span style="mso-spacerun: yes;">
</span>Therefore if the litigation referred to the question pertains to a lower
court in England, there is no reciprocal enforcement.<span style="mso-spacerun: yes;"> </span>This memorandum assumes that the said
litigation is taking place in the High Court of England or the Courts of
Chancery as aforesaid (the question refers to England and not United
Kingdom).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt;">Section 44-A of
the CPC has been described as a self-contained and independent provision with
the Honourable Sindh High Court in the case of <b style="mso-bidi-font-weight: normal;">Abdul Malik Badruddin v. Grosvenor Casino Limited</b> <u>PLD 1993
Karachi 449</u> (hereinafter the “Grosvenor Case”) stating that the procedure
of the execution is contained in sub-sections (2) and (3) of the said
provision. Therefore in Grosvenor Case, the Honourable Sindh High Court ruled
that provision of Order XXI Rule 23-A does not apply to foreign judgments.<span style="mso-spacerun: yes;"> </span>Order XXI Rule 23-A provides for the deposit
of decretal amount in the event that a judgment debtor seeks to file objections
against execution of a decree. By ousting the operation of this rule in foreign
judgments, the door has been flung open for a judgment debtor to file
objections without having to deposit a judgment amount as security. The
judgment in the Grosvenor Case also held that a foreign judgment or decree does
not operate <i style="mso-bidi-font-style: normal;">proprio vigore</i> in
Pakistan and is therefore not capable of automatic execution. This means that
at some point the local “District Court” (which is held to be a court of
original civil jurisdiction) may look at the merits of the judgment. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt;">The objections
that have specifically been allowed by Section 44-A of the CPC are exception or
objections contained in Section 13 (a) through (f) of the CPC. <span style="mso-spacerun: yes;"> </span>The first objection is that a judgment has not
been pronounced by a court of competent jurisdiction.<span style="mso-spacerun: yes;"> </span>The second objection is that the judgment has
not been passed on merits. The second objection gives the executing court the
power to determine the facts leading to the foreign judgment <i style="mso-bidi-font-style: normal;">de novo</i>. The third objection is that the
judgment was based on an incorrect view of international law or a refusal to
recognize Pakistan’s law in cases in which such law was applicable. Here again,
a question of law is to be determined by the executing court. The fourth
objection is that judgment was obtained as a result of proceedings that were
contrary to principles of natural justice. The fifth objection is that the
judgment was obtained through fraud and the final objection is that the
judgment sustains a claim that breaches a Pakistani law. All of these
objections require judicial application of mind and require the court to call
evidence and try the matter anew. Given that Order XXI Rule 23-A does not
apply, it becomes extremely easy for a judgment debtor to indefinitely delay
and even frustrate the foreign judgment or in this case the UK judgment.
Subsection 3 of Section 44-A of the CPC states clearly that the executing court
may refuse execution if it is satisfied that any of the exceptions or
objections contained in Section 13 of the CPC apply. The execution is also subject
to appeal and as a whole the process may take up to two years or more to
complete, which may be an additional consideration given that the issue at hand
pertains to a judgment on costs. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt;">It may additionally be stated that under
subsection 2 of 25.13 of the Civil Procedure Rules of United Kingdom, an order
for security for costs may be made “if the </span><span lang="EN" style="font-family: "Times New Roman",serif; font-size: 12pt; mso-ansi-language: EN; mso-fareast-font-family: "Times New Roman";">resident out of the jurisdiction; but not
resident in a Brussels Contracting State, a State bound by the Lugano
Convention, a State bound by the 2005 Hague Convention or a Regulation State,
as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982”.
Pakistan is not a signatory or a contracting to any of the aforesaid
conventions. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><u><span lang="EN" style="font-family: "Times New Roman",serif; font-size: 12pt; mso-ansi-language: EN; mso-fareast-font-family: "Times New Roman";">Conclusion<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 8pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN" style="font-family: "Times New Roman",serif; font-size: 12pt; mso-ansi-language: EN; mso-fareast-font-family: "Times New Roman";">In view of the foregoing it is clear that despite a
reciprocal enforcement provision under Section 44-A of CPC, the enforcement of
a monetary or a costs judgment in Pakistan is difficult, time consuming and
cumbersome. The execution is to be carried on the original civil side and will
be subject to further delays due to appeals. Additionally Pakistan is not a
signatory to the Hague Convention on Choice of Courts, 2005 and is not a
regulation state as defined by applicable law in the United Kingdom. It is, therefore,
recommended that an application for security under Rule 25.13 as aforesaid may
kindly be made in the said litigation to best secure the interests of the
client. <o:p></o:p></span></div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com15tag:blogger.com,1999:blog-6332474233028702074.post-29535036424363647282016-02-16T02:59:00.001-08:002016-02-16T02:59:53.827-08:00Enforcement of foreign decrees Part 1 <div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Question
Presented: </span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The client is a UAE based company (“Our
Client”) which entered into a contract with Messrs. AB Associates (“AB
Associates”), a Pakistan based company, for preparation of a master plan as
part of an overall consultancy assignment (“Assignment”). The purpose of the
Assignment is to assist the land development authority in Sialkot (“SDA”). Our
Client has fulfilled its contractual obligations and has invoiced AB Associates
accordingly in addition to sending them multiple reminders through emails and
phone calls. Our Client has also sent a legal notice to which AB Associates
responded by saying that they entered into an arbitration proceeding against
SDA and will pay Our Client once SDA pays them. Nothing in the agreement
between Our Client and AB Associates stipulates that Our Client’s remuneration
is contingent upon payment from SDA or any third party. Our Client and AB
Associates also agreed that governing law and construction of the agreement
will be in accordance with UAE Law and that in the event that a dispute cannot
be resolved through negotiation, courts at Dubai will have the jurisdiction to
settle the same. The question in a nutshell before us is whether or not
Pakistani courts will consider the governing law clause in the agreement null
and void. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Short
Answer: <span style="mso-spacerun: yes;"> </span></span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Pakistani
courts will not declare the governing law clause null and void but will instead
give it effect as an arbitration clause. The Pakistani courts will treat any
judgment by the courts in Dubai as a foreign arbitral award and as such this
judgment would be enforceable through the courts in Pakistan. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Discussion:
</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Pakistani law of contract is the Contract Act
of 1872 (the “Contract Act”), which will be the curial law in the event that
such an issue is brought before a Pakistani court at any time. The Contract Act
essentially codifies the English law of contract. There is an explicit
recognition of the principles most germane to the idea of the “freedom of
contract”. Case law in Pakistan has recognized this freedom of contract in
numerous pronouncements and this is considered, therefore, a trite legal
position. The parties in this instance, i.e. Our Client and AB Associates,
chose of their own volition the law of UAE to govern the contract. This is
permissible under choice of laws principles which are implied in English law of
contract (the principles of which have been codified in the Contract Act). <b style="mso-bidi-font-weight: normal;">Halsbury’s Laws of England</b> state that
“where parties expressly stipulate that the contract shall be governed by a
particular law, that law will be the proper law of the contract provided the
selection is bona fide and there is no objection on ground of public policy
and, apparently, even where the law has no real connection with the contract.”<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[1]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Similarly the parties chose courts at Dubai
for referral of disputes that they are unable to resolve through mutual
negotiation. It must also be noted that there is no specific reference to
arbitration. There is also the ancillary issue of whether or not the contract
was performed in Pakistan. It is important to deal with this canard at the
outset. The contract was most likely performed both in Pakistan and the UAE but
this is of no consequence to the question before us as becomes clear from
aforementioned Halsbury quote. Similarly the idea of balance of convenience has
no application in the instant issue because both parties entered into the
agreement willingly. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Section 28 of the
Contract Act in my view provides us ample guidance on issues of jurisdiction
and governing law. Section 28 states: <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">“<b style="mso-bidi-font-weight: normal;">Agreement in restraint of legal proceedings void. </b>Every agreement,
by which any party thereto is restricted absolutely from enforcing his rights
under or in respect of any contract, by the usual legal proceedings in ordinary
tribunals or which limits the time within which he may thus enforce his rights,
is void to that extent. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;">Exception
1. Saving of contract to refer to arbitration dispute that may arise-</b> This
section shall not render illegal a contract by which two or more persons agree
that any dispute which may arise between them in respect of any subject or
class of subjects shall be referred to arbitration and that only the amount
awarded in such arbitration shall be recoverable in respect of the dispute so
referred. When such contract has been made, a suit may be brought for its
specific performance, and if a suit, other than for such specific performance,
or for recovery of the amount so awarded, is brought by one party to such
contract against any other subject which they have so agreed to refer, the
existence of such contract shall be a bar to the suit. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Exception
2. Saving of contract to refer questions that have already arisen- </span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Nor
shall this section render illegal any contract in writing, by which two or more
persons agree to refer to arbitration any question between them which has
already arisen, or affect any provision of any law in force for the time being
as to references to arbitration.”<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[2]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Examining the operation
of Section 28 (and its exceptions) of the Contract Act, the Supreme Court of
Pakistan held in the case of <b style="mso-bidi-font-weight: normal;">M A
Chowdhury v. Mitsui OSK Lines Limited, </b><u>PLD 1970 SC 373<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[3]</span></span></u></span><!--[endif]--></span></span></a></u> that in order to
preserve “the sanctity of contracts it ought also be held that such foreign
jurisdiction clauses, even when they purport to give jurisdiction to a Court in
a foreign country, are really in the nature of arbitration clauses which come
within the exceptions to Section 28 and therefore should be dealt with in the
same manner as other arbitration clauses”. It was further held that the party
which seeks to invoke the foreign jurisdiction clause should ordinarily satisfy
the court that it is just and equitable to bind the parties to their bargain
i.e. in this case their decision to choose court at Dubai in UAE for dispute
resolution.<span style="mso-spacerun: yes;"> </span>Another case that may be
referred to, strictly as persuasive precedent, is <b style="mso-bidi-font-weight: normal;">Swedish East Asia Company Ltd v. B.P. Herman and Mohatta</b> (India) <u>AIR
1962 Cal 601</u><a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[4]</span></span></span><!--[endif]--></span></span></a>
where the Calcutta High Court stayed a suit in India where Swedish law was
designated as the governing law and Swedish courts were designated as the chosen
forum for dispute resolution. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">It may be noted here that
the assumption is that no exclusive jurisdiction is vested in courts at Dubai.
Section 28 <i style="mso-bidi-font-style: normal;">supra</i> therefore recognizes
the basic principle that parties to a <i style="mso-bidi-font-style: normal;">lis</i>
cannot confer jurisdiction on a court that does not possess any and cannot
divest jurisdiction from a court that does. However when read in light of the
aforesaid MA Chowdhury Case, it becomes abundantly clear that even exclusive
jurisdiction may be conferred on a jurisdiction in the nature of an arbitration
agreement. Therefore it follows that a Pakistani court would likely respect the
contractual term and accept the laws of UAE as the governing law of the agreement.
<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Pakistani courts will get involved in the
enforcement of the judgment which will be treated as an arbitral award. Pakistan
promulgated “The Recognition and Enforcement (Arbitration Agreements and
Foreign Arbitral Awards) Ordinance in 2005 (which was re-promulgated in 2007),
thereby putting in force the 1958 New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards. Therefore, a Pakistani court is bound
to enforce the judgment of the courts at Dubai as if it were a judgment of a
court in Pakistan. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Conclusion:
</span></b><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The
governing law clause of the agreement between Our Client and AB Associates is
not likely to be declared null and void by Pakistani courts. <o:p></o:p></span></div>
<br />
<div style="mso-element: footnote-list;">
<!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[1]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: Calibri;"> Halsbury's
Laws of England (Lord Simond's Edn.), (3rd Edn.), Vol. 7<o:p></o:p></span></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[2]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
Mahmood, M,<span style="mso-spacerun: yes;"> </span>Contract Act of 1872,
Commentary, 4<sup>th</sup> Edition published by Al Qanoon Publishers <o:p></o:p></span></span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[3]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
PLD 1970 SC 373 <o:p></o:p></span></span></div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/Memo%20-%20UAE%20governing%20laws.docx" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[4]</span></span></span><!--[endif]--></span></span></a><span style="font-family: Calibri; font-size: x-small;"> </span><a href="http://indiankanoon.org/doc/882120/"><span style="color: #0563c1; font-family: Calibri; font-size: x-small;">http://indiankanoon.org/doc/882120/</span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
accessed on 6 January 2016<o:p></o:p></span></span></div>
</div>
</div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-68615002324593201082016-02-16T02:57:00.000-08:002016-02-16T02:57:17.654-08:00Valuation methods - for Mergers and Acquisitions <div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Valuation approaches are the basic methodology
of evaluating a target business for acquisition. The four basic approaches to
valuation are as under:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Asset based approach<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Balance sheet or income based approach <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Market value based approach <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Comparable transaction approach. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.25in; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: .25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Asset based approach: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>Essentially this approach considers the fair
value of a company’s (or firm’s) assets minus the liabilities that have
accrued. This approach commonly uses either the asset accumulation method or
the capitalized excess earnings method. The first method establishes the fair
market value of tangible and intangible assets (including intellectual property
rights, key customer contracts and strategic partnerships) and subtracts from
this value, the value of recorded and contingent liabilities (including legal
court cases, tax exposure and environmental compliance costs). The resulting
value is the value of the business. The second method uses net tangible value
of assets and adds them up with excess earnings and good will. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.25in; mso-add-space: auto; tab-stops: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; tab-stops: .25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Advantages: <o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The key
advantage of this approach is that there is easily available data on assets.
The valuation therefore can be pretty straightforward. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">This
approach is most useful when evaluating businesses which have large tangible
investments in land, property and machinery etc. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It allows
for adjustments in fair market value- either up and down. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iv.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is
particularly helpful when there is only a brief record of a company’s or firm’s
earnings. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; tab-stops: .25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Disadvantages:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It may
understate the value of intangibles like intellectual property or business good
will. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It does not
track the future of earnings either up or down. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">A balance
sheet can be misleading in terms of exhibiting all assets. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; tab-stops: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: .25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Balance Sheet or Income based approach: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">This method
attempts to put a value on the target business by analysing its ability to
generate the requisite economic benefits for its owners. It takes estimated
future earnings of an equity interest and quantifies its net present value. It
looks at the target company’s net cash flow and capitalizes, multiplies or
discounts the same. The most famous method deployed by this approach is the
Discounted Cash Flow Method. This method establishes a discount rate i.e. a
rate of return which would make an acquisition economically beneficial. Another
method deployed by this approach is the Capitalization of Earnings Method which
takes a target’s discretionary cash flow and divides it by the capitalization
rate i.e. the rate of risk associated with the said benefit. Capitalization
rate is arrived at by subtracting long term growth rate in business earnings
from the discount rate. A third method is the Multiple Method and uses seller’s
discretionary cash flow. Here seller’s discretionary cash flow is multiplied
with a composite valuation multiple based on industry/business comparison. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; tab-stops: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; tab-stops: .25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Advantages: <o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The biggest
advantage is that it is a widely recognized and credible method of valuation. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is useful
in analysing companies at various stages and of various natures and is based on
in certain cases a comparison.<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It comes to
a valuation even without there being a market. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; tab-stops: .25in; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Disadvantages:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It relies on
projections which are largely hypothetical and based on predictions.<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; tab-stops: .25in; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Too many
variables are in play when determining a composite multiple or a discount rate.
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; tab-stops: .25in; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Market value based approach: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">This
approach looks current market price per share of a company if it is publicly
traded or if an IPO is filed. This price is then multiplied with the number of
shares outstanding. The actual price paid by the buyer in this case turns out
to be higher because the buyer usually has to account for a premium. Another
variant of this approach is to look at historic similar sales.<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">`Advantages: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is
reasonably straightforward in terms of calculation. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is based
on real data i.e. share price.<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is not
based on hypotheticals. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iv.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It can help
the target establish a substantial market value.<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Disadvantages:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is
usually only beneficial when the target is publicly traded. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is
usually not a good indicator when the target’s stock is thinly traded. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It may
overstate the value of the stock. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Comparable transaction approach: <span style="mso-spacerun: yes;"> </span></span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Comparable transaction
approach compares previous transactions of companies which are similarly placed
in the market i.e. the valuators look at similar acquisitions of companies with
similar industry, earnings and business models. Under this approach, the revenue
multiple or EBIDTA multiple is utilized. EBIDTA is Earnings before Interest,
Taxes, Depreciation and Amortization. The buyer usually organizes a multiples
table which lists a selection of previous valuations in the said industry. These
are usually similar or comparable companies with similar market capitalization.
This table is then used to arrive at a value that the buyer will be willing to
pay for the target. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Advantages:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">This
approach deploys simple straight forward calculations based on real public data
and empirical evidence. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It does not
depend on subjective data or future forecasts. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l0 level2 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Disadvantages:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>i.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is not
always easy to determine what companies are comparable. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>ii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is
extremely hard to obtain data of transactions with respect to private
companies. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iii.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Requires
considerable adjustment of prices etc when considering comparable data over a
longer period of time. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>iv.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is not
flexible.<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>v.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It does not
take into account – on its own – other factors such as future benefits etc. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; mso-list: l0 level3 lfo2; mso-text-indent-alt: -9.0pt; text-align: justify; text-indent: -1.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;"><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span>vi.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i></b><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Finally the
veracity of the data is always a question mark. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 1.5in; mso-add-space: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt 0.25in; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">It is
important to note that these approaches are seldom used as stand-alone but
rather a hybrid approach is adopted in valuation. Of the above, the income
approach especially <i style="mso-bidi-font-style: normal;">vis a vis</i>
Discounted Cash Flow Method is used in conjunction with comparable transaction
approach, especially the use of EBIDTA multiple as well as the revenue multiple
often together to determine the business health of the target. <o:p></o:p></span></div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-89926317473092263812016-02-16T02:54:00.001-08:002016-02-16T02:54:23.333-08:00Broad categories of mergers <div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The three broad categories of mergers and
acquisitions are:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Horizontal merger/acquisition<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Vertical merger/acquisition <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l3 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Conglomerate merger/acquisition <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Horizontal merger/acquisition:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">This happens between two companies or
businesses placed in the same market and providing the same products or
services. An example of a horizontal merger/acquisition is the Mobilink-Warid
merger/acquisition. The motives of companies entering into a horizontal
integration are any or all of the following:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Economies of
scale:</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>By joining together and forming a bigger
company gives the new entity or the expanded entity greater economies of scale.
These are the cost advantages that companies obtain due to size, output, or
scale of operations such as production etc. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Synergies:</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> By
combining sales channels for example, companies can increase their outreach and
become a larger player. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">c.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Market share
and growth:</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> Horizontal mergers are one way of improving market share.
Similarly the businesses merging may conclude that together they can grow
better and because of a better market share will be in a stronger position to
influence the market. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">d.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Eliminating
redundancies:</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> Two companies would have two finance departments, two
legal departments, two procurement departments etc. Mergers and acquisitions
can help eliminate redundancies. Obviously this is bad news for the employees
but overall by eliminating redundancies, companies become more profitable. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">e.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Filling the product range/product line:</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> In some
cases an acquisition of this kind can help fill a product range. So for example
in Mobilink-Warid merger/acquisition, the attraction for Mobilink is the 4G LTE
spectrum which it does not have on its own. Mobilink would be able to provide
4G LTE services to its users ultimately without having paid excessive amounts
for 4G unlike ZONG for example which has paid a large amount for its 4G
spectrum. <i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 0.5in;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Vertical merger/acquisition:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Vertical mergers/acquisitions happen between
two companies which – while in the same industry- are in a <b style="mso-bidi-font-weight: normal;"><u>buyer-seller relationship</u></b>. <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">Backward
vertical integration</i> would be a company merging with or acquiring its
supplier. <i style="mso-bidi-font-style: normal;">Forward vertical integration</i>
would be a company taking over a retailer, wholesaler or distributor. The main
reason for a vertical integration is to ensure either that the supply lines are
reliable, or to ensure greater control over distribution networks and sales
channels. A famous example of this kind of merger is the one that occurred
between Time Warner and AOL in 2000.<span style="mso-spacerun: yes;">
</span>Time Warner creates content and AOL was the largest internet
dissemination portal at the time. Eliminating redundancies also occurs to a certain
extent in this kind of merger. Similarly it may be useful in order to deploy
certain capacities which previously were not available. This is what happened
with British Petroleum’s 2003 acquisition of Russian TNK company which had oil
reserves but little refining ability or retail marketing for the western
market.<span style="mso-spacerun: yes;"> </span>BP took over TNK and it was a <i style="mso-bidi-font-style: normal;">win win</i> for both sides because BP got
access to oil reserves which it could then utilize in its refineries and sell
through its sales channels. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo3; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Conglomerate merger/acquisition:<o:p></o:p></span></i></b></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The conglomerate merger/acquisition usually
happens between two unrelated companies. A great example of this kind of merger
was Phillip Morris’ 1985 acquisition of General Foods i.e. a tobacco giant
taking over a diversified food company. Another example was the 1959
acquisition of Avis, Sheraton Group and Continental Baking Company by
International Telephone and Telegraph Corporation – which were completely
unrelated. The reasons for this sort of merger/acquisition are as under:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo4; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Breaking through cyclical and seasonal demand: </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">By far the
greatest reason for a buyer acquiring an unrelated business is diversification,
especially when its own product is of a cyclical or seasonal nature. By
breaking into a new market, it ensures that it is constrained by a particular
season or a particular kind of demand. <i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo4; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Regulatory pressures:<span style="mso-spacerun: yes;"> </span></span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Regulatory pressures in one industry
might force a buyer to look for alternatives in a market or industry that is
not as heavily regulated. This is a very common reason for conglomerate merger/acquisition.
<i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">A slight variation on this kind of merger is a <i style="mso-bidi-font-style: normal;">concentric</i> or <i style="mso-bidi-font-style: normal;">congeneric </i>merger. In this case the two companies are in the same
industry but serve different subsets or markets within it.<span style="mso-spacerun: yes;"> </span>A merger between a WLL broadband company with
a cellular mobile company would be an example of this congeneric or concentric
merger. Similarly one may argue that Microsoft’s acquisition of Nokia (to enter
into the smart phone market) was this kind of acquisition though it has turned
out to be a colossal failure. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo4; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">c.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Product line extension/market extension: </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Extension of
product line or market extension – as mentioned above- may be the rationale for
a congeneric or concentric merger.<span style="mso-spacerun: yes;"> </span>Here
too a product line hole may be filled by acquiring a company that has the
requisite product or intellectual property. Google and Yahoo’s acquisitions of
online app companies are great examples of such mergers/acquisitions. Proctor
and Gamble’s 2005 acquisition of Gillette for men care products was done to
fill a hole in its product line. <o:p></o:p></span></div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com3tag:blogger.com,1999:blog-6332474233028702074.post-41565834637424880822016-02-16T02:52:00.000-08:002016-02-16T02:52:01.420-08:00Mergers and Acquisitions - Why Companies acquire other companies and why they don't. <div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The reasons why companies decide to acquire or
merge with other companies are manifold and are as follows:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Diversification
especially for cyclicality reduction and to ease regulatory pressures: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The idea for
any business is to inject new blood and diversify. Diversity and product range
plays a critical part in any merger or synergy. A buying company therefore may
be able to break from a cyclical or seasonal market by acquiring a company
outside of its product range, thereby diversifying its product range and evading
profitability fluctuations. Similarly a business may operate in a stifling
regulatory environment and might want to acquire a company or a business which
operates in a relatively relaxed regulatory environment. This would allow
greater flexibility in operations. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Business
Model:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">The business
model of the company being acquired may be significantly more attractive. It
may offer fewer benefits or may not be hindered by unions. The acquiring
company may not be in a position to replicate that model and therefore may
choose to acquire it altogether. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Intellectual
Property, Licenses and Rights:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">
</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">A
very good reason for acquisition is usually to acquire intellectual property
and/or licenses and rights that the company being acquired might own or enjoy.
An example of this would be Mobilink’s recent acquisition of Warid which is
being done for the large part to acquire the Warid spectrum which allows for 4G
LTE operations, giving Mobilink an edge. Same holds true for trademarks,
copyrights and patents in other cases.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Market Share
and Growth</span></i></b><b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">:</span></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> One of the
major reasons and usually the riskiest one is the attempt to increase market
share through acquisition. This usually happens when the companies are situated
in the same market. A variant of this is to achieve market growth by acquiring
a company in a market that is growing faster. The first of these is risky
because it is open to regulatory challenges including competition
challenges.<span style="mso-spacerun: yes;"> </span>The second variant is very
similar to diversification explained above. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">5.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Production
Capacity, Product Range and Product Line</span></i></b><b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">:</span></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> Another
common reason for merger and acquisition is to either increase production
capacity or fill a hole in a product line.<span style="mso-spacerun: yes;">
</span>For example a mobile telephony company may seek to acquire a broadband
WLL company to ensure that it can also offer a dongle device as part of its
product range. Similarly a fixed line telephony company may acquire a mobile
telephony company to ensure that it can also cater to the mobile market.
Another related example of this is Microsoft’s acquisition of Nokia. Microsoft
wanted to take over Nokia to fill a hole in its product line i.e. smartphones.
Obviously the acquisition turned out to be a colossal failure in strategy but
nevertheless the idea behind it was sound. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">6.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Sales
Channels and other synergies:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Another
reason may be that a company might have effective sales channels and the other
acquiring company may want to utilize these effective sales channels. It is not
unusual for parent companies and subsidiaries to share sales channels. PTCL for
example uses the sales channels of PTML Ufone which is its 100 percent owned
subsidiary. So synergies in sales channels may actually be a very good reason
for two companies to merge or one company to acquire another. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">7.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Vertical
integration:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">A company
may acquire a supplier to ensure its supply lines are secured. This would be an
example of backward vertical integration. In other instances forward vertical
integration is also possible where a company may acquire its customer or a
distributor. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">8.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Local market
expertise:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">A foreign
company may want to acquire a local company to enter into the local market.
Numerous such examples exist across the border in India, where companies have
been acquired by foreign companies to acquire expertise and skills to operate
in the Indian market. Such an acquisition or a merger allows a foreign buyer to
acquire instantly the local market skill and expertise including knowledge of
local customs, laws and obstacles germane to language and other cultural
barriers. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">9.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Defensive
reasons and ulterior motives:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Sometimes a
company may acquire another company to become so disproportionately large that
its acquisition by a third company would render it to challenges under the
anti-trust and competition laws of the country. Another reason, usually an
ulterior motive would be, that the management thinks having a larger company
will mean greater executive compensation. This is usually a bad reason to
acquire and often leads to unmitigated disaster.<span style="mso-spacerun: yes;"> </span>Corporate greed is never a good reason for a
merger or an acquisition. <i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">10.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Target
company’s reasons for being acquired</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">:
</span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Equally
important are the reasons for a target company or business (i.e. company that
is being acquired) to allow itself to be acquired. These are:<i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Anemic Profits and Survival:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Usually if a company has little or no
profits it would want to be acquired so as to survive. <i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Competitive environment and Patent expiration:</span></i></b><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"> </span></i><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>A
company may want to be acquired because it cannot face the aggressive
competition by its competitors without extra help.<span style="mso-spacerun: yes;"> </span>Another reason may be that a company may find
itself in a situation where its exclusive patent is expiring and it may not be
able to compete without extra help. <i style="mso-bidi-font-style: normal;"><o:p></o:p></i></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">c.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Rapid growth or conversely stalled growth: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">In both
cases a company may want to be acquired. In the event of rapid growth, to
sustain working capital and in the event of stalled growth to further maximize
profits. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">d.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Shareholder pressure: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>Shareholders may press for acquisition where a
buyer is willing to offer complete liquidity to a group of shareholders. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">e.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Technological obsolescence: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>The technology used by a company may be
obsolete or nearing obsolescence. It may want to be acquired so that the buyer
may use it to convert it to new technology. In some ways we have seen such
acquisitions in the print media market where newspapers have been taken over by
technology companies who then convert existing newspapers into online portals. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;">The aforesaid reasons do not
constitute an exhaustive list. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 0.5in;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">There are many reasons, administrative, legal
and others, which may deter a company from acquiring or being acquired. These
are as follows:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: normal; margin: 0in 0in 0pt; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Competition law concerns: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>A merger may lead to anti-competitive and
anti-trust challenges. The newly merged entity may become too big for its own
good and such a merger may not be approved by the competition body or
regulator. An excessively large market share or in Pakistan’s case any
inhibition of competition when the merging parties cross thresholds defined by
the Competition Act 2010 may automatically be challenged and may not be
approved after the two review process. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Regulatory concerns:</span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>In certain industries, such as
telecommunication in Pakistan, the regulator plays an important role in
determining pricing structure and the role of a significant market player. For
example the on cards merger/acquisition of Warid by Mobilink is still going to
have to overcome regulatory hurdles and approvals.<span style="mso-spacerun: yes;"> </span>Failure to get regulatory approvals for
mergers can lead to<span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; text-align: justify;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Surprises resulting from poor due diligence</span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">: This
happens quite often in mergers and acquisitions. Nasty surprises such as an
incomplete audit or failure to get an undertaking or overlooking a key balance
sheet can have its own impact. Accurate due diligence would usually show the
financial and legal health of an entity. An acquiring concern should not touch
an encumbered target with a ten foot pole. It is not in a buyer’s interest to
assume any liabilities which it is unaware of.<span style="mso-spacerun: yes;">
</span><o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Lack of common vision: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">A lack of
common vision between two managements may be a big deal breaker. A lack of
common vision would mean that a convergence between the two managements would
be impossible and therefore the merger or acquisition would be doomed from the
start. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">5.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Complex, Costly and Convoluted: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Mergers and
acquisitions are often very complex, are definitely very costly and extremely
convoluted with regulatory codes and rules involved. The entire process
requires a commitment and a spirit of fairness which is often lacking between
two aggressive negotiating entities working at cross purposes.<span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">6.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Value reduction risk: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Empirical
evidence suggests that acquisition transaction often destroys value i.e. the
acquiring entity or the merged entity is ultimately valued less than the two
entities previously were in sum. Ultimately it is the opportunity cost of
advantages gained from the merger or acquisition. Would that opportunity cost
be acceptable?<span style="mso-spacerun: yes;"> </span>Would it be offset by
significant gains?<span style="mso-spacerun: yes;"> </span>This is ultimately
the call a merging or acquiring entity has to make. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">7.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Seller’s acquisition risks: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">By putting
itself out there for acquisition, a selling target exposes itself. For example
a competitor may enter the bidding process only to be able to conduct due
diligence on key and significant parts of the seller’s operations. It can
obtain pay rates, HR data, proprietary information, key operating and
engineering information, and product ranges both current and in pipeline.<span style="mso-spacerun: yes;"> </span>Usually a confidentiality agreement is used
to protect against this eventuality but their effectiveness is limited. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">8.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Misdirected objectives:<span style="mso-spacerun: yes;"> </span></span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">An acquiring company
may fail to pinpoint exactly what it wants out of the target acquisition. It
may want the HR culture or work ethic but that may not happen simply because it
takes over an entity. HR culture is not acquired but is embraced. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">9.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Alternative of building instead of buying: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">An acquiring
company may be acquiring a target because it wants to buy innovation and news
ideas. However it may be cheaper for the acquiring company to actually invest
in its own research and development which would lead to more organic innovation
and add value to the company. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; line-height: 115%;"><o:p> </o:p></span></i></b></div>
<br />
<div class="MsoListParagraphCxSpLast" style="line-height: normal; margin: 0in 0in 0pt 0.5in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">10.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></i></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">Poor Governance, confusion and lack of
leadership: </span></i></b><span lang="EN-GB" style="font-family: "Arial",sans-serif; font-size: 10pt;">In either merger or acquisition, there comes an extended
period of poor governance because new management is slow in implementation of
the plan or is unable to cope with fast changing situation on the ground. Poor
governance causes confusion and is usually coupled with a lack of leadership.
This is one of the major reasons to avoid a merger or acquisition situation
because the risk is that residual benefits of any such acquisition would be
squandered by either poor governance, infighting or confusion about the chain
of command. <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><o:p></o:p></i></b></span></div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-58016361748268538112016-02-16T02:32:00.000-08:002016-02-16T02:32:42.323-08:00Rotterdam Rules <div dir="ltr" style="text-align: left;" trbidi="on">
By Yasser Latif Hamdani<br />
<br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Introduction:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The United Nations
Convention on Contracts for the International Carriage of Goods Wholly or
Partly by Sea (hereinafter the “Rotterdam Rules” or the “Convention” as and
where the context permits) was prepared by the United Nations Commission on
International Trade Law (hereinafter “UNCITRAL”) and was designed to provide an
alternative <i style="mso-bidi-font-style: normal;">Hague Rules, Hague-Visby
Rules </i>and<i style="mso-bidi-font-style: normal;"> the Hamburg Rules</i> on
international carriage of goods by sea.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[1]</span></span></span><!--[endif]--></span></span></a> <span style="mso-spacerun: yes;"> </span>The Rotterdam Rules were adopted by the UN
General Assembly on 11 December 2008 and were signed at ceremony in Rotterdam,
Netherlands, on 23 September 2009 by 16 countries.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[2]</span></span></span><!--[endif]--></span></span></a> Till 2015 only a total of
25 countries have signed the Rotterdam Rules and only three countries have
ratified Rotterdam Rules. As a consequence, the Rotterdam Rules are still not
in force.<span style="mso-spacerun: yes;"> </span>The controversies surrounding
the ratification and adoption of the Rotterdam Rules, however, are not the
topic of this paper as the question pertains to the scope of Rotterdam Rules, in
terms of their application pursuant to the language of the Convention. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Scope
of Application:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The Rotterdam Rules apply
to “Contracts of Carriage” which are defined in Article 1(1) of the Convention.
These are contracts of carriage where the carrier, against payment of freight,
is tasked to take goods from one place to another. It is therefore envisages <b style="mso-bidi-font-weight: normal;">door to door multimodal transportation</b>
(as opposed to tackle to tackle regime under <i style="mso-bidi-font-style: normal;">The Hague-Visby Rules</i> which traditionally from the ship’s tackle is
hooked on the port of loading to the moment it is unhooked at the port of
discharge). It has to mandatorily have one leg at least by sea and can have
more than one kind of transports. The Rotterdam Rules therefore apply to not
only sea leg but land transportation as well and as such is seen as a
replacement for not just the pre-existing <i style="mso-bidi-font-style: normal;">The
Hague, The Hague-Visby Rules and Hamburg Rules</i> but also the <i style="mso-bidi-font-style: normal;">Multimodal Convention of 1980</i>. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Article 5 of the
Rotterdam Rules makes it clear that it applies to a situation where place of
receipt and place of delivery are in two different states and where – this is
most important- port of loading and port of discharge are also in two different
states. Additionally one of the following has to be in a contracting state: (i)
place of receipt, (ii) port of loading, (iii) place of delivery; or (iv) port
of discharge. <span style="mso-spacerun: yes;"> </span>Article 5 is subject to
exceptions or exclusions contained in Article 6 of the Rotterdam Rules. Article
6 supra excludes “Charter parties”, contracts for usage of ships for other
reasons and non-liner transportation. Non-liner transportation may also be
covered in the event that there is no Charter party or if there exists no
contract for other use of the ship and where a transport document or an
electronic transport record has been issued. <span style="mso-spacerun: yes;"> </span>Article 7 further applies the convention not
just to shipper and the carrier party to the contract but to holder or the
controlling party as well. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Here it must be stated
Article 82 of the Rotterdam Rules gives precedence to conventions applicable to
other modes transportation including air transport, rail transport and inland
waterways where there is no transshipment. <span style="mso-spacerun: yes;"> </span>This means that when read with Article 26 of
the Rotterdam Rules, the application of Rotterdam Rules will be limited to the
sea leg and not to transportation before and after where another international
instrument applies mandatorily. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Article 79 of the
Rotterdam Rules declares any contractual term in a contract of carriage that
clashes with the Convention is automatically void. However an exception is
created for volume contracts under Article 80.<span style="mso-spacerun: yes;">
</span>Volume contracts are defined in Article 1(2) of the Rotterdam Rules. A
volume contract provides for a series of shipments of specified number of goods
over an agreed period of time. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Carrier’s
liability:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">A carrier is defined as
someone who enters into a contract with the shipper in Article 1(5) of the
Rotterdam Rules. The carrier’s responsibility or liability encompasses the acts
or omissions by performing parties, master and crew of the ship and employees
of the carrier or the performing parties and any other person who assumes and
performs the duties or responsibilities of a carrier. A performing party is
most likely to be a subcontractor of the carrier when we consider the
definition in Article 1(6). <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The carrier’s duties are
as follows:<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(i)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Transport document:</span></u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"> Article
35 of the Rotterdam Rules place the duty to issue a transport document on the
carrier, unless of course the parties have agreed not to use a transport
document or where it is not the usual course of business or trade.<span style="mso-spacerun: yes;"> </span>Under Article 1(8) these include “Electronic
Transport Documents” thereby paving the way for ecommerce and the use of
electronic means for contract of carriage. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(ii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Duty to protect against loss, delay
or damage (carrier’s fault):</span></u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"> Article 17(1) of
Rotterdam Rules makes the carrier liable for any loss, delay or damage arising
out of the period of responsibility which is defined as from receipt to
delivery under Article 13. However Article 17(2) limits the liability to fault
of the carrier or any other person as defined under Article 18. Article 17(3)
is a kind of a force majeure clause which limits the carrier’s liability. Articles
17(4) and 17(5) further crystallize the carrier’s liability if the event that
carrier relies on can be shown to either be attributable to the carrier or a
performing party or if the carrier can’t disprove his fault in any other
circumstance or were caused by unseaworthiness or improper crewing or because
the ship’s hold or deck were not fit for carriage. For matters pertaining to
delay the claimant has to give a notice within 21 days or he loses his right to
compensation under Article 23(4) of the Rotterdam Rules. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span><u>Duty
of care:</u> There is a duty of care for goods during handling, stowing,
transporting from door to door on the carrier under Article 13(1) of the
Rotterdam Rules. <u><o:p></o:p></u></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iv)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Duty to keep the ship seaworthy and
cargo-worthy:</span></u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;">
</span>The carrier is required under Article 14 to keep the ship seaworthy and
cargo-worthy both at the start of the voyage and throughout it. <u><o:p></o:p></u></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Shipper’s
Liability:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">A shipper is defined as
someone who enters into contract with the carrier in Article 1(8) of the
Rotterdam Rules. Article 1(9) further introduces the concept of a “documentary
shipper” or a person who accepts to be named as the shipper on the transport
document and/or contract or carriage. The liabilities of both a shipper and
documentary shipper are identical.<span style="mso-spacerun: yes;"> </span>In
some cases a shipper is subject to strict liability and in others at fault
liability like the carrier. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">A shipper’s duties
include the following:<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(i)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Duty to provide accurate information:</span></u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">
Under Articles 28, 29 and 31 of the Rotterdam Rules a shipper is required to
provide accurate and timely information to the carrier. Article 31 is a strict
liability rule and as such the shipper indemnifies the carrier in this regard. <u><o:p></o:p></u></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; text-align: justify;">
<u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(ii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Duty to inform carrier of dangerous
nature of goods:</span></u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"> Under Article 32 of the Rotterdam Rules,
a shipper has to inform the carrier of the dangerous nature of goods and to
clearly the mark the goods as dangerous. This too is a strict liability rule. <u><o:p></o:p></u></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in;">
<u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Duty to perform obligations
faithfully:</span></u><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>The
shipper must perform obligations dutifully under the contract and is liable for
any loss caused by any act of omission by the shipper, documentary shipper or
the shipper’s employees etc under Article 30 of the Rotterdam Rules. With the
exception of Articles 31 and 32, this is an at-fault liability rule. <u><o:p></o:p></u></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Limitation
of Liability:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Rotterdam Rules limit the
liability of the carrier to 875 units of accounts per package or 3 units of
accounts per kilogram under Article 59 of the Convention. This is where either
the value of goods has been declared by the shipper or where a higher amount
has been agreed between the parties. A unit of account is defined is the
Special Drawing Right (“SDR”) as laid down by the IMF in Article 59(3). This
then is to be converted to a contracting state’s currency in accordance with
IMF procedure. Article 59 as a whole is subject to Article 60 of the Rotterdam
Rules which states that liability for delay would be limited to two and a half
times of the freight paid. The sum total however has been limited to the amount
payable under Article 59(1) i.e. 875 SDR per package or 3 SDR per kilogram.
Article 62 further limits the operation of limitation of liability where a loss
is attributable to a breach of obligation by the carrier or a performing party
and their employees etc. In this case the carrier loses the right to limit
liability. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Delivery
on Electronic Transport Document, Negotiable Transport Documents, and
Negotiable Electronic Transport Document:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">A very important and much
needed provision in the Rotterdam Rules is the acceptance of Electronic
Transport Document and delivery on such a document. Rotterdam Rules also govern
those situations where the receiver does not have the transport document.
Similarly it governs the use of negotiable transport documents and negotiable
electronic transport documents under Article 47 of the Rotterdam Rules. An
example of a negotiable transport document is a bill of lading. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Containerization:<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Given the multimodal
nature of transport envisaged under the Rotterdam Rules, the Convention is a
big nod towards containerization.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[3]</span></span></span><!--[endif]--></span></span></a><span style="mso-spacerun: yes;"> </span>The use of intermodal containers have
revolutionized the field of shipping. Given that the same container can be used
across rail truck and sea transport does away with the hassle of there being
separate contracts of carriages.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><span style="color: #0563c1;">[4]</span></span></span><!--[endif]--></span></span></a> The Rotterdam Rules now
give an overarching legal cover for the operation of intermodal containers. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Statute
of limitations/Time Bar:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Under Article 62 of the
Rotterdam Rules, a claim has to be brought within <b style="mso-bidi-font-weight: normal;">two years</b> of delivery or the time when delivery should have taken
place. For delay the shipper has to notify the carrier of a loss within <b style="mso-bidi-font-weight: normal;">21 days</b> under Article 23(4) supra. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Jurisdiction:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Under Article 66 of the
Rotterdam Rules, judicial proceedings (as well as arbitral proceedings) can be
instituted in the following places:<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(i)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Domicile of the carrier; or<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(ii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Place of receipt; or <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Place of delivery; or <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iv)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Port of loading; or <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(v)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Port of discharge; or<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(vi)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">A place agreed by the parties in contract.
<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Article 68 further introduces following places
of jurisdiction for actions against a maritime performing party (which would be
a sub-carrier or sub-contractor of carrier by sea):<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(i)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Domicile of the maritime performing party;
or<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(ii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The port where maritime performing party
took charge of the goods; or <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iii)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The port where maritime performing party
delivered the goods; or<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.75in; mso-add-space: auto; mso-list: l3 level1 lfo4; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%; mso-fareast-font-family: "Times New Roman";"><span style="mso-list: Ignore;">(iv)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The port where maritime performing party
usually performs services related to goods. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">Conclusion:<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;">The Rotterdam Rules build
upon at times and at times significantly depart from <i style="mso-bidi-font-style: normal;">The</i> <i style="mso-bidi-font-style: normal;">Hague Rules, The Hague-Visby
</i>and <i style="mso-bidi-font-style: normal;">Hamburg Rules</i>. Indeed they go
beyond them by envisaging <b style="mso-bidi-font-weight: normal;">door to door
multimodal transport </b>as opposed to merely sea transport. The Rotterdam
Rules apply to multimodal contracts of carriage with at least one international
sea leg.<span style="mso-spacerun: yes;"> </span>In other modes of transport the
Rotterdam Rules usually defer to other conventions if any. It has also
facilitated the growth of containerization by adopting a multimodal approach
and providing a legal framework for door to door transport. Another important
introduction is that of electronic transport documents and records which the
Rotterdam Rules explicitly recognize and set out a framework for. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "Times New Roman",serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div style="mso-element: footnote-list;">
<!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[1]</span></span></span><!--[endif]--></span></span></a><span style="font-family: Calibri; font-size: x-small;"> </span><a href="http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/2008rotterdam_rules.html"><span style="color: #0563c1; font-family: Calibri; font-size: x-small;">http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/2008rotterdam_rules.html</span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
Accessed on 4 January 2016<o:p></o:p></span></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[2]</span></span></span><!--[endif]--></span></span></a><span style="font-family: Calibri; font-size: x-small;"> </span><a href="http://www.rotterdamrules.com/content/introduction"><span style="color: #0563c1; font-family: Calibri; font-size: x-small;">http://www.rotterdamrules.com/content/introduction</span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
Accessed on 3 January 2016<o:p></o:p></span></span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[3]</span></span></span><!--[endif]--></span></span></a><span style="font-family: Calibri; font-size: x-small;"> </span><a href="http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=1976401&fileOId=1977150"><span style="color: #0563c1; font-family: Calibri; font-size: x-small;">http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=1976401&fileOId=1977150</span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
accessed on 4 January 2016<o:p></o:p></span></span></div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/TCL%20Paper%202%20-%20Rotterdam%20Rules%20-FINAL.docx" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10pt; line-height: 107%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="color: #0563c1;">[4]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: Calibri;">
Ibid <o:p></o:p></span></span></div>
</div>
</div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-9757664255781277222016-02-10T04:35:00.000-08:002016-02-10T04:37:30.324-08:00UNIDROIT Principles and CISG <div dir="ltr" style="text-align: left;" trbidi="on">
By Yasser Latif Hamdani<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;"></span></span></b><br /></div>
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">I.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Introduction:
CISG and UNIDROIT<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">The United Nations
Convention on Contracts for International Sales of Goods (“CISG”) is a
convention that was signed in Vienna in 1980 (though it was not until 1987 that
it had the requisite number of ratifications required to make it a binding
multilateral treaty) and has been ratified since then by 83 countries to date.
Developed by the United Nations Commission on International Trade Law
(“UNCITRAL”), it seeks to harmonize and create unified international sales
law.<span style="mso-spacerun: yes;"> </span>It was the result of 51 years of
collective efforts initiated by International Institute for the Unification of
Private Law (“UNIDROIT”).<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[1]</span></span></span><!--[endif]--></span></span></a> It was in 1968 when
UNCITRAL began its efforts that the 1920s proposal of Professor Ernst Rabel, a
German Comparativist and thinker, finally began taking shape. The UNIDROIT
Principles of International Commercial Contracts (“UNIDROIT Principles”) were
drawn up by the efforts of UNIDROIT in 1994 and subsequently enlarged in 2004.
A third edition of the UNIDROIT Principles was drawn up in 2010. Both the CISG
and UNIDROIT Principles are part of the <i style="mso-bidi-font-style: normal;">Lex
Mercatoria</i> or the “merchant law” and in particular the merchant law as it
applies internationally.<span style="mso-spacerun: yes;"> </span>One could
imagine the CISG as a codification of principles and the UNIDROIT Principles as
international common law of contracts.<span style="mso-spacerun: yes;">
</span>It may be stated here, however, that even though UNIDROIT Principles
were drafted with CISG very much in the background, UNIDROIT Principles have a
wider application than simply sales of goods and covers a broader field of
contracts and law, including for example <i style="mso-bidi-font-style: normal;">Lex
Sportiva</i> (Sports law).<span style="mso-spacerun: yes;"> </span>For the
purposes of this research paper, however, I will only consider applications of
UNIDROIT Principles as they relate to international sales of goods and in
particular the CISG. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">While CISG is an
international treaty which binds its contracting states to the language of the
convention.<span style="mso-spacerun: yes;"> </span>UNIDROIT Principles on the
other hand are principles that were drawn up by a body of professional
international lawyers, jurists and thinkers with the express purpose, inter
alia, “they may be used to interpret or supplement international uniform law
instruments”.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[2]</span></span></span><!--[endif]--></span></span></a>
Nevertheless there were many people who had participated in both endeavors.
Therefore in many ways the UNIDROIT Principles filled up those gaps in the CISG
that were but the obvious result of diplomacy and compromise required to arrive
at a complex multilateral treaty such as CISG. Therefore the UNIDROIT
Principles can be seen an aid and a supplementary device by which CISG can be
applied.<span style="mso-spacerun: yes;"> </span>This has basis in CISG itself
as I will argue in some detail below in light of case law now before us. To
answer the question broadly however, the nexus between CISG and UNIDROIT is to
be found in the application of UNIDROIT Principles to the interpretation of the
CISG and corresponding domestic law (in to which arbitrators and courts are
duty-bound to read CISG).<span style="mso-spacerun: yes;"> </span>The basis of
this is <b style="mso-bidi-font-weight: normal;">Article 7</b> of the CISG which
states its international character <a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[3]</span></span></span><!--[endif]--></span></span></a> and leaves room open for
application of general principles and private international law.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[4]</span></span></span><!--[endif]--></span></span></a> Article 7(1) of the CISG
states:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">“…in the interpretation
of this Convention regard is to be had to its international character and to
the need to promote uniformity in its application.”<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[5]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Article 7(2) of the CISG
states:<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">“Questions concerning
matters governed by this Convention which are not expressly settled in it are
to be settled in conformity with the general principles on which it is based
or, in the absence of such principles, in conformity with the law applicable by
virtue of the rules of private international law.”<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[6]</span></span></span><!--[endif]--></span></span></a> <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Professor Michael Joachim
Bonell, one of UNIDROIT’s leading legal consultants and one of the people who
helped frame the UNIDROIT Principles, has written in some detail on the issue
of UNIDROIT Principles being supplementary to the CISG.<span style="mso-spacerun: yes;"> </span>In one of his seminal papers on the nexus
between the two, he points out that CISG was the best that could be achieved by
way of legislation, while UNIDROIT Principles are the restatement of
international contract law.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[7]</span></span></span><!--[endif]--></span></span></a> While explaining the
formulation of UNIDROIT Principles, he explains that CISG was an obligatory
point of reference for the framers of the CISG. The UNIDROIT Principles,
therefore, were designed to explain unclear language and to fill those gaps
that were left by framing of CISG. This being the explicit intent of the
UNIDROIT Principles, as evidenced by Professor Bonell’s aforesaid paper, I will
attempt to analyze the nexus between the two by listing and explaining the case
law (both through arbitral awards and through national courts) that has read
into, for all practical purposes, the UNIDROIT Principles into the CISG as far
as the two are compatible. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">II.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></b><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span><b style="mso-bidi-font-weight: normal;"><u>Examples
of how UNIDROIT Principles have been used to supplement CISG (Non-exhaustive
list of cases and arbitral awards)<o:p></o:p></u></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">A.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Determination of Interest Rate in
accordance with UNIDROIT Principles while applying CISG <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Some of the earliest
cases or arbitral awards that referred to UNIDROIT Principles applied Article
78 of the CISG in conjunction with Article 7.4.9 of the UNIDROIT Principles.
Article 78 of the CISG does not clarify what the applicable rate of interest should
be and therefore requires Article 7.4.9 as an aid. The first case in this
regard comes in form of an arbitral award from 1994 by <i style="mso-bidi-font-style: normal;">Internationales Schiedsgericht der Bundeskammer der gewerblichen
Wirtschaft – Wien </i>in which the arbitrators laid down that the matter of
interest rate was governed but not “expressly settled” by the CISG. Therefore
the Arbitrators referred to Article 7.4.9 of the UNIDROIT Principles which
stated that the average prime rate in the buyer’s country would apply.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[8]</span></span></span><!--[endif]--></span></span></a> We see the application of
the same Article 7.4.9 of the UNIDROIT Principles in a decision by ICC International
Court of Arbitration<i style="mso-bidi-font-style: normal;"> </i>in 1995.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[9]</span></span></span><!--[endif]--></span></span></a><span style="mso-spacerun: yes;"> </span>Since then arbitral courts around the world
have repeatedly referred to the Article 7.4.9 of the UNIDROIT Principles to
settle the question of interest rates in international commercial
contracts.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">B.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Question of Hardship <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">In the case of <b style="mso-bidi-font-weight: normal;">Scafom International BV vs Lorraine Tubes
s.a.s</b>, the Court of Cassation of Belgium ruled that a contract was silent
on the issue of re-negotiation due to hardship. Therefore reference was made to
Article 7(2) of the CISG (i.e. use of general principles) and correspondingly
to “the general principles governing the law of international commerce,
concluded that according to such principles as laid down, among others, in the
UNIDROIT Principles of International Commercial Contracts”.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[10]</span></span></span><!--[endif]--></span></span></a> Re-negotiation due to
hardship was allowed consequently in line with the UNIDROIT Principles. This
was upheld by the Supreme Court of Belgium. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">C.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Pre-Contractual Negotiation and
Common Intention <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">In the case of <b style="mso-bidi-font-weight: normal;">Proforce Recruit Limited v. The Rugby Group
Limited, </b>the Court of Appeal (Civil Division) of the UK ruled that
pre-contractual negotiations and common intention of the parties were relevant
to determination of the dispute. In particular reference was made to UNIDROIT
Principles, Articles 4.1 to 4.3 read with Article 8 of the CISG which was the
governing convention.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[11]</span></span></span><!--[endif]--></span></span></a> This was again upheld in
the case of <b style="mso-bidi-font-weight: normal;">The Square Mile Partnership
Ltd v Fitzmaurice McCall Ltd</b><a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[12]</span></span></span><!--[endif]--></span></span></a><b style="mso-bidi-font-weight: normal;"> </b>and in <b style="mso-bidi-font-weight: normal;">Chartbrook Limited
v. Persimmon Homes Limited.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[13]</span></span></b></span><!--[endif]--></span></span></a></b><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Another judgment on point
came from New Zealand’s Court of Appeals in the case of <b style="mso-bidi-font-weight: normal;">Hideo Yoshimoto v Canterbury Golf International Limited </b>which while
applying Articles 4.1 to 4.3 of the UNIDROIT Principles described them as being
“in the nature of a restatement of the commercial contract law of the world
[and which] refines and expands the principles contained in the United Nations
Convention.”<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[14]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">D.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Place of Performance of Obligation <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">In the case of <b style="mso-bidi-font-weight: normal;">SCEA GAEC Des Beauches Bernard Bruno v.
Société Teso Ten Elsen GmbH & COKG</b> affirming the principle contained in
Article 57 of the CISG, the French <i style="mso-bidi-font-style: normal;">Cour
d'appel de Grenoble</i> referred to Article 6.1.6 of the UNIDROIT Principles to
settle the question of obligation pertaining to payment i.e. place of such
payment should be the creditor’s place of business.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref15" style="mso-footnote-id: ftn15;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[15]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">E.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Reasonable opportunity to be
acquainted with standard terms <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Netherland’s <i style="mso-bidi-font-style: normal;">Hof 'S-Hertogenbosch </i>applied Article
2.20 of 1994 UNIDROIT Principles to settle the dispute of whether a buyer
should have reasonable opportunity to get acquainted with the seller’s standard
terms, a question on which CISG was silent. <a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref16" style="mso-footnote-id: ftn16;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[16]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">F.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Limitation Period <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">In the case of <b style="mso-bidi-font-weight: normal;">Castellana Inmuebles Y Locales S.A. v.
Brunello Cucinelli SPA</b>, Spain’s <i style="mso-bidi-font-style: normal;">Audiencia
Provincial Madrid</i> SPA noting that CISG was silent on limitation applied
Article 10.2 of the UNIDROIT Principles to determine the limitation period. <a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref17" style="mso-footnote-id: ftn17;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[17]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.5in; mso-list: l1 level1 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">G.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Formation of Contract <o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Ruling on a contract
between a Finish company and a French company (which in its Russian version
invoked Swedish law) and applying CISG by virtue of the CISG’s incorporation in
domestic laws of France, Finland and Sweden, the ICC International Court of
Arbitration applied UNIDROIT Principles as a supplementary device to CISG and
also as the governing principles for contract formation.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref18" style="mso-footnote-id: ftn18;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[18]</span></span></span><!--[endif]--></span></span></a> <o:p></o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">III.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">The
appropriate role for UNIDROIT Principles vis a vis CISG: A contested issue<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">The upshot of the case
law discussed above is that UNIDROIT Principles have been applied in three main
ways in conjunction with CISG. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">a.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Application
of UNIDROIT Principles when CISG is silent on an issue (Gap filler).<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">b.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Application
of UNIDROIT Principles as a supplement to CISG and as universal trade usage.<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 8pt 1in; mso-add-space: auto; mso-list: l1 level2 lfo1; text-align: justify; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">c.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Application
of UNIDROIT Principles independently by way of a contractual clause as an aid
to interpret international contracts. This imagines an independent status for
UNIDROIT Principles even when they do not directly correspond to CISG or are
not moored in CISG. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Of the three, the first
two scenarios are directly relevant to the main thrust of the question before
us.<span style="mso-spacerun: yes;"> </span>The first application i.e. where
CISG is silent has a necessary first step and that is the legal basis for
reference to CISG. This usually happens by one of two ways. The first way is if
the contract is between two parties, either of which is based in a contracting
state and the governing law is of the contracting state. <span style="mso-spacerun: yes;"> </span>In that case the CISG is to be read into the
domestic law, either automatically (in the event the contracting state is
monist) or by incorporation into domestic legislation (if the contracting state
is dualist).<span style="mso-spacerun: yes;"> </span>Once the CISG is considered
part of the domestic law, a court taking cognizance of dispute arising out of
such a contract must apply CISG to its interpretation. Second way is when a
clause in the contract refers specifically to CISG as the governing law. It may
be the case that the contract either refers to CISG or both. Professor Bonell
recommends the following clause: “This contract shall be governed by CISG, and
with respect to matters not covered by this Convention, by the UNIDROIT
Principles of International Commercial Contracts.” Once the CISG is found to be
silent on a certain point or non-conclusive, the case law above suggests a
recourse to UNIDROIT Principles to complement the CISG.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">So how does UNIDROIT
Principles interact with the CISG? I have given case law above that elucidates
the ratio of various judgments and arbitral awards on specific points. However
the application of UNIDROIT Principles when interpreting, complementing or
supplementing the CISG is wider.<span style="mso-spacerun: yes;"> </span>As
mentioned earlier the UNIDROIT Principles were not meant to be a binding
document unlike CISG and therefore the leeway available to its drafters was
much greater than what was possible in diplomacy, tact and compromise that was
required in framing the CISG.<span style="mso-spacerun: yes;"> </span>This means
that UNIDROIT Principles are a more comprehensive framework and one which in
application goes beyond merely CISG.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">The international
character of CISG and its deference to general principles and private
international law as given in Article 7 mentioned hereinabove, means that
judges and arbitrators have had to rely on their own devices to interpret and
implement CISG. In this respect UNIDROIT is a veritable guide for
interpretation. Professor Bonell points out that fundamental breach of contract
for example is better defined and laid out in Article 7.3.1 of the UNIDROIT
Principles than in Article 25 of the CISG.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref19" style="mso-footnote-id: ftn19;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[19]</span></span></span><!--[endif]--></span></span></a> He points out that
Article 7.1.4 of the UNIDROIT Principles may be used as the complementary
device to Article 48 of the CISG where doubts about the right to cure by a
non-performing party exist.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref20" style="mso-footnote-id: ftn20;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[20]</span></span></span><!--[endif]--></span></span></a><span style="mso-spacerun: yes;"> </span>Professor Bonell also speaks at length about
the application of interest rate under UNIDROIT Principles i.e. Article 7.4.9,
which we have seen above in the case law as well. <span style="mso-spacerun: yes;"> </span>His view is largely shared by Professor Anna
Veneziano, an Italian professor of law, in her paper on “Change of
circumstances and the duty to renegotiate according Belgian Supreme Court”
where she discusses the Belgian Supreme Court’s decision upholding Belgian
Court of Cassation’s decision in the Lorraine Tubes case mentioned hereinabove.
She is wholly supportive of the idea of usage of UNIDROIT Principles as a means
to elaborate the CISG and its corresponding impact on domestic law and
jurisprudence.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref21" style="mso-footnote-id: ftn21;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[21]</span></span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>This position is contested to a certain extent
by Professor John Y Gotanda who argues that UNIDROIT Principles were not meant
to be “gap-fillers” in the CISG. He argues that essential mechanism provided by
the CISG to fill the gaps precludes the application of the UNIDROIT Principles
as the principal source of authority on whose touchstone the CISG can be
interpreted.<span style="mso-spacerun: yes;"> </span>He argues that UNIDROIT
Principles are not merely the restatement of general principles of
international contract law but are intended to be the embodiment of best
practices and solutions. Professor Gotanda reads the scope of Article 7(2) of
the CISG as being limited to that principle being “moored” to the basic premise
of a provision of CISG. He points in particular to the application of Article
7.4.9 of the UNIDROIT Principles in conjunction with Articles 74 and 78 of the
CISG as being an overreach by arbitrators and judges and argues that the former
actually upends the latter. He argues that by allowing interest at a lending
rate (which the UNIDROIT Principles allow), when read in conjunction with the
provision of Article 74 which allows for actual damages including any loss from
borrowing money, means that an aggrieved party may not borrow against funds
owed and may reinvest leading to the ultimate conclusion that application of
UNIDROIT Principles may overcompensate the aggrieved party.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref22" style="mso-footnote-id: ftn22;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[22]</span></span></span><!--[endif]--></span></span></a> Professor Gotanda further
argues that if CISG is silent on an issue or if there are gaps after
application of its literal text, the recourse must be to domestic law. He also
argues against the application of UNIDROIT Principles as trade usages by
arguing that approach forwarded by UNIDROIT Principles do not constitute
“universal trade usage”. Still he believes that they can inform the CISG as
solutions that can resolve some unanswered dilemmas left open by the text of
CISG.<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftnref23" style="mso-footnote-id: ftn23;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="color: #0563c1;">[23]</span></span></span><!--[endif]--></span></span></a> <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraph" style="margin: 0in 0in 8pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-align: justify; text-indent: -0.5in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><span style="mso-list: Ignore;">IV.<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><u><span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">Conclusion
<o:p></o:p></span></u></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt; text-align: justify;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;">The conclusion I draw
from the foregoing discussion is that arbitrators and judges have on numerous
occasions applied UNIDROIT Principles as gap fillers for CISG by relying on
Article 7(2) of the CISG which calls for resolution through application of
general principles of private international law. My view is closer to Professor
Bonell’s view which sees UNIDROIT Principles being drafted in the backdrop of
CISG and therefore, I concur with the view that UNIDROIT Principles are moored
in the premises that led to the adoption of CISG by contracting states. I do
not wholly agree with Professor Gotanda’s view that the recourse must first be
had to domestic law because I believe that the entire purpose of CISG was to
harmonize and unify international law on sales of goods. Furthermore one can
argue that UNIDROIT Principles are not incompatible with domestic law to begin
with. Professor Gotanda’s example using interest rates is too stretched and at
best esoteric given the overall thrust behind the effort to harmonize and unify
transnational commercial law. UNIDROIT Principles, therefore, in my view are
the foremost authority in determining and filling the gaps that may occur in
application of CISG. I also agree with the camp that argues that UNIDROIT
Principles constitute universal trade usages and therefore are directly
applicable. The world needs universal principles for international trade and
commerce and UNIDROIT Principles do an admirable job in supplementing
conventions like the CISG. This is precisely why arbitrators and judges use
them in the manner they have done so in the aforesaid case law on the subject. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 8pt;">
<span style="font-family: "times new roman" , serif; font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></div>
<br />
<div style="mso-element: footnote-list;">
<!--[if !supportFootnotes]--><br />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<br />
<div id="ftn1" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[1]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.cisg.law.pace.edu/cisg/biblio/bonell.html"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.cisg.law.pace.edu/cisg/biblio/bonell.html</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn2" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn2" style="mso-footnote-id: ftn2;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[2]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
See the Preamble to the UNIDROIT Principles <o:p></o:p></span></span></div>
</div>
<div id="ftn3" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn3" style="mso-footnote-id: ftn3;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[3]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Article 7(1) of the CISG<o:p></o:p></span></span></div>
</div>
<div id="ftn4" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn4" style="mso-footnote-id: ftn4;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[4]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Article 7(2) of the CISG<o:p></o:p></span></span></div>
</div>
<div id="ftn5" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn5" style="mso-footnote-id: ftn5;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[5]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Article 7(1) of the CISG <o:p></o:p></span></span></div>
</div>
<div id="ftn6" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn6" style="mso-footnote-id: ftn6;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[6]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Article 7(2) of the CISG <o:p></o:p></span></span></div>
</div>
<div id="ftn7" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn7" style="mso-footnote-id: ftn7;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[7]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.cisg.law.pace.edu/cisg/biblio/ulr96.html#n*"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.cisg.law.pace.edu/cisg/biblio/ulr96.html#n*</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015<o:p></o:p></span></span></div>
</div>
<div id="ftn8" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn8" style="mso-footnote-id: ftn8;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[8]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=635"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=635</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn9" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn9" style="mso-footnote-id: ftn9;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[9]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=637"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=637</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn10" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn10" style="mso-footnote-id: ftn10;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[10]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=1456"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=1456</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn11" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn11" style="mso-footnote-id: ftn11;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[11]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=1119"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=1119</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn12" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn12" style="mso-footnote-id: ftn12;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[12]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=1156"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=1156</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn13" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn13" style="mso-footnote-id: ftn13;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[13]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=1373"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=1373</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015<o:p></o:p></span></span></div>
</div>
<div id="ftn14" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn14" style="mso-footnote-id: ftn14;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[14]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=802"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=802</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn15" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn15" style="mso-footnote-id: ftn15;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[15]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=638"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=638</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn16" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn16" style="mso-footnote-id: ftn16;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[16]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=959"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=959</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn17" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn17" style="mso-footnote-id: ftn17;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[17]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=1907"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=1907</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015 <o:p></o:p></span></span></div>
</div>
<div id="ftn18" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn18" style="mso-footnote-id: ftn18;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[18]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;"> </span><a href="http://www.unilex.info/case.cfm?id=1403"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unilex.info/case.cfm?id=1403</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
accessed on 10 December 2015<o:p></o:p></span></span></div>
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<o:p><span style="font-family: "calibri"; font-size: x-small;"> </span></o:p></div>
</div>
<div id="ftn19" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn19" style="mso-footnote-id: ftn19;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[19]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">Bonell,
Michael J, <i style="mso-bidi-font-style: normal;">THE UNIDROIT PRINCIPLES OF
INTERNATIONAL COMMERCIAL CONTRACTS AND CISG -- ALTERNATIVES OR COMPLEMENTARY
INSTRUMENTS ? </i></span></span><a href="http://www.cisg.law.pace.edu/cisg/biblio/bonell.html#mjb64"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.cisg.law.pace.edu/cisg/biblio/bonell.html#mjb64</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Accessed on December 11, 2015. <o:p></o:p></span></span></div>
</div>
<div id="ftn20" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn20" style="mso-footnote-id: ftn20;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[20]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Ibid <o:p></o:p></span></span></div>
</div>
<div id="ftn21" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn21" style="mso-footnote-id: ftn21;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[21]</span></span></span><!--[endif]--></span></span></a><span style="font-family: "calibri"; font-size: x-small;">Veneziano,
Anna, <i style="mso-bidi-font-style: normal;">UNIDROIT Principles and CISG :
Change of Circumstances and Duty to Renegotiate according to the Belgian
Supreme Court</i> </span><a href="http://www.unidroit.org/english/publications/review/articles/2010-1-veneziano-e.pdf"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://www.unidroit.org/english/publications/review/articles/2010-1-veneziano-e.pdf</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Accessed on December 11, 2015. <o:p></o:p></span></span></div>
</div>
<div id="ftn22" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn22" style="mso-footnote-id: ftn22;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[22]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Gotanda, John Y, <i style="mso-bidi-font-style: normal;">Using the Unidroit
Principles to Fill Gaps in the CISG </i></span></span><a href="http://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=1089&context=wps"><span style="color: #0563c1; font-family: "calibri"; font-size: x-small;">http://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=1089&context=wps</span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Accessed on December 12, 2015<o:p></o:p></span></span></div>
</div>
<div id="ftn23" style="mso-element: footnote;">
<div class="MsoFootnoteText" style="margin: 0in 0in 0pt;">
<a href="file:///C:/Users/yasser.hamdani/Documents/Articles/The%20nexus%20between%20UNIDROIT%20and%20CISG.docx" name="_ftn23" style="mso-footnote-id: ftn23;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "calibri" , sans-serif; font-size: 10pt; line-height: 107%;"><span style="color: #0563c1;">[23]</span></span></span><!--[endif]--></span></span></a><span style="font-size: x-small;"><span style="font-family: "calibri";">
Ibid <o:p></o:p></span></span></div>
</div>
</div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-51050425916996348292016-02-10T04:14:00.000-08:002016-02-10T04:14:24.005-08:00Islamization of Pakistan's Legal System<div dir="ltr" style="text-align: left;" trbidi="on">
First published in the <a href="http://www.dailytimes.com.pk/opinion/08-Feb-2016/islamisation-of-pakistan-s-legal-system" target="_blank">Daily Times</a>:<br />
<br />
<br />
Justice A R Cornelius, being a liberal catholic Christian, is an unlikely champion of the Islamisation of the legal system in Pakistan. Yet facts show that it was he who first expounded the idea that in order for rule of law to take root in Pakistan, judges should freely deploy Islam to justify their legal decisions. Ironically, he did so speaking to officers at the General Headquarters (GHQ) on July 11, 1962 where he argued that the state could only find political legitimacy if it honoured the wishes of the people and unveiled a just Islamic order. To understand the context of Cornelius’ comments, I recommend that the readers refer to Clark Lombardi’s fascinating study ‘Can Islamising a legal system ever help promote liberal democracy? A view from Pakistan’, which is available online.<br />
<br /><br />
Of course, Cornelius envisaged Pakistani liberals as leaders of this Islamisation, which would be a sort of a renaissance of Islam and would unleash liberal rule of law in the country. Advising the military rulers of the country, Justice Cornelius said, “It is in this sense that the demand often heard in Pakistan for restoration of traditional Islamic institutions should be understood. It is the natural cry of a strong organism to be connected once again with its original and proper roots. The matter lies in the field of political therapeutics.” In doing so, Cornelius was overturning the axiomatic wisdom of Justice Munir and Justice Kayani, who had held that the question of an Islamic state would only lead to dissention given the variety of the often contradictory claims of various sects in Islam. With the Christian Chief Justice (CJ) of Pakistan now giving a nod to the Islamisation of the legal system, it was only a matter of time before a theory of Islamic review would take root in Pakistan. At least the military drew its own lessons from Cornelius’ exposition, especially in how it used that logic to the hilt under General Ziaul Haq. One wonders if General Zia himself was in attendance at Cornelius’ lecture.<br />
<br /><br />
Cornelius was speaking at a time when the world was yet to experience the spread of fundamentalism and revivalist thought in the Muslim world. I doubt he would hold the views he expressed at the GHQ in 1962 if he were alive today. For one thing, time has proved that liberals have failed to establish any kind of legitimacy vis-à-vis Islam. This was obviously natural given that the common man is not likely to reject the interpretations of established religious clergy in favour of modernist interpretations of Islam expounded by liberal Muslims or legal scholars attempting to reconcile Islam with modernity. The problem is that whenever the issue is going to come down to an interpretation of Islamic law, invariably liberal and progressive interpretations, no matter how persuasively argued, will lose out to traditionalist and orthodox views that are championed by a reactionary clergy. Priests with a divine mission, which Jinnah warned us against, will always trump any liberal attempts at reform. It is therefore a losing proposition for liberals to engage the clergy on that level, especially given that there are no liberal scholars of Islam grounded in Islamic history and jurisprudence, at least in Pakistan, who can challenge the established sectarian narratives of Barelvis and Deobandis. There are no Raza Aslans or Mustafa Akyols in Pakistan and even if there were, given the post-General Zia scenario, they would be driven out of the country. The treatment meted out to Fazlur Rahman Malik by Pakistan’s aggressive Islamists, at a time when Pakistan was a relatively liberal country, is a case in point. The more recent case of Javed Ahmad Ghamdi, by no means a liberal Islamic scholar but merely a reasonable one, is another.<br />
<br /><br />
A case in point is the Federal Shariat Court (FSC), which has recently been the subject of a lively debate between some of Pakistan’s brightest legal minds. The FSC was General Zia’s greatest trick. It was the foremost tool by which he intended to legitimise his illegitimate military dictatorship. The idea of a court of Islamic review empowered to give binding legal opinions on religious matters was itself a revolutionary one within Islam. Never in the 1,400 years of the history of Islam was there ever an institution that was vested with such jurisdiction. The closest the Muslim world ever came to this was under Caliph Mamun’s reign in the ninth century with his attempt to create a Church of Islam inspired by the rationalist doctrine of Mutazila. It ended in terrific failure. The very existence of the FSC therefore is a censure on the democratic will of the people of Pakistan, but it is said to be a popular censure. The people of Pakistan, we are told, want to have a shariat court. It is, to quote Cornelius, a matter of “political therapeutics”. These political therapeutics, in my opinion, have destroyed the dream that was Pakistan. Where do we draw the line?<br />
<br /><br />
Perhaps the first thing that liberals and reformists in Pakistan need to do is to stop trying to find a silver lining when talking of out of place institutions like the FSC. Instead, we need to dig out and revive those arguments that liberal judges had made prior to Cornelius’ ill-fated advice. Pakistan is home to many different kinds of Islamic sects, not to mention adherents of other religions. The different kind of Islamic sects cannot really agree on what it means to be a Muslim. Meanwhile, Pakistan is a modern state that has to exist in the modern world. When you talk of sharia, whose version are you going to implement? Will this argument not destroy the very fabric of the state? Has our experience over the last 40 years not shown us that this is an endless and fruitless debate that only weakens the state? As a Pakistani who wants this state to prosper and not just carry on in confusion, I reject the imposition of the FSC, designed to prop up General Zia’s military dictatorship, as having any legitimacy in deciding what is Islamic and what is not Islamic.</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-54791533208651456882014-08-16T09:34:00.001-07:002014-08-16T09:34:19.573-07:00Exercise of constitutional jurisdiction<div dir="ltr" style="text-align: left;" trbidi="on">
Accused invoking constitutional jurisdiction for a writ of prohibition against restart of proceedings against him trial court not lacking jurisdiction and no justification existing stopping proceedings petition suffering from lack of merits. No case made out for interference petition dismissed. [AIR 1965 SC 83; 1985 PCr. LJ 499]</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com4tag:blogger.com,1999:blog-6332474233028702074.post-77322825605292135442014-08-16T09:13:00.001-07:002014-08-16T09:20:51.908-07:00Protection on conviction for offences<div dir="ltr" style="text-align: left;" trbidi="on">
The conviction and sentence in criminal proceedings under ex-post <i>facto</i> law, is prohibited. The sentence impassible on date of commission of offence has to determine sentence impossible on completion of trial. [AIR 2010 SC 199].</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-14864537334597395682014-08-16T08:58:00.002-07:002014-08-16T09:18:18.462-07:00Scope<div dir="ltr" style="text-align: left;" trbidi="on">
Article 12 of the Constitution relates to law regarding an offence and has got no concern with the civil rights. [240 US 328].</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-10649237670335179132014-01-11T07:05:00.001-08:002014-01-11T07:05:42.920-08:00AbolitionThe destruction or extinguishment of anything; often used in reference to a position or ofice.Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-33704561608725714102013-08-14T23:36:00.000-07:002013-08-14T23:36:50.032-07:00Asbestos Lawsuits in the US <div dir="ltr" style="text-align: left;" trbidi="on">
<div dir="ltr" style="line-height: 1.15; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">By Masham Sheraz </span></div>
<div dir="ltr" style="line-height: 1.15; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br /></span></div>
<div dir="ltr" style="line-height: 1.15; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Asbestos litigation is known to be the longest-running, most expensive mass tort in U.S. history, proof of which is the fact that it involves more than 8,000 defendants and 700,000 claimants. Legal claims for injuries from asbestos involve more plaintiffs, more defendants and higher costs than any other type of personal injury litigation. Some analysts have estimated that the total costs of asbestos litigation in the USA alone will eventually reach $200 to $275 billion in the years to come.</span></div>
<b id="docs-internal-guid-62827753-80ab-f034-358a-a34c3fd046a2" style="font-weight: normal;"><br /><span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"></span></b>
<div dir="ltr" style="line-height: 1.15; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">The main driving forces at the back of asbestos litigation are the diseases caused by exposure to asbestos; mesothelioma, asbestosis and cancer are just a few of these. There are no known cures for the cancers, and the seriousness of them has led plaintiffs to push for more information from current and former employers. Current trends indicate that the rate at which people are diagnosed with the disease will likely increase through the next decade.</span></div>
<a name='more'></a><br />
<b style="font-weight: normal;"><br /><span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"></span></b>
<div dir="ltr" style="line-height: 1.15; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Since asbestos-related disease has been identified by the medical profession in the late 1920s, workers' compensation cases were filed and resolved in secrecy, with a flood of litigation starting in the United States in the 1970s, and culminating in the 1980s and 1990s. Since the first lawsuits against asbestos manufacturers were brought in the late 1920's, many lawsuits have been filed. </span><span style="background-color: white; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">The case of </span><span style="background-color: white; color: black; font-family: Arial; font-size: 15px; font-style: italic; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Borel v. Fireboard Paper Products Corporation </span><span style="background-color: white; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">became a landmark lawsuit, setting the stage for decades of asbestos litigation</span><span style="background-color: white; color: #4b4b4b; font-family: Arial; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">. </span><span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">As a result of the litigation, manufacturers sold off subsidiaries, diversified, produced asbestos substitutes, and started asbestos removal businesses. Furthermore, </span><span style="background-color: white; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">many companies that were defendants in asbestos related tort cases were forced into bankruptcy or declared it. </span><span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"></span></div>
<b style="font-weight: normal;"><br /><span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"></span></b>
<div dir="ltr" style="line-height: 1.15; margin-bottom: 0pt; margin-top: 0pt;">
<span style="background-color: transparent; color: black; font-family: Arial; font-size: 15px; font-style: normal; font-variant: normal; font-weight: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Ordinarily, only a small fraction of all those who are injured seek compensation from the courts Typically, the high costs of tort litigation screen out of the system the majority of claims for minor injuries and modest losses. In asbestos litigation, however, mass litigation strategies have effectively opened the courts to everyone who can prove exposure to asbestos and demonstrate a legally cognizable injury. </span></div>
<br /><span style="font-family: Arial; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><span style="font-family: Arial; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">It has been observed that the two methods that the U.S. legal system has developed to collectively resolve mass torts - bankruptcies of defendant firms and class action settlements -- have not worked for asbestos litigation. This is due to the fact that when one asbestos defendant gets bankrupt, plaintiffs' lawyers find other non-bankrupt defendants to sue, thus shifting the litigation pressure to new sectors of the economy. Also, the large numbers of asbestos plaintiffs, defendants and insurers make it nearly impossible to reach a voluntary agreement on a class action settlement. Thus, it is believed that the Congress will have to pass firm legislation in order to settle this issue for once and for all. Not only will it provide a mechanism to compensate the victims of asbestos-caused diseases but will also permanently curb the use of harmful substances such as asbestos.</span><br />
<span style="font-family: Arial; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"><br /></span>
<span style="font-family: Arial; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">(The writer is an aspiring lawyer)</span></div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-26728981050612820292013-08-14T12:14:00.000-07:002013-08-14T12:14:00.203-07:00Internet Freedom - Real Independence <div dir="ltr" style="text-align: left;" trbidi="on">
<div class="MsoNormal" style="text-align: justify;">
By Yasser Latif Hamdani</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
Newspapers reported that the IT
Minister, Ms. Anusha Rahman, is working with experts to create software to
block all objectionable material which would then allow the YouTube ban to be
lifted. After 11 months, this is where we are at and we still have it all
wrong. </div>
<div class="MsoNormal" style="text-align: justify;">
I am the petitioner’s counsel in <u>Bytes
for all v. Federation of Pakistan</u> etc before the Lahore High Court where
the petitioner argues for unfettered net freedom and an unqualified end to
censorship, filtering and regulation on the internet. As petitioner’s counsel I
would like to re-state for the people the case we have made before the
Honourable High Court in simple English language. It has been necessitated by a
malicious defamatory campaign that has been undertaken by certain quarters
within the power pro-censorship lobby in our government. </div>
<a name='more'></a><br />
<div class="MsoNormal" style="text-align: justify;">
The ostensible argument favouring
the YouTube ban has been that as an Islamic Republic, the state has certain
obligations towards Islam. Let us concede this view i.e. obligations towards
Islam. After all Pakistan is a federal republic to be known as an Islamic Republic.
The preamble to the Constitution which appears against as Article 2-A vests
sovereignty over the universe in Allah, Article 2 makes Islam the state
religion and the Constitution contains in it the repugnancy clause i.e. the
parliament shall not make any law that is repugnant to Quran and Sunnah. Could
this mean then that regulating what we see or do not see is a policy decision
for the Islamic Republic? From a constitutional angle, the answer has to be no,
despite state’s obligations towards Islam. </div>
<div class="MsoNormal" style="text-align: justify;">
Consider: Pakistan’s Constitution
also guarantees the right to life, right to fair trial, right to inviolable
privacy, freedom of expression, freedom of association, access to information
and freedom of religion. For freedom of expression the provisos contain a
reference to “glory of Islam”, “morality” and “law and order” as possible
reasonable restrictions through law. Let us first take the issue of the glory
of Islam. The onus is on the
pro-censorship section within our government to prove legally that their
actions indeed serve the glory of Islam.
How does depriving 30 million Pakistanis, mostly Muslims, of access to
YouTube serve this cause? It undermines it. Presumably a significant section of
these Muslims would be in a position to answer some of the scurrilous abuse
against Islam, had YouTube not been banned. Therefore the glory of Islam
argument makes no sense when you begin to dissect it. </div>
<div class="MsoNormal" style="text-align: justify;">
Law and order argument would hold
more water than glory of Islam in this case. The argument here is that if YouTube
is re-opened, it will provoke unthinking mobs to burn things and kill people.
Again this may or may not be the case.
The responsibility for a reasoned national discourse is that of the
political leadership. The Government can and should announce that it would
prepare a scholarly documentary to counter the patent untruths of the offending
materials on YouTube. There are many steps that the Government can take, short
of censorship, to both counter misrepresentation of Islam and ameliorate the
feelings of millions of Muslims in the country who have been outraged as a
result of one video. Blanket ban on a website as important and useful like
YouTube cannot be justified given Pakistan’s obligations under Article 19 of
the International Covenant on Civil and Political Rights (ICCPR). My colleague,
Nani Jansen, the General Counsel for Media Legal Defence Initiative in London,
put it succinctly when she wrote (with reference to the YouTube Ban) that under
sub-clause 3 of the aforesaid Article 19 the right to freedom of expression may
be restricted only when the following three conditions have been met:</div>
<div class="MsoNormal" style="text-align: justify;">
a) The restriction must pursue a
legitimate aim, such as protecting public order or the rights of others;</div>
<div class="MsoNormal" style="text-align: justify;">
b) The restriction must be
provided for by law; and</div>
<div class="MsoNormal" style="text-align: justify;">
c) The restriction must be
necessary.</div>
<div class="MsoNormal" style="text-align: justify;">
The unconstitutional and illegal
ban on YouTube is an arbitrary exercise of executive authority through a
shadowy body called the Inter Ministerial Committee that oversees such internet
related banning. There is no legislative sanction for this block nor should
there be one because simply put there is nothing in Islamic law or
jurisprudence that requires regulation of what a person can or cannot see. It is a question of personal freedom and not
public conduct. Simply put “seeing evil” alone has never been offence under
Islamic law. Therefore as much as it may be distasteful, what a person sees or
doesn’t see on his computer screen cannot under any circumstances be punishable
by law. Let us look at it from another
angle – if the crime is publishing a blasphemous video on YouTube, is the state
not concealing the crime by filtering it? </div>
<div class="MsoNormal" style="text-align: justify;">
The bottom line is that all
internet censorship is irrational, counterproductive and predatory. This is our
case before the Lahore High Court- nothing more, nothing less. </div>
<br />
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
</div>
Yasser Latif Hamdani, Barrister http://www.blogger.com/profile/07894003154407546758noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-61430179057559271392013-08-13T23:54:00.000-07:002013-08-13T23:54:12.779-07:00abdication<div dir="ltr" style="text-align: left;" trbidi="on">
The act of giving up an office, a power, the authority to act, or a right or trust.</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-85778233519342802372013-08-07T06:58:00.001-07:002013-08-07T06:58:27.383-07:00AcknowledgeTo acknowledge is to own or admit knowledge of ; to recognize the rights, authority or status.<div><br></div>Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-56800961582956608182013-08-07T06:44:00.001-07:002013-08-07T06:44:46.050-07:00Accumulative LegacyA legacy given in addition to another given by the same instrument or by another instrument.Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-40941672843530150292013-08-07T06:39:00.001-07:002013-08-07T06:39:58.011-07:00AccuserA complaint.Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-16585064949455036242013-07-02T23:28:00.000-07:002013-07-02T23:28:41.392-07:00Federalism<div dir="ltr" style="text-align: left;" trbidi="on">
A system of government , such as that in the United States, by which sovereign power is divided between the national and state governments.</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-39549696575976019992013-07-01T21:31:00.000-07:002013-07-01T21:32:52.601-07:00Exequatur<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div>
A certificate issued by the foreign department of a country to a consul or commercial agent of another country.It recognizes the official character of the consul or agent and authorizes him to fulfill his duties.</div>
</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-82678717734573229332013-07-01T05:39:00.000-07:002013-07-01T05:39:02.421-07:00Draft<div dir="ltr" style="text-align: left;" trbidi="on">
An order for the payment of money drawn by one person on another; a common term for a bill of exchange. Broadly speaking, the term " Draft " includes a bank cashier's check.</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-72266063187458835212013-07-01T05:16:00.001-07:002013-07-01T05:16:49.923-07:00Draconian law<div dir="ltr" style="text-align: left;" trbidi="on">
Especially severe law. The term has its origin in a harsh code of laws prepared by Draco, the celebrated lawgiver of Athens in the seventh century B.C.</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-25322239123777161432013-07-01T04:58:00.001-07:002013-07-01T04:58:40.171-07:00Down payment<div dir="ltr" style="text-align: left;" trbidi="on">
Money that must be paid initially when an item is bought on credit and the balance is to be paid later in installments.<br />
<br /></div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-50277823090802739422013-06-21T03:27:00.000-07:002013-06-21T03:27:32.226-07:00Class Action Lawsuit against Toyota Corolla. <div dir="ltr" style="text-align: left;" trbidi="on">
<br />
Toyota Indus Motors Pakistan has been accused of collusive pricing and destroying competition. Consequently if you bought a Toyota Corolla in Pakistan over the last 2 years, you may have a cause of action.<br />
<br />
If you or someone you know has bought a Toyota Corolla recently, you may be eligible for compensation.<br />
<br />
Please contact us for details.<br />
<br />
YLH&Co / Hamdani & Rana </div>
Anonymoushttp://www.blogger.com/profile/03915576264012524556noreply@blogger.com0tag:blogger.com,1999:blog-6332474233028702074.post-64674210450661468592013-06-21T00:56:00.000-07:002013-06-21T00:56:15.317-07:00aforesaid<div dir="ltr" style="text-align: left;" trbidi="on">
Before, preceding, or already mentioned.</div>
Anonymoushttp://www.blogger.com/profile/11288134163441271657noreply@blogger.com0