Introduction
One year ago, we wrote that the large business bankruptcy landscape in 2019 was generally shaped by economic, market, and leverage factors, with notable exceptions for disastrous wildfires, liabilities arising from the opioid crisis, price-fixing fallout, and corporate restructuring shenanigans.
The year 2020 was a different story altogether. The headline was COVID-19.
The pandemic may not have been responsible for every reversal of corporate fortune in 2020, but it weighed heavily on the scale, particularly for companies in the energy, retail, restaurant, entertainment, health care, travel, and hospitality industries. Mandatory shutdowns beginning in the spring of 2020 wreaked havoc on the bottom lines of thousands of companies confronting a precipitous drop in demand for their products and services. Some were able to weather the worst of the storm with packages of government assistance or by adapting their business models to meet the unique challenges of the pandemi
Introduction
This article provides a high-level overview of some of the common business models used by local entities that are engaged in the distribution, sale and marketing of their group s products and analyses the potential transfer pricing ramifications thereof.
The transfer pricing analysis included in this article is predominantly based on Circular 11/2018 (Determination of the appropriate transfer pricing method for activity related to distribution, marketing and sales of a multinational group within the local market),(1) published by the Israeli Tax Authority (ITA). Circular 11/2018 implements the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017 (OECD guidelines).
A commonly negotiated provision in M&A transactions is the clause that provides for the buyer s indemnity right, which, among other things, applies in relation to the liabilities of the target whose existence is based on a past event prior to the closing of the deal. This clause aims to limit the liability of the parties involved in the transaction for losses relating to the company or the asset traded and can be structured in several ways.
Facts
A relevant decision by the Sao Paulo Court of Justice highlighted the importance of expressly regulating this type of clause in M&A contracts. In the case, a contract for the purchase and sale of shares representing 26.05% of a limited company s capital was entered into. Pursuant to this agreement, the buyers would pay part of the price in cash and the other part by paying off the seller s debts to the company and the other partners.
Although the principles which constitute conventional wisdom are intended to be universal and are theoretically esteemed for their acceptability, international arbitration practice shows that despite a general consensus as to the formulation of certain principles, the perception of the way in which they should apply is likely to be influenced by the background of the party representatives or arbitrators.(1)
Legal backgrounds
The legal background of an arbitrator or counsel often influences their perception of the best way in which to conduct arbitral proceedings and apply the substantive law.
According to Pierre Tercier, justice is not dispensed in the same way globally. Thus, the preferred way of applying the law in one legal system may be inconceivable in another. This implies that when faced with the inherent diverse backgrounds of parties and their representatives in international arbitration, arbitrators should be ready to understand and apply rules with which they are not n
In a long-awaited court ruling, the European Court of Justice (ECJ) confirmed that the Belgian rules on dock work, obliging companies to have only recognised dockers carry out dock work in ports, do not necessarily constitute a violation of the free movement of workers, the freedom of establishment and the freedom to provide services. However, the ECJ rejected several parts of the recognition procedure of such dockers. Legislative changes are now inevitable.