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Critical Issues in International Distribution

Critical Issues in International Distribution. International Distribution Institute European Company Lawyers Association Union Internationale des Avocats . Termination Indemnity to distributors, “Illicit Commissions”, Revision of EC Competition Rules June 12 and 13, 2009, Barcelona .

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Critical Issues in International Distribution

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  1. Critical Issues in International Distribution International Distribution Institute European Company Lawyers Association Union Internationale des Avocats

  2. Termination Indemnity to distributors, “Illicit Commissions”, Revision of EC Competition Rules June 12 and 13, 2009, Barcelona

  3. International and domestic rules aiming at combating bribery, with particular reference to contracts with intermediaries Francois Vincke Former General Counsel and Secretary General PetroFina Member of the Brussels Bar Chairman ICC Anti-Corruption Commission

  4. Looking back at a recent past.- Bribery as another feature of international trade ( Prof. Bruno Oppetit) A turning point: Foreign Corrupt Practices Act (FCPA) unanimously voted in Congress in 1997: criminalization of bribery of foreign public officials, applicable also to foreign corporations listed in NY It is heavy to carry the “monopoly of virtue”: trying to enlist the United Nations for internationalizing FCPA Europeans back to “business as usual”

  5. A.- Review of existing instruments.- An impressive list.-

  6. 1- A wind of change.- Beginning of the nineties: Corporate Governance: accountability transparency Corporate Social Responsibility (CSR): profitability but also compatibility with societal objectives Business Ethics (OECD Principles of Corporate Governance): the Board to act in accordance with high ethical standards

  7. 2.- Complex EU instruments • The EU fights corruption in 3 ways: • Convention on the Protection of the European Communities’ Financial Interests of June 26, 1995 and its Protocols) • Convention on the fight against Corruption involving Officials of the European Communities or Officials of Member States of the European Union (May 26, 1997) • Framework Decision on combating corruption in the private sector of July 22, 2003 • The EU instruments address active and passive, directly or through an intermediary

  8. 3.- OAS.- Organization of American States: approval in Caracas on March 29, 1996 of the Inter-American Convention against Corruption. Entry into force on March 6, 1997 and ratification by 33 States. Creation on June 4, 2001 of a control system: MESICIC The Convention addresses active and passive, either directly or indirectly Most practitioners and scholars comment that this Convention is only “moderately” applied

  9. 4.- Council of Europe (I).- • The Committee of the Council of Ministers adopted on November 6, 1997 the Twenty Guiding Principles for the Fight against Corruption, elaborated by the Multidisciplinary Group on Corruption • These form a (quite dry) list of agenda items for further action. They are not mandatory but have a wide spectrum • They announce the taking of a number of other steps

  10. 5.- OECD.- The first strong international anti-corruption instrument came from an unexpected source: the OECD, which - as economic organization - is not used to practice criminal law After three Recommendations (of 1994, 1996 and 1997), the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was adopted on December 17, 1997. It entered into force on February 15, 1999 and was ratified by 38 States

  11. 6.- An effective convention.- The OECD Convention is only concerned with active, international (direct and through intermediaries) bribery: the FCPA model OECD has an effective monitoring system, with a Phase III starting in 2010. The whole follow-up is managed by a Working Group Convention based on “functional equivalence” Questions: why only the offering side, why not private-to-private bribery? Difficult to envisage changes in the document(s)

  12. 7.- GRECO.- • In May 1998, the Ministerial Committee of the Council of Europe creates the Groupe d’états contre la corruption which now consists of 46 States • GRECO will function as the guardian of the following texts: (i) the Twenty Guiding Principles, (ii) the Criminal Convention (iii) and its Additional Protocol, (iv) the Civil Convention, (v) the Model Code of Conduct for Public Officials and (vi) the Common Rules against Corruption in the Funding of Political Parties and Electoral Campaigns

  13. 8.- Council of Europe (II).- • The Criminal Law Convention on Corruption is opened for signature on January 27, 1999 • It addresses a large number of offences: (i) national and international corruption, (ii) public and private, (iii) foreign and international as well as (iv) trading in influence • This goes for direct as well as indirect corruption

  14. 9.- Council of Europe (III).- • The Civil Law Convention on Corruption opened for signatureon November 4, 1999 • This Convention obliges the signatory States to provide for effective remedies for persons who have suffered as a result of acts of corruption to enable them to defend their rights and interests, including the possibility of obtaining compensation for damage

  15. 10.- United Nations (I).- • The Convention against Transnational Organized Crime, or Palermo Convention, was adopted on November 15, 2000 • It contains provisions criminalizing participation in an organized criminal group, the laundering of proceeds of crime and corruption • It addresses active and passive public corruption, directly and indirectly

  16. 11.- United Nations (II).- • Finally, there is the United Nations Convention against Corruption (UNCAC), which was signed in Merida on December 9, 2003, entered into force on December 14, 2005 and was ratified by 136 States • This is the global anti-corruption Convention, as it • covers all corrupt practices (direct and indirect), and • it potentially applies to all countries around the world

  17. 12.- A major challenge.- • There is however a major drawback: even if the Conference of States Parties has decided in principle that there should be an “implementation review”, no decision to that end has yet been taken • In May, ICC – together with other anti-corruption organizations – launched a CEO letter destined to make the hesitant States aware that business wants to go for a genuine and thorough implementation of UNCAC

  18. 13.- First conclusion.- • Many (too many?) legal instruments • All prohibit bribing directly or through intermediaries • Not directly applicable texts • Not all are followed up in the same rigorous way • What does business expect next?

  19. B.- ICC’s role.- A persistent pioneer.-

  20. 1.- The first step.- • In 1977, ICC was the first international organization to condemn in no uncertain terms all forms of corruption • Why? • Belief in the level playing field, where each player can play freely his game in accordance with his talents • Belief in unfettered competition • Resistance to solicitation/extortion • Rules and Recommendations already in 1977

  21. 2.- With renewed energy.- • In 1995, ICC rewrites its Rules and cooperates with all international anti-corruption organizations • ICC urges the companies to have • a code of conduct • a fully fledged integrity program (the Seven Steps) • an organization which can ensure a sustainable anti-corruption compliance • an essential feature of this organization will be its capability to chose, to control and to remunerate its intermediaries

  22. 3.- New steps.- • Anti-Corruption Manual: Fighting Corruption • Guidelines on Whistle blowing • Ethics clause (under review) • Project RESIST • Guidelines on Intermediaries in the making

  23. 4.- ICC’s role.- • Making soft law: • Creating those norms, which will help companies (large and small) to fit better in the new ethical context • Education: • Creating a better awareness in and outside the business world about ethical behaviour • Advocacy : • Trying to obtain better appreciation by the authorities of the (huge) efforts made by the companies • Reform: • Obtain changes of the instruments to make them better adapted to economic reality

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