INSIDE THIS ISSUE:
1) COVID-19 and the Future of International Employment Law by Martin Luff, Counsel, Vinson & Elkins LLP (London); COVID-19; 2) Applicability of Force Majeure Clauses under Mexican Law b
y Antonio Franck, Partner, Cacheaux, Cavazos & Newton (CCN); 3) ILS Sponsors Two CLEs at Texas Bar Annual Meeting; 4) Annual Institute Update; 5) Human Rights Essay Contest Deadline Extended.
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International Law Section 2020: News, Events & More
| APRIL 2020
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Flexibility vs. worker protection
Some of the divergent approaches between the US and Europe reflect the long-established differences in their respective views on worker rights. While the US is comparatively low on regulation (with “at-will” employment a cornerstone principle in employment law), Europe has a long recognized extensive worker rights that make it considerably more difficult (and expensive) to terminate employees and implement RIFs. As an example, the US WARN Act (and the analogous state and local laws) is a rare exception to pure at-will employment, but provides only for advance notice of layoff. By contrast, European laws relating to RIFs include not only notice requirements, but also rules concerning consultation with employees, selection criteria and minimum statutory severance payments.
We are in uncharted waters and this article does not seek to argue that one or the other approach is “better” or more effective. It might be that the comparative flexibility of the US system will allow companies to adapt by slashing payroll costs quickly and efficiently so that businesses survive and are then able to rehire when the economy springs back into life, with the US federal government providing direct payments to employees to help to keep them afloat in the meantime and creating incentives for businesses to retain their staff through loan programs. But on the other hand, the more rigid European approach might reduce the overall rate of RIFs and help lessen the pain for employees, who in turn are consumers and whose spending will be critical to helping the economy spring back into life. The risk in Europe is that the more formalized employment processes and added regulatory burden and costs will reduce the ability to quickly adapt. Only time will tell and, with so many factors in play, it will be up to economists and public policy experts to look back and figure out what lessons can be learned. But for employment lawyers and HR professionals, the fundamental differences in policy are likely to accelerate the divergences in legal principles reflected in new laws, even if the overall objectives to save lives, jobs and the economy are broadly the same.
There are still many issues that are yet to be addressed in all of the hastily-passed laws, some of which are urgent unanswered questions while others will become more relevant over the course of the next few months. For example, where European countries are focused on protecting employees, what happens to all of those individuals who are deemed self-employed and do not enjoy the same statutory protections, such as those working in the “gig economy”? And how will employment laws adapt to varying local responses under the US federal system, such as where a governor or mayor orders a lockdown that is inconsistent with federal or other guidance, a challenge that many other jurisdictions will not have to face under unitary systems of government? Developments in employment laws across the globe will need to account for these differences in legal systems and cultural norms.
A new age of homeworking
With those businesses that are capable of accommodating homeworking now doing so, it remains to be seen whether this will become a more widely-adopted practice even after the pandemic passes. Multinational “white collar” businesses are already accustomed to colleagues working together across different locations and time zones, with the same practices of video conferences and other online collaboration tools now being adopted at a more local level. But these developments would still represent a seismic shift in the way modern workforces operate, and no doubt researchers and consultants will continue to look at the effect on productivity, collaboration, efficiency and data security, amongst other things.
From an employment laws perspective, existing legislation and regulations around health and safety and employee privacy will likely need to expand and adapt to accommodate a change in working arrangements. Privacy, in particular, is another area where we see a significant difference between the US and Europe, with the latter having recently stepped up legal protections through the implementation of the GDPR. With employees working from home, how will an employer effectively monitor the working time and attentiveness of its employees? Similarly, for those attending an office, can an employer require employees to undertake coronavirus testing or disclose test results before being allowed back, or take their temperatures at the door before they enter? The relatively low regulatory environment in the US may allow it to adapt more quickly to this new world, but it also runs the risk of employers overstepping the bounds of what is reasonable and necessary, leading to the slippery slope towards big brother-style employee surveillance.
An uncertain future
As uncertainty swirls around, it’s a case of taking things one day at a time. And that principle holds true for anyone considering the employment law implications of the current situation. What will be interesting (and what people working in this area will need to keep a close eye on) is how different legal frameworks around the world will adapt to these challenges and how certain laws and policies are likely to diverge further over the coming months precisely because of the historical and cultural differences that already exist.
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Martin Luff's principal area of practice is U.S., English, and international labor and employment law. He has extensive experience dealing with employment aspects of domestic and international business transactions, including mergers, acquisitions, and joint ventures. He also counsels clients on day-to-day HR and personnel issues, including employment and consultancy agreements, international employee transfers and expatriate arrangements, disciplinary and performance issues, senior executive terminations, and employment disputes. In addition, Martin advises clients on non-competition and non-solicitation covenants, redundancies and group layoffs, incentive arrangements and employment issues arising out of federal government contracts, record retention policies, and international data privacy and transfer laws. After six years in V&E’s Houston office, Martin is now based in London. He is licensed as an attorney in Texas and as a Solicitor of the Senior Courts of England and Wales.
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COVID-19 and Applicability of Force Majeure Clauses under Mexican Law
By Antonio Franck, Partner, Cacheaux, Cavazos & Newton (CCN)
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On March 11, 2020, the World Health Organization (“WHO”) declared the spread of the virus known scientifically as COVID-19 as a pandemic, which resulted in numerous governments taking a series of extraordinary measures that have affected the movement of people and goods. In many cases, these restrictions and difficulties may cause a breach of contract or otherwise complicate a contracting party’s ability to perform and/or comply with its contractual obligations. It is in these cases that force majeure clauses can come into play. Below is a general description of potential legal consequences of this type of case in contractual relationships governed by Mexican law.
The declaration of COVID-19 as a pandemic triggered questions regarding potential breaches of contract and the effects of such breaches, including the question of whether the COVID-19 pandemic can legally be considered an event of force majeure or an “act of God”, which could exempt the parties from performing and bearing the consequences of breaching their contractual obligations (e.g., payment of conventional penalties for delays in deliveries of goods, among others). In a case in which the pandemic results in the contract becoming more onerous for only one of the parties, the affected party may request the contract to be amended in order to restore contractual balance, arguing that the general terms have changed radically, a legal doctrine known as the "theory of unpredictability".
The answer to the question of whether COVID-19 can be legally considered as an event of force majeure or an Act of God under Mexican law will depend on the following: i) whether the situation makes it absolutely and directly impossible to perform required obligations; ii) whether at the time of entering into such obligations, it was impossible to foresee the circumstance; and iii) whether the damages were clearly caused by matters beyond the parties’ control.
Based on the above, one can preliminarily conclude that Mexican law would not excuse performance and allow for a contract to be breached or terminated if the COVID-19 impacts only complicate performance of a contract, or if necessary measures are not or have not been taken to prevent a breach. A force majeure defense under Mexican law is even less available if a party knowingly allows the circumstances of the pandemic to affect its ability to perform its obligations.
Therefore, we recommend taking the following preventive measures to mitigate the impact of conditions and risks arising as a result of COVID-19:
1) Review each contract, agreement, purchase order, and any executed document to determine whether such contain any provisions limiting liability or exempting the parties from liability in the case of an event of force majeure or an Act of God, and with the intention of complying with the terms stipulated in the contract.
2) If force majeure provisions do not exist in the agreement or respective document, give immediate written notice to the other party of the occurrence of the extraordinary and insurmountable event that seriously affects the performance of contractual obligations. If one asserts a force majeure or unpredictability defense with respect to civil contracts, it is important to note that such right must be invoked within a certain time period (for example, in Mexico City an extraordinary event must be notified or alleged within 30 days of the event). In either case, it is generally recommendable for the party at risk of breaching the agreement to approach the other party to discuss the matter and potentially reach an agreement. These communications should be documented in writing in case they are needed later to evidence the parties’ communications.
3) All businesses and parties should take measures to mitigate risks and potential losses and undertake planning on how to handle a prolonged COVID-19 pandemic.
4) It is essential to review the terms and the extent of coverage under current insurance policies in order to analyze coverage in the event of a claim.
5) Finally, businesses should try to limit breaches of contractual obligations to as little as possible, as it may become difficult later to prove that a breach was directly caused by the virus. Therefore, we recommended that all kinds of evidence such as, documents, regulations, recommendations, resolutions, and publications from federal, state and local authorities from the affected places and/or countries, be saved and archived in case such are needed to show a justifiable excuse for the breach of an obligation caused by the COVID-19 pandemic.
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Antonio Franck is a partner at Cacheaux, Cavazos & Newton (CCN), where he has worked since 2005. His practice is centered on advising and representing U.S. companies and investors doing Business in Mexico, particularly those involved in general corporate and business matters (such as mergers, spin-offs, acquisitions and financing transactions) as well as energy matters and topics such as foreign investment and international law.
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Texas Bar Annual Meeting | June 25-26, 2020
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ILS Sponsors Two CLEs on Thursday, June 25, 2020
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The International Law Section will host two CLEs on
Thursday, June 25th as part of the State Bar of Texas Annual Meeting being held at the
Hilton Anatole in Dallas.
The topics and times are below.
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Program Agenda | MCLE Credit: 2 Hours of Ethics
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The State Bar of Texas Annual Meeting is fast approaching. The International Law Section will host two CLEs on
Thursday, June 25th. The topics and times are below.
Bilateral Investment Uncertainty: NAFTA vs. USMCA (8:15 a.m. – 9:45 a.m. | 1 Hour Ethics)
This session addresses key bilateral investment considerations given the uncertainty of the surrounding NAFTA and the United States-Mexico-Canada Trade Agreement (“USMCA”). Specifically, this session will address some key distinctions between the NAFTA and the USMCA and considerations for lawyers advising clients engaged in cross-border transactions.
Panelists:
- Doug McCullough, Partner, McCullough & Sudan, PLLC (Houston)
- Bill Watson, Associate Fellow, R Street Institute (Fort Worth)
- Benjamin Torres-Barrón, Partner, Baker & McKenzie Abogados, S.C. (Mexico City)
- Manuel Padrón-Castillo , Partner, Baker & McKenzie Abogados, S.C. (Juárez, Mexico)
Managing Cross-border Investment Disputes (10:00 a.m. – 11:30 a.m. | 1 Hour Ethics)
This session focuses on the most effective means of resolving disputes concerning outbound and inbound investments between businesses operating in the United States and Canada. Panelists will address key issues such cross-border discovery, litigation procedures in foreign courts, the benefits and drawbacks of alternative dispute resolution, and other considerations to protect and enforce your client’s investments and business operations.
Panelists:
- Juan Alcala, Partner, Holland & Knight, LLP (Austin)
- Charles Conrad, Partner, Pillsbury, Winthrop, Shaw & Pittman, LLP (Houston)
- Bob Sills, Pillsbury, Partner, Winthrop, Shaw & Pittman, LLP (New York)
- Gemma Galeoto, Associate, Holland & Knight, LLP (Dallas)
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Update: 32nd Annual Institute | Postponed to November 2020
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Keynote Speaker:
Randy Bagwell, U.S. Army Colonel (Ret) JD,LL.M. Senior Director, International Services, U.S. Programs,
American Red Cross
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The State Bar of Texas
International Law Section Presents
32nd Annual Institute
“At the Intersection of the Technology Revolution &
Human Rights”
Postponed to November 2020 (TBA)
SMU Campus, Martha Proctor Mack Ballroom (Umphrey Lee Center), 3300 Dyer Street, Suite 101, Dallas, TX 75205
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1.5 days of panels on these topics: Data Privacy, Sustainability in the 21st Century, Blockchain and Cryptocurrency, Brexit, and coverage of topics relevant in the Energy and Natural Resources, Manufacturing and Healthcare industries.
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The Annual Institute is being presented in partnership with
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Registration Information
8 Hours of MCLE Credit including Ethics - Approval Pending
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Price includes 1.5 days of CLE, continental breakfasts, lunch on day one and closing reception.
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Early Bird Pricing Before March 15, 2020
Member ($200)
Non-Member ($300)
Students ($25)
Council & Action Committee Members ($175)
Government Agencies, Judges, New Attorneys (less than 2 years) ($100)
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Pricing After March 15, 2020
Member ($275)
Non-Member ($400)
Students ($25)
Council & Action Committee Members ($250)
Government Agencies, Judges, New Attorneys (less than 2 years) ($125)
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Annual Institute Program Agenda
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Day One Panels:
- Data Privacy
- Sustainability in the 21st Century
- Luncheon with Keynote speaker: Randy Bagwell, U.S. Army Colonel (Ret) JD, LL.M., Senior Director, International Services, U.S. Programs American Red Cross, Washington DC
- Blockchain & Cryptocurrency
- Is AI Taking Over Our (Lawyers’) Jobs?
- Brexit
Day Two Panels:
- Feature presentation by the State Bar of Texas International Law Section's International Human Rights Committee
- Energy & Natural Resources
- Manufacturing
- Healthcare
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Human Rights Essay Contest - Deadline Extended
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The State Bar of Texas International Law Section has extended the deadline for its annual Human Rights Essay Contest to
May 15, 2020. The competition is open to students enrolled in any Texas law school or Texas residents attending other law schools. Topic is any aspect of international human rights law. No minimum word count required.
First Prize: $1,500 plus publication of essay in our International Newsletter. The winner will be recognized at a future ILS event. For more information, contact Cristina Lunders at
cristinakl@yahoo.com.
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Sponsorship Levels:
$7,500 Worldwide Sponsor
$5,000 Continent Sponsor
$2,500 Country Sponsor
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Become an Annual Sponsor!
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The International Law Section invites you, your company or firm to sponsor the Section’s activities and be recognized for your support at numerous ILS events and publications.
Download
brochure
which explains the various levels of support and benefits available. Only through such support will the ILS be able to provide several CLE presentations, a two-day Annual Institute, a quarterly International Newsletter, and opportunities to travel to a foreign country for CLE and cultural exchange.
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ILS International Newsletter
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In case you missed it, our Winter 2020 Issue is ready for you to download! Go
here
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