TABLE of CONTENTS ARTICLES Politics and Legal Regulation in The
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\\jciprod01\productn\M\MIB\21-1\toc211.txt unknown Seq: 1 1-APR-13 14:31 TABLE OF CONTENTS ARTICLES Politics and Legal Regulation in the International Business Environment: An FDI Case Study of Alstom, S.A., in Israel JEFFREY A. VAN DETTA ..................................... 1 “Package Deal”: The Curious Relationship Between Fiduciary Duties and the Implied Covenant of Good Faith and Fair Dealing in Delaware Limited Liability Companies MONICA E. WHITE ......................................... 111 “Comply Or Explain”—A Flexible Mechanism to Countervail Behavioral Biases in M&A Transactions GERRIT M. BECKHAUS ..................................... 183 \\jciprod01\productn\M\MIB\21-1\ms211.txt unknown Seq: 2 1-APR-13 14:31 The UNIVERSITY OF MIAMI BUSINESS LAW REVIEW, (the “Review”) publishes submitted articles and student notes and com- ments on legal issues arising in any field related to business. These areas include, but are not limited to, corporation, tax, antitrust, banking, securities regulation, bankruptcy, environmental, sports, insurance, and labor law. Authors seeking publication can submit their articles electronically in Microsoft Word UNIVERSITY OF MIAMI format to the following email SCHOOL OF LAW address: [email protected] 1311 MILLER DR. .edu or through the ExpressO ROOM D334 Submission Service. Alternatively, CORAL GABLES, FLA. 33124-8087 authors may submit printed manu- scripts to the address listed herein. Footnotes should conform to the (305) 284-6885 19th edition of The Bluebook: A Uniform System to Citation, published by the Harvard Law Review Association. THE REVIEW, formerly the Business Law Journal, (ISSN 1047- 2819) is published two times annu- Publication Agreement ally by the students of the Univers- No. 40641054 ity of Miami School of Law. Available on LEXIS-NEXIS and WESTLAW databases. Subscription Price is $40 per annum. Subscriptions are automati- cally renewed in the Fall, unless prior notice of cancellation is received. THE REVIEW selects members on the basis of academic performance and a student writing competition. THE REVIEW does not discriminate Cite as: U. MIAMI BUS. L. REV. on the basis of age, color, handicap, national origin, race, religion, sex, or sexual orientation. \\jciprod01\productn\M\MIB\21-1\boe211.txt unknown Seq: 3 1-APR-13 14:31 VOLUME XXI SPRING 2013 NUMBER 1 EDITOR-IN-CHIEF MICHAEL DEL SONTRO MANAGING EDITOR EXECUTIVE EDITOR RESEARCH & WRITING JANA HOCHE MICHAEL GREENFIELD EDITOR JULIE MORGAN SENIOR ARTICLES &EXECUTIVE EDITOR RESEARCH & WRITING COMMENTS EDITOR VICTOR VELARDE EDITOR SCOTT ALLBRIGHT AVERIL ANDREWS ALUMNI EDITOR SYMPOSIUM EDITOR ANDREW FUSCO JACKIE ADER ARTICLES & COMMENTS ARTICLES & COMMENTS ARTICLES & COMMENTS EDITOR EDITOR EDITOR TAMARA BARNES MICHAEL BONAN SAM KUGBEI ARTICLES & COMMENTS ARTICLES & COMMENTS ARTICLES & COMMENTS EDITOR EDITOR EDITOR MICHAEL LARMOYEUX JOSH LEVINE GREG SEIGEL ARTICLES & COMMENTS EDITOR LAUREN SPAHN MEMBERS JUSTIN AIELLO RYAN GRUBICH DANIEL GWERTZMAN IAN DEMELLO JENNA GUSHUE ALEXIS RIORDAN CANDIDATES PAMELA ADEWOYIN ERIC FREEDMAN JOSEPH MATTHEWS AARON AHLZADEH ALEXI HAAS JOEL MCNABNEY RYAN APPEL ALEXANDRA HAYES DAVID MILLER JULIE BLACKMORE MATTHEW HIER LAUREN LEE PETTIETTE ALLISON BREDE BRETT HOLLAND MEGAN RALSTIN PHILIP ZAK COLANGELO ALISHA KAMADIA AMANDA RUGGIERI JONAS CULLEMARK ERIC KEGLEY RYAN TARNOW AARON DMISZEWICKI ETHAN KNOTT JOSEPH WASSERKRUG BLAZE DOUGLAS LEO LICHTMAN RACHAEL WILLIAMS \\jciprod01\productn\M\MIB\21-1\MIB103.txt unknown Seq: 1 21-MAR-13 11:59 POLITICS AND LEGAL REGULATION IN THE INTERNATIONAL BUSINESS ENVIRONMENT: AN FDI CASE STUDY OF ALSTOM, S.A., IN ISRAEL JEFFREY A. VAN DETTA1 I. INTRODUCTION ....................................... 4 R II. STAGE ONE: THE LEGAL AND BUSINESS ENVIRONMENT .11 R A. The State of Israel and its Environs .................... 16 R B. The Business Proposal: Alstom’s Joint Venture with Energix to Expand the Golan Heights Wind Farm .............. 20 R C. A Proposed Strategic Plan: Why Expanding the Golan Wind Farm in Joint Venture with Energix Optimizes Alstom’s Strategic Advantages in Opening a New Market for its Products and Services in the Middle East .......... 25 R 1. Israel’s Need for Electrical Power Currently Exceeds Supplies and Will Continue to Grow .............. 25 R 2. Electricity Generated by Wind Turbines is a Sustainable Energy Source That has Great Room for Growth in Israel and Increases Israel’s Energy Independence .... 29 R 3. Israeli Government Support for Wind-Generated Electrical Generation is Growing, and Israel’s FTA Agreement with the U.S. Will Permit Energix to Import Alstom’s American-Made Wind Turbines Duty-Free .............. 31 R 4. The Recommendation from the Business Environment Perspective.......................................... 35 R III. STAGE TWO—CRITICAL EVALUATION OF LEGAL ISSUES: NOT ONLY THOSE UNDER THE HOST STATE’S REGULATORY ENVIRONMENT, BUT ALSO THOSE UNDER THE FDI INVESTOR’S HOME STATE’S LAWS AND THE LAWS OF THIRD-STATES TO WHICH THE FDI INVESTOR HAS SUBSTANTIAL CONNECTIONS ...................... 36 R A. The Role of Treaties in the IBT Decision ............... 36 R B. The Role in FDI Decisions of Litigation Risk in Municipal Courts—With a Particular Emphasis on Corporate Social Responsibility ....................................... 43 R 1. Alstom’s Vulnerability to Suits at Home Over its FDI 1 Professor of Law & Associate Dean for Scholarship, Atlanta’s John Marshall Law School (AJMLS), Atlanta, Georgia. Professor Van Detta teaches courses in both International Business Transactions and International Civil Litigation. He dedicates this article to the memory of James F. Van Detta, Jr. (1922-2012)— the author’s father and his greatest teacher. 1 \\jciprod01\productn\M\MIB\21-1\MIB103.txt unknown Seq: 2 21-MAR-13 11:59 2 UNIVERSITY OF MIAMI BUSINESS LAW REVIEW [Vol. 21:1 in Israel: Not an American in Paris, but a Nanterrean in Nanterre .................................... 44 R 2. Alstom’s Vulnerability in Francophone Courts over FDI in Israel........................................ 47 R 3. A Frenchman in New York, not an American in Paris: Alstom’s Vulnerability to International Civil Litigation in American Courts ............................. 55 R C. Legal Aspects of the Political Risk Inherent in Alstom’s Choice of a Golan Heights FDI ....................... 88 R 1. Syria’s Claims to the Golan Heights ............... 88 R 2. The Impact of an Israel-Iran Armed Conflict on FDI in Israel—And the Role of Political Risk Insurance ... 92 R IV. SUMMATION .......................................... 106 R \\jciprod01\productn\M\MIB\21-1\MIB103.txt unknown Seq: 3 21-MAR-13 11:59 2013] REGULATION IN INT’L BUSINESS ENVIRONMENT 3 In Memoriam JAMES F. VAN DETTA, JR. April 10, 1922 — February 21, 2012 Business Teacher 1948-1987 “‘. annuus exactis completur mensibus orbis, ex quo reliquias divinique ossa parentis condidimus terra maestasque sacravimus aras. Iamque dies, nisi fallor, adest, quem semper acerbum, semper honoratum . habebo.’” (Aeneid, Bk. V, ll. 46-50) \\jciprod01\productn\M\MIB\21-1\MIB103.txt unknown Seq: 4 21-MAR-13 11:59 4 UNIVERSITY OF MIAMI BUSINESS LAW REVIEW [Vol. 21:1 I. INTRODUCTION With the economic instability roiling through the European Union (EU),2 companies located in the Euro Zone will be challenged truly to “think outside of the box” in structuring international growth from a now suddenly unstable home base.3 There is evidence that looking for investment opportunities outside the Euro Zone will continue to be a very propitious source of attractive economic returns.4 In turn, we who teach courses in International Business Transactions (IBT) will be challenged to help our students learn to lead, rather than follow, their future clients to do so as well.5 Globalization’s realities and permanency became established in the American consciousness during the 1990s and the first decade of the 21st 2 Patrick R. Hugg, Redefining the European Union’s Position in the Emerging Multipolar World: Strong Global Leadership Potential, Restrained by Asymmetry of Power and Dissonant Voices, 20 TUL. J. INT’L & COMP. L. 145 (2011); Inese Vaidere, The Impact of Regional and Cohesion Policy on the Economic Development of the EU, EUROPEAN INTEGRATION STUDIES (Lith.), no. 5, 2011, available at http://www.eis.ktu.lt/index.php/ EIS/article/view/1092/1168 (“As the global financial and economic crisis hit the European Union, no country was left unharmed. To this day, the Member States share the burden of excessive foreign debt, inflation, budget deficit, high unemployment levels, shaken stability of the currency, and many more.”); Daniel Daianu, Euro Zone Crisis and EU Governance: Tackling a Flawed Design and Inadequate Policy Arrangements (Jan. 1, 2012). CASE Network Studies and Analyses No. 433, available at http://ssrn.com/abstract=1991162; Stefano Micossi, Misguided Policies Risk Breaking Up the Eurozone and the EU, (Ctr. for Eur. Pol. Stud. (Belg.) Working Paper No. 260, 2011), available at http://ssrn.com/abstract=1996457. 3 See, e.g., Alfredo Jimenez & Juan Bautista Delgado-Garcia, Proactive Management of Political Risk and Corporate Performance: The Case of Spanish Multinational Enterprises, 21 INT’L BUS. REV. (Spain), (forthcoming Dec. 2012) (manuscript at 2) available at http://dx.doi.org/10.1016/j.ibusrev.2011.11.008 (noting that Spanish MNEs have displayed “a proactive use of political risk in the internationalization strategy . by taking advantage of their political capabilities in certain areas”). 4 For examples of how the