Journal of Law and Commerce

Front Matter Volume 41 Issue 2

Fred Porter — 2023-07-24

JLC Front Matter Vol. 41 Issue 2 (Spring 2023)

Rise and Fall of Ordinary Course Covenants and MAE Clauses: Case and Trend Analysis

Matthew Hyung Kyun Kwon — 2023-07-13

In the United States, the ordinary course of business provision has received inadequate attention in the field of corporate mergers and acquisitions. As anyone in the field is probably aware, the ordinary course of business covenant (“OC Covenant”) is one of the most common provisions included in almost every merger agreement. Illustrated by the fact that there are remarkably few notable precedents for the OC Covenant, despite its prevalence in merger agreements, notions of implementations and implications of the covenant have not drawn much attention from related professionals and scholars.

In turn, material adverse effect provisions (“MAE Provision”) have been “The Beatles” of mergers and acquisitions in the United States. Since its increased practical relevance from the subprime mortgage crisis, many notable precedents have since proved and confirmed that the MAE Provision’s sophisticated and complex enforcement standards made this provision extremely difficult to execute in the real world. However, in actual merger negotiations the provision has never stepped down from its celebrity status. Many influential theorists view the MAE Provision as having absolute authority in connection with risk allocation during the time from signing agreements to closing the transaction, and with such recognition in past decades, the MAE Provision holds an untouchable significance by being perceived as an attractive route to call off agreed transactions in a crisis.

This article proclaims that given recent trends in contract drafting and court decisions in connection with risk allocation during the interim period between signing and closing the merger, the role of the OC Covenant has been strengthened. To support this analysis, this article will proceed as follows. In Part I, this article will introduce the general features and background for the MAE Provision and the OC Covenant. In Part II, this article will introduce relevant risk allocation theories that have been suggested to govern risk allocation in order to present the history of important theories and their developments. In Parts III and IV, this article will examine features and developments of the MAE Provision and the OC Covenant with case examinations and literature analysis. The sections will refer to the 2021 data examination that Professor Guhan Subramanian conducted by examining 1,293 merger agreements in the MergerMetrics Database. The analysis will cover current structural shapes, as well as legal interpretation standards from meaningful precedents. Finally, in Part V, this article will propose a new understanding scheme for the risk allocation structure that implements and combines the academic theories, and drafting and litigation trends.

Court-Ordered Interim Measures in International Arbitration: A Comparative Approach

Ilias Bantekas — 2023-07-13

This paper argues that there is a distinct cross-border law concerning court-ordered interim measures in aid of international arbitration, which is made up of two key (intertwined) sources, namely: the relevant provisions of the UNCITRAL Model Law on International Commercial Arbitration and supporting case law and legislation in both Model Law states and non-Model Law states. The principles identified in this paper are assumed to qualify as general principles of law. In order for a court at the seat to grant interim relief in international arbitral proceedings the requesting party must demonstrate a prima facie case worthy of consideration, the likelihood of irreparable harm and a balance of inconvenience. There is at present no general consensus as to ex parte interim measures, with many states and national courts showing significant reluctance to grant these on account of the absence of procedural guarantees that they entail. In equal measure, in the absence of bilateral or multilateral treaties that allow national courts to recognize and enforce foreign interim measures in respect of arbitral proceedings seated abroad, states are equally reluctant to allow parties seated in other jurisdictions to approach their courts for interim relief on the ground that the other party has assets or interests there. Although the courts of some powerful nations allow for such requests, there is no general rule in this regard and none is expected in the near future.

Rethinking Decentralized Antitrust Regimes: A Window on the Future of Protectionism and Overregulation

Weimin Shen — 2023-07-13

Over 100 jurisdictions have a domestic competition law, making competition law one of the most widespread forms of economic regulation around the world. The existing decentralized antitrust regimes have increased transaction costs and uncertainties, enforcement conflicts, antitrust protectionism, and global overenforcement of antitrust laws. Yet international coordination has received little attention. Why? Two interest-based explanations suggest that the European Union and the United States have adopted different approaches to regulating competition, making the two leading regulators race to spread their regulatory models. Moreover, the balance of benefits under existing international legal rules continues to favor major corporations in both developed and developing countries. As a result, the developed world, particularly the United States, has viewed attempts at multilateral coordination as against its interests.

This Article challenges this conventional wisdom. It argues that the increasing heterogeneity among decentralized antitrust regimes poses a larger long-term threat to the US than is commonly believed. A closer examination of the proliferation of antitrust laws demonstrates why antitrust protectionism and overregulation are not temporary and not destined to level off. In addition, as more developing countries have the capacity to prosecute multinationals and as the strictest jurisdiction has the power to set the de facto world standard, today’s positive balance of benefits will disappear tomorrow. This Article argues that the United States should reverse its hands-off approach to international antitrust coordination and instead enact proposals that place greater convergence among national antitrust regimes. It highlights why the present moment is an opportune time to initiate, but notes that the window for initiation is likely to close as developing countries acquire increased economic strength and enforcement capacity.

The Right Visa at the Right Time: Proposing a Targeted Special Immigrant Visa as a Flexible Tool for Practical Immigration Reform

Fred Porter — 2023-07-13

N/a