The University of Texas System 10TH Annual Legal Conference

1
The University of Texas System10TH Annual Legal
Conference Austin, Texas

• Establishing Educational
• Partnerships Overseas
• Sue Snyder
• November 4, 2010

Jackson Walker, LLP 100 Congress Ave., Suite
1100 Austin, Texas 78701 512-236-2240 ssnyder_at_jw.c
om
2
The International World Affects How We Live our
Everyday Lives

• Our Life to be . . .
• http//www.youtube.com/watch?vd4laPqYea6wfeature
  related

3
Texas Today

• Texas is in the Top 3 in the Nation for Total
  Business Academic R D
• Texas has 2x the U.S. Average of Fully Bilingual
  Professionals in the Workplace
• Texas is the 1 Exporter By Far 160B
• 95 of Retail and Commercial Consumers Live
  Outside the U.S.
• Texas Exports generates 500,000 jobs

4
More Texas Statistics

• Texas is in the Top 2 for Receipt of Foreign
  Direct Investment
• 2008 Texas Received over 22 Billion
• 2008 Monies Created 5500 New Jobs
• 2003-2008 Over 93 Billion
• Texas Leads U.S. in EU Commercial Property
  Investments (About 51B)
• Foreign Companies Employ 5.1 Million Americans
• 200,000 Texans work for European Companies
• 50,000 Texans work for Latin American Companies

5
University International Facts

• More than 600,000 International Students are here
  in the U.S. (See Open Doors 2009 Report)
• Total foreign students increased 8 in 2008/2009
  Year (largest percentage increase since 1980)
• New enrollments up by 16
• India increased by 9 China by 21
• There is now a Record Number of International
  Students in U.S. Higher Education

6
University International Facts

• More than 250,000 U.S. Students Study Abroad
• (See Open Doors 2009 Report)
• Overseas Study by U.S. Students is up by 8.5 and
  has increased 4X in the past two decades
• American Students are Heading to LESS Traditional
  Places
• Strong Rise in China, India, Japan, South Africa,
  Argentina

7
Texas International Student Statistics

• During 2009
• Texas was 3rd in total Number of International
  Students
• The University of Teas was the 7th largest
  University with regard to Number of
  International Students (5,703)
• Texas Increase was double digits (NY and Calif.
  single)

8
International Program Changes

• Traditionally, top universities built their
  international presence through
• study-abroad programs
• research partnerships
• faculty exchanges
• joint degree programs offered with foreign
  universities.
• Overseas branches are now on the rise, but are
  considered RISKIER

9
Why are Universities Increasing International
Structures?

• Scholars Note
• Attract Top Research Talent
• Attract Grants
• Product Patents
• Raise Profile
• Build International Relationships
• Increase International Students (end of baby
  boom)

10
Universities Surveyed Tell Us

• Reasons to Increase International Presence
• Recruitment of Talent and Students (28)
• Growing Reputation Abroad (26)
• Increased Linkages with Universities Overseas
  (19)
• Additional Sharing research, access to top
  scholars, additional funding and grants, etc.

11
What are the Risks?

• New York Times Piece 2009
• (Michigan Student Commentary)
• Lack of Due Diligence
• NY Attorney General Investigation
• Failures
• (Not Achieving Objectives, Campuses in Trouble)
• Legal Implications

12
Types of International Structures
Contractual Programs
University Sponsored Programs
vs.
13
Contractual Programs

• Outsources aspects of overseas programs
• Overseas institution or domestic study abroad
  providers organize the program
• Can be used for previously University Run
  programs trips, internships, language immersion,
  etc.
• EASIER to control legal, administrative and
  liability aspects.

14
University Sponsored Programs

• Organized, operated and maintained by the
  University with little outside assistance.
• Short term faculty led trips
• Traditional study abroad programs
• (10 weeks with academic credit)
• Language immersion programs
• No outside entity involved in design or delivery
• GREATEST DEGREE of legal, administrative and
  liability risks

15
Legal Issues to Consider

• 1
• CAN YOU ENTER INTO AN INTERNATIONAL ENDEAVOR WITH
  THIS ENTITY OR COUNTRY?
• (different than should you)
• due diligence on reputation, risks, benefits,
• financial stability, shortfallings, etc.

16
Bad Boy Lists

• Denied Persons List
• A list of individuals and entities that have
  been denied export privileges. Any dealings with
  a party on this list that would violate the terms
  of its denial order is prohibited.
• Unverified List
• A list of parties where BIS has been unable to
  verify the end-user in prior transactions. The
  presence of a party on this list in a transaction
  is a Red Flag that should be resolved before
  proceeding with the transaction.
• Entity List
• A list of parties whose presence in a
  transaction can trigger a license requirement
  under the Export Administration Regulations. The
  list specifies the license requirements that
  apply to each listed party. These license
  requirements are in addition to any license
  requirements imposed on the transaction by other
  provisions of the Export Administration
  Regulations.

17
More Bad Boy Lists

• Specially Designated Nationals List
• A list compiled by the Treasury Department,
  Office of Foreign Assets Control (OFAC). OFACs
  regulations may prohibit transaction if a party
  on this list is involved. In addition, the
  Export Administration Regulations require a
  license ofr exports or re-exports to any party in
  any entry on this list that contains any of the
  suffixes SDGT, SDT, FTO, IRAQ2 or
  NPWMD.
• Debarred List
• A list compiled by the State Department of
  parties who are barred by 127.7 of the
  International Traffic in Arms Regulations (ITAR)
  (22 CFR 127.7) from participating directly or
  indirectly in the export of defense articles,
  including technical data or in the furnishing of
  defense services for which a license or approval
  is required by the ITAR.
• Nonproliferation Sanctions
• Several lists compiled by the State Department
  of parties that have been sanctioned under
  various statutes. The Federal Register notice
  imposing sanctions on a party states the
  sanctions that apply to that party. Some of these
  sanctioned parties are subject to BISs license
  application denial policy described in 744.19 of
  the EAR (15 CFR 744.19).

18
Embargoed and Sanctioned Countries

• Iran
• Iraq
• Former Liberation Regime of Charles Taylor
  Sanctions
• North Korea
• Sudan
• Syria
• Zimbabwe

• Balkans
• Belarus
• Burma
• Cote dIvoire (Ivory Coast)
• Cuba
• Democratic Republic of the Congo Sanctions

19
Anti-Boycott Laws

• A boycott is an agreement to stop doing business
  with, selling to, transacting with, or
  discriminating against another country
• Middle Eastern countries seek a boycott of Israel
  in their contracts
• This request may be found in bid invitations,
  contracts, letters of credit, MOUs, or verbal
  representations

20
Examples of Boycott Language Other
Restrictions

• We are fully aware of the Syrian legislation
  concerning the boycott of Israel and undertake to
  comply with it.
• Commerce Reporting / Tax Implications
• Request for Description of Business with Israel
  is reportable

21
Legal Issues to Consider

• 2
• What type of Arrangement is Preferable /
• What is Available in that Country
• Partnering with In-Country University
• Outsourcing
• Branch Office
• Non-Profits
• Etc.

22
Affiliation Agreement

• Collaboration
• Student Exchanges/Faculty Exchanges/Scholars in
  Residence/ teacher training/Professional and
  Technical Training.
• Very specific to Goal of Collaboration
• Contractual Issues
• Indemnity
• Choice of Law
• Enforcement
• IP Ownership

23
Third Party Provider Agreement

• Consortia to allow range of programming options
• for all students
• Usually administered by Study Abroad Provider
  Organizations
• Agreements shall address full range of issues
  such as who is providing insurance, admission
  criteria, admission of new universities, billing,
  indemnity, etc.

24
Foreign Investment Company

• Set up by Various Countries
• Could Require a Large Investment to begin
• May need funds to continue
• Tax issues remain and look at legal print
• Same legal issues to be discerned as for
  Affiliation Agreements
• Depends on Political and Economic Landscape of
  the Country

25
Direct Registration

• Register as a Foreign Entity
• Some countries allow filing a sample form with
  the Government (such as Ministry of Foreign
  Affairs, Ministry of Foreign Investment, etc.)
• Required Documents Often Include Charter
  Documents, Tax-Exempt Letter, Lists of Activities
• Liability should be Assessed
• May Not be Able to Do Business

26
Representative Office / Liaison Office

• Allowed in Many Countries
• Usually used for companies testing the waters to
  see if there is a market for their products.
• Restricted Activities but there are benefits
• Tax exempt sometimes
• Some countries say you cant carry on Business
• Often good for a few employees on the ground to
  facilitate a program with the host university

27
Branch Office

• Not a separate entity
• One step up from a Representative Office
• Can Do Business
• Extensions of home entity with no independent
  legal existence
• Assets at Risk
• Risks Tax Matters
• Often treated as In-Country Entities
• Education Registration could be very slow

28
Wholly-Owned Domestic Entity

• Types In Country / Tax Exempt Entities
  (non-profits)
• Government Requirements
• In-Country Involvement
• Ownership shares/IP etc/Directors etc.
• Registration Requirements
• Full Blown Entity with all issues pertinent
  thereto
• Board Resolutions / Powers of Attorney / Notary /
  Etc.
• Year long process

29
Legal Affiliate

• Creating a foundation or non-profit entity
• Members / Control Issues / Business Restrictions
  / Funding Restrictions

30
Non-Governmental Organization

• DEPENDS ON TYPE OF WORK BEING DONE
• Usually an easier creation
• Frequently exempt from
• VAT
• Duties/tariffs,
• Importation of Funds,
• Eased ex-pat rules, etc.

31
Memoranda of Understanding (MOUs)

• Usually something with a overseas government
  entity
• Sometimes assists in setting up business
• Sometimes required
• Comes in all shapes and sizes

32
Bottom Line

• Type of Structure will Depend on Numerous things
• Activity (student/faculty exchange, joint
  research, joint teaching, share grants, issue
  degrees, etc.)
• Length of Venture or Stay in Country
• Country/Host Institution
• Available Structures
• Minimization of Liability
• EVERY ARRANGEMENT WILL BE DIFFERENT

33
Legal Issues to Consider

• 3
• EMPLOYMENT MATTERS
• Assessment of issues relative to ex-pats,
  in-country hires, etc.
• As soon as you send someone over to perform work,
  or hire someone, you need to assess the laws.

34
University Employee Working in the Host Country

• Legal responsibility to register / Business
  Structure
• Working Permits
• Tax Implications (you and them)
• Liability Implications
• Immigration / Visa Issues
• Insurance Issues
• Banking Issues NACHA
• Taking Laptop, data etc Export Rules

35
Employment Law Country Specific

• Employment Law in other Jurisdictions
• often seems to Not Make Sense
• Differences between hiring locals, expats, etc.
• Employment Agreements / Direct Hire Agreements

36
Additional Considerations

• Certain countries REQUIRE entity establishment
  before hiring in that country
• Employment laws often cannot be waived
• Compensation
• Benefits
• Termination Rights

37
Additional HR Considerations

• Defense Base Act
• Federally Sponsored Institutions to purchase
  workers compensation for employees working
  oversees and others.
• Federal Laws
• Title VII Age Discrimination in Employment Act
  Americans with Disabilities Act but Fair Labor
  Standards Act
• Privacy Laws
• HIPPA, etc. European Union Data Protection Act.
  Personal Data

38
Legal Issues to Consider

• 4
• TECHNOLOGY / EXPORTS

39
Technical Rules

• Technical Exchanges Export Rules
• Classification of data exchanges
• Classification of research
• Exporting of Computers etc.

40
Export Controls

• ITAR -- International Traffic in Arms
  Regulations
• USML (United States Munitions List)
• Dept. of State
• Very Strict
• Military Matters
• Also need to register

41
Export Administration Regulations (EAR)

• Department of Commerce
• Dual Use Items
• Commerce Control List (CCL) vs. EAR99
• Need to Know
• Item
• Use
• Country
• User

42
Exclusions Applicable to Universities

• Published Technology
• Generally accessible to the public in any form.
• Submitted papers etc.
• Fundamental Research
• IF the resulting information is published and
  shared broadly in a scientific community (but
  maybe not prepublication review, corporate
  involvement, etc.)
• Educational Information
• Course Catalogs

43
Deemed Export Rule

• Release of technology to a foreign national
• (one who is not a permanent resident)
• even in the U.S. is a deemed export
• Looks at foreign nationals most recent country
  of citizenship or residency

44
Legal Issues to Consider

• 5
• IP MATTERS

45
IP Matters

• Is any IP being created?
• Who owns
• Protection of Country
• Government Laws
• Compulsory Licensing
• Existing IP
• Compulsory Licensing
• Trademarks / names / usage

46
Legal Issues to Consider

• 6
• ANTI-BRIBERY

47
Foreign Corrupt Practices Act (FCPA)

• Giving anything of Value (including a promise or
  authorization) to a Foreign Official with
  Knowledge of or Intent that some or all of the
  gift is for the purpose of Influencing the
  Foreign Official to assist in obtaining a
  Business Advantage for the Covered Person making
  the payment.

48
Foreign Official

• Officer, Employee or other person acting in an
  official capacity for
• A foreign government
• Any department, agency or instrumentality of a
  government
• Any quasi-governmental entity and corporation
  owned or controlled by a foreign government
  (parent corporations)
• Any Public International Organization (i.e. UN,
  etc)
• Any Foreign Political Party
• Candidate for Foreign Political Office

49
Covered Persons

• U.S. Citizens
• U.S. Residents
• U.S. Visitors who commit bribery while in U.S.
• U.S. Corporations, Partnerships or other
  Businesses
• Foreign Subsidiaries of U.S. Businesses if U.S.
  Company owns 50 or More

50
Additional Covered Persons

• Other Corporations, Business Organizations with a
  Principal Place of Business in the U.S.
• Other persons if they participate in a prohibited
  activity as an officer, director, employee,
  representative (including stockholder acting on
  behalf of the company) or agent of any U.S.
  business.

51
Exceptions / Affirmative Defenses

• Grease Payments for Routine Government Action
• The Payment is lawful under written laws and
  regulations of the foreign country
• Reasonable expenses to promote performance of
  contract or display services

52
Anti-Bribery Special Note

• Numerous Other In-Country Anti-Bribery Statutes

53
Legal Issues to Consider

• 7
• NUMEROUS OTHERS

54
Liability Protections

• Many Countries Do Not have Non-Profit or Public
  Entities (tax problems)
• Sovereign Immunity Issues
• Choice of Law / Choice of Forum
• Type of Legal System / Legal Environment
• Enforcement
• Foreign Sovereign Immunities Act here in the
  U.S.

55
Others

• Real Estate
• Insurance
• Health and Safety
• In Country Administrative Rules
• Banking/Funding/Money Conversions

56
Final Thoughts All Countries are Different

• Heaven is where
• the police are British, the cooks are French,
• the mechanics are German, the lovers are Italian
• and everything is organized by the Swiss.
• Hell is where
• the cooks are British, the mechanics are French,
• the police are German, the lovers are Swiss,
• and everything is organized by the Italians.

57
The University of Texas System10TH Annual Legal
Conference Austin, Texas

• Establishing Educational
• Partnerships Overseas
• Sue Snyder
• November 4, 2010

Jackson Walker, LLP 100 Congress Ave., Suite
1100 Austin, Texas 78701 512-236-2240 ssnyder_at_jw.c
om