In response to a February 24, 2010 request from the American Association of Exporters and Importers (AAEI), U.S. Customs and Border Protection (CBP) has attempted to clarify whether a CBP Form 28 (Request for Information) and CBP Form 29 (Notice of Action) affect an importer’s ability to make a valid prior disclosure.
In the response, CBP referred to T.D. 98-49 (63 Fed. Reg. 29126, May 28, 1998) in which it disagreed with a commenter that CBP Forms 28 and 29 could not be considered written evidence of commencement of a formal investigation. In T.D. 98-49, CBP explained that it would consider “the substance of the information contained” in the 28/29s and that it would treat each matter on a case-by-case basis, examining the specific facts and circumstances of each case.
CBP’s response to AAEI’s request made clear that as “a matter of law” CBP Forms 28/29 “may be considered a ‘commencement document’ for prior disclosure purposes.” It went on to state that, as a matter of policy, Form 29 will be used as evidence that a formal investigation has been commenced and giving notice to the importer of the investigation. CBP further stated that, as a matter of policy, Form 28 “alone should not be routinely considered a ‘commencement document’” under the prior disclosure regulations. CBP also stated it would be issuing clarifying guidelines setting out the circumstances under which a Form 28 may be used as a “commencement document.”
In its response, CBP clarified that importers should never treat a Form 28 lightly. Instead, as this firm has always advised, importers receiving a CBP Form 28 should stop, analyze, investigate, and thoroughly consider what information is being requested and assess the importer’s potential entire exposure before responding. In this way, the importer and its counsel can determine whether a valid prior disclosure can be and should be made to CBP.
In light of CBP’s response to the AAEI’s request, importers should be even more cautious when receiving CBP Forms 28/29 and more deliberative in the response and decision of whether to submit a prior disclosure.
14 September 2010
08 September 2010
New York Court Narrowly Reads Arbitral Forum Provision
Many foreign companies do business with companies in New York. Often those companies have cross-border agreements of some form (commercial agent, distributorship, joint venture) that calls for arbitration in the event of a dispute. Frequently, U.S. companies prefer arbitration under the commercial rules of the American Arbitration Association (AAA), so this posting should be of interest to both U.S. and foreign companies that use arbitration provisions in New York.
A New York state appeals court has ruled it is proper to compel non-AAA arbitration, despite a contract provision referring to proceedings pursuant to the American Arbitration Association’s commercial rules.
In a brief and unanimous decision, the Appellate Division, First Department, found that a contract clause calling for arbitration “in accordance with the commercial rules of the American Arbitration Association” does not require the arbitration to be administered by the AAA. The court is an intermediate appellate court having jurisdiction over cases from New York City and the Bronx. The case is Nachmani v. By Design, LLC, 901 N.Y.S.2d 838 (1st Dep’t. 2010).
According to the decision, the petitioner in the case demanded arbitration but not before the AAA, despite this contractual provision. The non-AAA arbitral body was not identified in the decision. For unknown reasons, the respondent waited 4 months before demanding that the arbitration proceed before the AAA. Before doing so, the respondent had already filed a counterclaim and designated its arbitrator.
While some commentators have questioned the decision, it appears that the court viewed the matter as a waiver issue because the respondent began participating in the non-AAA arbitration proceedings before demanding AAA arbitration. The court agreed with the petitioner that the contract clause was properly construed as a choice of law, not a forum selection clause, meaning that the non-AAA arbitral body would apply the AAA commercial rules to its proceedings. The court also pointed out that the respondent that AAA arbitration would not provide the respondent with “any greater assurances of arbitrator impartiality,” indicating that it saw no qualitative difference in which arbitral body administers the arbitration on the issue of impartiality.
The case should put parties on notice that the best practice is to carefully draft international arbitration clauses so their intentions as to which arbitral body will administer the arbitration are stated clearly. In addition, once arbitration is demanded, respondents should promptly decide their strategy to either participate in the proceedings before the body selected by the petitioner or challenge the forum selected or risk waiving those challenges.
A New York state appeals court has ruled it is proper to compel non-AAA arbitration, despite a contract provision referring to proceedings pursuant to the American Arbitration Association’s commercial rules.
In a brief and unanimous decision, the Appellate Division, First Department, found that a contract clause calling for arbitration “in accordance with the commercial rules of the American Arbitration Association” does not require the arbitration to be administered by the AAA. The court is an intermediate appellate court having jurisdiction over cases from New York City and the Bronx. The case is Nachmani v. By Design, LLC, 901 N.Y.S.2d 838 (1st Dep’t. 2010).
According to the decision, the petitioner in the case demanded arbitration but not before the AAA, despite this contractual provision. The non-AAA arbitral body was not identified in the decision. For unknown reasons, the respondent waited 4 months before demanding that the arbitration proceed before the AAA. Before doing so, the respondent had already filed a counterclaim and designated its arbitrator.
While some commentators have questioned the decision, it appears that the court viewed the matter as a waiver issue because the respondent began participating in the non-AAA arbitration proceedings before demanding AAA arbitration. The court agreed with the petitioner that the contract clause was properly construed as a choice of law, not a forum selection clause, meaning that the non-AAA arbitral body would apply the AAA commercial rules to its proceedings. The court also pointed out that the respondent that AAA arbitration would not provide the respondent with “any greater assurances of arbitrator impartiality,” indicating that it saw no qualitative difference in which arbitral body administers the arbitration on the issue of impartiality.
The case should put parties on notice that the best practice is to carefully draft international arbitration clauses so their intentions as to which arbitral body will administer the arbitration are stated clearly. In addition, once arbitration is demanded, respondents should promptly decide their strategy to either participate in the proceedings before the body selected by the petitioner or challenge the forum selected or risk waiving those challenges.
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