AN OVERVIEW OF SOME U.S. LEGAL ISSUES RELEVANT TO CANADIANS

Transcription

1 AN OVERVIEW OF SOME U.S. LEGAL ISSUES RELEVANT TO CANADIANS Presented at the Smythe Ratcliffe US and Cross-Border Seminar 2013 Jeffrey A. Peterson Dorsey & Whitney LLP U.S. Lawyers in Canada 1

2 TODAY S TOPICS Corporations Why Delaware? Contracts I can read American English Lawsuits I know I ll be sued Immigration I hate crossing the border 2

3 1. U.S. Corporations Very straightforward no citizenship or residency requirements no in-state meetings, office or presence (except registered agent) single individual as sole officer and director incorporate in a day or two objective names (no numbered companies) 3

4 Which State? Delaware Preferred among U.S. lawyers Very sophisticated law and courts Largely historic Caution if a large number of authorized shares Nevada ( made in Canada ) Key: Where are the employees and assets? Washington? 4

5 Other Entities Limited Liability Companies (LLCs) Americans use to avoid taxation at entity level U.S. blocker corporation (holding company) necessary for use by Canadians Members accorded limited liability protection Member = Shareholder Manager = Director 5

6 A Risk Many sound reasons for a U.S. subsidiary Tax, marketing presence, etc. But if title passes through U.S. subsidiary, then it is the importer of record Potential liability for: Customs Anti-dumping 6

7 2. Contracts Rules of Construction and Interpretation Canada - Plain Meaning U.S.A. - Context Context allows finding intentions Broad discovery Scope for Courts & Arbitrators Differing underlying law Changing the governing law clause can be dangerous 7

8 3. Can Canadians Do Business in the U.S.A. without Exposing their Ass[ets]* to U.S. Courts? * denotes non-u.s. assets of the Canadian parent 8

9 U.S. Jurisdiction Jurisdiction is the Threshold Issue Jurisdiction = whether a court will hear and determine a case; whether a court has the power or legal right to decide a lawsuit 9

10 Minimum Contacts Minimum Minimum minimum minimum minimum U.S. veil piercing U.S. subsidiary acting as U.S. agent Parent company acts in the U.S. (e.g. directed advertising) 10

11 Arbitration: Predictable The NEW YORK CONVENTION The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards A Treaty 11

12 Treaty Requirements U.S. courts must recognize a written agreement to arbitrate U.S. courts must refer parties to arbitration U.S. courts must recognize and enforce arbitral awards 12

13 Sample short form clause Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity of it, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules in effect on the date of this Agreement. 13

14 Arbitration only Binds Contract Parties Arbitration Clause = Contract a Contract is only binding on parties 14

15 Third Party Claims An employee of the U.S. customer The innocent third person on the street The third party business s lost profits 15

16 A Structure Properly capitalized U.S. entity can help, but subsidiary acting as agent? Remove key Canadian assets to a holding company Implicates Canadian corporate shield Tax benefits too where holding company is offshore Canadian operating company still exposed? No assurances! 16

17 Insurance Essential protection Check your Policy Perhaps no real exposure if safe goods 17

18 4. Business Immigration NAFTA: 4 types L-1 E TN B-1 18

19 Visas and Work Permits Nonimmigrant status Temporarily work in the U.S. Immigrant visas or Green Cards Permanently work in the U.S. Similar to Landed Status in Canada 19

20 Bottom Line If there are U.S. operations, Canadian citizen managerial or essential employees very likely can obtain U.S. work authorization 20

21 Two Most Common L-1 E-2 21

22 Executives and Managers (L1-A) and Specialized Knowledge (L1-B) Employed abroad for one year in last three Canadian company is parent, subsidiary, affiliate or branch office Canadian company continues to conduct business 22

23 L-1A Manager Means an employee with staff to manage or An employee who manages a key function 23

24 L-1B Specialized Knowledge Means unique or proprietary knowledge Takes at least one year to acquire Subjective interpretation Abused Doesn t mean someone who holds an advanced degree 24

25 Benefits of L-1s For Canadians Short adjudication time may apply at the border Green Card may be obtained on same basis 25

26 Start Up L-1s L-1A only granted for one year; extension required thereafter Must prove: employing Americans generating revenues, etc. 26

27 E-1 (Treaty Trader) Visa status is available where: U.S. company is ultimately majority owned by Canadians Employee is a Canadian 50% of international trade between Canada and the U.S. 27

28 E-2 (Treaty Investor) Visa status is available where: Same a E-1, except rather than trade requirement: Substantial investment of capital into the U.S. Capital is at risk to the investor U.S. employees (active U.S. business operations) 28

29 Contact Jeffrey A. Peterson Partner, Dorsey & Whitney LLP T: (604)