When the European law department of Ball Corporation, my employer, found itself short-staffed, I was sent to join our European legal team for a few months. This opportunity gave me an excellent introduction to English and European law and business that will benefit me as I continue to work on corporate, customer, supplier, regulatory, and contract matters in North America.
Differences in Political and Economic Philosophy
Because I attended law school in the United States, shareholder primacy (the goal of maximizing economic value for shareholders) is my starting point for analyzing whether any corporate action is justified. For this reason, the power of works councils, which are comprised of worker representatives who actively participate on the boards of European companies, surprised me. Similarly, the British government’s recent announcement that pension funds have a fiduciary duty to consider the environmental risks of their investments struck me as a departure from the shareholder primacy model that I learned in law school. I realize that lumping together the United Kingdom and all other European jurisdictions as stakeholder jurisdictions is too simple; for example, many US jurisdictions, including Indiana, have adopted some form of constituency statute, and stakeholder interests (particularly sustainability) in US jurisdictions appear to be gaining influence. However, compared with most US jurisdictions, including Delaware and New York, European jurisdictions currently place more focus on non-shareholder interests. This exposure to the European stakeholder model gave me a broader perspective on corporate matters in North America.
Exposure to Different Regions, Opportunities, and Roles
One of my first assignments was to draft the documents necessary to issue dividends, which introduced me to our European tax team and the legal structure of our European business, and it also taught me a bit about legal formalities in Continental European jurisdictions. I discovered the value of the UK Companies House website, where I found information on directors, liquidity, and dividends, and I had the opportunity to assist with sustainability efforts and restructuring industry trade groups. I gained experience with company strike-off and liquidation procedures and saw an example of how a lawyer’s analytical skills can provide value in non-legal areas, as evidenced by our European general counsel’s leadership of the sustainability team in Europe.
By drafting and negotiating customer and supplier agreements from our European headquarters, I got to know our European commercial team, gained insight into how our European customers are organized and the regulatory issues that affect them, and learned some notable differences between US and UK contract law.
Knock-out in the US vs. last shot in England. Under the UCC’s knock-out rule (2-207), in a deal between merchants for the sale of goods, conflicting terms cancel each other out and the common law or the U.C.C. fills the gaps. France and Germany have also adopted the knock-out rule. In England (and generally under the U.N.’s CISG), the last shot rule still applies, and it dictates that the last contract sent by one of the parties governs. For this reason, it is important to work with your commercial team to execute master agreements and obtain confirmation and acceptance of the terms you want to control the deal.
Force majeure. In the United States, if contracting parties fail to include a force majeure clause, section 2-615 of the U.C.C. provides a default clause. English law lacks such a broad code-defined force majeure concept, so lawyers working in England should make sure to include in their contracts an appropriately broad list of force majeure events.
Choice of law. One of my colleagues explained to me that “in Europe, the defendant plays at home.” Lawyers working in England should explicitly select English law and exclude the CISG/Vienna convention, to take advantage of the English courts’ business expertise, predictability, efficiency, and its familiar case law.
Payment terms in different jurisdictions. Even when English law controls, you should consider the laws of other jurisdictions. For example, if your supplier is French, Spanish, Serbian, or Polish, you may need to limit payment terms to a certain number of days, as the law in these countries may limit payment terms.
Competition law. As part of my responsibility supporting our European sourcing team, I helped respond to questionnaires from the EU Competition Commission and delivered dawn raid presentations to my colleagues. Some familiarity with EU competition laws, particularly its standards for establishing dominance, may help US lawyers manage their risk and advise on customer contracts in North and Central America, especially when dealing with global customers or where the competition laws in the European Union and North America align.
EU principles and tariffs. When negotiating the sale of goods through European jurisdictions, US lawyers should consider whether the principle of the free movement of goods and services within the European single market can be used to provide leverage to their position. Paying close attention to Brexit, and considering other countries’ tariffs and sanctions from a European perspective may provide useful ideas to apply to the tariff, trade, and compliance issues in North America, particularly as governments around the world continue to increase tariffs, trade barriers, and the severity of sanctions.
The laws of legal professional privilege in the individual EU member states generally determine whether certain communications are protected by privilege and outside the scope of discovery. Investigations in the context of competition law provide a notable exception to this rule. In the context of an investigation by the EU competition authorities, privilege sometimes does not apply to in-house counsel; in such a situation, for a written communication to be protected by the attorney-client privilege, it generally must come from or emanate from a lawyer qualified to practice in a jurisdiction of the European Economic Area, who is not bound to the client by a relationship of employment.
GDPR and European Law
The General Data Protection Regulation (GDPR) went into effect during the second week of my secondment. While becoming familiar with the GDPR, I learned that EU primary treaty law is primarily implemented through regulations and directives. Directives, such as the Data Protection Directive implemented in 1995, require EU countries to achieve a result by a certain deadline, but leave them free to choose how to do so. The Data Protection Directive aimed to protect the data of EU citizens from misuse, but because it was a directive, its implementation differed by jurisdiction. The GDPR, on the other hand, and its expanded definition of personal data, its requirement for explicit consent to data use, access rights, rights to be forgotten, breach notification requirements, extraterritorial effect, and its increased fines, apply automatically and uniformly to all EU countries.
The time I spent working with our European law department was certainly worthwhile. I hope that the insights I shared will help you decide if a secondment is right for you.
The views and opinions expressed in this article are those of the author and do not reflect the opinions of his employer or anyone else.