Young Lawyers Newsletter Oct 2013

7/28/2019 Young Lawyers Newsletter Oct 2013

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Young LawyersNewsletter o the International Bar Association Public and Proessional Interest Division

OCTOBER 2013 VOL 19 NO 2


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YOUNG LAWYERS OCTOBER 2013 3

IN THIS ISSUE

From the Co-Chairs 4

Committee ofcers 5

IBA Annual Conerence:

Boston 611 October 2013

Our Committees sessions 6

Articles

Crowdunding in Ontario: nding the

balance in undamental securities

law principles 8

Oil royalties in Brazil 11

Jewellery thet and VAT 12

Brazilian National Commission or Truth 13

The right o property in the state o

Rio de Janeiro 14

Terms and Conditions or submission o articles

1. Articles or inclusion in the newsletter should be sent to the Newsletter Editor.

2. The article must be the original work o the author, must not have been previously

published, and must not currently be under consideration by another journal. I it

contains material which is someone elses copyright, the unrestricted permission

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the article and the material should be clearly identifed and acknowledged withinthe text. The article shall not, to the best o the authors knowledge, contain

anything which is libellous, illegal, or inringes anyones copyright or other rights.

3. Copyright shall be assigned to the IBA and the IBA will have the exclusive right

to frst publication, both to reproduce and/or distribute an article (including

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to do the same. Following frst publication, such publishing rights shall be non-

exclusive, except that publication in another journal will require permission rom

and acknowledgment o the IBA. Such permission may be obtained rom the

Director o Content at [email protected]. The rights o the author will be respected, the name o the author will always be

clearly associated with the article and, except or necessary editorial changes, no

substantial alteration to the article will be made without consulting the author.

Contributions to this newsletter are always

welcome and should be sent to the

Communications Ocers Masha Ooyevaar at

[email protected] or Bruno Barata at

[email protected].

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This newsletter is intended to provide general inormation regarding recent developments aecting

young lawyers. The views expressed are not necessarily those o the International Bar Association.

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Should you wish to advertise in the next issue o the

Young Lawyers newsletter, please contact the IBA

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INTERNATIONAL BAR ASSOCIATION PUBLIC AND PROFESSIONAL INTEREST DIVISION4

FROM THE CO-CHAIRS

Needless to say, the Committeesleadership continues to be hard at

work to ensure that plans or theIBA Annual Conerence in Boston

are progressing and that our sessions willonce again be among the most relevant andinteresting or young lawyers in particular.

As this edition o the newsletter containsplenty o inormation on our Boston plans(see pages 67), we will not go into much

more detail in this message; suce to say weare excited and condent that what we areorganising will grab your attention during theconerence week.

One thing I do wish to mention is ourregular Night Out which will take place inBoston on the evening o Thursday 10 Octoberrom around 9.30pm until... well wheneverthe last party animal decides to go back to theirhotel! Keep your eyes and ears open or detailso the venue at the conerence itsel we allhope to see you there and its bound to be one

o the wildest nights o conerence week i pastyears are anything to go by.Recently, the Young Lawyers Committee

co-organised a joint specialist conerencewhich was held in September: the 5thBiennial Construction Projects rom

Welcome to the second

newsletter o 2013

Dr Rouven FBodenheimer

LLS Lungerich Lenz

Schuhmacher, Cologne

[email protected]

Heather Irvine

Norton Rose,

Johannesburg

heather.irvine@

nortonrose.com

Conception to Completion Conerence.This project has seen us work closely withthe International Construction ProjectsCommittee and the IBA European RegionalForum in such a successul and symbioticmanner that we hope to replicate thecooperation with other committees and oraon a regular basis.

It is at this point that we should let you allknow that as o 1 January 2014 my current

Co-Chair, Heather Irvine, will be taking overthe reins in this committee alongside AdamGoodman, a current Vice-Chair.

As my term as Chair and later Co-Chairslowly comes to an end and I prepare to bowout graceully, I want to take this opportunity tothank not only all o the Committees leadershipboth past and present, but also all o you, themembers, who have made my time working with

you not only productive and motivating but alsoan immense amount o un.

You are in rm hands with Heather and

Adam and, o course, I shall continue to bepresent at Committee events to lend my supportand enjoy the atmosphere and camaraderie

which has developed over the years and which Ihope to enjoy or very much longer!

Dr Rouven F Bodenheimer


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COMMITTEE OFFICERS

Committee ofcers

Co-ChairsRouven F Bodenheimer

LLS Lungerich Lenz Schuhmacher, Cologne

Tel: +49 (221) 130 8160

Fax: +49 (221) 130 8162

[email protected]

Heather Irvine

Norton Rose, Johannesburg

Tel: +27 (11) 685 8829

Fax: +27 (11) 883 4000

[email protected]

Vice-Chairs

Garrett Miller

Eugene F Collins, DublinTel: +353 1 202 6400

Fax: +353 1 667 5200

[email protected]

Adam Goodman

Heenan Blaikie, Toronto

Tel: +1 (416) 643 6857

Fax: +1 (416) 360 8425

[email protected]

Secretarys

Makoto Hirasawa

Okuno & Partners, Tokyo

Tel: +81 (3) 3274 3805

Fax: +81 (3) 3272 [email protected]

Catriona Watt

Fox, London

Tel: +44 (20) 7618 2400

Fax +44 (20) 7618 2409

[email protected]

Website Ofcers

Marc Baltus

Heuking Khn Ler Wojtek, Dsseldor

Tel: +49 (211) 600 55 257

Fax: +49 (211) 600 55 285

[email protected]

Robert WakulatWakulat Law, Toronto

Tel: +1 (416) 458 4841

[email protected]

Communications Ofcers

Bruno Barata Magalhaes

Correa de Mello & Tolomei, Rio de Janeiro

Tel: +55 (21) 8747 0210

Fax: +55 (21) 2232 4415

[email protected]

Masha OoyevaarMcMan & Co, London

Tel: +44 75001 31642

[email protected]

Events Ofcer

Rainer Kaspar

PHHV Prochaska Heine Havranek Vavrovsky Rechtsanwlte,

Vienna

Tel: +43 (1) 714 2440

Fax: +43 (1) 714 2440 6

[email protected]

European Forum Liaison Ofcer

Marco Monaco Sorge

Tonucci & Partners, Rome

Tel: +39 (06) 362 271

Fax: +39 (06) 323 5161

[email protected]

National Representatives Ofcers

Mariana Estrade

Hughes & Hughes, Montevideo

Tel: +598 2916 0988

Fax: +598 2916 1003

[email protected]

Mark Gilligan

Patton Boggs, Abu Dhabi

Tel: +971 (0)2651 5900

Fax: +971 (0)2651 5955

[email protected]

Young Lawyers Initiatives Ofcer

Kimathi Kuenyehia

Kimathi & Partners, Accra

Tel: +233 (0)302 770 447

Fax: +233 (0)302 766 870

[email protected]

Membership Ofcer

Robert Steven Bernstein

Holland & Knight, New York

Tel: +1 (212) 513 3427

Fax: +1 (212) 385 [email protected]

PPID Administrator

Robyn Wheatley

[email protected]


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IBA ANNUAL CONFERENCE 2013, BOSTON: YOUNG LAWYERS COMMITTEE SESSIONS

Monday 0930 1230

Public inquiries and commissionsPresented by the Forum or Barristers and Advocates, the Judges

Forum, and the Young Lawyers Committee

Public accountability and transparency are ever on the increase.

Pressure on governments to ensure accountability also increases.

As a result, public inquiries and commissions o inquiry are a

growing area o practice or many. Debate can be had as to the

motivation or setting up, and the benets, o such inquiries.

Also, such inquiries give rise to dierent procedural and advocacy

techniques than arise in usual litigation or arbitration. This session

will consider the circumstances o, and approaches to, inquiries in

dierent jurisdictions, including as to diering tribunals, procedure

and advocacy, as well as the reports that fow rom them. It will be

addressed by leading barristers, advocates, and judges.

Monday 1430 1730

Young lawyers introductory meetingPresented by the Young Lawyers Committee

A must-attend i this is your frst IBA event!

IBA Annual Conerences can be rather overwhelming or even

intimidating, particularly or those who are attending one or

the rst time. To help you nd your way, the Young Lawyers

Committee traditionally hosts an introductory meeting or young

lawyers, to which you are warmly invited.

Ocers o the Young Lawyers Committee will provide a general

introduction to the IBA, guide you through the conerence

programme, share with you how to get the most out o the

conerence and inorm you o social events particularly targeted at

young lawyers.

We are planning to address other topics o interest to

newcomers as well.

Moreover, it has also become a much-appreciated tradition or

the Young Lawyers Committee to invite Chairs rom other IBA

committees to present their group and plans or the conerence

week. This has led to the perect win-win situation in which

young lawyers learn who to address when identiying their ocuso interest, and in which committees rom both the LPD and

SPPI are able to attract and recruit resh blood. Hence, make

this session your priority check-in or the Monday morning. And

by the way, dont worry i you cant make head nor tail o those

abbreviations used two sentences above this will be only one othe thousand topics covered in this essential nutshell to the IBA!

Tuesday 0930 1230

Who wants to be an ambassador?Presented by the Senior Lawyers Committee and the Young

Lawyers Committee

Are senior lawyers better ambassadors or their law rms than

younger lawyers or vice versa? Assuming each can contribute in

dierent ways, how can senior and younger lawyers best support

each other in this vital endeavour?

This session will address the ollowing issues:

What does the role o a law rm ambassador involve?

What personal qualities and skills does a successul law rm

ambassador need and how are such skills acquired?

Is involvement in management an essential pre-requisite or

an ambassador and, i not, how should an ambassador be

brieed?

What should a successul ambassador be expected to bring

back to his or her law rm or in-house legal department?

Is there a specic age, or age range, at which lawyers reach

their peak in terms o their work production and rainmaking

ability? Can lawyers really be grinders, minders and nders at

the same time and is there a specic age or age range when

they should change roles?

Are senior lawyers too ar rom the coalace and the cutting

edge to do the job properly? Bright and dynamic though they

may be, are younger lawyers suciently wise and experienced

to be the main ambassadors or their law rms? Are they too

busy to devote the necessary time to the role?

How do these actors dier as between large, medium-sized

and small law rms, and what special considerations apply to

in-house counsel as ambassadors?

How does the position dier in dierent jurisdictions where

senior and younger lawyers are respected less or more?

How can senior lawyers successully pass on ambassadorial

goodwill to younger lawyers and how can younger lawyersbest succeed to such goodwill?

Young Lawyers Section sessions


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IBA ANNUAL CONFERENCE 2013, BOSTON: YOUNG LAWYERS COMMITTEE SESSIONS

Wednesday 0930 1230

Construction a wide playing feld orlawyersPresented by the Asia Pacifc Regional Forum, the International

Constructions Project Committee and the Young Lawyers Committee

Construction law is a relatively young, highly specialised area

o legal practice; one in which it is vital that lawyers new to the

eld have a strong grasp o both legal doctrine and technical

understanding in order to ensure that lawyer and client speak the

same language.

Construction law is intrinsically unctional and pragmatic

architects, engineers and lawyers each bring their own knowledge

and perspective to the table and the lawyer ailing to recognise

will likely cause riction and even undamental problems. As

construction law is not purely about legal matters as such, but

also oten requires a need or understanding technical terms,

engineering ailures or design faws on the part o the lawyer, what

better way to learn and gather understanding than rom more

experienced colleagues and even clients?

This session will discuss what benets experienced lawyers and

those new to international construction law can glean rom each

other in this complex and ast-developing area o the law.

Wednesday 1430 1730

The thin red line cartels, raud andcorruptionPresented by the Business Crime Committee and the Young

Lawyers Committee

When does cartel conduct become criminal?

Where does the boundary between a purely administrative

oence, and a criminal one, lie?

Does criminalisation o cartels enhance competition law

enorcement?

Recent trends in cartel criminalisation.

What dierent kinds o legislation regulate bid-rigging?

How do dierent regulators deal with corrupt bid- rigging, and

how do they coordinate their investigations and prosecutions?

What are the potential sanctions or bid-rigging involvingcorruption (administrative penalties, criminal sanctions, uture

exclusions rom public works) and how do these actor into

the decisions made by leniency applicants?

Thursday 1430 1730

Swimming with land sharks: propertytransactions and ethicsPresented by the Proessional Ethics Committee, Real Estate Law

Committee and Young Lawyers Committee

This session addresses the nature o property transactions andthe ethical obligations on lawyers in the context o regulation,

property development and client protection. These are discussed

in the context o various property transactions, including issues o:

statutory requirements or property development;

nancing and accountability o lawyers; contract negotiations;

condentiality and disclosure requirements on parties;

ethical obligations on lawyers involved in dispute resolution or

property matters;

protecting the rights o the client; and

dealing with the unethical conduct o others and what

proessional standards are required.

Thursday 1800*

Young lawyers receptionSheraton Boston Hotel

The highlight o the reception will be the presentation o

the prestigious IBA Young Lawyer o the Year Award in

recognition o William Reece Smith Jr.

Sponsored by

Friday 0930 1230

The role o secretaries and other third

parties in assisting arbitral tribunals torender awards in international arbitration a coeehouse debatePresented by the Arbitration Committee and the Young Lawyers

Committee

This session will explore the use by arbitrators o tribunal

secretaries and other third parties, including counsel at the

administering institution, law clerks, associates in law rms and

in-house experts, in assisting arbitrators to ull their duty o

determining the parties dispute and rendering the award.

The session will identiy existing concerns about the involvement

o such third parties in the arbitral process:

How visible should their contribution be to the parties? What are the limits to their involvement?

Should the parties bear their costs as part o the costs o the

arbitration?

This is a lively and controversial topic in light o the recent ICC

revised note on the use o secretaries and concerns raised by

commentators and practitioners about so-called super arbitrators

who attend tribunal deliberations ater having been brieed on

the issues in the case by a team o researchers.


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CROWDFUNDING IN ONTARIO: FINDING THE BALANCE IN FUNDAMENTAL SECURITIES LAW PRINCIPLES

This past spring, the US-based gossip

website Gawker raised just overUS$200,000 in approximately two

weeks in an eort to purchase analleged video that depicted the Mayor o

Toronto, Rob Ford, smoking crack cocainewith local drug dealers. Ethical questionsaside, this is only the latest, and perhaps mostesoteric, demonstration o the power o thegrowing crowdsourcing phenomenon. In theshort time that crowdunding platorms haveexisted, unders have supported a wide varietyo successul projects including Sundancelms, a whiskey distillery and a bicycle-poweredbackyard arming business. According toCrowdsourcing.org,1 more than US$2.7bn

was raised in 2012 via these platorms. This

year, that amount is expected to increase toUS$5.1bn. Crowdunding is hot.Crowdunding has been dened as seeking

nancial contributions rom online investors,sponsors and donors to und or-protor non-prot initiatives or enterprises.2Crowdunding can generally be broken downinto a number o variants including: the donations model, with no expected

nancial return; the rewards model, under which unders

expect a tangible benet, such as theprivilege to order a companys products in

advance, receive a discount on a product orget access to exclusive content; and

the investment model, where undersprovide money in exchange or an equitystake or provide small-scale loans.

To date, approximately hal o allcrowdunding proceeds have been directedtowards donations and rewards-basedprojects.3 An early example o a crowdundedsuccess story is the watchmaker Pebble.4In order to realise its goal o developingan e-paper smart watch or iPhone and

Android, Pebble used a rewards-based modelto become the most highly unded Kickstarterproject to-date by raising US$10.27m rom68,928 backers.

The donations and rewards modelscontinue to be wildly popular, but this trendis expected to change as more undersgain the ability to participate in equitycrowdunding projects. While both Australia5

and the UK6 have hosted operating equitycrowdunding platorms or a number o

years, the passing o the American JOBSAct (Jumpstart Our Business Startups Act)7is anticipated to drive broader adoption othis model. The JOBS Act was signed intolaw on 5 April 2012, with the objective oeasing US securities regulations or smallto medium-sized businesses engaged inequity nancing. Unortunately, the USSecurities and Exchange Commission hasdelayed publishing the applicable rules

and regulations or its implementation, soequity crowdunding is still not yet available.However, the JOBS Acts passage has kick-started the interest o other jurisdictions inexamining the viability o this option.

In the Province o Ontario, the OntarioSecurities Commission (OSC) released apaper or public eedback and commentaryon 14 December 2012 (OSC StaConsultation Paper 45-710: OSC ExemptMarket Review)8 that examines a potentialexemption to enable the issuance ocrowdunded equityor local companies. The

OSCs examination takes into account its dualmandate under section 1.1 o the Securities

Act (Ontario)9 to (i) provide protection toinvestors rom unair, improper or raudulentpractices; and (ii) oster air and ecientcapital markets and condence in capitalmarkets. In conducting its review, the OSCsituated a potential crowdunding exemption

within the broader exempt market.One o the key principles o Ontario

securities law is that securities may not bedistributed unless a prospectus is led with

and receipted by the OSC.10

A prospectussets out inormation about the issuer othe securities (the Issuer), describes thesecurities and canvasses the anticipated risks

Crowdunding in Ontario:fnding the balance in

undamental securities lawprinciples

Robert Wakulat

Wakulat Dhirani,

Toronto

robert@

wakulatdhirani.com

Nabil Dhirani

Wakulat Dhirani,

Toronto

[email protected]

Zev Smith

University o Windsor,

Ontario

[email protected]


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acing the Issuer. It also provides certainrights to investors, such as the right to sue ordamages in the event o a misrepresentation.In order or securities to be issued withouta prospectus and qualiy as an exempt

distribution in the exempt market, thetransaction must meet the terms o anavailable exemption. These exemptions areprimarily enumerated in National Instrument45-106 and include the accredited investorexemption; the ounder, control personand amily exemption; and private issuerexemption.11 The crowdunding exemptionis proposed to be in addition to these alreadyestablished exemptions.

The OSC proposal closely tracks theapproach in the JOBS Act. Its objectives are

to allow or equity-based crowdunding whilesimultaneously mitigating risks to investors.The OSCs consultation paper put orth aconcept idea or discussion purposes and,based on the received eedback,it will consider modiying the exemptionparameters or ending its exploration entirely.

A distribution under the crowdundingexemption would involve three parties: theIssuer, the investor and a unding portal. Asin the UK and Australia, the OSC proposesregistering unding portals. Portal activity(ie, showcasing investment opportunitiesand matching Issuers with investors) willgenerally constitute trading or advisingactivity under the Securities Act (Ontario),

which would normally require registrationunder an appropriate dealer or advisercategory.12 According to the OSC, thisregistration requirement is an importantinvestor protection measure necessary toaddress integrity, prociency and solvencyrequirements applicable to unding portalsand the persons operating them.13 Havingsaid that, the OSC also recognises that a

unding portal would undertake relativelylimited activities in comparison to establishedcategories and may accordingly circumscribethis requirement to some extent.

In addition to protecting investors viaportal registration, the OSC has also proposedcertain Issuer restrictions and investorprotection measures. The our primary Issuerrestrictions are: Qualifcation criteria:The Issuer, and its

parent and principal operating subsidiaries,i any, must be incorporated or organised

under Canadian laws and must have theirhead oces located in Canada. Limit on security:The issuance o securities

will be limited to common shares;

non-convertible preerred shares; non-convertible debt securities linked to a xedor foating interest rate; and securitiesconvertible into common shares or non-convertible preerred shares.

Limit on oerings:An Issuer cannot raise morethan CAD1.5m in any 12-month period.

Limit on advertising:Other than the undingportal and the Issuers website, no othermarketing initiatives may be undertaken.However, social media use would bepermitted to drive investors to the portal orthe website.

Even greater investor protection would beput in place through a number o otherconditions: Investment limits:An investor could not

invest more than CAD2,500 in a singleinvestment or more than CAD10,000 intotal in a calendar year.

Disclosure:The investor must be providedwith sucient disclosure, which includesinormation certied by the Issuer aboutthe oering, the Issuer, the unding portaland any other registrant involved. Thisinormation would include a descriptiono principal risks and audited nancialstatements or distributions over CAD500,000.

Risk acknowledgement.The Investor must signa risk acknowledgement orm conrmingthey are within the investment limits, canbear the loss o their entire investment, andthat the investment is highly illiquid.

Cooling o period:Investors will be ableto exercise a withdrawal right within twobusiness days.

Ongoing disclosure:Investors are entitled toannual nancial statements and the Issuermust maintain records about the issuedsecurities, names o investors and the useo unds.

The OSC public comment period on

its Consultation Paper concluded on 8March 2013 with over 100 comment lettersreceived. While investor-protection remainedan outstanding issue to a minority orespondents, generally speaking the proposalearned widespread support. Many o theserespondents view crowdunding as a meansto accelerate innovation and democratisemarkets. As noted by crowdunding providerHiveWire Inc, having limited access tocapital based on gender, race, or (dis)abilityis neither air nor ecient, yet there are

clear indications o inequality in our systemthat directly impact many Ontarians.14 Inparticular, they cited Kauman Foundationresearch indicating that only our to nine


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per cent o all venture capital unding goesto women-owned businesses. Along withother respondents, HiveWire has aith thatcrowdunding could alleviate these types ocapital market inclusion issues.

Other key reasons that were given tosupport a crowdunding exemption included: Funding gap:It would increase the

availability o capital or investment inSMEs. Respondents identied a gap inunding or projects in the CAD12m range,

which could be addressed by growing thepool o available capital.

Market validation:By committing unds toa project, the crowd may also oer market

validation or that product. A recent well-known example was reaching a US$2m goal

in less than two days or the resurrectiono the Veronica Mars television show as alm project. (Sceptics note that crowdshave previously channeled investments intosituations that turned into asset bubbles.)

Disincentive to commit raud:It was suggestedthat the power o social media will proveto be a greater investor protection toolthan regulation because Issuers would bebetter known to investors via their onlineinteractions. The power o the crowd wouldultimately expose raudulent Issuers.

Market competitiveness:Once the USimplements its equity crowdunding model,it will start attracting entrepreneurs andinnovators keen to take advantage othe opportunity. The OSCs adoption oa crowdunding initiative would ensureOntario avoids the risk o lagging behind inthe North American investor landscape.

These supporting attributes werecounterbalanced by a number o concernsincluding: Investment risk:It has been argued that

it is more likely that poorly inormed

investors will lose their money by betting oncompanies they havent thoroughly vettedor, in a worst case scenario, are deraudedo their savings.

Illiquidity:There was agreement amongrespondents that the liquidity oinvestments is a concern perhaps leavinginvestors with stakes they cant easily sell,and thus potentially be saddled with taxliabilities they cant honour.

Disclosure ormat:Given the anticipatedwide range o investor sophistication, the

ormat o an easily digestible yet eectiveorm o disclosure remains unresolved.Alternative media ormats such as shortvideos or PowerPoint presentations have

become widely adopted in rewards-basedcampaigns, but whether they should replaceor supplement other legal disclosuredocuments remains a live issue.

Investment appeal:Equity crowdunding

can result in thousands o shareholders,each with ractional interests in the Issuerthat may create challenging governancestructures or businesses in the early stageso development. This could complicateconducting routine corporate businessand arranging uture nancings. Even iequity investors are given non-voting shares,Ontario corporate laws give shareholdersthe right to vote in respect o certainundamental changes.

While the above concerns were ocused

on the impact to the exempt market andinvestors, the legal proession itsel willace a ew questions on how to respondto an investment landscape that includescrowdunding. In a presentation put togetherby the Law Society o Upper Canada, AlisonManzer o Cassels Brock cautioned thatany legal advice sought by Issuers wouldonly reduce the already modest undsavailable to them, and deter investors byadding unnecessary complexity to thetransaction. More signicantly, she notedthat crowdunding is liable to create greaterrisk exposure or lawyers. For instance, giventhe limitation on undraising totals, clientsmay attempt to maximise investor dollarsby constraining legal ees through limitedmandates, which could prevent lawyers romcomprehensively assessing the associatedrisks. Or, more ominously, the nature ocrowdunding participants may lead themto be more liable to engage in a breach odisclosure obligations and/or commit raud.These risks are likely to increase considerablyi the lawyer uses his or her trust account to

collect and disburse the unds.Based on eedback or the proposed

crowdunding exemption rom both marketparticipants and the legal proession, a muchclearer picture has begun to emerge orthe OSC on the best way to move orward.In particular, while OSC Vice-Chair JamesTurner has acknowledged the risks involved

with implementing an exemption, he has alsopublicly expressed a personal preerence tosee, at a minimum, a pilot project be set up tointegrate the opportunity into the provinces

investment landscape. This is in contrast tothe Commissions prevailing view to maintainthe status quo. The OSC continued its review

with a roundtable discussion or investors


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OIL ROYALTIES IN BRAZIL

and potential investors in start-ups in June2013 and has indicated that its response tothe consultation paper and this roundtable

will be made public in early Autumn 2013.Other Canadian regulators, most notably

the Autorit des marchs fnanciersin Quebec,are also reaching out to the public in orderto gauge interest in crowdunding. In themeantime, Canadians are let to scratch theircrowdunding itch by exchanging cash orrewards related to projects such as graphicnovels, video games, string quartets andalleged videos o their mayors smoking illicitdrugs.

Notes

1 See www.crowdsourcing.org/editorial/turning-to-the-2013c-report-to-make-sense-o-the-crowdunding-

industry/25611/500.2 Crowdsourcing.org, last accessed 5 June 2013.3 Massolution.com, 2013CF The Crowdunding Industry

Report, Massolution, 2013 at 7.4 See http://getpebble.com.5 See Australian Small Scale Oerings Board at:

www.assob.com.au.

6 See CrowdCube at: www.crowdcube.com.7 See: http://en.wikipedia.org/wiki/Jumpstart_Our_

Business_Startups_Act.8 Ontario Securities Commission, OSC Sta Consultation

Paper 45-710: Considerations or New Capital RaisingProspectus Exemptions OSC, 14 December 2012.

9 RSO 1990, chapter S.510 See note 5 above at 6.11 Ontario Securities Commission, National Instrument 45-

106: Prospectus and Registration Exemptions (2009), 32OSCB.

12 See note 6 above; Clause (e) o the denition o trade insection 1(1) o the Act includes any act, advertisement,solicitation, conduct, or negotiation directly or indirectlyin urtherance o a sale o a security. OSC and courtdecisions have held that establishing a website that oerssecurities or inormation about securities oerings toinvestors through the Internet constitutes an act inurtherance o a trade. Where this type o trading activityis conducted with regularity and or a business purpose,the OSC will generally consider the unding portal tobe in the business o trading or advising and thereore

subject to the dealer or adviser registration requirement.13 See note 5 above at 30.14 Asier Ania and Christopher Charlesworth, HiveWire

Public Comment to the OSC, at www.hivewire.ca/2013/03/14/hivewire-public-comment-to-the-osc.

Oil royalties in Brazil are sharedbetween states, municipalities andthe producers who have sueredcosts associated with the operation.

Although the oil, as a commodity, belongsto the Federal Union, its production raises anumber o costs and risks or the local entitiesand communities in the territory o theexploration and extraction. As a result o this,

the Constitution requires compensation to thestates and municipalities.

With the creation o Federal Law No12,734/12, the sharing scheme has beenchanged with royalties now shared amongall the states and municipalities across thecountry. Thus, non-producer states now takeadvantage o an unusual compensation schemeor losses that they have never experienced.

For this reason, the state o Rio de Janeiroled a lawsuit at the Supreme Brazilian Court

Oil royalties in Brazil

Bruno BarataMagalhes

Corra de Mello &

Tolomei, Rio de Janeiro

brunobarata@cmtadv.

com.brquestioning the constitutionality o the law(Claim No 4,917). The minister, CarmenLucia, was the rapporteur o the claim andapproved the suspension o the eects o thelaw. The suspension will last until a decision isreached by all o the ministers.

The reasons or the suspension o the law bythe Brazilian Supreme Court were as ollows:

The relevance o the grounds submitted in

the application o this claim by the governoro the state o Rio de Janeiro and the legalplausibility o the arguments it exposedregarding the undeniable risks to legal,political and nancial security o states andmunicipalities experiencing uncertainty as tothe rules levied on payments to be made byederal entities, some arising out o improvedconcessions and rights arising thererom,have met the instant precautionary measurerequired or approval.


12/14


JEWELLERY THEFT AND VAT

On 6 October 2007, a spectaculararmed robbery, which includedthe taking o hostages, took placeat a Harry Winston store in Paris.

Among the items stolen that day was jewellerythat Harry Winston had placed under acustoms warehouse regime. This regime allowssuspension o payment o customs duties and

Value Added Tax (VAT) until the items areremoved rom the customs warehouse andplaced into ree circulation within the EU.

As the warehouse keeper, Harry Winstonwas responsible or keeping the goods undercustoms supervision. Following the robbery,the French customs administration soughtpayment o the duties and VAT on the stolen

jewellery items rom Harry Winston.Ater an unsuccessul appeal with the

customs authority, Harry Winston broughtthe matter to the French courts. Ultimately,the Court o Cassation, the highest court inthe French judiciary, directed two questionsto the Court o Justice o the European Union

(CJEU): whether the EU Customs Code couldbe interpreted to mean that the thet ogoods held under a customs warehousearrangement amounts to the irretrievableloss o the goods and a case oorce majeure(ie, causes that are outside the control othe parties, such as natural disasters, thatcould not be evaded through the exerciseo due care)1; and

whether thet o such goods give rise toa chargeable event and to cause the(import) VAT to become chargeable.2

The CJEU ocused solely on the wording othe Customs Code and case law that denesit. The Court concluded that, contrary to theopinion o the reerring court, the acts inthis case were covered by Article 203 o theCode that states that a customs debt arises

when goods are removed rom customssupervision. A robbery is undoubtedly aremoval leading to the occurrence o acustoms debt. Contrary to other customs debtarticles, Article 203 does not provide or anexoneration clause like irretrievable loss o

the goods and orce majeure.

Masha Ooyevaar

McMan & Co,

Amsterdam

mooyevaar@

mcmanco.com

Jewellery thet and VAT

Also with regards to VAT under the secondquestion, the CJEU held that the thet ogoods rom a customs warehouse arrangement

will give rise to a chargeable event and sinceimport VAT ollows the customs rules thusimport VAT will become payable.

This case underlines the severity oregulatory requirements placed uponimporters o goods that are stored undercustoms warehouse arrangements.Interestingly, the issue o whether Harry

Winston, as the innocent victim o the thet and not the robbers should have beenthe party responsible or the customs debtin the rst place, was not addressed by theCourt. Article 203(3) Customs Code givesseveral denitions o debtors, such as, theperson who removed the goods, any persons

who participated in such removal and theperson who acquired or held the goods inquestion (or in other words in this case: therobbers, the accomplices and the ence). Thelast denition in this list is where appropriate,

the person required to ull the obligationsarising rom temporary storage o the goodsor rom the use o customs procedure under

which those goods are placed. Since thecustoms authorities were unable to claim thedebt rom the robbers and accomplices, theyprobably used this last option and claimedthe duty and the VAT rom Harry Winston.

Whether a hostage-taking robbery, such asin this case, constitutes where appropriate isstrongly debatable. Apparently, even a brutalarmed robbery was not a sucient reason orFrench customs to waive the duties and VATrom the innocent warehouse keeper.

Another sour point or Harry Winston wasthat, had the goods been robbed rom thestore (and not rom the bonded warehouse)then no VAT would have had to have beenpaid because, according to the CJEU, ashopkeeper is not responsible or VAT i thegoods are stolen.

Notes

1 Legal Dictionary, orce majeure at: http://legal-dictionary.thereedictionary.com/orce+majeure.

2 C-273/12,France v Harr y Winston SARL[2013],

paragraph 23.


13/14


BRAZILIAN NATIONAL TRUTH COMMISSION

Since the 16th century, black people

were brought to Brazil and terriblyexploited. Whip, rape and murder

was usual. Ater 13 May 1888, the dateo the theoretical abolition o slavery, up to 5October 1988, the date o the promulgationo the eective Constitution, black peoplecontinued to be the victims o torture and weresignicantly more likely to go to jail.

Torture in Brazil, rom the 16th century

until the beginning o the last dictatorship,obeyed a heinous unwritten rule: torturewas reserved or black people, the poor andprostitutes. The last dictatorship disobeyedthis unwritten rule and barbarously tortured

white people, middle class lawyers and collegegirls. Denying that torture took place is a lie;however, choosing only to investigate certainoccurrences o torture is deeply racist.

Throughout Brazilian history, black womenhave been raped in slave houses and in manygovernment acilities and when this hashappened, nobody seems to care. However,

during the dictatorship the unwritten lawabout only torturing black people, the poorand prostitutes was discarded and many whitecollege girls aliated to anti-dictatorshipmovements were tortured and raped. Today,the Brazilian National Commission or Truthis investigating the crimes committed againstrich, white Brazilians. And why is this thecase? Because or them, torture against whiteand middle class people is not acceptable.

In So Paulo, the most important businesscity in Brazil, between October 1975 and

January 1976, a amous journalist and apoor metallurgist were brutally tortured andassassinated by police and military ocers.Even General Geisel, at that time the Brazilianpresident, was able to link both episodes and,or that reason, he relieved General Ednardoo the command o the Brazilian II Army.

What did the Brazilian people do? In order toprotest against the murder o Vladimir Herzog,

Brazilian National Truth

Commission

Rodrigo LopesLourenorodrigo.l.lourenco@

hotmail.com

the amous journalist, a great religious meetingwas held in the biggest cathedral in So Paulo.Where was the mass or the soul o Manoel FielFilho, the poor metallurgist? It was certainly notin the cathedral.

Two years beore the religious meeting orthe amous journalist, a catholic mass, againat the So Paulo cathedral, had been held ora victim o the dictatorship. In March 1973, amass was celebrated or the soul o a college

student, barbarously tortured at the same placewhere the journalist and the worker died. Thestudent was Alexandre Vannuchi Leme. So,or the souls o the amous journalist and thecollege student, the religious meeting tookplace at the most important cathedral in SoPaulo. Why did nobody pray in the cathedralor the soul o Manoel Fiel Filho? Perhapsbecause his torture and death seemed torespect the unwritten rule that torture wasacceptable or use against black people, thepoor and prostitutes.

The Brazilian National Truth Commission,

created by Federal Law No 12,528, will beinterested in the repulsive acts o Cenimar,the Center o Inormation o the Navy, duringthe last dictatorship. There, during thedictatorship, many crimes were committedagainst people who were not black, or poor,nor prostitutes. Unortunately, the Commission

will not investigate the shameul episodes thatlead to the Whip Revolt, which, in 1910, leadblack navy men to rebel against the way theBrazilian navy punished their alleged mistakes.

Nobody should deny that the last

dictatorship tortured and killed manypeople. However, poor and/or blackBrazilians continue to suer these sametragedies. There is a high risk that theonly result o the Brazilian National TruthCommission will be the conrmation that,in Brazil, it is only a crime, a shame or anerror to torture people who are not black,poor or a prostitute.


14/14


THE RIGHT OF PROPERTY IN THE STATE OF RIO DE JANEIRO

The right o property is a kind o socialright inserted in the Brazilian FederalConstitution (Article 5). Thereore, itis a constitutional precept that, rather

than observed, must be guaranteed. In thissense, and to regulate this right, in 2001 theeects o National Law No 10.257 (known asthe City Statute and which established generalguidelines o urban policy, and in 2009, the

eects o National Law No 11.977, which createsthe social programme My House, My Lieand establishes regularisation in urban areas),

were initiated.The law, which has an impact across

the country, created a programme or theproduction and acquisition o new housingor redevelopment o urban property andproduction or renovation o rural housing oramilies with incomes o up to BRL4,650.

The regularisation is the set o legal,urban, environmental and social measures

aimed at regularising inormal settlements,guaranteeing the right o property or theiroccupants. Thereore, the above-mentionedregularisation should note vectors as the socialunction o urban property, spatial segregation,

vulnerable spaces and urban policy.Such legal measures are consistent with

the My House, My Lie social programme,which is part o the National Urban and RuralHousing Programmes.

In the state o Rio de Janeiro, it is possibleto say that the advance o legislation inlegal and administrative instruments or

the promotion o the right o property hasaccelerated the process o regularisation osocial interest. It is an irreversible processthat is part o a set o actions o the stategovernment to eradicate poverty and socialinequalities in their territory.

The recognition by the government o thatright in irregular areas enables citizens to haveuniversal access to all the benets o the ormalcity. The address allows legalised proo oresidence, which shows a signicant portion oresidents are hiding, and makes the recipient

able to claim urban interventions that ensure

The right o property in the

state o Rio de Janeiro

Raael Picciani

Department o

Housing, State o

Rio de Janeiro

[email protected]

Bruno BarataMagalhaes

Corra de Mello &

Tolomei, Rio de Janeiro

brunobarata@

cmtadv.com.br

basic inrastructure. Also it promotes access toservices as well as ensuring the right to transertheir house to their heirs.

In this sense, the state o Rio de Janeirohas expanded its local rules to improve andacilitate the application o the laws. Thus,the parliament approved ComplementaryLaw No 131/09, which creates the Institute oLand and Cartography, responsible or land

regularisation and promotion o donationsby public deed. They then also approved theComplementary Law No 144/12, which allowsthe same institute to carry out the donationo the administrative orm, and transer to thestate the notary ees and responsibility o thebeneciary amilies.

No less important was the establishmento partnerships between institutions or theull implementation o regularisation. Thestand out partnership is between the PublicDeenders Oce o the Institute o Land

and Cartography, which has consolidateditsel as a great notary engaged in landtenure and confict mediation in cases oland dispute.

Currently, about 800 communities are inthe process o regularisation in the state oRio de Janeiro. There are urban and ruralareas where the goal is to reach the issuanceo 38,000 property titles by the end o 2014.

I seeminly insucient demand in thestate o Rio de Janeiro (where the housingdecit is estimated at 430,000 units, includingareas not regularised) indicates, however,

that the implementation o these legalinstruments as public policy does ull thesocial unction o the land, and its action hasar-reaching consequences. The awarding o10,200 property titles in 2012 illustrates this,as this is the equivalent o the entire worko regularisation perormed in the previousdecade (19962006).

It is necessary to assign the ullment othese goals to the merits o the Brazilianlegislation and, in the case o the state o Riode Janeiro, the local legal mechanisms and

institutional partnerships.

Documents

Young Lawyers Newsletter Oct 2013