People Innovation Excellence

FACT SCENARIO

 

Contestants will be given an international trade case study to work on. The case study requires contestants to make recommendations on dispute resolution issue and the structuring of certain commercial issues. The objective is to provide contestants with an opportunity to appreciate issues of an international transaction.

 

Case Study Problem

Chunky is a famous steak restaurant in the USA. It has many outlets in different US states. Its headquarter is in California. Venny was studying in California and was a huge fan of Chunky T-bone steaks. She consulted her boy friend, Arif, about getting a franchise from Chunky Inc to open an outlet in Jakarta. Venny and Arif both thought that Chunky steak will be very popular along with its dessert menu that carries the famous New York Cheescake. Venny  and Arif approached Chunky Inc for an Indonesian franchise and Chunky Inc agreed to certain broad terms to govern the franchise.  Chunky Inc is new to franchise business because all of its outlets are owner occuppied. Venny and Arif would set up a company PT Chunky to undertake the new venture.  Venny recently inherited a big aparment in Singapore and $500,000 from her grandmotther.  The $500,000 was deposited into her Singapore UOB bank account. Chunky comes to you for advice on how best to negotiate a franchise agreement that protects their interest. The following issues are to be discussed.

  • Choice of law and dispute resolution forum

Chunky wants the parties to submit all disputes under the agreement to California court, but Vennyand Arif prefer appointing Jakarta district court decide on all disputes under the agreement. DISPUTE RESOLUTION CLAUSE – Both parties to try any dispute arising out of the agreement and both parties agree to have California law govern the agreement. Consider these questions:

  1. What if Venny agrees to Chunky's request on forum of dispute resolution?
  2. What if Chunky Inc accepts Venny's request to designate Indonesian court as forum for dispute resolution? Advise if there is any disadvantage for Chunky Inc to agree to this.
  3. What is a possible compromise if the parties could not settle on either California court or Indonesian court to try future dispute?
  • Follow the money

Venny has no assets in Indonesia.  Although she comes from a well to do family, the assets are all in her parents’ name.  The only assets she owns are those she inherited in Singapore.  Chunky wants to know how it can be secured with Venny’s assets if there is a claim against Venny’s new company PT Chunky for breach of contract.

Identify any other issue for bonus points.

 


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