Homework answers / question archive / International Arbitration and the New Economy Spring 2021 -- LAW 928A (Beckett/Suskin) Take-Home Exam Instructions: Address just one of the three following topics below in 8 to 10 pages

International Arbitration and the New Economy Spring 2021 -- LAW 928A (Beckett/Suskin) Take-Home Exam Instructions: Address just one of the three following topics below in 8 to 10 pages

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International Arbitration and the New Economy Spring 2021 -- LAW 928A (Beckett/Suskin) Take-Home Exam Instructions: Address just one of the three following topics below in 8 to 10 pages. You may consult all of the readings in the course and, if you wish, any other materials you find online provided, of course, that all of your work is your own. You have 72 hours from when you initiate the exam to complete it. Do good work. (These exam instructions consist of five pages.) 1. Mass arbitration and on-line consent. You have been hired to audit the dispute resolution provisions of the Terms of Use for PetSmart. https://www.petsmart.com/help/terms-andconditions-H0010.html#arbitration_agreement (a) The GC is concerned about mass arbitration risk. Your audit has revealed that a plaintiff’s firm is currently advertising for a potential consumer class action against PetSmart based on improper training of dog groomers, who caused unnecessary pain and trauma to beloved pets. The grooming services are purchased and scheduled through the PetSmart website, which are governed by the PetSmart Terms of Use. Arbitrations under the Terms of Use are pursuant to the American Arbitration Association ("AAA") in accordance with its Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes. What changes, if any, would you recommend to the terms to address this risk? If you would make no changes explain why and how you would address mass arbitrations brought against the company. (b) The final page for on-line orders features this language, with hyperlinked Terms of Use, which appears directly under the “submit order” button: By placing your order, you agree to PetSmart's Privacy Policy and Terms of Use. Once you complete your purchase, please call your local store for help with your order. At a high level, based on your reading of the cases in class, would such a clause constitute consent to arbitrate? Why or why not? What changes would you suggest to the clause, if any, and why? 2. International Arbitration and Commercial Disputes in Life Sciences and Tech. It’s 2025. You have a small Miami boutique law firm catering to start-ups. Your classmate and frenemy has just been named general counsel of Mango, an emerging tech company that started in the South Florida Tech Gateway in an accelerator program and has had a meteoric rise. Mango designs and manufactures advanced chips and telecom processors for 6G, which are expected to be widely 1 licensed in the industry as critical components. Over half of Mango’s contractors, suppliers and customers are outside of the US. On the first day of the job, the Founder reports to your friend that the leader of Mango’s venture capital firm just called him and complained that Mango was “gravely exposed” to counterparty risk because many of its critical contracts were with non-US companies and he had just learned that “there’s no way to enforce a US judgment overseas!” The Mango form contract provides for disputes to be resolved in the “state or federal courts located in Miami-Dade County, Florida.” The Founder is concerned because Mango is planning on going public in the next year (which is the reason the GC was brought on board) and she doesn’t want any “surprises or hiccups.” The GC turns to her ‘Cane network. She has a hazy recollection that some of her classmates took a weird, wide-ranging 1-credit Zoom course during the Pandemic of 20/21 that might be vaguely relevant. A few of your course classmates meet with her at a bar in the Grove. The Mango GC asks why the company insisted on this sort of “lame, parochial” provision. You have trouble talking over the din of the bar and your friend’s phone starts blowing up with other demands from her new boss. As she is leaving the GC tells you and your friends to “just get a memo together asap” explaining how the company should design its dispute resolution provisions. The Mango GC explains that Mango doesn’t have a budget for this, and the Founder is a stickler for tight budgets, especially for legal spend. But she tells you she will find a way to pay you in options. As it turns out, you are the only one willing to work on these terms. Your friends disappear into the night leaving you with what they call the “pro bono” assignment, and the tab. (a) Prepare a brief memo explaining the possible advantages and disadvantages of the current Mango DR clause, addressing the enforceability issues raised by the VC, and making recommendations for how Mango should approach dispute resolution (you can use bullet points). Also consider issues of separate treatment (or carve outs) of certain disputes and confidentiality. (b) Before you complete the memo, the Mango GC texts you with the following message: “Frand or Frank or something? What is this??? We have to license our stuff if it’s essential, which seems quite vague and self-serving. Are you kidding me? You have to cover this in the memo. Founder is pisssssed. Also, can’t pay more for this. But can give you free Mexican at the Mango cantina Tuesdays and Thursdays, subject to availability.” Briefly explain the FRAND standard, how FRAND dispute arise and how FRAND disputes can be resolved. 2 3. The New Economy and International Investment Law. Ideology is a web-based platform based in Iceland that has no offices, personnel, or any form of physical presence in any other jurisdiction. Based on questionnaire results, demographics, and access to user data (if the user permits), it uses AI to make suggestions on music and books the user would like, like Netflix. A new version goes much farther and advertises that it now offers “AI for everything.” This version uses AI for broader suggestions in areas such as housing, jobs, professions, and partners. The app is free to users, through a Terms of Use Agreement. The company generates revenue through ads and service upgrade fees. The Republic of Ruritania is a small, traditional, agrarian state that is in the throes of change, at least in its major urban center. There is a booming tech sector in that city that focuses on blockchain and cryptocurrency. The right-wing authoritarian government that has ruled the country for three decades initially experimented with liberalizing this sector and even promoted the tech industries. But it is now shocked by the large sums of money that the industry has generated and the “decadent materialistic culture” that has arisen that it has proclaimed “threatens the motherland’s traditional conservative values.” The new Ideology app goes viral in Ruritania, especially the dating and mate-finding feature. Tech-savvy Gen Z users organize impromptu gatherings they call “swarms” where they gather to use the app to locate and meet other users in the venue the app selects for them. Ideology generates a compatibility score based on the prospective partners’ Ideology profile but also analyzes and vets public source data such as credit scores, known dating history, traffic and criminal violations, college boards, grades and family history. It generates a “likely satisfaction” score on seven key indices and even predicts the likely progression of the relationship over milestones, the risk of divorce and a likely divorce date. Some mischievous users organize “demolition swarms,” where the goal is to meet up with users with the lowest compatibility scores. The government is gravely concerned about the disruptive effect Ideology and other forms of AI are having on dating patterns and cultural preferences. Younger adults are moving away from arranged marriages in favor of Ideology’s matching AI. Based in part on Ideology’s recommendations, young people have also stopped listening to the state sponsored Radio Ruritania and its standard fare of propaganda and traditional folk tunes, despite the government’s attempt to lure them back with a streaming service for “Ruritanian Rap” and “Patriotic Hyperpop,” created by artists on the government payroll. The government promulgates regulations restricting certain “high risk” AI uses, such as those involving: biometric identification and categorization of natural persons; management and operation of critical infrastructure; education and vocational training; employment, workers management and access to self-employment; access to and enjoyment of 3 essential private services and public services and benefits; and traditional core cultural values. The regulations require “full algorithmic transparency” as to the functioning of the AI to enable the regulators and the users understand the relevant data points and how they are weighed. The regulations require ex ante approval of the high-risk use and subject any approved high-risk use to auditing and ex post review in the form of market surveillance. It gives the government broad powers to “promulgate additional detailed regulations” in “specific fields of endeavor” and to issue waivers to protect “critical national interests.” The Ruritania Ministry of Culture and Information concludes that Ruritania’s folk music traditions are a critical element of its traditional core cultural values. They promulgate regulations requiring that at least 75% of any music selections made by AI be from Ruritanian folk music groups approved by the government. It also concludes that Ideology’s recommendation algorithm is biased in favor of “decadent Western music” and is part of a conspiracy “to erode and destroy our artistic tradition.” The Ministry goes further with the use of AI for “the selection of dating or marriage partners,” banning it altogether. The Ministry finds that the Ruritanian courtship tradition of arranged marriages and traditional matchmakers that use “time-honored, heuristic methods” reflects “core cultural values” and ensures “unions that promote social order and high birth rates.” It therefore concludes that “any use of AI, machine learning, or data analytics for dating or marriage partners is decadent and inimical to core Ruritanian values and is therefore prohibited.” Critics charge that the government caved to pressure from the lucrative domestic matchmaker industry (matchmakers receives 25% of the dowry and are known to accept side payments to present more desirable prospects). Feminist groups attack the regulations are “regressive, antifeminist and misogynistic.” In response to Ideology, the Ruritanian Worshipful Society of Traditional Matchmakers has established what it calls its own “robotic mate selection helper,” Misha the Matchmaker, that uses analytics based on “traditional values.” The government grants Misha the Matchmaker a waiver because the “robot assistant” is “programmed for traditional values” and under the “full control of certified Ruritanian matchmakers, who, unlike godless Nordic hyper-capitalists, have the power to guide and override the AI to ensure a process that protects the moral sensibilities of their customers and our nation’s core social values.” There is a bilateral investment treaty in force between Iceland and Ruritania. Assume that its provisions, including the definition of investment and the substantive protections, are identical to those in the US model BIT (see link below). https://ustr.gov/archive/assets/Trade_Sectors/Investment/Model_BIT/asset_upload_file847_6 897.pdf 4 (a) What are the jurisdictional and substantive arguments Ideology can make regarding Ruritania’s AI regulations and what are the jurisdictional and substantive defenses Ruritania can raise? (b) Despite the prohibition on the use of Ideology for dating, the government is unable to develop effective measures that prevent young Ruritanians from using the app and convening illegal swarms. Ideology complies with a government order to prevent certain geolocations from using the app, but that has proved ineffective. The month after it is banned Ideology suffers massive denial of service attack that lasts a week and cripples the company. Ideology later finds some of its servers have been encrypted rendering them unusable. It also discovers that some of its key AI and encryption IP have been copied. Ideology’s cybersecurity firm determines the attacks emanated from the official offices of the Ruritania Ministry of Culture and Information. What are the jurisdictional and substantive arguments that Ideology would make and what are the jurisdictional and substantive defenses that Ruritania would raise? THIS IS THE END OF THE EXAM 5