Business Leadership and Law

192 Pages·2017·1.52 MB·English

by  Anurag K. Agarwal (auth.)

Anurag K. Agarwal
Business
Leadership
and Law
Business Leadership and Law
Anurag K. Agarwal
Business Leadership and Law
123
Anurag K.Agarwal
Indian Institute of Management
Ahmedabad
India
ISBN978-81-322-3680-1 ISBN978-81-322-3682-5 (eBook)
DOI 10.1007/978-81-322-3682-5
LibraryofCongressControlNumber:2016955923
©TheAuthor(s)2017
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To
My mother,
Late Mrs. Bimla Devi Agarwal,
An absolute positive thinker
Preface
Thisbookismeantforbusinessleaderswhowishtoremainontherightsideofthe
law. It is essential in any jurisdiction, and much more in international business, to
understandtheroleoflawinbusiness.Abusinessleadercanneglectlawonlyathis
andhiscompany’speril.Itisfoolhardyforanybusinessleadertothinkthat‘lawis
forlawyers’andasabusinessperson‘whyshouldIbotheraboutlaw?’Lawinmost
evolved jurisdictions is highly dynamic and it is expected of a business leader to
anticipatethechangeswhichmaytakeplaceandalsotopro-activelymakethebest
effortstomitigatethelosswhichmayoccurduetosuchchanges.Better,hecantry
toplayaroleinthelawmaking—directlyorindirectly—sothatthechangesarein
tune with the requirements of his business.
Thebookiswrittentounderstand,appreciateandmakethebestuseofthelegal
environmentinwhichbusinessisdone.Thereareseveralquestionswhichcometo
the mind of a business leader vis-à-vis law. The book tries to answer these ques-
tions.Thefirstquestionis‘asabusinessperson,doIneedtoknowlaw?’andends
with theunderstanding that ‘law ismy friend, philosopher and guide’. In between,
the business leaders realises the value of contracts, intellectual property, dispute
resolution, role of government, etc.
I have tried my best that the book is not daunting. To make it interesting and
easy to read, it has numerous case studies—often related to court decisions—and
current examples. The language is lucid and devoid of legal jargon as far as pos-
sible.Primarily,thebookfocusesoncourtcasesandseveralotherbusinessstories.
The book, hopefully, will connect well and touch upon—if not answer all—a lot
manyissues,concerns,andqueries,whichoftentroubleabusinessleader.Thebook
is meant chiefly for senior and top management, and also for business persons at
anylevelwhoaspiretoreachsuchaposition.Thisisnotindustryorsectorspecific.
This is useful for all businesses. I envisage the book to be a useful companion to
globalbusinessleaders,thoughatilttowardsIndiamayobviouslybevisible.Some
of the cases are India specific but they bring out issues pertinent to any global
business.
The book starts with an introduction, which talks about certain essential
thoughts—certainty, anticipation and creating options—a business leader cannot
vii
viii Preface
escapefrom,andemphasisesontheimportanceofbeingontherightsideofthelaw
while working to make profits.
The book covers the following topics in different chapters—knowledge of law,
role of the government, law making and lobbying, using contracts to achieve the
business goals, aligning business and legal strategy, significance of intellectual
propertyinbusinesses,resolvingandavoidingdisputes,engagingalawyerandhow
the judges make a difference in the legal environment, being ethical, and making
law your friend, philosopher and guide. Each chapter is not a watertight com-
partment.Issuesflowfromonechaptertoanother.Thus,theapproachtounderstand
the subject is not modular. It has to be integrated learning. While trying to
understand a particular topic the entire attention should be on that topic and
thereafterthebusinessleader must develop theabilitytoassimilateit andintegrate
it with the overall understanding.
Therearemanyotherissuesrelatedtomanagingabusinesssuccessfullywhicha
businessleadermaybeconcernedwith.Mostofthemarebeyondthescopeofthis
work as it is not expected to be daunting and unwieldy. I have selected the ones
which have been repeatedly emphasised in class discussions with the students and
executivesoverthepast12years.Thebook,hopefully,willconnectwellandtouch
upon—if not answer all—a lot many issues, concerns and queries, which often
trouble a business leader. I envisage the book to be a useful companion to the
business leaders.
Iwouldliketosincerelythank allthestudentsandexecutives with whomIhad
such wonderful and rich discussions in class. Deliberating about the practical
problems the executives face helped me sharpen the subject and explore further.
Thanks to Springer and its entire team, particularly to Ms. Sagarika Ghosh, whose
persistence made this possible.
Thisbookwouldhavenotseenthelightofthedaywithoutthepersistentefforts
ofmyfamilyinmotivatingandencouragingmedespitegettingboredattimeswith
myuntimelynarrationofvariousbusinesscasesandstories.Icannotthankmywife
Manjari and sons Anant and Akshat adequately for showing tremendous under-
standing,patienceandloveasIworkedforlonghoursinpreparingthemanuscript;
mostofthesehoursrightybelongedtothem.Thisbookhasanindelibleimpression
of my mother—a diehard possibility thinker—in steering thoughts towards posi-
tivityatalltimes.Ihadstartedworkingonthisbookwhenshewaswithus,withher
inspiration and blessings.
Ahmedabad, India Anurag K. Agarwal
September 2016
Contents
1 I am a Businessperson. Do I Need to Know the Law?.. ..... .... 1
The Law: How Much? ... ..... .... .... .... .... .... ..... .... 1
Key Aspects of Study and Practise of the Law.. .... .... ..... .... 2
The Law: Knowledge and Its Application.. .... .... .... ..... .... 7
Business Leaders and the Law .. .... .... .... .... .... ..... .... 8
Heien Versus North Carolina (US Supreme Court, 2014).. ..... .... 11
Douglas Versus Hello! (House of Lords, 2007) . .... .... ..... .... 12
Ashok Kumar Sharma Versus State of Rajasthan
(Supreme Court of India, 2013) . .... .... .... .... .... ..... .... 14
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 16
2 How Can the Government Affect My Business?... .... ..... .... 19
Chinese Government Made Mattel to Eat Crow (2007).... ..... .... 21
Iraq and Exxonmobil (2011).... .... .... .... .... .... ..... .... 22
India: Lavasa and HCC (2010).. .... .... .... .... .... ..... .... 24
Google in Germany; Privacy Issues (2013). .... .... .... ..... .... 26
Australia: Adani and Coal Mines (2015)... .... .... .... ..... .... 28
Royal Dutch Shell in Russia (2006) .. .... .... .... .... ..... .... 31
France: Arcelormittal Steel (2012).... .... .... .... .... ..... .... 32
‘Kill Mittal’ Computer Game ... .... .... .... .... .... ..... .... 33
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 34
3 How Do I Align Legal and Business Strategy?.... .... ..... .... 37
Coca-Cola and Pepsi: Early Times and the Word ‘Cola’... ..... .... 38
Walmart Versus Betty Dukes, (US Supreme Court, 2011) . ..... .... 41
Australia: Tobacco Plain Packaging Act (2011) . .... .... ..... .... 42
Vodafone: Tax Issues in India... .... .... .... .... .... ..... .... 45
Volkswagen Emission Cheating (2015).... .... .... .... ..... .... 48
Carbon Fees for Airlines in Europe and Crisis in America. ..... .... 51
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 53
ix
x Contents
4 Can I Have a Role in Lawmaking?. .... .... .... .... ..... .... 57
Eastern Railroad and Truckers in Pennsylvania.. .... .... ..... .... 58
GSK in China: Ineffective Lobbying.. .... .... .... .... ..... .... 60
Samoa: Dateline and Driving on the Left .. .... .... .... ..... .... 62
Competition Commission of India: Delayed Start... .... ..... .... 64
Regulatory Control . .... ..... .... .... .... .... .... ..... .... 65
Radia Tapes and Lobbying..... .... .... .... .... .... ..... .... 65
Walmart in India.... .... ..... .... .... .... .... .... ..... .... 67
Election Funding and Corporates .... .... .... .... .... ..... .... 69
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 71
5 Should I Really Take Contracts Seriously?... .... .... ..... .... 73
Monsanto and Contract Signed by Farmers. .... .... .... ..... .... 74
Coca-Cola, Novelis and Hindalco.... .... .... .... .... ..... .... 76
Concluded Contract: Pennzoil, Texaco and Getty Oil. .... ..... .... 78
E.U. Consumer Rights Directive, 2011.... .... .... .... ..... .... 80
Google, Paypal and Trade Secrets, 2011... .... .... .... ..... .... 82
Business Contracts and Bribery.. .... .... .... .... .... ..... .... 84
Man Proposes, God Disposes: Force Majeure in Business
Contracts.. .... .... .... ..... .... .... .... .... .... ..... .... 86
Technology Transfer and Business Contracts ... .... .... ..... .... 87
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 89
6 Will Intellectual Property Help My Business?. .... .... ..... .... 93
Copyright: Google–Oracle API.. .... .... .... .... .... ..... .... 94
Trunki Versus Kiddee Case: What is in a Design? UK Supreme
Court, 2016.... .... .... ..... .... .... .... .... .... ..... .... 96
Confidential Information: Thompson, Abramson
and Sloan-Kettering.. .... ..... .... .... .... .... .... ..... .... 97
Roses Are Red, Violets Are Blue… Is Cadbury Purple?... ..... .... 99
What is in a Name? A Lot ..... .... .... .... .... .... ..... .... 100
Myriad Case: Biotechnology Business and Gene Patents .. ..... .... 102
Trademarks and the Madrid Protocol . .... .... .... .... ..... .... 104
Aereo Case: Technology Versus Law. .... .... .... .... ..... .... 106
Patenting Abstract Ideas: Alice Corp. Versus CLS Bank .. ..... .... 107
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 109
7 I Love Peace. No Disputes Please... .... .... .... .... ..... .... 111
Suzuki—Volkswagen Dispute, 2011.. .... .... .... .... ..... .... 112
ONGC—Sumitomo, 1991. ..... .... .... .... .... .... ..... .... 114
Rio 2016 Olympics, Disputes and Arbitration... .... .... ..... .... 115
Microsoft, Mits, Pertec and Basic.... .... .... .... .... ..... .... 117
BG in Argentina: Catch-22 Situation.. .... .... .... .... ..... .... 120
Contents xi
Detroit’s Revival and UAW, 2011 ... .... .... .... .... ..... .... 122
Lance Armstrong: Fame, Shame, Business,
Charity and Law, 2013... ..... .... .... .... .... .... ..... .... 124
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 125
8 I Must Make Profits. Do I Need to Be Ethical? ... .... ..... .... 129
Ethics and Law. .... .... ..... .... .... .... .... .... ..... .... 130
Corporate World.... .... ..... .... .... .... .... .... ..... .... 132
India: Satyam, Raju and Pricewaterhousecoopers (PWC), 2009 .. .... 134
House of Lords 1998: KPMG, Sultan of Brunei
and Prince Jefri Bolkiah .. ..... .... .... .... .... .... ..... .... 138
Law ‘As It Is’ and ‘As It Ought to Be’.... .... .... .... ..... .... 141
Libor and Criminal Action, 2012 .... .... .... .... .... ..... .... 142
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 145
9 Please Get Me a Good Lawyer. .... .... .... .... .... ..... .... 147
Coca-Cola and Pepsi in India: Delhi High Court, 1999.... ..... .... 147
Dispute About Lawyers’ Fees for Resolving Dispute . .... ..... .... 151
Rich, Powerful, Courts and Law. .... .... .... .... .... ..... .... 152
Natural Gas, Naturally: Jus Dicere and not Jus Dare. .... ..... .... 154
When Copycats Win in China... .... .... .... .... .... ..... .... 155
Judges of Exceptional Integrity Needed ... .... .... .... ..... .... 157
Obamacare and Chief Justice Roberts. .... .... .... .... ..... .... 159
India: Reliance–Government Dispute . .... .... .... .... ..... .... 160
Lehman’s 38 Billion Dispute Settlement:
Better Late Than Never... ..... .... .... .... .... .... ..... .... 162
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 163
10 The Law Is My Friend, Philosopher and Guide... .... ..... .... 167
Google, Competition Law and Compliance in Russia. .... ..... .... 168
Starbucks and Tax Avoidance in the UK .. .... .... .... ..... .... 169
Daimlerchrysler in Ohio .. ..... .... .... .... .... .... ..... .... 171
Big Auto, Big Oil and the Law.. .... .... .... .... .... ..... .... 173
Accounting Scandals in Japan: Difficult to Understand.... ..... .... 175
BP and Noncompliance with Environmental Laws ... .... ..... .... 176
Apple–Samsung Legal Fight: The Unending Saga ... .... ..... .... 178
Goldman Sachs and Landwind in China... .... .... .... ..... .... 179
Choppers in Choppy Waters: Suppressio Veri, Suggestio Falsi,
February 2013.. .... .... ..... .... .... .... .... .... ..... .... 181
Business Leaders and the Long Arm of the Law .... .... ..... .... 182
Takeaway for Business Leaders . .... .... .... .... .... ..... .... 184