Sunday, 28 September 2008

5 trillion Jackpot

Concession blocks that Brazil has auctioned since 1998 may hold 50 billion recoverable barrels of oil in their pre-salt strata, giving them a potential market value of more than $5 trillion!

From my window

From my window

From my window, I see children playing in the streets.
I hear fireworks manifesting November’s treat.
I glance at random people walking by.
From my window, I see a whole world fly.

This is my window.
An object made out of wood and glass.
Both are destructible yet they work as an impasse,
to intruders, at last.
An interesting concept – so vast.
Where to draw the line? How to define it?
Physically? Subjectively?

From my window I see nothing.
I see a reflection of my own window on the window of the house across the road.
It all looks the same.
Beyond that wooden and glassed structure, nothing remains.
To that we shall not inquire, for it may be an intrusion of my neighbour’s privacy.

I see nothing because it’s dark.
Yet I notice random shadows in the street.
I hear a plane fly by.
What does the pilot see?
Nothing, surely.
Its dark.
Maybe he too, sees random shadows below his feet.

Back to privacy.
Surely if I pop my head over my neighbour’s fence whilst she’s sunbathing would count as an intrusion of her proprietary privacy: that is, her right to enjoy
Her life privately
Within the vicinity of her own home.
But what about the pilot, flying the plane?
He can certainly glance down, and see different things,
And see many people sunbathing, even when it rains.
Yet people don’t seem to really mind about that.

What else can my window tell me?
It plays an interesting, vital trick.
It allows sunlight in the house – an invasion of privacy?
That would be to stretch one’s imagination beyond what needs be.

More importantly, from my window, I see freedom.
I see the world beyond this glassed structure.
I see doors in houses opposite.
Opportunities that can be opened.
Flowers that blossom.
People, random.
Then I understand the value of privacy,
And the pleasure of liberty.
For liberty is really, to look outside the window in a sunny or rainy day, and fear nothing – and open the door and step outside.
Fear nothing, for your window is not an impasse, not a veil protecting your own privacy – but a sign of freedom, of perspective, of ideas.
Stand up and re-visit the windows in your house.
You’d find more than just a wooden and glassed structure: you’ll find yourself.
Demolish the house, rebuild it if you like – but you’ll notice that if there is one thing that houses can’t do without: windows.

Look at your window and think of it as an opportunity.
A bridge, a possibility.
Look at it and think: this is my window, my child, my sexual fantasy.

There is usually one way in a house, that is, through the door.
That is precisely the purpose of a door:
A medium of providing access to someone’s property. And to privacy?
It serves no more.

But windows, oh windows, they’re different.
They’re transparent.
They cement darkness with light.
Sometimes you can even stare outside without being noticed by the outsiders.
They enhance the colours in your room and,
The light in your life.

From my window, I see you, a reflection of my sight.

Clausula Compromissoria e Compromisso Arbitral

Qual a diferença entre cláusula compromissória e compromisso arbitral? Em que momento e por quem elas são estipuladas?

Clausula arbitral / Cláusula Compromissória
A cláusula arbitral é a convenção através da qual as partes em um contrato comprometem-se a submeter à arbitragem os litígios eventualmente derivados do contrato. Nos paises de common law, e conhecida como "arbitration clause" (ver Lowenfield, International Litigation and Arbitration, 2nd Ed. West Group). A cláusula compromissória é autônoma em relação ao contrato, de modo que mesmo ocorrendo nulidade ou outros vícios não implicam, necessariamente, em nulidade da cláusula compromissória.

Pela cláusula compromissória, submetem ao julgamento do árbitro conflitos futuros, que podem nascer do cumprimento ou interpretação das relações jurídicas estabelecidas por contrato. O Judiciário tem interpretado a cláusula arbitral como sendo uma simples promessa de constituir o juízo arbitral (RT763/210) .

Compromisso arbitral
No caso do compromisso arbitral, as partes submetem ao julgamento do árbitro um conflito atual. "O compromisso arbitral é a convenção bilateral pela qual as partes renunciam à jurisdição estatal e se obrigam a se submeter à decisão se árbitros por elas indicados"
(Guilherme, 2007).

O compromisso arbitral é muito mais antigo do que a cláusula arbitral. Em Roman Law, o principio era conhecido como compromissum. O compromisso arbitral pode ser judicial ou extrajudicial.

O elemento que distingue a clausula compromissoria e o compromisso arbitral e o momento de 'nascimento'. A clausula compromissioria nasce no momento inicial do negócio principal, como medida preventiva dos interessados, com a intenção de assegurar e garantir as partes de um eventual desentendimento futuro. Já o compromisso é um contrato em que as partes se obrigam a remeter a controvérsia surgida entre elas no julgamento de árbitros. Pressupões, portanto, contrato perfeito e acabado, sem que as partes tenham previsto o modo pelo qual solucionarão as discórdias futuras. O compromisso é, portanto, específico para a solução de certa pendência, mediante árbitros regularmente escolhidos.

Quem estabelece o compromisso arbitral? O juiz ou as partes?

O compromisso arbitral, conforme a Lei n°9.307/96, pode ser de duas espécies:

1.Judicial, referindo-se à controvérsia já ajuizada perante a justiça ordinária, celebrando-se, então, por termo nos autos, perante o juízo ou tribunal por onde correr a demanda. Tal termo será assinado pelas próprias partes ou por mandatário com poderes especiais (CC, arts. 851 e 661,§2°; CPC, art. 38, com redação da Lei n°8.952/94; Lei n°9.307/96, art. 9°, §1°). Feito o compromisso, cessarão as funções do juiz togado, pois os árbitros decidirão; na INGLATERRA o Civil Procedure Rules (CPR, 1999) obriga o juiz a sugerir ADR (Alternative Dispute Resolution, ou seja, mediacao, negociacao, arbitragem etc) para as partes antes de avaliar/ajuizar o caso perante as cortes ordinarias.

2.Extrajudicial, se ainda não existir demanda ajuizada. Não havendo causa ajuizada, celebra-se á compromisso arbitral por escritura pública ou particular, assinada pelas partes e por duas testemunhas (CC. Art. 851; Lei n°9.307/96, art. 9°, §2°)

Tuesday, 23 September 2008

Irritability in the Oil Market: is the latter suffering from PMS?

Question: What's the difference between women and the price of oil?
Hmm. Tough one...

Here am I again writing about oil. Why? Why again? You might be thinking: OK, enough with the oil business Mister - enough already!

So why do I carry on writing about it?

Yes, you've guessed it. Oil making the news once again. That is because the price of oil has jumped by more than $16 to $120.92 a barrel, the biggest one-day gain on record. Last week oil traded as low as $91! Virgil once wrote: "women, so changeable, so fickle". Well, perhaps women and the price of oil aren't that different from eachother afterall...

Friday, 19 September 2008


Videocon Industries and Bharat Petroresources Ltd, a wholly owned subsidiary of Bharat Petroleum Corporation Ltd, has acquired Brazil’s EnCana Brasil Petroleo Limitada for $283 million. Videocon and Bharat Petroresources will pay $165 million for the acquisition and another $118 million as reimbursement for EnCana’s expenses since January 1, 2007.

The world now realizes how profitable these Brazilian oil companies can be...

A wine machine? Eh? Oenodigital!

"Please insert 50p." Hmmm. How many of you have been disappointed/poisoned by the taste of watered down coffee from standard - and cheap - coffee machines?

I was browsing through Bloomberg's website today and found an interesting entry, which could probably be best described as a fusion between oenophilia and technology. That is the essence of the Clo Wine Bar at the Time Warner Center in New York, which features interactive computer touch screens that let oenophiles call up descriptions of cult, boutique and rare vintages before tasting! Tasting/buying wine is now
as easy as buying music for your iPod/iPhone. Oenophiles can scan through illustrations of each bottle with their fingertips, and with the swipe of a credit card, an Enomatic dispenser squirts out the vino. And it tastes nothing like the 50p coffee machine. One disadvantage though: they're bound to get customers who are completely digitally illiterate!

Wednesday, 17 September 2008

The "Magic" Moment: Revealing Brazil's true strength

The "Magic" Moment: Revealing Brazil's true strength

I wish I had written the following article - the only thing I can do now is support it. And spread the message:

BrazOil Update: Is the US financial malaise going to burst Brazil's economic bubble?

One of Brazil's leading newspapers, "O Estado de Sao Paulo" reported earlier today that Petrobras may have difficulties financing offshore projects if the U.S. financial crisis worsens. Indeed, the company's share price dropped from 4.6% to 29.87 reais. This did not, however, prevent the company's head of exploration and production to say that he expects the company to be producing 1.126 million barrels a day of oil equivalent from its new 'pre-salt' fields by 2017. Petrobras' strength is thus unlikely to be affected by the U.S. financial malaise - perhaps financial cancer is a better term. Indeed, domestic monthly oil output rose to a record high in August after production was raised at two wells and another platform entered into service.

Sunday, 14 September 2008

BrazOil Update

Brazil's economy will likely grow 4% next year as oil exploration bolsters investment even as the U.S. slowdown hampers growth, according to Folha de S. Paulo. A worsening of the economy in the U.S., which has presidential elections in November, may be the "only thing" that can retard Brazil's economic growth (this is particularly so as the US is Brazil's biggest trading partner).

Saturday, 13 September 2008

"Stir-Fry":Could the US Target South America for Oil?

The Brazilian army started Operation Atlantic, a military exercise off the coasts of Sao Paulo, Rio de Janeiro and Espirito Santo. The exercise, which will last a couple of weeks, is a way to arouse people's awareness on necessary means to protect the so-called "Blue Amazon," a 4.5-million-square-kilometer coast oil rich area. According to Admiral Santos, the maneuver will boost response of the Brazilian armed forces in case of major conflicts over the oil fields. Is Brazil taking precautionary steps to protect its recently discovered oil fields? I think the answer to that question is obvious. The real question is whether this military simulation could become a real-life situation (involving the Bush administration, as the perpetrator, of course). Hopefully not. If Obama wins, American foreign policy could dramatically be - for lack of a better word- improved; and, well, less oily and more "stir-fry."

Update on this story:

Thursday, 11 September 2008

BrazOil Update

Brazil's Petrobras has just announced that the completion of the Iara well drilling (which first found oil in Aug 2007) confirmed the discovery of light oil in the Santos basin pre-salt reservoir with a recoverable volume estimated in 3 to 4 billion barrels of light oil and natural gas. Time to dig for some more!

M&ABoom in Brazil: Time for UK Law Firms to Reconsider their International Strategies

Latin America's M&A market barely grew in 2007, but exploded in Brazil, which is now the top deal market in the region. Law firms in the UK are always very keen to open offices in exotic places like Dubai and Singapore but have yet failed to fully grasp the potential of the Brazilian market. This note therefore calls for UK law firm's greater involvement in Latin America (particularly Brazil) not through special representatives or strategic alliances, but by setting up a firm's own office in the country.

Tuesday, 9 September 2008

Oil prices fall as OPEC ministers meet

Brend crude has fallen below $ 100 as OPEC Ministers meet in Vienna. Prices have sunk from a record of more than $147 a barrel seen in July. What does this tell us about the oil market? Well, for one, it demonstrates the market's fickleness - a bit like the English weather. Also, it shows how the price of oil is heavily dependent on geopolitical and extraneous factors. Perhaps the "market" could be more kind to the consumer - or should the consumer be more pro-active in seeking alternative fuel sources from the market?

Le Chemin de La Vie (published in the International Book of Poetry, Paris, 1998)

Comment savoir si, la vie est bien reelle,
On ne peut le dire, elle est tellement belle.
Se promener sur notre grand royaume,
Decouvrir, la flore et la faune.
Les animaux, en devinette, marchant sur la mer,
Vivant et montant, les gros rochers de pierre.
La souffrance de l'esclavage,
La douleur sur nos visages.
Deguisant nos beaux costumes sur une vie terrestre.
Marchant toujours, courant, nageant sur la mer.
Regarder les yeux qui se refletent sur la riviere:
Peur de cheval, de fer pour s'y mettre.
La terre c'est la vie,
La vie est donc la terre.
Quand on nous dit l'huminate,
Ils nous disent fierte et longue duree.
Regardez ce qu'il y a autour,
Il n'ya pas que l'humanite.

Lucas Bento, Aix-en-Provence, 1998

(Written sometime in April '98.)

Monday, 8 September 2008

Martial Arts and Crime Prevention: OMAA's role in Oxford

An Interview with the Oxford Martial Arts Academy's Director, Tim Lalic.

1) What is OMAA?

OMAA is an academy which provides the main forms of contact martial arts, such as boxing, Muay thai, brazilian jiu jitsu, M.M.A. However, we believe that martial arts is for everyone, whether you consider yourself strong or weak –because at OMAA we believe that strength stems from dedication, courage, and discipline, not physical strength. So I think that OMAA offers a new approach to martial arts training.

2) Some people associate martial arts to violence. What is OMAA’s “new approach”?

Well, our fundamental values are respect, humility, patience and innovation. Our teaching doesn’t focus merely on the “how to fight” – or the physical side – but perhaps more importantly, we provide psychological training: how to stay calm and disciplined in dangerous situations. Our educational philosophy strives to form not only champions in the ring, but also champions in the community. Most martial art academies in the country are doing a good job at providing training, but the great thing about OMAA is that we instil our fundamental values in everything we do and we remain committed to being accessible to all our members regardless of ability, gender or age.

3) Why did you decide to create such an academy?

Well, I think that the decision initially came from my personal passion for martial arts: I’ve been practising Kickboxing and Brazilian Jiu Jitsu for the past 10 years or so. But the OMAA project was really about passing on that passion to the community in Oxford. Unfortunately, martial arts training in Oxford is pretty unreliable and scattered. There is no fixed place for training, instructor standards vary, and people don’t usually get value for money. OMAA therefore serves the entirety of the martial arts community by providing professional training with professional equipment at affordable prices.

But OMAA is also about making our communities a safer place to live. Oxford’s crime rate has been increasing over the past few years and that is quite disconcerting. By providing professional training, not just physical, but also psychological (or philosophical, if you like), we therefore see ourselves as educators and contributors in preventing crime in Oxford.

4) How does OMAA help the community in the everlasting fight against increased teenage

Well, by giving kids an opportunity to stay off the streets and being involved in team-building activities. We teach people how to control themselves, and in the eventuality of danger, how to respond in reasonable ways. Our competitions also give teenagers the opportunity to compete at national levels and reach their full potential. A person who is confidently trained in martial arts will be less likely to be the aggressor and will usually try to resolve a dangerous situation without the use of force. But we must make one thing clear: we don’t train fighters, we train champions – and champions lead by example: you don’t see world champions knocking people out in the streets.

5) Where do you see OMAA in the next 5 years?

I would like to see our “new approach” in different cities, where martial arts training is underprovided. Most importantly, I hope the OMAA philosophy will become a strong ally in the prevention of national crime. As Rick English put it, “a black belt is nothing more than a belt that goes around your waist. Being a black belt is a state of mind and attitude.” Here at OMAA we will continuously concentrate our efforts into nurturing a culture where that state of mind and attitude can be fully developed.

Sunday, 7 September 2008

Au revoir le dollar!

Brazil and Argentina are to sign a trade agreement that will effectively cease the use of the Dollar as the currency for trade between both countries. This demonstrates how Latin America is gradually becoming less dependent on the American economy - a trend noticeable all around the world. Both countries are to use local currency instead: real and peso.

A Theory of Apparent Opposites: Moving from an inconvenient truth to a convenient solution

One of the greatest things about nature is the ability of “apparent opposites” to work together in resolving problems and creating great things. Perhaps one of the greatest examples of all is the sexual union by male and female organisms in the reproduction of species. But one can also look at the Sun and water in contributing to the photosynthesis process (“apparent opposites” as water puts out fire). Recently, medical researchers found evidence that eating transgenic tobacco prevents cervical cancer (most people would associate tobacco to being a cause of cancer!). Human reason and dialogue enables conflicting and opposite interests to be resolved peacefully. For every action there is an equal and opposite reaction. In a world full of dilemmas, we could perhaps modify the physics tenet to “for every action there is an opposite yet compatible reaction.”

Issues surrounding environmental preservation and sustainability have come under great scrutiny in the past decade. Oil products (and its derivatives) are arguably one of the main culprits in environmental degradation. The reality of the matter is that our consumption patterns are damaging our natural environment – a damage that could potentially be irreversible. That it is an inconvenient truth cannot be disputed. What we can do, however, is to turn the inconvenient truth into a convenient solution.

In the legendary film Armagedon, the President of the United States passionately articulated our ability to engineer our common courage in resolving problems that are common to people all over the world:

“I address you tonight, not as the President of the United States, not as the leader of a country, but as a citizen of humanity. We are faced with the very gravest of challenges. The Bible calls this day Armagedon: the end of all things. And yet, for the first time in the history of the planet, a species has the technology to prevent its own extinction. All of you praying with us need to know, that everything that can be done to prevent this disaster is being called into service. The human thirst for excellence and knowledge, every step up the ladder of science, every adventurous reach into space, all our combined modern technologies and imaginations, even the wars that we fought have provided us the tools to wage this terrible battle. Through all the chaos that is our history, through all of the wrongs and the discords, through all of the pain and suffering, through all of our times, there is one thing that has nourished our souls and elevated our species above its origins, and that is our COURAGE.”

The underlying theme in the film is quite powerful. Workers from an oil rig are called upon to save the planet that is about to be bombarded by a number of meteors, wiping our species from the face of the Earth. The fact that the “heroes” are from the oil industry is ironic because it is they that will essentially prevent the natural catastrophe from occurring (the oil industry preventing natural damage. hold on. what?). And this brings us to the environment. Global warming and environmental degradation caused by human activities are arguably natural catastrophes waiting to happen. The author of this blog has enthusiastically spilled an extensive amount of electronic ink on the recent oil discoveries in Brazil. But the author is also aware that oil products do harm the environment. We must therefore combine our modern technologies and imaginations and go further up the ladder of science to ensure that the “apparent opposites” – oil products and the environment – can work together in providing a platform of sustainable co-existence. Our dependence on oil will not, realistically, be replaced by biofuels any time soon. Thus we must adapt our technology in order to prevent irreversible damage to our environment, and thus ultimately, to our very own well-being. Arguably, the convenient solution is under construction. Governments around the world are addressing environmental issues like never before. Even oil companies are working hard to improve their technology and reduce externalities.

Human beings only tend to react en masse in a state of emergency. A state of emergency is primarily the work of psychological stimuli. The convenient solution to the global inconvenient truth therefore begins with a change of mindset. We are now faced with the gravest of challenges of this century. It is time that “everything that can be done to prevent this disaster is called into service.”

To see the Armagedon clip, please click here.

A (re) introduction to Politics

“Oh that Prime Minister of ours hasn’t got a clue about what he’s doing!” The truth is that most people don’t have a clue about what the Prime Minister does, what he should be doing or what they can do in order to improve their political environment. Politics is everywhere. It shapes our lives. It dominates the news. It empowers and weakens us. It does so many things yet sometimes it appears that nothing is being done. But what exactly is politics?

Politics is difficult to define yet easy to recognise. For instance, take a look at the media. US Presidential elections. Prime Minister under pressure. Government invests in education. Politics is essentially a process that seeks to manage or resolve conflicts of interest between people. It is a decision making process. This process results in laws, economic and social decisions, and international relations. And the great thing about politics is that it starts with YOU. Indeed, and at the risk of echoing the obamian doctrine, “yes we can”, yes YOU can. But yes you can what?

Such an obamian-optimistic vibe (of which I support), however, is not shared by all of us. “A good politician”, wrote the American writer H.L. Mencken, “is quite as unthinkable as an honest burglar.” Cynical views of politics and politicians are legion. One only has to look at George Orwell’s 1984: “the Party seeks power entirerly for its own sake. We are not interested in the good of others; we are interested solely in power. The object of power is power.” Surely, the Obama doctrine seeks to change that. It seeks to give YOU the chance to effect change. But how can you do that if most people don’t even know what governments do in the first place?

Giddens provides a good insight into governments’ role in society. It provides means for the representation of diverse interests. It offers a forum for reconciling the competing claims of those interests. It creates and protects an open public sphere, in which unconstrained debate about policy issues can be carried on. It provides a diversity of public goods, including forms of collective security and welfare. It regulates markets in the public interest and foster market competition where monopoly threatens. It fosters social peace through the provision of policing. It promotes active development of human capital through its core role in the education system. It sustains an effective system of law so that citizens know their rights and duties. Governments have a directly economic role, as a prime employer, in macro and micro intervention, plus the provision of infrastructure such as roads. Finally, it fosters regional and trans-national alliances and pursue global goals.

Government, however, cannot act in a vacuum. It must base its decision on some sort of moral basis, or a particular political philosophy. Political philosophy is an interesting area of politics, dating back to ancient civilisations. Confucius (a Chinese philosopher) believed that a ruler should learn self-discipline, should govern his subjects by his own example, and should treat them with love and concern. Only the morally upright ruler should be able to govern. However, such a positive characterisation of government wasn’t shared by Plato. For Plato, all conventional political systems (democracy, monarchy, oligarchy) were inherently corrupt. Plato argued that the state ought to be governed by an elite class of educated philosopher-rulers, who would be trained from birth and selected on the basis of aptitude: “those who have the greatest skill in watching over the community.” Isn’t this a bit elitist? Save a handful of exceptions, isn’t this the case anyways in the world today? Look at the British Parliament: it is dominated by an elite clique that was conditioned for a lifestyle not shared by the majority of people. In today’s Western World, democratic principles imply that everyone has a role to play in politics. This is a view shared by Aristotle (a Greek philosopher), who believed that ethics and politics are intertwined and that a truly ethical (or inherently good and righteous) life can only be lived by someone who participates in politics.

Our participation in politics is rooted in the foundations of political ideologies. The media speaks of a right-wing and left-wing politics. But what does that mean? This classification dates from the French Revolution era, when those members of the National Assembly (Assemblée nationale) who opposed the monarchy sat on the left, while those who supported it sat on the right. The right wing is often linked to moral and social conservatism, law and order, and religion, while the left wing is often linked with redistribution of wealth (and thus higher taxes) and resources towards the poorer or less successful sections of society, and with secularism and disestablishmentarianism. The right wing is more often linked to the idea of social equity (being fair), and the left wing to the idea of social equality (being uniform and equal). Government is supposed to protect and preserve our freedoms. But how much intervention should government exercise in our personal freedoms? The more they intervene, the more authoritarian they are. In contrast, libertarian governments tend to stay away from our personal lives thus giving us more freedom to do what we like.

The British political system is mainly dominated by the “two-party system”, where Labour and Conservative parties rule the political arena. National political decisions are made within Westminster (Parliament), where the House of Commons and House of Lords debate on political matters (i.e. the economy, healthcare, law and order, education etc). In the US, this is made within Congress where the Senate and the House of Representatives form the political soul of the country. There is no real world government, although there exist mechanisms to govern international relations, such as the United Nations (UN) and the World Trade Organisation (WTO). The effectiveness of international organisations is, however, a matter of debate.

This note has tried to kill far too many birds with a single stone - but if there is something I want you to take with you once you leave your desk, it is this:

Every now and again, silence must be disturbed in order to give way to new and better ideas. The increased power of corporations; a growing consumerism trend; weakening social cohesion; individualism dwarfing harmony; short-termism over sustainability; profits over people; corruption corrupting integrity; respect and family values fading away and being traded for selfish principles; waging war, not for self-preservation or the promotion of noble ideals, but for furthering self-interest; the heart-tearing feeling of seeing the face of a disappointed child who has been let down by society; poverty. It is not up to me to give you an insight into the future of politics. But it is down to you to fight for a brighter political future. Making decisions to improve your life and the lives of those in your community. Standing up for tried and tested principles that have shaped modern civilisation: respect, trust, family, harmony, integration, integrity, the rule of law, and equality. In a world where our economy is richer but our society is poorer, we must recognise that we’re all in this together and not allow anyone to be left behind. The speed at which the modern world changes can be exhilarating, but also disconcerting. So it’s more important than ever to strengthen the ties that bind society together and provide reassurance and stability: family; community; a sense of responsibility; sustainability. That’s politics guys. That’s what it should be all about.

Team Work and Success

One of the greatest speeches ever made:

Friday, 5 September 2008


President Hugo Chavez got the legislative rubber stamp Thursday he needs to complete his effective nationalization of Venezuela's fuel industry. Under the newly passed bill wholesale distributors will have 60 days to sell their businesses to the state oil company, Petroleos de Venezuela SA (PDVSA), or face expropriation. This move effectively puts the Venezuelan government in a similar position to that of the Brazilian government and Petrobras.

But how will the Venezuelan government spend the cash from its oil revenues?

Venezuela is the world's fifth-largest oil exporter and oil accounts for 90% of its exports by value. Chavez wants to maximize the government's take in order to fund what he calls "21st century socialism" (Lula's government in Brazil will try to do the same following recent major oil discoveries - see "Nationalistic Tendency" post below).Venezuela's President has also nationalized the largest telephone, electricity, steel and cement companies. Chavez's main reason for this latest measure is that is is needed to stop intermediary firms from profiting from high oil prices. The government has also said the measure will help stop the illegal smuggling of the country's highly subsidized gasoline to Colombia and Brazil. Venezuela's pump prices are currently some of the lowest in the world at £0.09 a gallon for premium fuel.

In a world increasingly dominated by economic liberalisation, I sometimes wonder whether monopoilising is an efficient solution to social problems.

Major Investment by a Brazilian Firm: VALE

Brazilian mining company Vale broke ground Friday on a US$479 million phosphate mine in Peru. Vale's Bayovar mine, due to open in 2010 in the northern province of Piura, will produce about 3.9 million metric tons of phosphate a year. Vale, the world's top producer of iron-ore, has never before mined phosphate, but demand for fertilizer - for crops from sugarcane to soy - is now skyrocketing as agribusiness booms across Brazil, Argentina and Paraguay. Brazil is now forced to import most of its fertilizer, despite producing 6 million tons of phosphate fertilizer a year.

Major Investment in Brazilian Engineering

An American International Group (AIG) subsidiary has made an equity investment in a Brazilian engineering firm, the company said. AIG Investments made a $38.6 million investment in Advento Participacoes S.A., a leading specialty engineering services provider, AIG said in a statement. Advento will use the funding to acquire Serpal Engenharia e Construtora Ltd., a Brazilian construction company, establishing Advento as the only construction and turnkey engineering group in Brazil.

Thursday, 4 September 2008

Brazil Declines OPEC's offer

"I received the ambassador of Iran, and he invited Brazil to become part of OPEC. It wasn't a suggestion but a formal invitation," said Edson Lobao, Brazil's Energy Minister, at a media conference.However, Brazil has now officially turned down OPEC's invitation to join the organisation.

Shipping Away

China’s third-largest shipbuilder, Jiangsu Rongsheng Heavy Industries Co. Ltd and the world’s biggest iron ore supplier, Brazilian company Companhia Vale do Rio Doce (VALE) have concluded an order for building 12 very large ore carriers, making it the world’s largest shipbuilding order ever contracted.

An Invitation to Treat

OPEC has invited Brazil to join the organisation. The move only highlights Brazil's potential to become a major oil production nation. Politically, if Brazil decides to accept the invitation, the country's geopolitical strength will increase and thus give it more leverage in international commerce.

Wednesday, 3 September 2008

One Unenforceable Contract a Day Keeps Investors Away:

Problems in enforcing contracts in Brazil

In the book of Enoch (2: para.23), God affirmed: “My Word is My Deed.” In an ideal world, human beings would be as honest and integral as God and there would be no need for contracts: everyone would take the other’s Word as a solid and reliable guarantee of performance. But once we walk through the inflamed gates of the commercial world, contractual arrangements form the status quo. As a growing economic powerhouse, Brazil really ought to consider reforming some aspects of its Contract Laws. The current contractual system in Brazil may repel investors and send the wrong message to the international financial community.

Efficient contract enforcement encourages businesses to engage with new customers and new markets. Yet in Brazil most courts are slow, inefficient, unpredictable and even corrupt. It is also unfortunate that most courts have little experience with commercial cases. Arbitration is supposed to expedite contract enforcement. However, because companies have traditionally been unwilling to use arbitration, firms go to court to force the other party into arbitration. Arguably this step defeats the purpose of arbitration, which is to avoid going to court in the first place.

Trials can last for years; multiple appeals are common—increasing costs and uncertainty (in Brazil, 88% of commercial cases are appealed, in Argentina 13%, Peru 17%, and in Mexico 30% - World Bank 2007 figures). Recent changes in the Code of Civil Procedure set time limits on appeals and eliminate the suspension of the court process when the judicial decision is appealed before the judgment in order to introduce new evidence or call on experts (interlocutory appeals).

The Supreme Court in Brazil handles more than 100,000 cases a year versus approximately 200 cases handled by its counterpart in the United States and frequently, judicial decisions are perceived to be pro-debtor.

Whereas US courts tend to validate “choice of law” clauses, Brazilian courts tend to favour Brazilian Law. Clearly, such a paternalistic stance undermines contractual flexibility and is arguably “anti-market” in nature. This damages the country’s international commercial appeal by increasing what economist Ronald Coase calls “transaction costs” – which are those costs incurred in the negotiation process.

Thus, as part of a larger reform package, it would probably be a good idea to set up specialized commercial courts in Brazil. Specialized courts are associated with faster and cheaper contract enforcement in industrialized and middle income countries. One reason is that judges become experts in handling commercial disputes. In addition, commercial courts often require less formal procedures resulting in faster trials. Businesses that have little or no access to efficient courts must rely on other mechanisms—both formal and informal, such as trade associations, social networks, credit bureaus or private information channels—to decide with whom to do business and under what conditions. Businesses may also adopt conservative business practices and deal only with a small group of people linked through kinship, ethnic origin, or previous dealings. Transactions are then structured to forestall disputes. Whichever alternative is chosen, economic and social value may be lost. The main reason to regulate procedures in commercial dispute resolution is that informal justice is vulnerable to subversion by the rich and powerful. But heavy regulation of dispute resolution has negative consequences. Across the region, the more complex the procedures, the longer the delays and the higher the cost to enforce a contract. Less wealth is created and bearing that in mind less people around the world will be interested in investing in Brazil.

Nationalistic Tendency Could Be the Wrong Strategy For Brazil

The Brazilian government is currently debating proposals to further its share in the country's oil industry. Petrobras, the largest oil producer in Brazil, is currently owned by both government and private sectors. However, following the recent discoveries of the Tupi field, the government is considering increasing its ownership rights into what will most definitely be a very profitable venture. A separate state owned oil company may therefore be set up in order to manage the country's oil exploration and production contracts in the subsalt cluster. Under this system, the government would own the oil but pay companies with part of the proceeds. Surely, Lula's administration is interested in using most of the 'oil money' to resolve social problems:

"The priority for the resources from pre-salt fields will be education and the eradication of poverty,'' Lula said in a speech to celebrate Brazil's independence today. "We'll turn perishable wealth, such as oil and gas, into a permanent source of wealth for the Brazilian people."

However, such nationalistic tendencies could send the wrong message to international investors who are willing to invest in the country. Protectionism is more of a foe than a friend of economic development and given the current global financial malaise, it would wiser to adopt liberalisation as the government's economic policy. In any event, it is first necessary to determine precisely how much oil there is before embarking on how it is likely to be shared.

Tuesday, 2 September 2008

An Introduction to Shipping Law (published in the Obiter Dicta Law Journal)

An Introduction To Shipping Law

Welcome ‘onboard’. 'Shipping' is the physical process of transporting goods and cargo. Virtually every product ever made, bought, or sold has been affected by shipping. Despite the many variables in shipped products and locations, there are only three basic types of shipments: land, air, and sea. This article is concerned with some features of Shipping law, or Maritime law, in the context of the carriage of goods by sea.

The EU is the world's largest trading bloc. Its foreign trade with the rest of the world is more than double the Japanese total and even greater than the US figure. There is no doubt about the strategic significance of shipping for the EU and its Member States. Indeed, about 90% of the EU's foreign trade is carried by sea. About one-third of the goods carried each year between the Member States is carried by sea.

Ships are accorded a nationality, like persons and corporations, and thus subject to the jurisdiction of that nationality. As with all objects of property commanding a certain value and involving a certain risk, co-ownership in ships is a familiar phenomenon. Ownership of a ship in common takes a somewhat unusual form, since each ship is notionally divided into sixty four parts. The origin of this practice has not been definitely established although various theories have been advanced. For instance, it is believed that the custom grew out of the fact that in olden days most vessels had 64 ribs.

A person desirous of trading at sea may charter a ship, purchase one, or have one built specially. Which course he adopts will depend on the state of the market and its future as he foresees it, the probable period during which the ship will be used, the trade in which it is to be employed and the consequent necessity of special equipment. For instance, a record number of new ships are to be delivered in 2009 and 2010 due to an expected increase in demand of coal and iron ore from the Chinese and India economies.

From the earliest days of trading, the character of shipping as a means of transporting goods and passengers, along rivers and across lakes and seas, established this sector as a necessary component in the development of international commerce. As Pamborides put it, 'transportation of goods has mostly been carried out by sea making the conservation of the shipping industry a sine qua non factor for the world's economy.' Let's take the iPod as an example. It's technology is developed in Silicon Valley in California, its parts are assembled in China, and you probably bought it from, an English company. So how did it get there? Answer: In a ship. And with that ship comes shipping law, leading the way.

In a nutshell, shipping law can be divided into two categories: wet and dry. 'Wet shipping' specialises in casualty related work including collisions, salvage, wreck removal, pollution and other environmental issues, hull insurance, actual and constructive total losses and personal injury claims.

For instance, marine salvage is the process of rescuing a ship, its cargo and sometimes the crew from peril. Salvage law provides that a salvor (a person that saves another) should be rewarded for risking his life and property to rescue the property of another from peril. Salvage is a very ancient right, one that can be traced to the ancient Greeks and the Rhodian maritime code of some 3,00 years ago. There are also clear references to it in Roman law and it is referred to in the Laws of Oleron in AD 960; the maritime law of Visby in 1219 (which provided that the amount of the salvage award should be assessed by an arbitrator); and by the 16th century law of Trani (which provided that the salvor should receive half of the value of if the property had initially been afloat, and two-thirds of the value if it had been beneath the sea).

Salvage is not only an ancient right but one peculiar to maritime law. If I see my neighbours’ house on fire and voluntary extinguish it, I am not entitled to any remuneration for so doing. However, if the master and crew of the ship come across another vessel on fire and extinguish that fire, or save it or contribute in saving it from any other danger, they will be entitled to salvage award. The seas can be a very lonely place and even today there are parts of the world where it is not easy to find assistance. Thus in shipping law we find solidarity…

'Dry shipping' specialises in disputes arising out of Charterparties, bills of lading, ship building, sale contracts, finance and insurance. A buzz word often heard in City law firms specialising in Shipping law is "Charterparty". A Charterparty is a contract between merchant and shipowner by which a ship is leased or hired for the conveyance of goods on a specified voyage, or for a defined period of time (called Voyage Charterparties and Time Charterparties respectively). The contract essentially deals with the use of the vessel. The charterer takes possession of the vessel for a certain amount of time or for a certain point-to-point voyage.

In the Voyage Charter, the charterer hires the vessel for a single voyage – say from a port in Portugal to another in Japan - while the vessel's owner provides the master, crew, bunkers and supplies (similar to renting a car with a chauffeur). In a Time Charter, the vessel is hired for a specific amount of time. Essentially, the owner still manages the vessel but the charterer can determine the employment of the vessel, and may sub-charter (i.e. sub-let) the vessel on a time charter or voyage basis. There is a third form of charter called the bareboat or demise charter. This is like a time charter in which the charterer takes responsibility for the crewing and maintenance of the ship during the time of the charter, assuming the legal responsibilities of the owner (similar to renting a car for a specified amount of time). A number of disputes will inevitably arise as a result of different interpretations concerning clauses in the Charterparty. Many shipping disputes are referred for arbitration before arbitrators who will have particular experience (commercial or legal) in the area in question.

The other big facet of dry shipping is finance. Shipping finance is important as commercial ships are expensive to buy. The essence of any ship finance deal is that a bank or some other lender advances money to a shipowner to assist the owner to build a new ship; buy a second-hand ship; convert, repair or alter a ship; or refinance existing indebtedness secured on a ship. The lender must be secured and looks, for his principal (though by no means only) security, to the ship itself. More than most other forms of finance, ship finance is international. Indeed, a ship is an unusual asset. Most ships move – or are capable of moving – all over the world. The financing of large ocean-going ships is undertaken by banks all over the world (and thus spreading the risk), by no means just for owners in their own country. On the contrary, and certainly for larger ships, it is more likely to find a Singaporean bank, acting through its London office, lending to a Brazilian-controlled owning company and securing itself on a Chinese registered ship.

As you may have gathered, shipping law is highly commercial and international. It is a fascinating practice area providing opportunities to combine economic theory to legal and technological practice. Efficient transport networks are integral to a healthy world economy. Effective rules governing these methods of transportation, or the subjects involved in these operations, are essential in ensuring business efficacy and certainty. Arguably, such rules are crucial in keeping international trade afloat and preventing the global economy from falling into an irrecoverable abyss (and I don’t mean the subterranean ocean). In any event, I hope this article has shed some light on a branch of the law that deserves to be studied in greater detail at undergraduate level.

Brazoil Report due soon

Here's two interesting articles the BBC has posted earlier today about the state of the oil market and recent oil discoveries in Brazil: