1. There are three case studies with associated questions. Read the case studies and answer only two out of three.
2. Before writing your answers, read the cases and prepare suitable notes to assist you to write succinct and
accurate answers. The quality of your answers will be determined on the basis of the completeness of your answer. You
will need to identify the relevant legal issues, apply the law to the facts of the question and cite relevant case law
and statutes to support your answers.
3. Each case study is worth 50 marks. Your task is to answer the question as completely as you can. You are expected
to adhere to the word limits.
Answer two case study questions.
Each question is worth 50 marks.
Case 1
(Total: 50 marks)
1. Facts
The High-tech Group is a multinational enterprise with the head office in State A, a permanent establishment in State B,
a 100% owned subsidiary in State C and an immovable property in State D.
State A has concluded double taxation agreements with States B, C and D, based on the OECD tax model convention, without
any change to the rules foreseen in the model.
The permanent establishment in State B realizes profits amounting to 1’500’000 US$. In State B, business profits are
subject to tax at the rate of 30%. In State A, corporate income tax rate is of 25%. According to its domestic law, State
A exempts profits taxed abroad.
The subsidiary in State C distributes a dividend of 3’000’000 US$ to its parent, High-tech Group, in State A. Under
domestic law of State C, dividend payments are subject to withholding tax at the rate of 20%.
High-tech decides to sell the immovable property it purchased in State D. On the sale, High-tech realizes a capital gain
of 1’200’000 US$. In State D, capital gains are subject to tax at the rate of 30%. In State A, the rate of tax on capital
gains is 25%.
2. Questions:
– Describe where the business profit of the permanent establishment will be taxable; mention the rule(s) of the
OECD tax model convention to which you refer, if applicable. If the business profit of the permanent establishment is
taxable in State B, mention if it is also taxable in State A; justify your answer.
– Mention what is the rate of the withholding tax that State C will levy upon distribution of the dividend of the
subsidiary to its parent. Justify your answer, amongst others, by mentioning if the OECD tax model convention applies; if
so, which article and why. Also describe if, and if so at which rate, the dividends received by High-tech in State A will
be taxed.
– Mention where the capital gains realized on the sale of the real estate will be taxed (in State A or in State D);
justify your answer, amongst others by reference to the rule(s) of the OECD tax model convention which is(are)
applicable. If the capital gains are taxable in State D, please mention if they are also taxable in State A and explain
why.
Case 2
(Total: 50 marks)
1. Facts
A-Co, domiciled in Saudi Arabia, intends to conclude an agreement with a company in Switzerland, B-Co, to export dates.
A-Co undertakes to sell an amount of 2’500 kg of dates, quality “A-Premium”, for the price of 12 US$ / kg. A-Co will send
the dates by plane, to Geneva, before 30th November 2015 (B-Co insists on getting the dates at that time, as it sells a
lot of these products just before Christmas). B-Co will get delivery of the dates in Geneva. It will mandate a company to
check the products. It undertakes to pay the price immediately after checking of the products is completed.
In order to draft the purchase and sale agreement, both parties agree to get inspired by the United Nations Convention on
contracts for the international sale of goods.
2. Questions
Please, draft the agreement between the parties, taking into account that this agreement must be implemented in Saudi
Arabia and in Switzerland.
Case 3
(Total: 50 marks)
1. Facts
The first business contact between K. D… P… GmbH & Co. (hereinafter: K. D…) and the [Buyer] took place in the
middle of August 2002. Some time during this period, K… D…, the then senior sales manager of K. D…, had a telephone
conversation with Thomas H…, the executive manager of the [Buyer]. Following this conversation, K. D…, on 20 August
2002, made an offer via e-mail to the [Buyer], concerning the delivery of food dextrose. During the first telephone
conversation, there was, as yet, no talk of any precise quantity to be delivered. The written offer by K. D… was based
on a quantity to be delivered of 24 metric tons (which corresponds to one lorry consignment); the offer, however, was
designated “non-committed”. The calendar week of 42/02 was designated as the earliest possible date of delivery.
Subsequently, there were several other telephone conversations, during none of which, however, was any concrete agreement
concluded.
On 16 September 2002, the [Buyer] ordered from K. D… 15,000 kilograms of food dextrose via telefax, to be received by a
customer of the [Buyer], H… AG, prior to calendar week 40. According to statements by the [Buyer], both the delivery
date mentioned above, and the quantity indicated, had earlier been agreed upon in a telephone conversation with an
employee of K. D…, a Ms M… . The telefax of 16 September 2002 was, however, returned on the same day, carrying on its
face the answer of K. D… that, at present, only the delivery of five metric tons could be confirmed, with the date for
picking up the goods set at 17 October 2002. The remaining ten metric tons would be delivered as soon as possible. The
first partial delivery took place on 16 October 2002, the subsequent deliveries on 7 and 20 November 2002. K. D… issued
to the [Buyer] invoices of the respective amount of €2,600. The [Buyer] refused to pay the invoices, stating that it had
incurred additional costs, and lost profit, as the goods had not been delivered on one single occasion, and, moreover,
had been delivered too late.
The [Seller], on 19 April 2004, at the Cantonal Court (hereinafter: District Court) of Zug, requested that proceedings be
issued against the [Buyer] concerning claims mentioned in the introduction to this judgment. The claims that are the
object of these proceedings, and which have been converted into the local currency, corresponding each to CHF 4,009.20,
are based on the invoices relating to the delivery of three times five metric tons of food dextrose during the autumn of
2002; these invoices remain unpaid.
In its response of 28 May 2004, the [Buyer], in essence, requested the dismissal of the claim, alleging that the [Buyer]
was entitled to set-off claims which exceed the claims that are the subject of these proceedings. Due to excessive ado
about the deliveries in question, the [Buyer] had incurred costs (telephone conversations of long duration, excessive
correspondence) of about CHF 2,000. The delivery of the goods in three instalments, instead of one single delivery,
caused additional costs for freight of about CHF 900. Finally, the delays in delivery led to the loss of an important
customer, engendering an annual loss of expected profit of CHF 5,000, i.e., a loss of CHF 10,000 over two years.
In the rejoinder of 2 July, and the counter-rejoinder of 3 September 2004, both parties maintained their claims. The
[Seller] rejected the set-off claims of the [Buyer], stating that K. D… had not been guilty of any breach of contract,
and had delivered the goods in accordance with the agreement. The [Buyer] countered that K. D… had been fully aware of
its flawed performance, as it would otherwise not have offered to bear the additional freight.
2 Question
Taking into account the fact that the agreement between the parties is regulated by CISG, please indicate which party is
right, on which ground and which damage is to be paid to whom, if any.
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