Darshan
Hey everyone, welcome to another episode of DarshanTalks. I'm your host Darshan Kulkarni. It's my mission to help patients trust the products they depend on. As you may know, I'm an attorney. I'm a pharmacist, I advise companies with FDA regulated products. So if you think about drugs, wonder about devices, ponder over pharmacy or consider cannabis. This is the podcast for you. My guest today is also an attorney. I'm an attorney as well. So I do have to start off with our disclaimers. Not legal advice, not clinical advice. I also do these podcasts, these live streams because they are really interesting. I get to talk to really cool people like my guest today. So if you'd like this, please like it. Please comment, please subscribe. And I'm sure my guests will appreciate this as what I please share with people who you think might learn or might might want to know more about podcast and the discussions we're having. If you want to reach me, you can find me on Twitter at DarshanTalks, or just go to our website at DarshanTalks calm. Our podcast today our live stream today I'm really excited about because today what we're going to end up talking about is is this idea of international transactions. And I've always hinted at this is kind of work have done before. A lot of my clients tend to be International, but I get to talk to someone who does this true blue at a global level. And then I'm going to talk a little bit more about that we're going to hear more about it as well. Our guest today is a licensed attorney both in Germany and the United States in North Carolina, and is admitted as a foreign law consultant in Georgia. he consults clients on us German and European law. His practice areas include international business transactions in corporations in the US and Germany, and foreign direct investment advisory startup consultations, immigration business visas, company sponsored green cards, as well as dual citizenship applications. So our guest for today, ladies and gentlemen, is Reinhard von Hennings, how are you Reinhart? Good to see you again.
Reinhard
Darshan always great to see you always great to talk to you. I'm doing perfect. How about yourself?
Darshan
I'm doing well. It's been it's been a very difficult period as you as we all know, with with COVID. And one of the things I've been trying to figure out is, should I start traveling more and I've been struggling with that you on the other hand, just came back. You just came back from Jeremy, how was that? How is Jeremy doing right now?
Reinhard
Germany is great. If you listen to the news, Germany has a big problem with an unprecedented flood, where 1000s of people are homeless. 1000s of people are missing. Hundreds are somewhere injured, over 170 confirmed deaths at this time. And this unprecedented flood is something which is really a big issue in Germany right now. After everybody thought we are done with Corona we are done with all the COVID prevention now a whole area of Germany's under another disaster. Other than that, it was certainly a good mixture between scary and cheerful to be traveling again, to be on many hours have bought onboard off an airplane. Wondering does my double vaccination work and what's happening on that and also by the same token, air travel is no longer what it used to be. My travel was rebooked twice on both ways. So it was rebooked twice and leaving it was rebooked twice on flying back. So my return flight had to be delayed for two days because British Airways did not serve as one flight. And therefore American Airlines could not bring me out. So my big takeaway is when when my wife and I celebrated the birth or first round of kids, the twins area told me you need to add an hour to your life if you want to leave the house. But I can tell not everybody in the same spirit added day to your travel. Make sure you don't return the day before you have to do business or make sure you don't fly the day before you need to be in the other part also world because it may change and it did happen to me. I arrived exactly two days later than scheduled because of shortage of lights. Before Corona, there were over 3500 daily, sorry, weekly flights between Europe and the United States. In the corona hybrid was down to live with over 100 now the numbers are going up. But the availability is certainly very, very different. So how was it? It was a thrill It was fun. It was different. It's almost like you need to learn how to walk and to talk and to ride a bike again, because rules are different on all different levels.
Darshan
So the rules are different but and you're talking about this flood Let me ask you the first question because I wasn't aware of this flood so I suddenly feel like I'm living under a rock. How where's the flood impacting
Reinhard
The flood is impacting the middle Western territory of Germany, which was bordering to France, to the Netherlands and to Belgium. And it was an unprecedented rain over a couple of days due to a storm. It's known as burned. You know, we call out hurricanes in America, different names. So the very deep storm burned, created an unprecedented amount of rain over multiple days, just create the soil to be oversaturated. And little streaks and little whatever water puddles in little cities, which are normally 234 feet high, and up to be 25 feet high. Wow. Or in the metric system. Normally, there are 60 centimeters, one river is reported. And it ended up to be higher than eight meters. There are roads 12 meters, which is 36 to 38 foot underwater, because of how the water flows. So the impact is primarily in Germany, also a little bit in France, in Belgium and the Netherlands, but this whole Rhine area where lots of rivers flow into the Rhine, they're all impacted. And it was a disaster. Why did you not hear it? joking about international things. What I realized is that so many media are talking about local news, they're talking about the news, and international news are very hard to grasp. So when I talk about international things, I always need to reflect myself, what do people know when I talk about things what I in my daily life experience does not match your news feed. Because you may have a different geographic interest, you may have a different intellectual academic interest. So the world is bigger than we think. But by the same token, it's hard to get news
Darshan
it's it's so interesting you say that now let me ask you this. I've been to Germany a few different times, but a few different places. So but I apologize I'm not as familiar as I should be with German geography. My question to you is are these floods impacting a an industrial part of Germany and is it a impacting business?
Reinhard
So the the so called loan is a big city many people know so cologne is kind of like on the most northern rim of the impacted region, and cologne is immediate city. cologne is a is a technology city and Cologne, so to say on the western part of what we call the Ruhr Valley, and the Ruhr Valley is known for heavy metal and steel, old fashioned 18th 19th 20th century production of of things. So there is an impact there. What's the majority of the impact is just slightly outside of the industrial area, where people rely on tourism, where people rely on wine on agriculture. And I hear voices from different hotels and vacation suppliers to say, Well, after a Corona restrictions were lifted, we had hoped for a nice summer, but not everybody thinks we're under the flood. And bookings are canceled left and right. It's almost like there's a hurricane in Miami, everybody's canceling their trip to Amelia Island, because I think it's the same state. So right. So it's a ripple effect on tourism primarily. But again, you know, the sad news is people lost their lives in a flood. And that's something where I feel we should have enough technology out to war and our floods coming, especially in the 21st century. But yeah, the impact is in the western part of Germany. So if you know where Frankfurt is, and then the river Rhine goes up north. So the area between north of Frankfurt and cologne is impacted.
Darshan
Okay, because I've been in Frankfurt before but I didn't realize is in the same area. You just land with the, with the airplane go from there. Now. It's but but let's take that next step. So you were talking a little bit about how you are intimately familiar with and you're doing these global transactions involving Germany and dealing with global transactions involving the US. In situations like this, where you have flooding? How do you? Is this going to impact the types of agreements you start drawing up as you continue? In terms of joint ventures? Do we now say, x a flood will be a act of God, and therefore we may not perform? Or is this sort of a we're now expecting this and it's just what we do when we just take backups and that that that risk is on you as a company?
Reinhard
It's a burning question. It almost sounds like this question about force majeure. What what we see very often is that contracts call for certain implications and certain excuses. And one of the larger force majeure discussion I had with my clients was about this. This container ship was stuck in the Suez Canal, where the question is, Is somebody whose goods are on that ship and who cannot get the goods to the ship Port of designation now subject to the first module or excuse, meaning that because the goods are stuck somewhere in transit, he's excused off on time delivery. And the quick answer is it depends on how the contract is drafted. And what what I've seen after Corona a big push in my team to make sure that we revisit all of the force majeure clauses, and you may know I do my daily video podcast and on occasion I talk about force majeure. And I had a big force majeure session after we had the corona situation because Corona was certainly non foreseeable. So the traditional interpretation of what happened was not applicable and I think many companies got out of luck, like a global pandemic to be considered a force majeure was arguably possible under the old rules. But now as we have seen how the world has shut down, and especially now with this Suez Canal issue, or now this flood, the likelihood of major disasters seem to be increasing, whether it's global warming, or whether it's global travel, where pandemics travel faster and types of airplanes. So what may have worked in the corona pandemic may not work in the future because right now a global pandemic is foreseeable. We have seen it. So we are drafting we are redrafting force majeure clauses, and to entertain everybody. If you have a good force majeure clause under the laws of pick your state, let's say under the state of North Carolina, this is force majeure clause enforceable in California, maybe, maybe not. But even think it more if a force majeure clause was drafted in the United States, jurisdictions. How would this compare to an interpretation and the European Union law or under German law or under French law where force majeure could be defined different or if you add on top of that, that we have different culture, understandings of law all over the world? cosmodrome may be differently interpreted in South America from from Africa may be different in Asia, from Australia, and all of those force majeure components for me mean that as lawyers, and as we are drafting contracts, we need to be very alert about two things. Number one, what is the law? And number two? How could the law be seen different in different parts of the world because what sticks in North Carolina may not stick in Pennsylvania, what sticks in the United States may not stick in Germany. So in a way, force majeure is a big discussion point. And my team and I are drafting force majeure clauses for every contract, and I'm adding now floods, and I'm adding now pandemics and I'm also adding doubt forced governmental shutdowns, because certain borders are shut down. In the past, we thought about countries where all of a sudden you have a civil unrest where people cannot enter Well, he does is not enough, because we may right now have governments voluntarily shutting down their borders, which happened a little bit over a year ago, when President Trump has shut down the borders on so many instances in order to protect this country. And not arguing whether it's right or wrong. But as long as we see the reality of that. And what we saw as a surprise in 2020 is for me, is the new norm. So drafting is more challenging, more fun. But by the same token, if the job would be boring, we wouldn't do it.
Darshan
Exactly right. But But now we're talking about how you are broadening the scope of force mature. And as we start getting into that, do you find more companies will start doing deeper due diligence into force majeure issues, to see if they have a plan to address these, these disruptions? And what I mean by that is, let's say you're talking about a joint venture, you're talking about a buy sell agreement. Do you think that there's going to be a new focus on? Are you ready for strikes? Are you ready for flooding? Like do you have a place to store your things? Are you ready for COVID? And therefore manufacturing disruptions? Or do you think that most people based on what you're seeing are going to come out of this in 234 months, five months, and go go back to where life was before?
Reinhard
I think the human nature tends to forget bad things and look forward. And so I believe there's some some short lived memory here. And if you if you think about the job, we as attorneys and counselors have is to say, Well remember that time when it didn't work, so we need to be more careful and drafting. So while I think people will forget, I can also see that we have different kinds of technology, which I think is fascinating. We're an old problem may be overcome by technology. I think for example, 3d printing of gadgets, may improve any delivery shortages, when all of a sudden you cannot get containers from A to B, but you need certain gadgets. Well, how about you You make your own gadgets by using a 3d printing technology. And then you have, instead of force majeure arguments, you have licensing arguments, you have copyright arguments, you have different protection arguments here. But the human mind in my understanding is always there to invent. And we as lawyers are there to support and to underlie what's the human mind is doing, there's a human mind doesn't feel in 20 years, force majeure is an issue because everything is done with 3d prints cool, then we have a different legal system to solve. And different legal components became obsolete. If you talk about horse carriage ride laws in London in the end of the 19th century, they obsolete by now because nobody seriously rides horse carriages in the City of London anymore. And those laws are no longer needed. But nobody thought about drone taxis and so there is a need to reinvent it. So what I think is the law in a way is here to stabilize society. By the same token, the law is there to push society forward in following needs of the society by defining what's right, what's wrong.
Darshan
So so that really raises the question. You talked about society defining what's right or wrong, as we, as you start doing international transactions, one of the things you start dealing with is this idea of what is right or wrong. So let me ask you sort of a general question. Because you're uniquely positioned to talk about this. Culturally, we think from the US perspective of Germans as being extremely precise, extremely adept. Um, what is the perception from the from the German side, when they're doing transactions with the US? is it all about the finance and the fact that there's a lot more money here? Or is it we have to deal with them, and they just have a bigger market? What is that perception like?
Reinhard
Wow, so for me, as a German American dual citizen who lived the past 25 years of my life in America, it's hard to really figure out how much is a true German view, which I have right now to the American society, because views change over time. Sure. I, I would say, the prospection of society is very often defined by how the society present itself, which means through media, through movies, through music, through fashion, through politicians, through actions or through admissions. So the German image of the United States is in a certain way, a Hollywood image. Now back to you, how realistic is Hollywood compared to the real American life? So that's what I think is the first problem that's your Hollywood image is the Hollywood image. The second part
Darshan
is when we clarify the question, though, I think I didn't phrase the question properly. Okay. What I'm referring to though, is when you deal with your clients, and they have to do a transaction with the US, what do they make their pressure points to be and you have to deal with?
Reinhard
Good, that's a good one that's sorry for not catching that. neons what my clients see the Americans very often is your reticle easy going, and no, no fixed predictability behind that. And I had seen situations where we were in the middle of a deal and the deal seemed to fall apart and then the American counterpart said okay, if x doesn't work, how about y? And this was a real estate driven transaction where all of a sudden the seller offered a different piece of land and the German client got very nervous what's wrong with this piece of land? Why doesn't he want to sell it to us anymore? And what's more new piece of land Why does he want to do that? What did you realize in the meantime which we didn't know? So there's American Okay, let's make a deal you know, this one doesn't work let's shape it a little bit different is very normal for the American culture so it took me a while to explain that we have a cultural gap here there's nothing wrong with property a or property B it's just a thought that you don't like property a therefore the TV if you don't like property B, let's ask for property C and say and the answer was both parties is not productive you're not prepared for that. So it's it's nice to see those different cultures so the the trial and error easygoing, let's let's make a deal is certainly something which is not part of the German of the German culture. And if I have more time, I can add more to that,
Darshan
please, please, please do.
Reinhard
So the second part, which confuses Germans a lot is when they say brainstorming that brainstorming is not prepared. And so from an American point of view, you want to do brainstorming, of course you're not prepared. But the German mindset is, well if we have an unprepared brainstorming then we cannot brainstorm On correctly. So tell me the limits of my brainstorming because before I start to brainstorm, I need to know what's off limits. And the nice American phrases to think out of the box is something which does not fit with certain German cultures or certain German personalities. So what we do very often is a good amount of hand holding to combine those cultures when you're sitting in a room and trying to to draft the deal. Or when you're sitting in a room after you had the first mru or IOI indication of intent, and pushing it over into an LSI letter of intent or an M mu, and even arguably, whether there's a logic behind the order. But if you're if you're on a discussion like that, what German counterparts find confusing that the American counterparts change their mind, and the typical German answer for question is no. typical American answer for a question is yes. At the end, both make it work because the Germans re revisit their No, the Americans revisit their Yes. So as a little bit of a yes, and or Yes, but or no, but no end. So at the end those cultures meet, but you have two different starting points. And it's always fascinating to see how much time is wasted in multinational negotiations, where you have have a day of cultural clash, and then you start to talk business.
Darshan
So do you find that so many questions that pop out of this? Obviously, someone like you, Reinhardt is unique, you actually speak both languages or speak both cultures for lack of a better term. But were you seeing say a the other side coming out? Do you find them? If it's a deal in the US? Do you find them flying German lawyers over to the US, and they're having to deal in the US? Or are they having? I guess what I'm trying to figure out is, which lawyers do you use in those scenarios in cross cultural cross border transactions?
Reinhard
The question is probably more seen about what was the applicable law, and we see transactions which are done under United States law, or the laws of a certain United States state. We also see transactions done under French law, German law, Italian law, and therefore the drafting of the final documents lays more on those lawyers who are who have a good working understanding of that, of that language, also of the legal system, we see more and more arbitration clauses to be used in international business transactions. However, even then you need to figure out what is the applicable law? What is the baseline of interpretation? And the lawyers teams back to your question, who's flown into what transaction it's less glamorous? Or maybe it's good that it's not so glamorous? Because a lot of things are done in advance via emails via phone conferences or nowadays zoom seem to be the new phone conference substitute. So many things are prepared so the real get together of all the all the guys in one room is getting more and more exotic are more and more rare. But it happens especially it happens in different stages when the discussion is critical. But back to your question, who is better for it the best is the one under which laws the contract is eventually drafted.
Darshan
Intuitively that makes total sense to me. But having worked on several of these deals, the thing that I feel I'm missing quite honestly is I feel like the issue of which law matters is almost one of the negotiations that happens so to me you'll hear are the terms of the agreement here is your memorandum of understanding or letter of intent or whatever you want to call it um and and you don't even get to the jurisdiction or the language or the the venue and jurisdiction questions till you till the actual contract. So what I'm hearing you say which is very different from what I usually do things I'm fascinated I'm learning here. You what you're telling me is that you go backwards, you first go, which countries do I want the law to apply from? And then I'll draft everything else according to that which means you'd have to have a pretty deep country specific knowledge of each law system. Is that fair? Am I saying things that are accurate the way you're describing? I think
Reinhard
you picked up what I said but it's probably not not that not black and white. Okay, the I don't see negotiation and start with which laws applicable No, okay. Okay. When people are first in love, they talk about how to create a family, not how to file for divorce. So business people talk business, for Where to go with a lawsuit is definitely not on the on the front of their mind. What we see very often is is drafting of when the paper gets drafted and redrafted it gets more more detailed at that stage, the question comes down under which laws it is. And then the The question is who's more who's more in charge, I very often have no preference in giving up certain laws as in. We don't need to speak specifically to American law or to German law. Why? Because we are part of the same country mindset, we were part of the same structure of a euro, American, or sometimes a huge as the three monotheistic religions being driven by moral set of minds, which are very often reflected in the legal system. And while we certainly have transactions which I've been in where we had involved Sharia law, if it comes down to how you define interest, and the tradition in parts of the world, and how can you make an interest calculation, if you want to have a Sharia component in with an investor from Riyadh, for example? And that's, that's a question where in my understanding, so those are, those are real deep thoughts behind that. But once you are done with, what do you want to do, it boils down to that at the end, many things are different, but it's real real and many things are similar. You always want to follow the good Roman legal principle, which is over 2000 years old pack doesn't serve under treaties, contracts need to be followed. And you need to have an enforcement system for this Roman law principle of pacta zone to the vendor. And if you have a contract, then make it stick under German law. Hooray, go for it. But you need to have the understanding of what you want, first, and then you put in what it is. But if you follow the pack doesn't serve under, and that a contract needs to be followed through. That makes no difference if you enforce a contract under German law, under North Carolina law, or under California law, because the legal guiding principles are similar. That's where I think in all the differences, we can talk about a lot, the similarities of humanity, what you want to have a very, very much closer, you want to contract with follow through, you want to have a business partner you can trust, you want to have a business partner to keep this business partner liable. This business partner does not perform, because he has a delay of performance. You want to feel that somebody needs to pay for it, and there's somebody is not me, if it's somebody else's fault. those principles for me are universal. And I very often tell my clients when we are down to, oh, it needs to be the laws of Texas in this deal, because one of the companies is in Texas, and they are not negotiating out of that Mr. Klein's give it up, you know, let's negotiate something more relevant payment terms, security deposits, letters of credit, how do you how do you secure transaction, let's focus on that, and give up Texas law because at the end, you can say American law is weird and funny, and we don't have juries in other parts of the world. But it's a relative predictable legal system in America. And my ongoing mantra is, let's fight on those matters where you can win payment terms is irrelevant deal. On the esoteric chance, if you go to court, less than 1% of us go to court. Let's Don't waste time on that. And if it's a negotiation, leverage, give it up. I don't care. Go to Texas, it's nice.
Darshan
I usually as you know, I do these for about 1520 minutes. I'm already almost double that. I've one last question from Lydia before we let us go. As we face global issues like COVID and climate change, would we be better off as a society? If international law was less adverse or adversarial, and more cooperative? What do you think?
Reinhard
Wow, brilliant question. And of course, more cooperativeness is good in times of crisis. The under spoke the the underlying assumption is that international law as it is, is adversarial. And I would probably phrase it like that is that the law by itself is adversarial because it helps to resolve conflicts. Centuries ago, or millennia ago, people used weapons to fight a conflict. Now people go to court. So the court system is kind of like a continuation of an adversarial tradition, but it's less brutal than it was to enforce. Law was a sword. So therefore, I think fsru components are always part of that. But the cooperative approach, I like it, as we see cooperative approaches very often done in the world of arbitration. We see arbitration Mmm. where two companies go to arbitration because they know we need each other. I have a transaction where my client is telling me, yeah, let's fight for our rights, but they are 30% of our revenue. So we cannot get too upset. We need to stand by our words, but we have five deals coming in over the next six months. So let's make it work. So I see in reality that cooperation is in the day to days mind, and the lawyers are there to make the cooperation stick, and to push down the adversarial components. Olivia, it's it's a great question. And I think, especially in light of the initial climate catastrophe I talked about was a flood. In light of climate change, we need more flexibility and cooperation is certainly a great, a great mindset to have.
Darshan
Thank you again, Ryan. Ryan, Before we continue, before we start wrapping up, how can people reach you?
Reinhard
Well, one part is to look into Twitter henig's is my handle attenex H e Nn. iags. I also have my personal website, which is Reinhardt fanatics.com. You can go to my morning using website which has now put it all into this book format, which I printed over from the first 100 musings it's morning using.com. So all of those methods are good. But the easiest would be to use my Twitter handle attenex.com and send me messages over that. Email works phone works.
Darshan
Very, very cool. So let's ask a couple more questions. Like I said, with three questions more, we have to ask you, one, based on recent talk today, what is one question you'd like to ask the audience?
Reinhard
Wow, that's a good one. I think the the question I'm always curious to know is what surprises you about the international law the most? And how do you how do you see that international law is so different from your domestic law? And what is something which you have not heard before? For example? What whatever it is, I'm really curious to see what is the biggest surprise in international law which you hurt? Or what's the biggest surprise international you all you've seen?
Darshan
So I'm gonna answer that first. By the way, Lydia already says thanks, Reinhard learned so much. So thank you, Lydia, for listening in. But I'll answer the question. First, I think the thing I learned the most, and I thought it was hilarious was how the Germans see Americans as unprepared for for brainstorming. That, to me is hilarious. And yet so German and so accurate. So I love it. I absolutely love it. But it's just cultural differences. It's just how do you come to a conversation? Should you come to every conversation prepared? Or is is the point of some conversations not to be prepared? Yeah. So that would be my takeaway. Um, two more questions. My question for you then would be, what is something you've learned in the last month that you think the audience might might find interesting?
Reinhard
What I learned? And I like this question, because I'm sometimes when I'm on a board situation, and we have a little icebreaker I uses what did you learn since our last meeting, so right now now, the giving end of that? What I learned is that private entrepreneurs can create miracles and where companies who are stuck or governments who are stuck cannot provide solutions. What I learned after this whole flood in Western Germany, that starlink, which is Elon Musk's company, put 12 dishes into the remote areas of complete destruction, to have internet connection over satellites, which was part of Elon Musk's starlink satellite network. Why is this relevant? Because people don't they have no way to communicate otherwise, help cannot be directed if you don't have any phone communication or internet communication. So to pump 12 of those satellite dishes in an area of disaster is very meaningful. And what I learned out of that is how much further the private satellite industry isn't I thought I thought so many things are done with governmental agencies, NASA Isa and whatever it is, but here we have private entrepreneurs, a private spirit, the entrepreneurial spirit, which made something work and I learned that as a part of this disaster starlink enter 12 dishes.
Darshan
Very cool. Last question. Um, what made you happy this week?
Reinhard
Well, if I rephrase this question, what made me happy last week is that I had a chance to see my parents after Corona so long I haven't seen them tends to to visit more family members on the trip. And it was just nice to see family for the first time, sometimes since 2019, when Corona hit in 2020, and all the travel bans and all the voluntary non travel for safety reasons. became in place I didn't want to travel before but to see my parents again after so long made me really happy and last week of course when I came back and what made me happy to see my family here
Darshan
very very cool. Right now before we hang up last reminder How can people reach you? I just asked her I just want to remind people
Reinhard
Twitter use my headaches handle h e n n i g 's. Alternatively send me an email at Reinhardt attenex dotnet
Darshan
perfect right now. Thank you so much for being our guest today.
Reinhard
My pleasure Darshan, thanks for inviting me Have a beautiful day.
Reinhard
This is the DarshanTalks podcast, regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on twitter at DarshanTalks or the show's website at DarshanTalks.com