Slide 18 of 26
It is important to understand that all products and services, regardless of whether are financial or not, have in common that their successful formation and fulfillment depend on the simultaneous application of multiple legal disciplines. Any lawyer who has put together a corporate merger understands that the corporate aspects, the tax aspects, the financing aspects are all pieces of a single whole -- if you canít determine the taxation, you canít determine the price; if you canít determine the price, you canít draft the offering materials. And the transaction will never occur. Equally, the transaction will never occur if you canít value the assets, and you canít value the assets unless you can determine the nature of the rights and obligations that actually are the assets, and you canít do that unless you know which laws apply. Hence, the fact that you can get an agreement with respect, say, to the banking or finance aspect of the matter, but you donít have agreement with respect to all the other pieces of the puzzle means that you fundamentally will not have the formation or the fulfillment of the product or service. In essence, the service or product transaction wonít happen unless all the necessary issue variables are resolvable within a tolerable degree of uncertainty (that is, you can price for the uncertainty)
1. The foregoing has an important implication for suggestions that one way to proceed to deal with harmonization through international agreements is to use a sector-by-sector approach. The very unity of the transactions suggests that the utility of this sector-by-sector approach is limited.
2. The foregoing also has important implications for the activities of the various working groups of the ABU Jurisdiction Project. For initial analytical purposes and division of labor purposes, it was, of course, necessary to break the work into conventional classifications such as taxation, sale of goods and the labels of the other working groups. However, it is important to understand that each of these are dispensable elements of unitary commercial endeavors. It is also important to understand that items which appear to be separate are really the same; for example, as notes earlier, on the functional level the payments system and the securities settlement system are essentially the same thing. There is no apparent reason why there should be different jurisdiction results in the two cases.