Managing Legal Issues in Study Abroad Programs

1. 2014 Legal Issues in Higher Education October 14, 2014 5a - Have Risk, Will Travel – Part I: Managing the Business Aspects of Study Abroad Presented by: Seth F. Gilbertson, Associate Counsel, SUNY Office of General Counsel

2. On the Docket • Foreign employment issues • Foreign property leasing and acquisition • Structuring financial transactions in support of international activity • Establishing relationships with partners and providers • Insurance basics • Export controls basics • Essential policies for overseas operations

3. Jacques files for his pension The French Department has used Jacques for 15 years as its local coordinator in Provence. He works out of his home making travel, sightseeing, and accommodations arrangements in Southern France and Paris for groups of students from your campus. The Department considers him to be an "independent contractor."

4. La pensionné • Jacques informs your university that he intends on retiring (at 52). Soon after, the Ministère des Affaires Sociales writes to demand that you make 15 years of pension, health, and employment tax payments (equal to 150% of Jacques’ fee per year). • What do you do? • What are your options if the employment determination stands?

5. Foreign Employment Issues • What are the options for employing an individual (or individuals) in-country? • Is there an option or model that makes sense? • Is your institution legally and operationally capable? • Can you afford it? • How do you make your chosen model a reality? • What legal arrangements need to be in place? • A specific type of agreement? • A specific legal structure of vehicle? • What about U.S. workers overseas? • Is there and appropriate dichotomy between locals and expats?

6. Foreign Employment Solutions • Require legal review of any foreign pay-for-service relationship • Use reliable paymaster (PSA) and/or have local lawyer review any arrangement • Periodic review every couple of years • Analyze the status of people you send from U.S. to foreign countries (faculty exchanges and trip leaders) • Limit time in country and follow visa restrictions • Consider using foreign partner institutions as agents • Look for consortiums and services agents • Consider operating a separate U.S. affiliate

7. We've got a place in _____ • Your university rents a small suite with a classroom, common area, and office in Provence for groups of students to congregate, study, and receive instruction while in Provence. • Jacques was in charge of making the arrangements and he signed the lease in his own name. • Now he wants to transfer it to the university. • How can this be accomplished?

8. Foreign Real Estate Issues • To lease or to buy? • Is your use sustained and permanent enough for either? • Look out for programs that are dependant on one individual or program • How much flexibility do you need? • Is there an appropriate vehicle available? • Are the uses you intend permitted? • Is the cost prohibitive?

9. Foreign Real Estate Solutions • Rethink the need and options • Have any leases reviewed by local counsel or specialty firm • Do a competitive search • Consider creating a U.S.-based holding corp • Might be same as employment vehicle • Look to foreign institutional partners or consortiums • Definitely have license-status reviewed • Whose your agent?

10. Trust But Verify Prof. Peril leaves for Moscow with a group of architecture students in three days. While in country, the students will use dorms and classroom space at the Putin Friendship University of Russia, a partner of your institution. In the past, the School of Architecture at your institution has simply used an electronic funds transfer to compensate PFUR.

11. doveryai no proveryai • PFUR's bank says that the payment has been "flagged" by the Ministry of Finance and cannot be processed. As of the day of departure, the transfer has still not gone through. • Was a bank-to-bank electronic funds transfer appropriate? • While trying to help, you notice that PFUR's website markets its relationship to your institution and includes a prominent display of your institution's emblem. When you ask Prof. Peril about this, he casually states that "It's okay. I told them they could do that."

12. Foreign Financial Transactions • Look at major programs (employment, real estate, etc.) but don’t forget the small trips • Ensure that travelers both • Have access to the necessary capital, including emergency funds (cash), and • Don't carry too much across boarders • Bring in internal controls • Use qualified accounting or consulting firm to navigate regulations and transfers • This shouldn't be too easy

13. Driving Us Crazy Your college institutes a new "service learning" program in Columbia, sending a group of nursing students to a remote underserved area to administer vaccinations. The program is run be Prof. Selfless. The Nursing Department contracts with Leave-It-To-Us, a tour provider that will handle all of the necessary travel arrangements. Leave-It-To-Us in turn hires Mr. Bus to take the students from Medellin to the village where they will be staying. Half way there, the bus breaks down.

14. Driving Us Crazy • Mr. Bus is not bonded and apparently cannot afford the necessary repairs. • Calls to Leave-It-To-Us go unanswered. Apparently their CEO, Ms. Selfless, is out of the country on business. • With the help of a Columbian faculty member, you are able to arrange for another bus to pick up the students in the jungle and take them back to Medellin, but the cost is exorbitant. • Nothing in the contract covers this scenario • What do you do?

15. Affiliates & Providers • Who to choose • Tour providers • Hotels • Transportation • Facilities • What to look for • How to contract • Agreements with foreign institutions

16. Choosing Providers • Due Diligence • Don't rely on faculty! • Larger companies might not seem as "authentic" or fun, but it's no fun to manage an emergency with mom & pop • Look for higher education experience • We have needs! • History can be invaluable

17. Choosing Providers • Attempt to institute a competitive process • Consider using a committee • Academic, Risk, Legal and Business all have important views here • Use an RFP (or modified) if possible • Get multiple quotes • May require some flexibility in plans • Look at multiple inputs • Price is not determinative

18. What to look for • Tour Providers: • Experience • Size • Credentials • Insurance • Housing/facilities: • Security • Fire safety • Transport: • Licensed • Bonded • Insured • No student or faculty/staff drivers!

19. Contracting • Bind risk to control at every turn • Indemnity • Insurance • U.S. law or local counsel • Guarantees • Locations (tour) • Sites & hotels • Timing • Staff #s • Licensure

20. Contracting • Deposit, then increments • Cost should be all-inclusive • Consider taxes and other payments (gratuity, etc.) • Institution pays • Students never a party • No kickbacks • Including "free" faculty travel • If college is unwilling to pay for a necessary element, trip should be rejected • Consider contracting for multiple trips • Better rates and avoids search/negotiation process

21. Agreements With Foreign Institutions • Avoid "agreements to agree" • If you must, just keep it short and don't hard commit to anything • Start small, a few students, and expand slowly • Choice of law & dispute resolution • Your state • Keep silent, or • International arbitration (non-binding if possible) • Governing language or equally-weighted copies?

22. Agreements With Foreign Institutions • Include intermittent termination options, but make sure students in the program can finish • Consider space, staffing options, and financial transaction procedures (and currency) • Be clear about who's responsible for license issues • This can get complicated quick if credit or degrees are crossing boarders • Create course equivalency chart

23. Insurance • Too boring for a hypo? • Four basic types: • Liability • Kidnap & Ransom • Health • Evacuation • Important for employees to have all four (depending on place) • Students need health and evacuation (can be combine) • Make sure trip leaders know basics and have contact info

24. Export Controls • Goes beyond research • Academic conferences becoming suspect • Prioritize by country • China and Russia first • Then Eastern Europe and Middle East • Maintain "clean" technology • Look at incoming and outgoing • Beware "deemed exports" • I-140 section 6 • Consider engaging in outside expertise if you don’t have it • Ripe for an audit or compliance review

25. Bonus Risk: Brand Maintenance • Be like DisneyTM • Not every school, department or professor should be speaking on behalf of or granting IP licenses to foreign "partners" • Clarify that usual protocols apply abroad • Register vigorously • Include language in every contract

26. Policies you need • No person goes overseas without approval • Have self verification checklist (more in Part II) • Tie to indemnification • Tracking process is essential • Include export controls questionnaire • No money spent overseas without approval • Centralize all international outflows • Tie planning/approval to reimbursement • Have procurements and contract authority sit outside of academic or research area • Require justification • Require legal review

27. Discuss