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CONTENTS
FINDINGS OF FACT............................................... 4
I. Introduction............................................. 4
II. Graphic Design Issue..................................... 4
A. R.J. Reynolds Tobacco Co.; Nature of the Dispute..... 4
B. Graphic Design; Package Design....................... 5
C. Reynolds' Cigarette Products......................... 5
D. Reynolds' Marketing Activities....................... 6
E. Graphic Designs...................................... 8
F. Advertising.......................................... 8
G. Longevity of Graphic Designs and Advertising
Campaigns............................................ 9
H. Litigated Expenses...................................10
III. Expropriation Issue......................................10
A. American Independent Oil Co.; Nature of the Dispute..10
B. Events Leading to the Expropriation................. 11
C. The Expropriation and the Arbitration............... 13
1. The Expropriation and the Agreement for
Arbitration..................................... 13
2. Conduct of the Arbitration...................... 14
3. Questions Presented to the Tribunal............. 15
4. Aminoil’s Claims With Respect to Expropriated
Assets.......................................... 15
5. Rate of Interest; Inflation..................... 17
6. Final Award..................................... 17
7. Validity of the Expropriation................... 19
8. The Question of Indemnification................. 21
D. Petitioner’s Tax Treatment of the Award............. 25
OPINION....................................................... 27
I. Graphic Design Issue.................................... 27
A. Issue............................................... 27
B. Arguments of the Parties............................ 27
C. Tax Rules Governing Advertising Expenditures........ 29
1. Introduction.................................... 29
2. Deductible Business Expenses.................... 31
3. Ordinary Business Advertising................... 32
D. Advertising Campaign Expenditures................... 39
E. Conclusion.......................................... 44
II. Expropriation Issue..................................... 46
A. Description of the Issue............................ 46
B. Arguments of the Parties............................ 47
C. Discussion.......................................... 48
1. Introduction.................................... 48
2. Authority To Interpret the Award................ 49
3. The Award Is Ambiguous.......................... 49
4. Extrinsic Evidence.............................. 53
5. Expert Testimony of Charles N. Brower........... 53
6. Respondent’s Position........................... 58
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Last modified: May 25, 2011