International organisations

• UN – United Nations

• general purposes:

  • maintenance of peace and security

  • development of friendly relations among nations

  • promotion of cooperation in solving economic, social, cultural and humanitarian problems

  • promotion of respect for human rights and international freedoms

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1 UNCITRAL United Nations Commission on International Trade Law

• one of two bodies actively involved in drafting international law (the other is the International Law Commission)

• concentrates on the development and codification of international law

• tries to overcome the practical problems created by different nations having different laws relating to trade

• looks to standardise international law in areas such as:

  • sale of goods

  • e-commerce

  • dispute resolution

• also attempts to increase international trade by introducing the Hamburg rules covering

  • carriage of goods by sea

  • international bills of exchange

• encourages countries to adopt UNCITRAL principles

2 UNCITRAL United Nations Commission on International Trade Law

• UNCITRAL – specific ways in which UNCITRAL tries to harmonise and unify international trade

  • coordinating the work of the various interested organisations

  • encouraging inter-organisational cooperation

  • promoting wider acceptance and participation in existing international conventions

  • preparing new international conventions, model laws and uniform laws

  • promoting ways of ensuring consistency in the interpretation and application of conventions and laws

  • collecting and disseminating information on legal developments and national legislation

  • maintaining close liaison and collaboration with the UN Conference on Trade and Development

  • maintaining contact and liaising with other UN elements concerned with international trade

• conflict of laws identifies the governing law and forum where parties or states differ

• a convention applies between states that have adopted it; a model law applies only when enacted by a state; Incoterms® apply only when the parties incorporate them

• OECD – promotes international policy co-operation, including standards relevant to trade and business conduct

• UNIDROIT – develops modernised and harmonised principles of private and international trade law

3 WTO World Trade Organisation

• formed in 1995

• based on the principles of the General Agreement on Tariffs and Trade (GATT)

• devoted to the promotion of international free trade in goods, services and intellectual property

• in order to achieve this, it works actively to remove obstacles to free trade

  • tariffs

  • import controls

  • customs

  • bureaucracy

• acts as a forum for the creation of trade agreements and then …

• ... administers them when they are formed

• continuously reviews the trade policies of different nations

• assists developing nations to design their own national trade policies

• assists in international trade dispute resolution

4 ICC – International Chamber of Commerce

• purpose is to serve world business by promoting

  • trade

  • investment

  • open markets

• advocates free and fair competition among businesses

• encourages economic growth in both developed and developing countries

• active in its attempts to fight international commercial criminal activities

• concerned with the legal processes which underpin trading activity such as trade agreements and dispute resolution arrangements

• developed INCOTERMS

5 INCOTERMS

• produced and promoted by International Chamber of Commerce

• idea is to address the main issues involved in international trade

• in particular, the terms address

  • the extent to which the costs of carriage are included within the contract price

  • which party should bear the risk in the event of goods being damaged during the delivery of those goods

  • the allocation of carriage costs, risk, insurance and export/import clearance; Incoterms® do not transfer ownership or govern the whole contract

  • the extent to which customs duties are included within the contract price

  • the responsibility for customs clearance documentation

• these INCOTERMS incorporated into a contract establish the extent of the service and the risk accepted by each of the contracting parties, and will be reflected in the negotiated price of the contract

6 INCOTERMS (these MUST be learned!)

• Incoterms® 2020 has two categories

  • rules for use in relation to “any mode / modes of transport”

  • rules for transport by sea or inland waterway

• “any mode of transport” rules

  • may be used when either sea transport is not involved or….

  • …. if it is, , when sea transport is only for part of the journey

• 7 rules / abbreviations apply

  • EXW “ex works”

    • minimum obligations for the seller concerning delivery of the goods

    • buyer is responsible for all costs incurred in delivery from seller’s premises

  • FCA “free carrier (named place)”

    • seller completes obligations when the goods have been cleared for export and custody has been transferred to a named carrier at a specified place

  • CIP “carriage and insurance paid to”

    • CIP – the seller pays carriage and insurance to the named place, but risk passes when the goods are handed to the first carrier

  • CPT “carriage paid to”

    • CPT – the seller pays carriage to the named place, but risk passes when the goods are handed to the first carrier

  • DPU “delivered at place unloaded”

    • requires the seller to pay for carriage to the named place of destination and to unload the goods there

    • does NOT include costs of import clearance – these costs are the responsibility of the buyer

    • the goods are delivered when they are unloaded at the named place of destination and placed at the buyer’s disposal

    • the named place of destination may be any agreed place, not only a terminal

  • DAP “delivered at place”

    • the seller bears all costs (except import clearance costs) involved in delivering goods to the named destination – the “place”

    • this means all costs up to the point where the goods are ready to be unloaded by the buyer at the agreed destination

  • DDP “delivered duty paid”

    • seller completes obligations when the goods have been delivered to the buyer at a specified location in the buyer’s country

    • seller pays all costs of delivery to that location including all import taxes, customs duties and any other official charges in the importing country

• “sea or inland waterway transport” rules

  • these rules apply when goods are being transported from one port to another

• 4 rules / abbreviations apply

  • FAS “free alongside ship”

    • only applies where goods are transported by ship

    • seller’s responsibilities / obligations cease when the goods are placed on the quay alongside the ship

    • the seller clears the goods for export and delivers them alongside the ship at the named port of shipment

  • FOB “free on board”

    • buyer arranges for shipment

    • seller completes obligations when goods are loaded onto the ship

    • seller provides export documentation, buyer provides import documentation

  • CFR “cost and freight”

    • only applicable to goods being delivered by ship

    • risk passes when the goods are on board the ship at the port of shipment; the seller pays freight to the named destination and the buyer arranges insurance

    • thus the buyer arranges for marine insurance and for customs costs

  • CIF “cost, insurance and freight”

    • all three costs shall be the responsibility of the seller

    • insurance is such that the buyer has the right to recover from the insurer

    • minimum insurance cover is contract price plus 10%

• terms apply to domestic carriage of goods as well as international (previously these rules only applied to international carriage)

• goods sold whilst in transit?

  • only the original seller “ships” the goods

  • so subsequent purchasers now have an obligation to “procure goods shipped”

  • buyers and sellers must cooperate in providing sufficient information to each other to make easier the import / export of the goods

• handling costs

  • the 2010 terms try to remove an awkward situation which used to exist under the 2000 terms

  • 2010 terms clearly allocate responsibility for the handling costs at the destination terminal