The ICC Model Contracts. What makes them stand out?

Transcription

1 The ICC Model Contracts What makes them stand out? 1

2 Customs Logistics Sale Technical requirements 2

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4 How do I secure payment? Documents Logistics Payment Examination How do I secure arrival in time, in conformity? But nevertheless, for international trade to be sustainable, it must be balanced 4

5 Risk in international trade Risk of misunderstanding Risk of non-performance Risk of inadequate quality Risk of non-payment Risk of dissolution Risk of damage or loss during transportation Confidentiality risk Financial risk Exchange, investment Legal risk Administrative risk Contract terms and conditions Political and commercial Financial and economic Technical requirements Cultural / language / behavioral differences 5

6 Risk management in international trade order (confirmation) Contract framework contract general conditions parties port, trade, Customs Lex Mercatoria International law National law 6

7 Why businessmen often work without a contract «It is too expensive for small deals» «If we put the deal on paper there no longer is a deal» «Legal does not understand what business is about» «We never go to court» «We don t even understand our own general conditions» «We solve things commercially»

8 but sometimes they are willing to compromise «for in case we have to go to court» credit tax accounting customs advance payment payment transfer «to deepen the relationship with the counterpart» «to instruct colleagues»

9 R&D Insurance Production Forwarder Legal Customs agent Corporation Bank Logistics Customer services... Accounting Finance

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11 Customs agent Conformity Warehousing Insurance Transport Inspection Customs Contract Invoice Order Legal title economic ownership VAT & accounting Documents Payment (L/C, ) Applicable law Dispute settlement Packaging and labelling 11

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13 The buyer doesn t care about the price all he cares about is the landed cost of purchase Regardless of the contractual choices regarding transfer of costs, risks, obligations etc. the buyer ALWAYS pays; a seller assuming costs, liabilities or obligations will include this in his selling price together with a premium for risk and administration; if the seller does not assume given costs, risks or obligations, someone else will have to assume them and will charge the cost to the buyer; they will remain to be a cost factor for the buyer. The challenge is thus not to avoid costs, risks or obligations at all cost, but to allocate these factors of the total cost of purchase at the place where they can be managed at the lowest premium. 13

14 Transport Customs export - import Insurance Certification, labelling, Quality Inspection Financing Distribution 14

15 THE CONTRACT: HOW? 15

16 How to draft a contract? Contract = manual Define your objectives Make a checklist (of what always goes wrong) Logical order - coherence Writing Verification (lawyer) Language?

17 What about model contracts? Contract = manual = specific for every undertaking but nevertheless, draft your own model contract Negotiating power Advantages of scale Competition within the company network Uniformity Choice of law Dispute settlement.. LAW. COURTS

18 PROS AND CONS OF (THE ICC) MODEL CONTRACTS 18

19 International model contracts Models for specific parties Agents, sellers, buyers, Sectorial models contracts Orgalime ( FIDIC ( GAFTA; NOFOTA; National model contracts ACLA (All China Lawyers Association); Standard Business Contracts (Larcier 2013); International standard contracts; ICC (

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21 Purpose of (good) Model Contracts: 1. harmonization of industry/sector standards contribution to lex mercatoria ; 2. weaker contracting parties looking for a model of reference to counter contractual obligations presented by the stronger partner; 3. SME occasionally engaging in international operations and/or changing foreign partners; 4. contracting parties looking for a neutral/standard/compromise position to overcome different positions while negotiating; 21

22 Different types of model structures 1. Single models full text with fill in clauses 2. Dual models Short part specific clauses (fill in boxes) Lengthy part general clauses 22

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24 Working process - Common platform Kick off Istanbul CLP 12/11/2010 Paris 16/02/2011 Gütersloh 3-4/05/2011 (partial) Amsterdam 15/06/2011 Brussels 10/10/2011 Paris 18/11/2011 London 19/04/2012 (informal) Venice 17/05/2012 Lisbon 14/09/2012 Executive Board 27-28/09/

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29 HOW DOES THE MODEL WORK? 29

30 file:///c:/users/koen/documents/icc/fr%20en%20juin%202013/icc%20 Model%20International%20Sales%20Contract/index.html 30

31 invoice + packing list EXW transport document Buyer = shipper - certificate of origin insurance certificate + open account advance payment with back up guarantee, stand by L/C or credit insurance EXW - documentary collection letter of credit delivery when 'ready for collection' is incompatible with payment upon collection of documents at destination as no shipping documents are to be presented, it is difficult to organize payment upon presentation of a 'delivery document' 31

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36 probably the most difficult decision in a company s lifetime Going international requires continuity structure; Long term relationship >< sale bill is presented much later; Decision prior to market knowledge / experience and its return; What s possible? 36

37 file:///c:/users/koen/documents/agentuur%20en%20distributie/app%20 Dis/distribution-channels-abroad-2014_08_28/en/index.html 37

38 RIGHTS AND OBLIGATIONS MANAGEMENT 38

39 Territorial market approach & www. 39

40 E-commerce distribution agreements Principal/supplier on the internet? Agent/distributor on the internet? Prohibition internet site? Mandatory link? Prohibited link? Physical obligations Data transmission advertising (banners) Site content links web design domain name Pricing indirect commission 40

41 ENFORCING THE CONTRACT 41

42 Dealing with Disputes Negotiation Conciliation / Mediation Arbitration Litigation ADR

43 Dispute Settlement Third party involvement Decision making Enforceability Negotiations ADR - Binding third Arbitration Courts Mediation party advice No Yes Yes Yes Yes Parties Parties Third party Dispute Dispute review board adjucation board Voluntary Voluntary Voluntary Third party Forced execution after exequatur Abroad: New York 1958 Third party Forced execution Abroad: treaties Brussels I Debate Yes Yes and no Yes (and no) Yes Yes Proof finding Ad hoc Ad hoc Ad hoc Flexible rules Strict rules Guilt question Secundary Tertiary Secondary Primary Primary Truth finding Secundary Tertiary Secondary Primary Primary Contractual basis Yes Yes Yes Yes Not required

44 Litigation - EU EU: Defending party in the EU Regulation (EC) N 44/2001 (Brussels I); March 1, : Regulation (EU) N 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Defending party outside the EU National law (L. 16/07/2004)/ treaty

45 Litigation - EU principle: Freedom writing Presumed exclusivity no choice made Defending party + Place of execution Sale of goods: place of delivery Incoterms (ECJ 25 February 2010, Case C-381/08, Car Trim) Services: place service

46 Court competence - EU Seller CIP Buyer Agent Principal (factory) In case of dispute the courts of (place), (country) shall have jurisdiction. Nevertheless the Seller/Buyer may bring any dispute before any other court that has competence according to the applicable rules of procedure. 46

47 Arbitration What? Case heard by arbitrator / panel of arbitrators who have authority to decide the case Private court Writing exclusive Arbitration clause Arbitration agreement Ad hoc arbitration Institutional

48 Arbitration Advantages / Disadvantages quick specialists secret, informal language, law independent, non-conflictual New York 1958 Geneva countries no appeal? cost? provisional measures? Exequatur enforcement no jurisprudence exclusive competences 48

49 WHAT ABOUT ISSUES THE PARTIES DIDN T/COULDN T AGREE ABOUT? 49

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51 Criteria for choosing The applicable law 51

52 Considerations 1. Maximum freedom of contract 2. Clearly defined and easily accessible content for the parties and for litigation purposes (1) to make a trustworthy risk analysis (2) to gather experience (advantages of scale) 3. Efficient application 4. Acceptable as party-neutral Not of one of the parties 52

53 Convention on the Int l Sale of Goods (CISG) (1980) Drafted by UNCITRAL and Adopted in 1980 Vienna Sales Convention As of 2014, 81 members (U.S., China, Germany, Japan etc.) A Treaty Eliminating the Conflicts of Law Chinese law of sale = Belgian law of sale Supremacy Trumping national law Economies of scale 53

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