international steel trading - hp-legal.com · • remedies for breach of contract by the seller •...
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INTERNATIONALSTEEL
TRADINGIMPORTANT POINTS TO BEAR IN MIND
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YOUR PARTNERS IN LAW*
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PETER HENSELER
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WOLFGANG SCHMITZ
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„LAMINATIONS“
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„3.1“
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INTERNATIONAL STEEL TRADE
WHICH LAW ?
TECHNICAL STANDARDS
PRESENTING THE CASE STUDY „LAMINATIONS“
THE CISG
THE INCOTERMS
FRAMING THE PURCHASE CONTRACT
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WHICH LAW ?
THE SELLER‘S LAW?
AS A RULE, THE SELLER‘S LAW WILL PREVAIL
THE BUYER‘S LAW?
SOLUTION: CISG!
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WHAT IS CISG?
WHAT IS THE CISG?
• THE UNITED NATIONS CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
• DRAFTED BY THE UNITED NATIONS COMMISSION ON
INTERNATIONAL TRADE LAW (UNCITRAL) IN 1980
• ADOPTED BY 70 NATIONS
• TO GOVERN CROSS BORDER TRAFFIC ONLY
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CISG MEMBERSTATES
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KIND OF SALES
• ALL KINDS OF GOODS – NO SHIPS OR AIRCRAFT
• NOT FOR GOODS BOUGHT FOR PERSONAL, FAMILY,
HOUSEHOLD USE
• NOT FOR THE SUPPLY OF LABOUR AND OTHER
SERVICES
CISG - SPHERE OF APPLICATION
PERSONAL SCOPE
• PARTIES TO THE CONTRACT HAVE THEIR PLACES OF
BUSINESS IN DIFFERENT MEMBER STATES
• THE RULES OF PRIVATE INTERNATIONAL LAW LEAD TO
THE APPLICATION OF THE CISG*
* THIS RULE HAS BEEN OPTED OUT BY SOME COUNTRIES SUCH AS SINGAPORE
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THE CISG COVERS
• THE FORMATION OF THE CONTRACT
• THE DELIVERY OF GOODS AND HANDING OVER OF DOCUMENTS
• CONFORMITY OF THE GOODS AND THIRD PARTY CLAIMS
• REMEDIES FOR BREACH OF CONTRACT BY THE SELLER
• PAYMENT OF THE PRICE
• TAKING DELIVERY
• REMEDIES FOR BREACH OF CONTRACT BY THE BUYER
• PASSING OF RISK
• PROVISIONS COMMON TO THE OBLIGATIONS OF THE SELLER AND OF THE
BUYER
CISG - SPHERE OF APPLICATION
THE CISG DOES NOT COVER
• THE PASSING OF PROPERTY OF THE GOODS FROM THE SELLER TO THE BUYER
• THE AMOUNT OF INTERESTS DUE TO THE CREDITOR
• THE STATUTE OF LIMITATION
• THE EXTRA-CONTRACTUAL PRODUCT LIABILITY
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• UNIFORM LAW
• COVERING APPR. 2/3 OF
CROSS BORDER WORLD
SALES
• AVAILABLE IN MOST
BUSINESS LANGUAGES
• CONCISE WORDING WITH
ONLY 100 ARTICLES
• BALANCED ACCOUNT OF
SELLER‘S AND BUYER‘S
RIGHTS AND ABLIGATIONS
• CAN BE ALTERED IN WHOLE
OR IN PART
• INTERNET ACCESS TO
WORLD WIDE CISG
JURISDICTION
(WWW.UNCITRAL.COM)
• LEAVES SOMES GAPS TO BE
FILLED BY SELLER‘S LAW
• NON-UNIFORM NATIONAL
LAWS MIGHT BE MORE
FAVOURABLE TO SELLER OR
BUYER
CISG – PRO‘S AND CON‘S
PRO‘s CON‘s
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WHAT THEY ARE
• UNIFORM RULES FOR THE INTERPRETATION OF 13 SPECIFIC
TRADE CLAUSES
• SET UP BY THE INTERNATIONAL CHAMBER OF COMMERCE
(ICC) IN PARIS
• ALTER AND SUPPLEMENT THE PROVISIONS OF THE CISG
• REPRESENT „USAGE“ WITHIN THE SENSE OF ART. 9 CISG
THE INCOTERMS
WHAT THEY ARE NOT
• LEGALLY BINDING REGULATIONS
• RULES ON THE CONCLUSION OF THE CONTRACT, NOR THE
DELIVERY TIMES NOR THE PAYMENT OF THE PURCHASE
PRICE
• RULES ON THE PASSING OF TITLE
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Group EGroup EGroup EGroup E DepartureDepartureDepartureDeparture Ex Works EXW EXW EXW EXW
GroupGroupGroupGroup FFFF Main carriage unpaid Main carriage unpaid Main carriage unpaid Main carriage unpaid
Free On BoardFOB FOB FOB FOB
Free Alongside ShipFAS FAS FAS FAS
Free CarrierFCAFCAFCAFCA
Group CGroup CGroup CGroup C Main carriage paid Main carriage paid Main carriage paid Main carriage paid
Carriage And Insurance Paid ToCIP CIP CIP CIP
Carriage Paid ToCPTCPTCPTCPT
Cost, Insurance and FreightCIFCIFCIFCIF
Cost And FreightCFRCFRCFRCFR
Group DGroup DGroup DGroup D Arrival Arrival Arrival Arrival
Delivered Duty PaidDDPDDPDDPDDP
Delivered Duty UnpaidDDU DDU DDU DDU
Delivered Ex Quai DEQDEQDEQDEQ
Delivered Ex ShipDESDESDESDES
Delivered At Frontier DAF DAF DAF DAF
THE INCOTERMS
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TECHNICAL STANDARDS
WHAT THEY ARE
• LAY DOWN CHARACTERISTICS AND/OR
SPECIFICATIONS OF A PRODUCT
• AGREED AND SET UP IN CERTAIN
FORMALIZED COMMITTIES THAT ARE OPEN
TO PARTICIPATION BY ALL INTERESTED
PARTIES ON A CONSENSUS BASIS
• PUBLICLY AVAILABLE AND ROYALTY FREE
• SUBJECT TO AGREEMENT /
IMPLEMENTATION IN THE SALES CONTRACT
WHAT THEY AREN‘T
• LAWS OR REGULATIONS, ALTHOUGH THEY MAY BE
INBEDDED INTO SUCH LEGAL ACTS.
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TECHNICAL STANDARDS
SOME IMPORTANT STEEL STANDARDS
• EN 10021 GENERAL TECHNICAL DELIVERY REQUIREMENTS
FOR STEEL & IRON PRODUCTS
• EN 10025 HOT ROLLED PRODUCTS OF STRUCTURAL STEELS
• EN 10027 DESIGNATION SYSTEMS FOR STEEL
• EN 10079 DEFINITION OF STEEL PRODUCTS
• EN 10204 METALLIC PRODUCTS – TYPE OF INSPECTION
DOCUMENTS
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PRODUCT DESCRIPTIONPURPOSE / USAGE
WARRANTYPERIODS
CONSEQUENTIALDAMAGES
PASSING OFRISK AND PROPERTY
PAYMENT
APPLICABLE LAW
TESTING/INSPECTIONNOTIFICATION PERIODS
VENUE/ARBITRATION
SOME POINTS TO OBSERVE
FRAMING THE PURCHASE CONTRACT
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PRODUCT DISCRIPTION / PURPOSE & USAGE
FRAMING THE PURCHASE CONTRACT
AS A RULE, IT IS THE BUYER WHO HAS TO SELECT THE STEEL FOR
THE INTENDED USE (EN 10025)
THE SELLER MUST DELIVER GOODS WHICHARE OF THE QUANTITY, QUALITY AND
DESCRIPTION REQUIRED BY THE CONTRACT(CISG)
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WARRANTY PERIODS
CISG: 2 YEARS FROM THE DATE ON WHICHTHE GOODS WERE HANDED OVER
FRAMING THE PURCHASE CONTRACT
EU STANDARD:MINIMUM ONE YEAR AFTER DELIVERY
NON-EU-STANDARD:90 DAYS AFTER DELIVERY
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CONSEQUENTIAL DAMAGES
FRAMING THE PURCHASE CONTRACT
CISG: SELLER‘S RESPONSIBILTY UNLESSDAMAGES WERE NOT FORSEEABLE
EU*: PREDOMINANTLY SELLER‘S RESPONSIBILTY ONLY IN CASES OF HIS NEGLIGENCE
NON-EU: PREDOMINANTLY SELLER‘S RESPONSIBILTY EXCLUDED IN THE CONTRACT
*DEPENDANT ON THE NATIONAL LAW
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PASSING OF RISK
FRAMING THE PURCHASE CONTRACT
INCOTERMS: DEPENDING ON THE AGREED CLAUSE
CISG: IN PRINCIPAL WHEN THE GOODSARE PASSED TO THE FIRST CARRIER
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PASSING OF PROPERTY
FRAMING THE PURCHASE CONTRACT
CISG/INCOTERMS: NO REGULATION
DEPENDING ON THE NATIONAL LAWWHERE THE GOODS ARE
THEREFORE: RETENTION-OF-TITLE-CLAUSE!
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INSPECTION/NOTIFICATION (CISG)
FRAMING THE PURCHASE CONTRACT
INSPECTION: BUYER MUST INSPECT THE GOODS
WITHIN A SHORT A PERIOD AS IS PRACTICABLE IN THE CIRCUMSTANCES
NOTIFICATION:BUYER MUST GIVE NOTICE TO THE SELLER
SPECIFYING THE NATURE OF THE DEFECT WITHINA REASONABLE TIME AFTER HE HAS DISCOVERED
IT OR OUGHT TO HAVE DISCOVERED IT
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PAYMENT (CISG)
FRAMING THE PURCHASE CONTRACT
AT THE SELLER‘S PLACE OF BUSINESS
WHEN THE GOODS/DOCUMENTS ARE AT BUYER‘S DISPOSAL
NOT BEFORE BUYER HAS HAD AN OPPORTUNITY TO EXAMINE THE GOODS
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PAYMENT (CLAUSES)
FRAMING THE PURCHASE CONTRACT
PAYMENT/CASH AGAINST DOCUMENTS/C.A.D.
OPEN TERM
PAYMENT/CASH AGAINST L/C
PAYMENT/CASH AGAINST BANK GUARANTEE
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APPLICABLE LAW
FRAMING THE PURCHASE CONTRACT
CISG IS A SUITABLE BASIS
IF NOT AGREED: SELLER‘S LAW
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„THE LAMINATIONS CASE“
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1. The intermediate trader will, in such claims, mostly be caught between two stools: Mostly by legal reasons, but most of all by business reasons, he will be on the one hand forced to follow his purchaser’s requests to settle the
claim, but then, on the other hand, mostly legal, but often powers of fact will prevent him
from forwarding those costs to his (foreign) seller.
„THE LAMINATIONS CASE“
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2. As for the legal solution of such cases, the UN sales law, the CISG, will offer adequate
solutions to a case like this: It entitles the user to debit the stockholder with the damages
suffered from the material’s defect who in turn
may forward the claim to the trader who is then entitled to pass it on to the producer.
Unfortunately, most foreign steel producers have excluded this very handy law within their
general terms and conditions giving rise to the law of the producer’s country.
„THE LAMINATIONS CASE“
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3. Within claims for product defects, most legal systems do not allow the end user to
directly address the producer leaving him the way through the intermediate person / the
trader only. What we commonly understand
when we speak of “Product Liability” and what normally allows the damaged person to
directly address the producer, works only where a product has caused a material or
personal damage which is at no means the rule.
„THE LAMINATIONS CASE“
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4. In most countries’ internal legal systems, a trader is not responsible for consequential damages. On the other hand, especially in times where steel is short, the intermediate
person / trader has no other choice than to accept his sellers’ terms and conditions. Such
conditions will more than often exclude the producer’s liability for consequential damages
and they will contain extremely short claim
periods which stand against the trader’s efforts to forward the claim to the producer on
time.
„THE LAMINATIONS CASE“
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6. Also the steel user bears his part of responsibility. He has to make sure that the goods meet his
requirements, either by ordering the appropriate testing or by testing the goods himself upon their
delivery. He cannot expect that his seller automatically orders the appropriate testing (as he, as a rule, has no knowledge of what the steel is being used for) nor that he examines the goods in regard to certain properties, as this testing would require appropriate testing tools which a trading house does not have. And, again as a rule, the trader does not even see the goods on their
way from the mill to his customer.
„THE LAMINATIONS CASE“
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1st REQUEST:REFRAIN FROM INADEQUATE
LIMITATIONS OF YOUR RESPONSIBILITY WITHIN YOUR
GENERAL SALES CONDITIONS. A CLAIM PERIOD OF AT LEAST ONE
YEAR FOR HIDDEN DEFECTS SHOULD BE A MATTER OF COURSE.
„THE LAMINATIONS CASE“
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2nd REQUEST:STAND UP TO YOUR PRODUCER’S
RESPONSIBILITY AND DO NOT TRY TO SHIFT THAT RESPONSIBILITY TO YOUR
CUSTOMER OR TO HIS CUSTOMER. LOSSES FROM PRODUCT DEFECTS
SHOULD BE SETTLED AT ITS ORIGIN.
„THE LAMINATIONS CASE“
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THANK YOU FORYOUR KIND ATTENTION!
INTERNATIONAL STEEL TRADING