Private International Trade Law Issues - Essay Example

Running Head: PRIVATE INTERNATIONAL TRADE LAW Private International Trade Law No] Private International Trade LawQuestion 1: Critically discuss the implications of the chosen contract law for the parties, and deal specifically with these issues: • Which rules will the arbitrator apply as lex mercatoria? Will the arbitrator have to (or be able to) apply CISG as the UK is not a contracting party  Support your answer with references to judicial decisions and journal articles. You do not need to apply the conflict of law rules. Introduction International trade has increased manifold since the beginning of World War-11. Keeping in mind the complexity of trade related issues and to address such issues, international laws came into being. Lex mercatoria refers to specific part of international commercial law, which is unwritten, including customary commercial law; customary rule of evidence, procedure; the general principles of commercial law. Convention on the International Sale of Goods (CISG) CISG known as Convention on the International Sale of Goods is the essence of international sale of goods. It ensures buyer and seller obligations and the remedies there against. However, it has no relevance regarding the validity of contract or its provision. The UNIDROIT (the International Institute for the Unification of Private Law) principles also provide a gap-filling role for international Commercial Contracts to support CISG1. Case Study of Wholefoods, UK and Viladistok, Russia Let us examine the case of Wholefoods Limited Company of UK, which is importing quality sea foods and the Russian Company Valadistok who supplies sea foods. It is interesting to note that the court system in UK does not allow application of law to the non-state law. However, under certain clauses, if it is part and parcel of an agreement between the two companies who are authorized to choose arbitration laws subject their dispute to general principles of law alike. At present, a trend is going on to recognize that the legal parameters of legal order that should not be limited to national law. Therefore, the regulations stemming from the reputable arbitration institutions in the globe believe in that legal relation should be governed by the most convenient “rules of law, take the example of lex mercatoria and the new PECL. Lex Mercatoria It would be in the fitness of things if Lex Mercatoria will ensure that the legal orders of each country could be the principles since Lex is subservient to state concessions. It does exist as an entity to the international trade activity. Conflict of rules often bore results. Legal experts are of the view that national laws were primarily enacted to govern domestic transactions. Therefore, it fails to touch upon the requirements of international transactions. This had ended the impairment of world trade2. In the said case, the only way out to settle the issues between the importer and the exporter is nothing, but an arbitration process since UK is not the contracting party of the CISG whereas the lawyers of the Russian Company are not familiar with the Lex Mercatoria. International Commercial Arbitration As far as the commercial arbitration is concerned, it should not be localized concerning the issue in view the number of transactions and the legal relationships with certain jurisdictions in International Commercial Arbitration. It is the responsibility of an arbitrator to find out international laws or domestic rules that address the issues before him, thus, PECL fulfils the vacuum properly. Addressing the issues within the ambit of PECL, in fact, constitute an autonomous Lex Mercatoria to take advantage or advantages with regard to international commercial arbitration3. PECL suggests viable solutions of similar cases, enables the resolution of disputed cases for the consideration of competent jurisdiction to be heard and decide. Prior to that, Lex mercatoria was not treated as desirable choice as far as the applicable law was concerned. At that time, lawyers advised clients for choosing of a definitive and provable law. In view of the above, lex mercatoria has not gained favour4. Where National law may not be acceptable as a desirable choice, PECL can be used as an operating tool like lex mercatoria more judiciously since it is not binding on both the parties. We may not put it aside keeping in view of its potential advantage to the extensive use of PECL. The costs of lower transactions linked with commercial trade, which is in line with the Uniform principles of trade. Now, it is the need of the hour that the law makers should revisit the old version of lex mercatoria in order to reshape it in line with the present day requirements5. It is true that the essence of European Contract Law drives from the peace ideals, prosperity and justice for all those who live in the European Countries. It makes the people of Europe to respect the diversity of national laws, portraying their traditions and culture in the forms of multi dimensional governance. We have seen in the past that institutional arrangements have not shown their success since they are inadequate to accomplish the task. Therefore, we have to find out ways and means to achieve our goals6. Case Examples Here we are citing the judgement of the European Court of Justice, which addressed the issues threadbare in the petition filed before the competent court of judgment under Article 12 on the rights of Van Gend en Loos7. The legal fraternity creates a new legal order for the benefits of those states who have limited sovereign rights, consists of not only member states as well as for their nationals. Independent legislation of member states is not limited to individuals’ obligations, but to confer rights to become part of legal heritage. Mentioned rights are conferred by the treaty. One can find the reflection of treaty in the given historical judgment8. The duty of the court is to direct when a treaty could be implemented effectively. The competent court of law held that the introduction of Treaty of Rome aimed at to establish a common market place for the common man to benefit rather than to adopt typical international agreement. Of course, it creates common obligations between the trading partner states in terms of their rights and the responsibilities in the competent court of law9. The competent court of law admits the facts decided that failure of member states to strictly comply with the rules and regulations of the EU law would be supervised by enforcement action or to seek assistance of the member states for the implementation of the decision of the court of competent jurisdiction. However, it does not mean that the enforcer’s states are not able to enforce the decision of the national or international courts. Two reasons of mentioned action are quite appealing against the backdrop of failure of sufficient legal protection with regard to individuals. The other one was that individual enforcement was considered as an effective supervisory mechanism. The availability of both options i.e. supervision and legal rights to individuals. As per the statement of Stephen Weatherill, the Commission and member states can be categorized as dual vigilance10. The Court held that Netherlands has no right to implement a higher tariff than that in place since January 1st 1958. The Court observed that increase in the tariff can be raised in two ways either increases in the rate or reclassification of a product that deserves higher rated category. The said act in view informs that the court observation was illegal under Article 12. The question of proper tariff for urea was remitted to the national court11. Birse Construction Ltd v. St David Ltd EWHC Technology is also a relevant example. In the mentioned case of arbitration, the arbitrator referred to section 5 of the Arbitration Act 1996, which were incorporated in the agreement as evidenced in the minutes of the meeting dated back to May 12, 1997. The arbitrator is of the view that if it be necessary, there might be a reason to place application for payment, which is inconsistent with the amendments made to clause 30 of the contract12. The arbitrator further stated that even if the facts were not as cleared as they had to be, an issue should be directed under order 73, and rule 6 since such issue could be tried in the court of law. The contesting parties should know where they stood at this point of time rather earlier than the case proceedings that favours arbitration. In any event, it is highly desirable that an issue such as the formation of a contract incorporating an arbitration agreement should be determined by the court before the arbitration takes place and before time and money is expended through the decision of arbitrator. We are of the view that it is the best way to resolve the issue between the importer and the exporter13. Conclusion The case in question requires the indulgence of an arbitrator to sort out the issues. The arbitrator determines the role and function of listening and reading the evidence presented before him during hearing. Arbitration can be considered as a form of Alternative Dispute Resolution (ADR)14. In aforesaid case, the importer hails from UK and the exporter is residing in Russia. Here the arbitrator is the competent jurisdiction to decide the matter in accordance with the International law so as to enforce the judgment against the importer or the exporter as the case may be and to compensate the aggrieved party by way of attachment of assets or freezing of bank accounts15. Here in the mentioned case, it will be easier to decide the matter by the arbitrator rather than the competent court of law under the London Court of International Arbitration. To sort out the matter relating to international disputes, the enforcement of arbitral award in accordance with the New York convention of the United Nations Commission that deals with International Trade Law is quite easier than the rigorous enforcement of national court’s judgment. Here, the signatory countries of the convention are responsible to implement arbitration award from another signatory country of the convention16. Question 2: Advise WholeFoods and Vladivostok Imports in respect of their claims. Do not discuss the Arbitration Procedure in your answer. WholeFoods got into an agreement with Vladivostok Imports for the obtainment of 100 000 tins each of 100 grams of black caviar CIF ‘Capitan Rudkoff’ port of Dover at the cost of 50 GBP per tin. The Cargo was to arrive in Dover no later than November 1st, 2013. The Contract was governed by lex mercatoria and the UN Vienna Convention on Contracts for the International Sale of Goods (CISG) and any disputes were to be resolved in the London Court of International Arbitration. Issues for WholeFoods Regarding the Delivery The consignment got late and in place of reaching on 1st November 2013, it reached on 10th January 2014. The total net weight of the caviar was unchanged. However, instead of 100 000 tins 150 000 were delivered, - 50 000 tins of 100 gram net weight and 100 000 tins of 50 gram net weight. As a result of the belated delivery of the caviar, WholeFoods lost their sub-buyer, Waitrose plc, which had to buy elsewhere in time for their pre-Christmas sales.  WholeFoods wants to take legal action against Vladivostok on the basis of a. Late delivery. b. The discrepancy in the number of delivered tins. c. Loss of profits on the aborted sale to Waitrose. Advice to WholeFoods Lex Mercatoria and International Arbitration Law Lex Mercatoria can work without connection to national law. However, in case of a dispute, a claim can be made in front of national court. In this case, London Court of International Arbitration needs to be accessed for any kind of dispute resolution as both the parties agreed on it in the contract. The court is for international arbitration, so national laws do not apply in this case. However, in case of authorization to get an arbitral award, the winning party can claim in national court as per national law for putting in force the arbitral award, which shows finally that lex mercatoria cannot be fully independent as it requires incorporation of national court for dispute settlement17. Independent contracts are also there that require the inclusion of lex mercatoria as ‘the substantive law of the contract’ that can require inclusion of arbitration clause or mutual agreement on autonomous contract assurance as ‘a warrant for the execution of the award’. As per the rules and regulations of the autonomous contract assurance, the guarantor has to compensate the winner of the arbitration process upon stipulation, escorted with award. Therefore, the arbitration award can be claimed without the involvement and intrusion of any national court18. Breach of Contract As per UK law, a contract is breached when a party to contract is unable to work accurately and precisely, as per its duties under the contract. For example, the inability to provide goods or to provide agreed services can be categorised as breached duties. Actual breach is a condition when one party rejects to complete his part of bargain on the agreed due date or is unable to work fully19. Here, the case of Poussard v Spiers20 can be described as Poussard became a part of an agreement requiring her to sing opera for three months. She did not fulfil her duty fully because of falling ill resulting in actual breach of contract. Likewise, another case can be described here. Bettini v Gye21 is a case involving Bettini who entered in a contract requiring him to sing opera for three months. He was unable to participate in six days rehearsals due to which, he lost his contract because of breach of contract. For dealing with a breach of contract, there are remedial measures available such as the injured party get compensated monetarily by a fixed amount adjusted by the court. The innocent party has to indicate about its suffering at the hands of the other party. An actual loss results in the recovery of damages22. The Trade Description Act 1986 Erroneous detailing of goods, provisions and accommodation are prohibited by the Trade Description Act 1986. The act also forbids false suggestion of price of good involving false claims in advertising goods. The account of products and services should be precise and truthful. The description of goods or services can be given verbally or in writing, but the trader should not try to conceal any related information and should not mislead into getting something what it is not. As per the Description Act 1986, quantity, size or calculation of goods, their processing features, their components, date of development, their suitability, potency, performance, attitude or precision, and any other physical features, everything must be clearly stated and no misleading should be there23. The cases, which are mentionable here are Sherratt v Geralds The American Jewellers Ltd (1970)24 and Sutton LBC v Perry Sanger & Co Ltd (1971)25. In the first case, the defendants were put on trail under the Trade Descriptions Act 1968 for retailing a waterproof watch, which was erroneously claimed as waterproof while it was not. The second case involved impeachment of defendants under the Trade Descriptions Act 1968 for wrongly detailing a dog as a Sheltie while in actuality, it was a cross breed. The dog was wrongly described as a Sheltie. WholeFoods can bring the case in the London Court of International Arbitration for legal action against Vladivostok Imports who failed to provide the consignment in the agreed due date. However, WholeFoods could ignore the delay if the items that it obtained fulfilled its ordered demand. Vladivostok Imports breached the contract, firstly by delaying the shipment, which reached two months late against the agreed due date and secondly, the order was somewhat transformed because WholeFoods in place of getting 100,000 tins each of 100 grams of black caviar, got 150,000 tins, 50 000 tins of 100 gram net weight and 100 000 tins of 50 gram net weight. Although, the net weight was same, but the required items were not provided as promised. According to the Trade Descriptions Act 1968, the information provided related to goods detailing should not be misleading or false, so Vladivostok Imports can be sued for their breach of contract and providing goods different to what was promised. As far as the case of Loss of profits on the aborted sale to Waitrose is concerned, WholeFoods cannot sue Vladivostok Imports because they were not knowledgeable about WholeFoods coming sale with Waitrose. Issues for Vladivostok Imports Regarding the Delivery WholeFoods accepted BoL that required payment within ten days after acceptance and the failure of the company in paying requires to be dealt through legal action. Net weight of tins was same while the quantity is different that was not part of the contract and was just a warranty. The company rejects the liability for the aborted sub-sale to Waitrose because of their lack of knowledge. Advice to Vladivostok Imports UN Vienna Convention on Contracts for the International Sale of Goods (CISG) International selling of products under a contract is managed by CISG. However, the deals involving sales to clients, selling of services and selling of particular categories of products are excluded from CISG. The contracting parties should belong to different states for the sale of goods. The contracting parties can also choose to trade as per CISG. The validity of the contract along with the influence of the contract on property where the goods are sold, do not come under the contracting details of CISG. CISG deals with the contract in terms of offering and acceptance of the two involved parties and the obligations of the parties as per contract. The concerned parties are required to deliver goods in accordance with the amount and quality predetermined in the contract. CISG also involve the payment of products and obtainment of goods. CISG provides common laws related to remedial measures that can be adopted in case of breach of contract. The suffering party can claim for damages in case of any breach to the contract26. According to Article 45 of CISG, in case of breach of contract by the seller, the buyer is authorized to claim for indemnification for damages, involving the intrusion of current business. The suffered loss should be equal to claimed loss and should be identified with the execution of contract. The Article 51 of CISG states that the buyer is eligible to terminate the contract if he receives part of the goods in place of the full contracted goods as if it is a breach of contract on partial basis. The breach of contract under CISG can be comprehended as damages suffered by one party because of other party and this breach disables the suffering party from getting what they apparently perceived in the contract27. According to Article 78 of CISG, in case of no payment of the delivered goods or obligatory breach, the sufferer in accumulation of the required indemnification for damages or losses, may claim for interest on the payment that was not paid in reality28. Considering all the mentioned facts, Vladivostok Imports can sue WholeFoods, but they should keep in mind that the delay and change in the sent goods appears to be a breach to the contract. However, when Wholefoods has accepted the BoL, they were restricted to pay for the consignment within ten days to the acceptance of BoL. Hence, Vladivostok Imports can ask for the payment based on the liability of WholeFoods to pay. Overall, Vladivostok Imports is advised to handle the issue by negotiating with Wholefoods in the arbitration court. Bibliography Alan R, Law and practice of international commercial arbitration (Sweet & Maxwell 2004). Bettini v Gye (1876) QBD 183 Birse Construction Ltd v. St David Ltd [1999] EWHC Technology 253 Cristian Gimenez C, "Lex Mercatoria, International Arbitration and Independent Guarantees: Transnational Law and How Nation States Lost the Monopoly of Legitimate Enforcement" (2012) 4 Transnational Legal Theory 3 345-370. Filip DL, International business law and Lex Mercatoria (North-Holland 1992). Janet D, James G, and William W, Cases and materials on criminal law (OUP 2010). Joseph ML, Understanding the CISG: a compact guide to the 1980 United Nations convention on contracts for the international sale of goods (Kluwer Law International 2008). Michael HW, Contract law and practice: the English system with Scottish, Commonwealth, and Continental comparisons (Kluwer law international 2006) Peter S and Ingeborg HS, Commentary on the UN Convention on the International Sale of Goods (CISG) (OUP 2005) Poussard v Spiers (1876) 1 QBD 410 Robert M Arbitration law (Informa Business Publishing 2007). Sherratt v Geralds The American Jewellers Ltd (1970) 68 LGR 256 Sutton v Perry Sanger & Co. Ltd (1971) 135 JP Jo 239 Van Gend en Loos v.Nederlandse Administratie der Belastingen [1963] ECR 1 Read More