Legal Environment Nguyen Thi Xuan Quynh – 04IBU10

BASICS AND SOURCES OF INTERNATIONAL TRADE LAW

About the structure of international trade law

About the rules of private international law

What should you be aware of when contracting internationally?• Forum

– Forum shopping!– Contractual clause!

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Conventions, Treaties

Principles

Lex Mercatoria

”Soft Law”

Even obligatory = EU,Mostly non-obligatory (CISG)

Non-obligatory ”aiding-tools”

Supra-national principlesOf int. Trade law (pacta suntServanda)

”Model rules” of int.Trade law

RULES OF PRIVATE INTERNATIONAL LAW AS THE FOUNDATION

SALES CONTRACTNO CLAUSE FOR APPLICABLE LAW / CHOISEOF LAW

CLAUSE FOR APPLICABLE LAW / CHOISE OF LAW EXISTS IN CONTRACT

”any question not covered by this contract will be governed by the law of Finland. In case of disputethe court of Lahti, Finland shall havejurisdiction”=LOWER COURT

OF LAHTI IN ACCORDANCE WITH FINNISH LAW

IN WHICH COUNTRY ARE THE PROCEEDINGS?

WHAT LAW APPLIES?

-> CONVENTIONS: RESPONDENT’SDOMICILE OR PLACE OFCONTRACTUAL PERFORMANCE(CLAIMANT MAY CHOOSE)

-> CONVENTIONS: CENTRE/FOCUSOF CONTRACT (SELLER’S PERFORMANCE = LAW OF SELLER’S COUNTRY) OR CLOSEST CONNECTION(THE COURT WITH JURISDICTION CHOOSES)

SALE OF GOODS = LAW OF SELLER’S COUNTRYSERVICES ETC. = CLOSEST CONNECTION

Legal Environment Nguyen Thi Xuan Quynh – 04IBU10

• Applicable Law – Rules may lead to unexpected situation if not agreed – Contractual clause!

• Enforcement – arbitration – New York convention – general courts – mostly bi-lateral treaties

• f.ex. FI-USA– Check with Attorney!

Sources of international trade law – CISG (Convention on the International Sale of Goods)• Internet: http://www.cisg.law.pace.edu/ (Pace Law School, excellent internet pages on the CISG) • Convention for international trade • 1980• international breakthrough

– forms the rules for international trade in over 2/3 of world trade – As of 18 May 2009, the United Nations reports that 74 States have adopted the CISG – 7.7.2010: 76– Link to contracting states:

• application in practice?– Mainly application of the law of a Member State or through the rules of private international

law CISG contracting states 17.4.11

Link to table of participating countries: http://www.cisg.law.pace.edu/cisg/countries/cntries.htmlSources of international trade law – UNIDROIT Principles

• http://www.unidroit.org/english/principles/contracts/main.htm – Go to: ”Integral version” = Version with commentary

• CISG - aid to interpretation– aim to specify / improve

• also an independent set of rules– CISG ONLY with regard sale of goods– Service contracts included! (agents f.ex.)

• idea ”soft method to unify contract/sales law internationally• previous set from 1994, latest from 2004

– 2004: electronic commerce added

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Legal Environment Nguyen Thi Xuan Quynh – 04IBU10

– experts from all over the world as drafters of the principles– Worldwide success

Sources of international trade law – Principles of European Contract Law (PECL)• http://frontpage.cbs.dk/law/commission_on_european_contract_law/ • new European (EU) ”contract law”

– gained its form after long preparation (1974->)– similar to previously know international contract/sales laws by structure– differences in contents

• PECL meant to be used also to other contracts than sale of goods– Similar to UNIDROIT, but PECL also between natural persons (C to C) and consumer contracts

(B to C)• when compared to Finnish legislation

– combination of sales act and law of legal acts (same as CISG and UNIDROIT Principles) Sources of international trade law – Incoterms

• http://www.iccwbo.org/index_incoterms.asp • clause for delivery for international trade

– sales including carriage• not an international convention

– no automatic application– made by ICC

• why to use?– contracting on distribution of risk / costs / responsibilities– compare to drafting a separate contract clause including all the same info!

• shipping terms – ship/contract party

DISPUTE RESOLUTION AND PRACTICAL POINTS OF VIEWS ON THAT

What is dispute resolution?• No matter how well a contract is drafted there may always be a contract party somewhere who

breaches it• Dispute resolution offers a way out of any breach of contract• However, dispute resolution itself is not going to save anyone from anything

– You always need to understand the entire scheme of dispute resolution and in addition be prepared in all possible ways!

Who are the players on the field of dispute resolution?• Attorneys (asianajajat)

– Only a person working in an Attorney’s office (asianajotoimisto), every attorney has to pass the bar exam!

– The Finnish Bar Association supervises with a hard grip!– Thus a good choice for every company or private individual

• Lawyers (lakimiehet)– Has the lawyer’s law degree (University degree, Master of Laws)– Does not (necessarily) have anything else!– Law Office (lakiasiaintoimisto)

• Judges (tuomarit)– Only operate in Courts

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Legal Environment Nguyen Thi Xuan Quynh – 04IBU10

– Government appointed officials– No special expertise (beside law)

• “Finland divided into “public” and “private” lawyers”• Arbitrators (välimiehet)

– Only operate appointed by contract parties – Power to decide same as a Judge in a Court proceeding– Usually 3 arbitrators (f.ex. Finnish law on arbitration)

• Many, many different rules on arbitration in force internationally• Also f.ex. For “small claims procedures”

– Special expertise – Costs are high!

Various ways of dispute resolution• Negotiations

– Primary way regarding any breach!– Success depends on negotiators but also on good and clear contract terms!

• Mediation– In Finland The Finnish Bar Association (asianajajaliitto) offers these services, check

http://www.asianajajaliitto.fi/asianajotoiminta/sovintomenettely (unfortunately only in Finnish!)

• Court procedure– Lower Courts -> Courts of Appeal -> Supreme Court (käräjäoikeus -> hovioikeus -> korkein

oikeus)• Arbitration

Dispute resolution in business practice• International Attorney’s office the best choice for a company involved in international business (f.ex.

http://www.magnussonlaw.com/public/offices/article/id/Helsinki) – full-service independent law firm with offices in Copenhagen, Gothenburg, Helsinki, Minsk,

Moscow, Stockholm and Warsaw• Attorney’s office connection before the 1st contract ever!

– May take part in contracting (f.ex. Have your contract papers checked out by your Attorney when negotiating)

– Far more efficient case handling!• Get to know your Attorney!

– Let your Attorney get to know you and your (key) personnel– F.ex. To whom can your Attorney always call?

• Efficient and proactive co-operation leads to winning! What is included in “Efficient and proactive co-operation”?

• Excellent contract• Trail of evidence secured• (as said on the previous slide) knowing your attorneys already beforehand• When preparing for a Court battle

– Get all the evidence to your attorney• He/she will sort out the most relevant evidence

– Tell all you can, do not lie to your own attorney! – In large scale cases “preparing like for a play in a theater”

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Legal Environment Nguyen Thi Xuan Quynh – 04IBU10

• Includes in addition to preparing for your own hearing estimating what the opposing side is going to bring out and preparing for that as well

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