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(共25张PPT)
CHAPTER 16 INSPECTION, CLAIM, FORCE MAJEURE AND ARBITRATION
Commodity Inspection
Claim
Force Majeure
Arbitration
§1 Commodity Inspection
Importance of commodity inspection?
An indispensable part in the transfer of the goods.
A buyer has not lost his right to reject the goods unless and until he has had a reasonable opportunity of examining them.
On most occasions, inspection by authoritative, impartial inspection bodies is required.
The certificates issued by inspection bodies serve as proofs for transferring the goods, lodging and settling claims .
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2. Time and places of commodity inspection
(1) Provisions in CISG (Article 38)
① The buyer must examine the goods, or cause
them to be examined, within the shortest period.
② If the contract involves carriage of the goods,
examination may be deferred until after the
goods have arrived at their destination.
If redirected in transit or re-dispatched, the
seller knew or ought to have known of the
possibility of such redirection or re-dispatch,
examination may be deferred until the goods have
arrived at the new destination.
(2) Three ways of stipulating the place and time of
inspection in the contract
① Shipping quality and weight;
② Landed quality and weight;
③ Inspection at the port of shipment and
re-inspection at the port of destination.(√)
3. Commodity inspection body
Governmental
AQSIQ: General Administration of
Quality Supervision, Inspection
and Quarantine (China)
FDA: Food and Drugs Administration (USA)
SGS: 瑞士日内瓦通用鉴定公司
UL: 美国保险人实验室
Lloyd Surveyor, B.V. 英国劳合氏公证行
NKKK: 日本海事鉴定协会
Non-
governmental
Three basic tasks of the State Commodity Inspection
authorities (China):
Statutory
Inspection
Formulate the List of Import and Export
Commodities Subject to Inspection Enforced
by the Commodities Inspection Authorities
① System of import safety license and
export quality license.
② Hygiene registration system.
③ Quality certification marks.
④ Commodity inspection marks.
Supervision
and control
Survey
Accept the entrustment for surveying
service of import and export commodities
4. Commodity inspection standards
The mandatory standards;
(2) The standards stipulated in the contract;
(in the absence of mandatory standards or the mandatory standards are lower)
(3) The standards of the producer’s country.
(if the above two are not available)
5. Commodity inspection clause
“ It is mutually agreed that the Inspection Certificate of Quality and Quantity (weight) issued by the China Import and Export Commodity Inspection Bureau at the port of shipment shall be part of the documents to be presented for negotiation under the relevant L/C. The Buyers shall have the right to re-inspect the quality (weight) of the cargo. The re-inspection fee shall be borne by the Buyers. ”
§2 Claim
Liabilities of breach of contract
(1) Implication of breach of contract
Breach of contract: Actual failure or refusal to perform contract without a legitimate legal excuse.
Seller:
fails to deliver the goods;
fails to deliver the goods within stipulated time;
delivers the goods that do not conform to the contract.
Buyer:
fails to open the relevant L/C;
wrongly refuses to accept the goods;
fails to dispatch vessel under FOB.
(2) Liabilities of breach of contract
CISG Fundamental breach of contract
(substantially deprived the other party of what he is entitled to expect ) Non-fundamental
breach of contract
British law
Breach of conditions
(essence of the contract, quality, quantity, etc.) Breach of warranty
The aggrieved party is entitled to Terminate the performance of the contract
Sue for damages Sue for damages only
2. Claim clause in the contract
Discrepancy and claim clause
“ Claim: Any claim by the Buyers regarding the goods shipped shall be filed within 30 days after arrival of goods at the port of destination specified in the relative Bill of Lading and supported by a survey report issued by a surveyor approved by the Sellers.”
(2) Penalty clause
① Penalty clause regarding the Seller's delay in delivery
“Should the Sellers fail to make delivery on time as stipulated in the contract, the Buyers shall agree to postpone the delivery on condition that the Sellers agree to pay a penalty which shall be deducted by the paying bank from the payment under negotiation, or by the Buyers direct at the time of payment. The rate of penalty is charged at 0.5% of the total value of the goods whose delivery has been delayed for every seven days, odd days less than seven days should be counted as seven days.
But the total amount of penalty, however, shall not exceed 5% of the total value of the goods involved in the late delivery. In case the Sellers fail to make delivery ten weeks later than the time of shipment stipulated in the contract, the Buyers shall have the right to cancel the contract and the Sellers, in spite of the cancellation, shall still pay the aforesaid penalty to the Buyers without delay.”
② Penalty clause regarding the Buyer's delay in opening of L/C
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“Should the Buyers for its own sake fail to open the letter of credit on time stipulated in the contract, the Buyers shall pay a penalty to the Sellers. The penalty shall be charged at the rate of 0.5% of the amount of the Letter of Credit for every ten days of delay in opening the Letter of Credit, however, the penalty shall not exceed 5% of the total value of the Credit which the Buyers should have opened. Any fractional days less than ten days shall be deemed to be ten days for the calculation of penalty. The penalty shall be the sole compensation for the damage caused by such delay.”?
§3 Force Majeure
1. The meaning of force majeure
An impediment beyond control, which the contracting party could not reasonably be expected to have taken into account at the time of concluding the contract or to have avoided or overcome it or its consequences.
Natural phenomena: earthquake, flood, tempest, war
Social factors: governmental prohibition of import and export of certain commodities, etc.
2. The consequences of force majeure
Termination of contract: If the basis of the contract has
been damaged or destroyed.
Example: the fire has burnt a famous painting by Pablo
Picasso.
Suspension of contract: If the performance of contract is
just delayed by a force majeure case temporarily or for a short
time.
Example: a delayed shipment because of industrial strike.
3. Force majeure clause in the contract
?(1) The scope of force majeure events; (2) Time limit of notifying
the other party; (3) The issuer of the certificate.
“Force majeure: If the shipment of the contracted goods is prevented or delayed in whole or in part by reason of war, earthquake, flood, fire, storm, heavy snow or other causes of Force Majeure, the seller shall not be liable for non-shipment or late shipment of the goods or non-performance of this contract. However, the seller shall notify the buyer by telex or fax and furnish the latter by registered airmail with a certificate issued by the China Council for the Promotion of International Trade attesting such event or events.”
§4 Arbitration
The ways of settlement of disputes
Conciliation: Disputes can be settled in an amicable way
(2) Arbitration: Most popular method.
(3) Litigation: expensive, slower, unfriendly atmosphere.
2. Features of arbitration
A written agreement to resolve disputes by arbitration between the parties to a contract is required.
The arbitration body is a civilian institute, which does not have statutory jurisdiction.
Arbitration awards are final and binding without the recourse to appeal or retrial (复审).
The arbitral award is legally enforceable.
3. Advantages over court proceedings
Speed: In many cases an arbitration can be heard without the long delay as it is possible to choose arbitrators to suit the timetable of the parties.
(2) Flexibility: Parties to an arbitration contract are free to
customize and refine the basic arbitration procedures to
meet their particular needs.
(3) Confidentiality and Goodwill: Without the consent of the parties, a third party will not be allowed to participate in the process. Hearings are usually held in a less adversarial setting.
4. Arbitration agreement
(1) Place of arbitration: in the country of either party, or in a
third country.
(2) Organization of arbitration: permanent or provisional;
Permanent: Arbitration Court of International Chamber of
Commerce, China International Economic and
Trade Arbitration Commission.
(3) Procedure of arbitration:
(4) Applicable rules of arbitration: In principle, the rules in the
arbitration place. But arbitration rules do not always go
with the arbitration place.
(5) Award of arbitration
The arbitration clauses often bear such words that “The arbitration award is final and shall have binding force upon the two parties” so as not to cause ambiguities.
(6) Fees of arbitration
An arbitration clause shall provide that the arbitration fees shall be borne by the losing party.
(6) Fees of arbitration
“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination of invalidity thereof, shall be settled amicably through negotiation. In case no settlement can be reached through negotiation, the case shall then be submitted to the China International Economic and Trade Arbitration Commission of the China Council for the Promotion of International Trade, Beijing for arbitration in accordance with its Rules of Arbitration. The arbitral award is final and binding upon both parties. The arbitration fees shall be borne by the losing party.”
5. Enforcement of an award
Must automatically execute;
In case one party fails to execute, the other party
may apply to the competent court for enforcement;
Within the territory of China, apply to the Intermediate People’s Court;
Outside China, if the country in which the residence or the property of the losing party is located has already accede to “the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards ”, the other party may apply to the competent court in that country.

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