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INCOTERMS 2000 - In context

INCOTERMS 2000 - In context. ICC Iceland Legal Director Søren Theilgaard. INCOTERMS 2000. Welcome and Introduction 5 Presentation of INCOTERMS 25 INCOTERMS and Contract of Carriage 20 INCOTERMS, Delivery and Payment 20 INCOTERMS and Insurance 15

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INCOTERMS 2000 - In context

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  1. INCOTERMS 2000 - In context ICC Iceland Legal Director Søren Theilgaard INCOTERMS 2000 - Søren Theilgaard

  2. INCOTERMS 2000 • Welcome and Introduction 5 • Presentation of INCOTERMS 25 • INCOTERMS and Contract of Carriage 20 • INCOTERMS, Delivery and Payment 20 • INCOTERMS and Insurance 15 • Problem areas in INCOTERMS 2000 60 • Questions and Answers 10 • Closing INCOTERMS 2000 - Søren Theilgaard

  3. PRESENTATION OF INCOTERMS • History - What is INCOTERMS • Supplement to Sale-Purchase Agreement • Record of international customs and usage • 1. version 1936. Updates 1953 - 1980 - 1990 • What is new in INCOTERMS 2000 • No obligation - Where applicable • 13 Clauses and 4 categories • 10 obligations • Variants of INCOTERMS INCOTERMS 2000 - Søren Theilgaard

  4. INCOTERMS 2000What is new ? • EXPORT / IMPORT CLEARANCE IN ONES OWN COUNTRY - NOW ALSO FAS OG DEQ • LOADING ON AND UNLOADING FROM VEHICLE- FCA: At Seller’s premises Seller must load At terminal carrier must unload- DAF: - DDU: Goods arriving at destination without- DDP: being unloaded from vehicle INCOTERMS 2000 - Søren Theilgaard

  5. INCOTERMS 2000What is new ? • FCA - CLAUSE HAS BEEN SIMPLIFIED AGAIN - No distinction between different means of transportation, full container load or consolidated goods • GREATER CONSISTENCY IN TERMINOLOGY • More places indicate: NO OBLIGATION INCOTERMS 2000 - Søren Theilgaard

  6. INCOTERMS 2000What is new ? • EXPORT / IMPORT CLEARANCE:- Only WHERE REQUIRED • CFR/CIF A8 - CHARTER PARTIES - Unlike Incoterms 1990 no requirement that the Charter Party must be presented when transport document refers to the Charter Party INCOTERMS 2000 - Søren Theilgaard

  7. INCOTERMS 2000 • 4CATEGORIES • Group E Departure • EXW • Group F Main carriage unpaid • FCA - FAS - FOB • Group C Main carriage paid • CFR - CIF - CPT - CIP • Group D Arrival • DAF - DES - DEQ - DDU - DDP < 1953 1967 1980 1990 INCOTERMS 2000 - Søren Theilgaard

  8. INCOTERMS 2000 • MODE OF TRANSPORT AND THE APPROPRIATE INCOTERM 2000 • Any mode of transport • Group E EXW • Group F FCA • Group C CPT - CIP • Group D DAF - DDU - DDP INCOTERMS 2000 - Søren Theilgaard

  9. INCOTERMS 2000 • MODE OF TRANSPORT AND THE APPROPRIATE INCOTERM 2000 • Maritime transport only • Group F FAS - FOB • Group C CFR - CIF • Group D DES - DEQ • - or in combination with a different mode of transport INCOTERMS 2000 - Søren Theilgaard

  10. 10 MIRRORED OBLIGATIONS 1) PROVIDE GOODS - PAYMENT OF PRICE 2) LICENSES, AUTHORIZATIONS AND FORMALITIES 3) CONTRACT OF CARRIAGE AND INSURANCE 4) DELIVERY - TAKING DELIVERY 5) TRANSFER OF RISKS 6) DIVISION OF COSTS 7) NOTICE TO BUYER AND SELLER 8) PROOF OF DELIVERY, TRANSPORT DOCUMENT OR EQUIVALENT ELECTRONIC MESSAGE - EDI 9) INSPECTION OF GOODS, PACKAGING AND MARKING 10) OTHER OBLIGATIONS INCOTERMS 2000 - Søren Theilgaard

  11. INCOTERMS 2000 • Welcome and Introduction • Presentation of INCOTERMS • INCOTERMS and Contract of Carriage • INCOTERMS, Delivery and Payment • INCOTERMS and Insurance • Problem areas in INCOTERMS 2000 • Questions and Answers • Closing INCOTERMS 2000 - Søren Theilgaard

  12. CONTRACT OF CARRIAGE • Rules regulating international transportation: • Road - CMR Geneva Convention 1956 • Rail - COTIF Berne Convention + CIM • Air - Warszaw and Montreal Convention) • Marine - Merchant Shipping Act Carriage of Goods by Sea (Haag-Visby and Hamburg Rules) • Freight Forwarder - NSAB 2000 INCOTERMS 2000 - Søren Theilgaard

  13. CARRIER’S LIABILITY • Liability • Road: Control • Rail: Act of God • Air Way: Act of God • delay - Burden of proof • Marine: Negligence - reverse burden of proof • Freight Forwarder: Control INCOTERMS 2000 - Søren Theilgaard

  14. CARRIER’S LIABILITY • Limit to liability • Road: 8,33 SDR pr. kilo • Rail: 17 SDR pr. kilo • Air Way: 17 SDR pr. kilo • Marine: 667 SDR pr. kollo or 2 SDR pr. kilo • Freight Forwarder: 8,33 SDR pr. kilo 1 SDR = app. 1.20 EURO INCOTERMS 2000 - Søren Theilgaard

  15. CARRIER’S LIABILITY • Limit to loss in case of delay • Road: freight • Rail: 3 x freight • Air Way: 17 SDR pr. kilo • Marine: 2½ x freight • Freight Forwarder: freight INCOTERMS 2000 - Søren Theilgaard

  16. INCOTERMS and CONTRACT OF CARRIAGE CARRIER • Receives Goods from Seller • Issues Transport Document • Responsible for the Goods during transportation • Hands over Goods to Consignee / Purchaser INCOTERMS 2000 - Søren Theilgaard

  17. CONTRACT OF CARRIAGE • 3 Functions • Receipt for the Goods • Contract for carriage of the goods • Authority to hand over the goods • Freight receipt - Sea Waybill / Non negotiable • Bill of Lading • Charterparty INCOTERMS 2000 - Søren Theilgaard

  18. CONTRACT OF CARRIAGE • In accordance with Sales Contract • Division of costs • Risk - Interest • Liner Terms or Tramp Terms • Cargo Insurance • Basis for payment through Documentary Credit • Contracting or performing carrier INCOTERMS 2000 - Søren Theilgaard

  19. COSTS • In accordance with Sales Contract • INCOTERMS Item A.6 and B.6. • Passing upon delivery • exemption: C-Clauses • In accordance with Contract of Carriage • In particular loading costs • Transit costs • Terminal Handling Costs INCOTERMS 2000 - Søren Theilgaard

  20. INCOTERMS 2000 • Welcome and Introduction • Presentation of INCOTERMS • INCOTERMS and Contract of Carriage • INCOTERMS, Delivery and Payment • INCOTERMS and Insurance • Problem areas in INCOTERMS 2000 • Questions and Answers • Closing INCOTERMS 2000 - Søren Theilgaard

  21. DELIVERY • What is delivery • Consequences of delivery • What happens is delivery does not occur • passing of risk - A5 / B5 • costs - A6 / B6 • Where does delivery occur - INCOTERMS A4 • Choice of INCOTERM Clause has an impact on delivery, passing of risk and costs INCOTERMS 2000 - Søren Theilgaard

  22. DELIVERY FAS - FOB CFR - CIF FCA - CPT - CIP DES-DEQ DDU DDP EXW DAF | | | | | | | Marine transport Carrier Border Buyer’s place Seller’s place Arrival Departure INCOTERMS 2000 - Søren Theilgaard

  23. PAYMENT • WHEN MUST PAYMENT BE MADE • WHERE MUST PAYMENT BE MADE • PAYMENT IF GOODS ARE NOT RECEIVED • INSURANCE MAY REPLACE PAYMENT • Cargo Insurance • Credit Insurance • Documentary Credit INCOTERMS 2000 - Søren Theilgaard

  24. PAYMENT When must payment be made ? • CISG Art. 58 (1) If the buyer is not bound to pay the price at any other specific time he must pay it when the seller places either the goods or documents controlling their disposition at the buyer's disposal in accordance with the contract and this Convention. The seller may make such payment a condition for handing over the goods or documents. - Cf. however CISG Art. 57 (1) - Payment when documents are handed over to buyer. INCOTERMS 2000 - Søren Theilgaard

  25. PAYMENT When must payment be made ? • CISG Art. 58 (2) If the contract involves carriage of the goods, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer except against payment of the price. (3) The buyer is not bound to pay the price until he has had an opportunity to examine the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity. - E.g. Cash against Documents or FOB / CIF INCOTERMS 2000 INCOTERMS 2000 - Søren Theilgaard

  26. PAYMENT Where must payment be made ? • CISG Art. 57 (1) If the buyer is not bound to pay the price at any other particular place, he must pay it to the seller: (a) at the seller's place of business; or (b) if the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place. • Payment against documents - Where and when documents are presented . INCOTERMS 2000 - Søren Theilgaard

  27. CISG LANDE • CISG lande • Ikke CISG lande INCOTERMS 2000 - Søren Theilgaard

  28. PAYMENT AGAINST DOCUMENTS • Which documents • Certainty that agreed documents are prepared • Payment before Delivery / Passing of Risk • Seller’s comfort • Buyer’s comfort • No guarantee that payment is made / only retention right INCOTERMS 2000 - Søren Theilgaard

  29. LETTER OF CREDIT • Agreement on payment guarantee and terms of payment • Agreement between buyer and issuing bank • Honouring bank - Confirmed L/C • Satisfying Documentary Credit conditions • L/C Rules between banks / ICC 500 INCOTERMS 2000 - Søren Theilgaard

  30. INCOTERMS 2000 • Welcome and Introduction • Presentation of INCOTERMS • INCOTERMS and Contract of Carriage • INCOTERMS, Delivery and Payment • INCOTERMS and Insurance • Problem areas in INCOTERMS 2000 • Questions and Answers • Closing INCOTERMS 2000 - Søren Theilgaard

  31. INCOTERMS and INSURANCE • Insurance for own interest / Who is at risk ? • Seller insuring buyer’s risk  CIF / CIP: from delivery to destination contract price + 10% minimum conditions direct claim against insurance company • Additional insurance required • theft, jettison, water damage, strikes, war • higher insurance sum, redestination, subsequent transportation, sale in transit INCOTERMS 2000 - Søren Theilgaard

  32. INCOTERMS and INSURANCE • Institute Cargo Clauses C • Covers named events • Institute Cargo Clauses A  All risk insurance except - strikes, war, inherent vice, deficiency in packaging, ordinary leakage, delay • Certain events are not insurable • Who carries the risk for the goods ? INCOTERMS 2000 - Søren Theilgaard

  33. INCOTERMS and INSURANCE • Insurance Interest • Who carries the risk for the goods ? • Insurance of subsequent interest • Sale of goods in transit • Claim against insurer • Who carries insurance interest • Assignment of insurance interest • Recourse against carrier INCOTERMS 2000 - Søren Theilgaard

  34. INCOTERMS 2000 • Welcome and Introduction • Presentation of INCOTERMS • INCOTERMS and Contract of Carriage • INCOTERMS, Delivery and Payment • INCOTERMS and Insurance • Problem areas in INCOTERMS 2000 • Questions and Answers • Closing INCOTERMS 2000 - Søren Theilgaard

  35. INCOTERMS 2000 Problem Areas Frequently Asked Questions INCOTERMS 2000 - Søren Theilgaard

  36. INCOTERMS 2000FAQ • Delivery upon loading on / unloading from carrier’s vehicle.- must loading/unloading be completed for delivery to happen ?- who pays the cost and carries risk of loading / unloading ? EXW - Not loaded on collecting vehicle arrival FCA - Loaded on vehicle at Seller’s place, but not unloaded at carrier’s place DAF - not unloaded at border DDU/ DDP - not unloaded at place of destination • NB difference between FCA and FAS:FAS - Delivery only when goods are placed on quay alongside vessel INCOTERMS 2000 - Søren Theilgaard

  37. INCOTERMS 2000FAQ • When delivery is effected without loading (EXW) or unloading (FCA), what is the legal effect of Seller assists Buyer to do so ? - Reimbursement of costs ? - Risk ? - Is delivery postponed until loading / unloading is completed ? Similarly in DAF, DDU and DDP when carrier assists in unloading. • What is the meaning of EXW loaded / FCA unloaded ? - Does not intend to change the passing of risk INCOTERMS 2000 - Søren Theilgaard

  38. INCOTERMS 2000FAQ • FCA - Delivery when carrier arrives at Seller’s place with a container instead of a truck. Is Seller obliged to stowe goods in container ? • Yes, if carrier so requests and it is not unusual (cf. Seller must load on carrier’s collecting vehicle) • Does Seller not wish to assume that obligation he should have contracted EXW. INCOTERMS 2000 - Søren Theilgaard

  39. INCOTERMS 2000FAQ • Terminal Handling Charges - FCA • Export clearance - Seller’s cost • Cost of carriage, Warehouse storage after buyer’s receipt of goods - Buyer’s cost • Wharfage and Airport charges - Not export taxes that Seller must pay. Depends on whether charge is triggered before or after delivery. • Air transport security fee - similar - Possible clause • THC for Seller’s expense • Customs and practice between parties may shift THC INCOTERMS 2000 - Søren Theilgaard

  40. INCOTERMS 2000FAQ • Terminal Handling Charges - FOB • Seller’s cost until delivery when goods pass ship’s rail • Similarly according to FAS until ”alongside ship” (on quay or in barge) • If Seller wishes to avoid costs in port of shipment he must choose FCA • Costs relating to marine transportation, including quay charges and transshipment in subsequent port must always be paid by Buyer. • Terminal Handling Charges for container load • Seller has effectively done what he is supposed to do when container has been loaded, whereas delivery and division of costs and risk does not occur until goods pass ship’s rail.- Not appropriate - Choose FCA instead. INCOTERMS 2000 - Søren Theilgaard

  41. INCOTERMS 2000FAQ • FOB - What is ship’s rail ? • Shall be understood literally - subject to interpretation • FOB - Passing of Risk in case of transshipment • FOB Helsingborg, transshipment to Ocean Vessel in Hamburg. Delivery and Passing of Risk at Helsingborg. • FOB - Pre Transportation ? • FOB Helsingborg. Truck to Hamburg. - Wrong use of FOB Incoterms. • FOB Airport destination Japan ? • Air forwarder receives goods at Danish airport, carries goods to Frankfurt. Accident on the road. Who carries risk ? - Not an approved Incoterms. INCOTERMS 2000 - Søren Theilgaard

  42. INCOTERMS 2000FAQ • FOB - Does Seller have the obligation to ensure that Goods are Stowed / Trimmed ? • Only where agreed to - (Handling after delivery) • FOB Rotterdam Incoterms 2000 Stowed and Trimmed is merely a cost clause and does not change delivery or passing of risk. INCOTERMS 2000 - Søren Theilgaard

  43. INCOTERMS 2000FAQ • Place of Delivery ? Seller’s place or when Seller is handing over the goods: • At Seller’s: EXW • At Carrier’s: FCA, FAS, FOB, CFR, CIF, CPT, CIP Buyer’s place or Buyer’s carrier: • Port of Destination: DES, DEQ • At Border: DAF • At Buyer’s: DDU, DDP • Specifying point at the named place of delivery ? • Seller’s interest. We pays costs and carries risk until that point. - Right to elect point within named place. INCOTERMS 2000 - Søren Theilgaard

  44. INCOTERMS 2000FAQ • Place of delivery in EXW-Clause EXW agreed, but Seller contracts on behalf of Buyer for transportation and insurance and invoices EXW-price + freight and insurance. Invoice reads: CIF Port of destination. Freight and insurance prepaid. • Are the two Clauses identical ? - Cost and freight ?- Risk ? EXW Amsterdam, to be shipped to Buyer’s address Sacramento CA arrival 20 April 2004. • Where does delivery take place ? - Cost / Risk ?- Delay ? INCOTERMS 2000 - Søren Theilgaard

  45. INCOTERMS 2000FAQ • Place of delivery in C-Clauses CIP Johannesburg by air from Frankfurt. Goods are lost after storage with Air Carrier in Johannesburg before handed over to buyer. • Where must the goods be delivered ? - Johannesburg Airport ?- At Buyer’s in Johannesburg area ? (Choice of destination) • Who carries risk for the loss in Johannesburg ? • Where does delivery take place ? CIP Durban (SA) or DDU Durban (SA). • Costs until place of destination ? - Buyer pays transit costs and possible unloading costs according to CIP ? • Place of delivery and passing of risk ? INCOTERMS 2000 - Søren Theilgaard

  46. INCOTERMS 2000FAQ • Place of delivery in D-Clauses DDU Buyer’s place by air from New York to Paris. Buyer has 3 different places of business in France, which is reported to Seller only after contract is executed. • Where must goods be handed over ? - Paris Airport ?- With Buyer in France, 1 point or 3 different points ?- Costs by delivering 3 places instead of 1 ? • Who carries risk of goods being lost in Paris ? • Where does delivery take place ? DDP Hong Kong by Air. • Delivery at air carrier’s warehouse or at buyer’s ? (Choice of place of delivery) INCOTERMS 2000 - Søren Theilgaard

  47. INCOTERMS 2000FAQ • Eksport Clearance • Seller, except in EXW • Import Clearance • Buyer, except in DDP • Transit Clearance • Seller until delivery, thereafter Buyer. • Costs in transit, including permissions in C-Clauses must also be paid by Buyer, cf. Item B6, 2.part.- unless transit costs are included in the cost of carriage that Seller shall pay. INCOTERMS 2000 - Søren Theilgaard

  48. INCOTERMS 2000FAQ • Passing of Property in Scandinavian Law • Protection against Seller’s creditors when contract has been made and the goods have been duly appropriated to buyer.- Swedish Law: - goods have arrived in Buyer’s possession • Protection against Buyer’s creditor when goods have arrived in Buyer’s possession • Not important whether or not goods have been delivered or who carries the risk. • Not settled in INCOTERMS • Other jurisdictions may view this issue differently • Matter of contract. • Subject to bankruptcy rules. INCOTERMS 2000 - Søren Theilgaard

  49. INCOTERMS 2000FAQ • CFR - Loading- and unloading costs • Seller pays loading costs. • Unloading costs ? - see B6, 3.part • costs of loading, including lighterage and wharfage charges, unless such costs and charges were for the Seller’s account under the contract of carriage; • ”Liner Terms” imply that the vessel takes care of both loading and unloading and is reimbursed therefore as part of the cost of carriage. • ”Tramp Terms” or specific agreement of ”free in/free out” implies that the carrier does not take care of loading and/or unloading as part of the cost of carriage, e.g. - Seller pays for loading- Buyer pays for unloading INCOTERMS 2000 - Søren Theilgaard

  50. INCOTERMS 2000FAQ • Unloading costs in D-Clauses • DAF, DDU and DDP Buyer pays unloading costs at destination • DES Buyer pays unloading costs • DEQ Seller pays unloading costs (Seller pays transit costs until this place) INCOTERMS 2000 - Søren Theilgaard

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