Claim, Force Majeure and Arbitration
Generally speaking, importers and exporters also need to pay attentions to following issues:
1. Claims
In import and export business, claims regarding quality and quantity or weight are common, even though proper inspection of the goods has been conducted by designated surveyors or public inspection bureaus. The goods may have been damaged or lost during transit. Therefore, it is necessary to include a discrepancy and claim clause in a contract.In case the goods delivered are inconsistent with the contract stipulations, the buyer should make a claim against the seller within the time limit of re-inspection under the support of an inspection certificate or survey report issued by a nominated survey agency.
If a claim is justified, prompt and well-supported, it can be settled in the following ways:making refund and compensating for other direct losses or expenses; selling the goods at lower prices; or replacing the faulty goods with perfect ones.
Sometimes a penalty clause should be included in the contract in case one party fails to implement the contract such as non-delivery, delayed delivery, delayed opening of L/C.Under this clause, the party who has failed to carry out the contract must pay a fine, a certain percentage of total contract value.
2. Force Majeure
Force Majeure is an event that can be neither anticipated nor reduced to control.Force Majeure events enable a seller to avoid his contractual obligations without paying a compensation or penalty.
A Force Majeure clause in the contract should specify the scope of force majeure events,consequences, time limit of notice to the other party, certificate and the agencies which issue them.(www.xing528.com)
Force majeure events include certain natural disasters such as fire, flood, storm, heavy snow, earthquake, etc. and social disturbances like war, strike, sanctions, etc. There are usually two consequences of force majeure: termination of the contract and postponement of the contract.
In case of a force majeure event, the party who quotes the clause should give prompt notice to the other party within a specified time limit. A force majeure event should also be verified by a certificate that attests such an event. The issuer of the certificate should be mentioned in the clause.
3. Arbitration
In international trade, when disputes arise between exporter and importer, it can be settled through friendly consultation, litigation or arbitration. Friendly negotiation or mediation is the best method of all and beneficial to both parties. The majority of the disputes are settled by this way and friendly business relations are thus maintained between exporters and importers.If the disputes cannot be settled through amicable negotiation or mediation, arbitration will be the next best alternative, as litigation is usually costly and time-consuming.
Arbitration is a means of settling a dispute between 2 parties through the medium of a third party who is not partial to either of the parties to the dispute, and whose decision on the dispute is final and binding, that is, neither party shall bring and appeal for revision before a law court or any other organizations. An arbitral award once made has the force of law and there is no need to register and keep it is a law court.
The general arbitration procedures are to submit dispute to arbitration, appoint arbitrators,hear a case and issue an award.
An arbitration clause in an international contract may state, for example, like this：“Any controversy or claims arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the International Chamber of Commerce （ICC）,and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.”
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