International Trade Facilitation Rules

In performing international trade services operations, banks are required to follow both a set of domestic regulations and international guidelines. Among the international rules and guidelines, International Chamber of Commerce (ICC) publications are the most relevant. The major relevant regulations followed in performing trade services activities in a country are Domestic Rules/Regulations, Country specific Trade and/or Exchange Control or Foreign Exchange, Management/Control Regulations, Trade Policy Documents, Rules/Regulations on Customs Formalities etc. Beside these Key International Guidelines/Rules: Uniform Customs and Practice for Documentary Credit (UCP 600 including eUCP); Uniform Rules for Collections (URC 522), Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits (URR 725), International Standard Banking Practice (ISBP 745), International Commercial Terms 2010, International Standby Practices [ISP-98], Uniform Rules for Demand Guarantees [URDG 758], and Documentary Instruments Dispute Resolution Expertise Rules (DOCDEX), United Nations Vienna Convention on Contract of Sale of Goods etc.

Commercial Invoice-Sale Purchase Agreement
Sales purchase agreement is the contract between exporter and importer. In case of three methods of payments (cash in advance, open account and documentary collection), sales/purchase contract is the guiding document. Practically, for these three methods, banking system needs a standard format for purchase/sale agreement, considering the risks to protect the interests of the clients in a better manner. In case of LC, the contract may be considered as relatively less important as the terms and conditions of the contract are expected to be in the LC itself. There is no doubt that terms and conditions of commercial invoice or sales purchase contract would vary for different products, modes of payment, and sources of imports. Components of a Standard Purchase/Sale Contract are Name and address of applicant, the applicant’s bank/ collecting/ presenting/ buyer’s bank, Name and address of the beneficiary’s bank /nominated/ remitting/ seller’s bank, total value and full description of goods (specification, quantity, unit price, etc.) Last date of shipment, date of expiry and documents required, Payment terms: method, tenor, trade terms etc., and warranty/ guarantee undertaking Dispute settlement process (arbitration or litigation and the governing laws) Retention of title Liquidated damage clause; and force majeure. The CISG, which is popularly known as Vienna Convention provides a uniform framework for contracts of sale of goods. The CISG was developed by the United Nations Commission on International Trade Law [UNCITRAL], and was signed in Vienna in 1980. The CISG allows exporters to avoid choice of law issues, as the CISG offers acceptable substantive rules on which contracting parties, courts, and arbitrators may rely. As of September 2014, it has been ratified by 83 countries, which account for a significant proportion of world trade. Under the treaty, the parties, which come from all legal traditions, having different economies together account for over two thirds of global commercial exchanges (UNCITRAL 2014).

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