6.

International Sales Contract The United Nations Convention on Contracts for the International Sale of Goods (CISG; the Vienna Convention) is a treaty that is a uniform international sales law. As of 6 March 2013, it had been ratified by 79 countries that account for a significant proportion of world trade, making it one of the most successful international uniform laws. Brazil was the most recent state to ratify the Convention. The CISG was developed by the United Nations Commission on International Trade Law (UNCITRAL), and was signed in Vienna in 1980. The CISG is sometimes referred to as the Vienna Convention (but is not to be confused with other treaties signed in Vienna). It came into force as a multilateral treaty on 1 January 1988, after being ratified by 11 countries. The CISG allows exporters to avoid choice of law issues, as the CISG offers "accepted substantive rules on which contracting parties, courts, and arbitrators may rely".[4] Unless excluded by the express terms of a contract, the CISG is deemed to be incorporated into (and supplant) any otherwise applicable domestic law(s) with respect to a transaction in goods between parties from different Contracting States. The CISG has been regarded as a success for UNCITRAL, as the Convention has been accepted by states from "every geographical region, every stage of economic development and every major legal, social and economic system". Countries that have ratified the CISG are referred to within the treaty as Contracting States. Of the uniform law conventions, the CISG has been described as having "the greatest influence on the law of worldwide trans-border commerce" It has been described as a great legislative achievement, and the "most successful international document so far" in unified international sales law, in part due to its flexibility in allowing Contracting States the option of taking exception to certain specified articles. This flexibility was instrumental in convincing states with disparate legal traditions to subscribe to an otherwise uniform code. A number of countries that have signed the CISG have made declarations and reservations as to the treaty's scope, though the vast majority 55 out of the current 79 Contracting States have chosen to accede to the Convention without any reservations.

The CISG is the basis of the annual Willem C. Vis International Commercial Arbitration Moot held in Vienna in the week before Easter(and now also in Hong Kong). Teams from law schools around the world take part. The Moot is organised by Pace University, which keeps a definitive source of information on the CISG. Reservations A few countries declared important reservations. For example, in the Nordic countries (i.e., members of the Nordic Council), Part II was not generally applied, unless the contract expressly specified this (reservation authorized by Article 92 CISG). Instead, local law is applied, resulting in some slight differences. For example, a Finnish seller must give a "reasonable amount of time" for a foreign buyer to consider an offer; CISG allows the seller to retract the offer before the buyer has accepted the offer. However, Denmark, Finland, and Sweden withdrew their Article 92 CISG reservations and became a party to Part II CISG, except for trade among themselves. In fact, Nordic countries do not apply the CISG in trade between each other, but rather local law. This is due to a reservation in accordance with Article 94 CISG. A consultation on this issue was carried out in Norway. The results seem favorable to the withdrawal of the Part II declaration in that country, as well. INCOTERMS Language is one of the most complex and important tools of International Trade. As in any complex and sophisticated business, small changes in wording can have a major impact on all aspects of a business agreement. Word definitions often differ from industry to industry. This is especially true of global trade. Where such fundamental phrases as "delivery" can have a far different meaning in the business than in the rest of the world. For business terminology to be effective, phrases must mean the same thing throughout the industry. That is why the International Chamber of Commerce created "INCOTERMS" in 1936.

INCOTERMS are designed to create a bridge between different members of the industry by acting as a uniform language they can use. Each INCOTERM refers to a type of agreement for the purchase and shipping of goods internationally. There are 11 different terms, each of which helps users deal with different situations involving the movement of goods. For example, the term FCA is often used with shipments involving Ro/Ro or container transport. INCOTERMS also deal with the documentation required for global trade, specifying which parties are responsible for which documents. Determining the paperwork required to move a shipment is an important job, since requirements vary so much between countries. Two items, however, are standard: the commercial invoice and the packing list. INCOTERMS were created primarily for people inside the world of global trade. Outsiders frequently find them difficult to understand. Seemingly common words such as "responsibility" and "delivery" have different meanings in global trade than they do in other situations. In global trade, "delivery" refers to the seller fulfilling the obligation of the terms of sale or to completing a contractual obligation. "Delivery" can occur while the merchandise is on a vessel on the high seas and the parties involved are thousands of miles from the goods. In the end, however, the terms wind up boiling down to a few basic specifics: Costs: who is responsible for the expenses involved in a shipment at a given point in the shipment's journey? Control: who owns the goods at a given point in the journey? Liability: who is responsible for paying damage to goods at a given point in a shipment's transit? It is essential for shippers to know the exact status of their shipments in terms of ownership and responsibility. It is also vital for sellers & buyers to arrange insurance on their goods while the goods are in their "legal" possession. Lack of insurance can result in wasted time, lawsuits, and broken relationships.

INCOTERMS can thus have a direct financial impact on a company's business. What is important is not the acronyms, but the business results. Often companies like to be in control of their freight. That being the case, sellers of goods might choose to sell CIF, which gives them a good grasp of shipments moving out of their country, and buyers may prefer to purchase FOB, which gives them a tighter hold on goods moving into their country. In this glossary, we'll tell you what terms such as CIF and FOB mean and their impact on the trade process. In addition, since we realize that most international buyers and sellers do not handle goods themselves, but work through customs brokers and freight forwarders, we'll discuss how both fit into the terms under discussion. INCOTERMS are most frequently listed by category. Terms beginning with F refer to shipments where the primary cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the seller pays for shipping. E-terms occur when a seller's responsibilities are fulfilled when goods are ready to depart from their facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive at some specific point. Because shipments are moving into a country, D terms usually involve the services of a customs broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at virtually all ports and determining who is responsible for each charge. Recently the ICC changed basic aspects of the definitions of a number of INCOTERMS, buyers and sellers should be aware of this. Terms that have changed have a star alongside them. EXW (EX-Works) One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller with greater responsibility on the buyer. In an EX-Works transaction, goods are basically made available for pickup at the shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is released to the consignee's freight forwarder. The buyer is responsible for making arrangements with their forwarder for insurance, export clearance and handling all other paperwork.

FOB (Free On Board) One of the most commonly used-and misused-terms, FOB means that the shipper/seller uses his freight forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods. "Delivery" is accomplished when the shipper/seller releases the goods to the buyer's forwarder. The buyer's responsibility for insurance and transportation begins at the same moment. FCA (Free Carrier) In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk and the expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in FCA the seller chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a predetermined port or destination point and the buyer is responsible for Insurance. FAS (Free Alongside Ship)* In these transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS requires the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these terms will ordinarily use their freight forwarder to clear the goods for export. "Delivery" is accomplished when the goods are turned over to the Buyers Forwarder for insurance and transportation. CFR (Cost and Freight) This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing with the actual cost of merchandise "C" and the other "F" refers to the freight charges to a predetermined destination point. It is the shipper/seller's responsibility to get goods from their door to the port of destination. "Delivery" is accomplished at this time. It is the buyer's responsibility to cover insurance from the port of origin or port of shipment to buyer's door. Given that the shipper is responsible for transportation, the shipper also chooses the forwarder.

CIF (Cost, Insurance and Freight) This arrangement similar to CFR, but instead of the buyer insuring the goods for the maritime phase of the voyage, the shipper/seller will insure the merchandise. In this arrangement, the seller usually chooses the forwarder. "Delivery" as above, is accomplished at the port of destination. CPT (Carriage Paid To) In CPT transactions the shipper/seller has the same obligations found with CIF, with the addition that the seller has to buy cargo insurance, naming the buyer as the insured while the goods are in transit. CIP (Carriage and Insurance Paid To) This term is primarily used for multimodal transport. Because it relies on the carrier's insurance, the shipper/seller is only required to purchase minimum coverage. When this particular agreement is in force, Freight Forwarders often act in effect, as carriers. The buyer's insurance is effective when the goods are turned over to the Forwarder. DAT (Delivered At Terminal) This term is used for any type of shipments. The shipper/seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal. DAP (Delivered At Place) DAP term is used for any type of shipments. The shipper/seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer. DDP (Delivered Duty Paid)

DDP term tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is responsible for dealing with all the tasks involved in moving goods from the manufacturing plant to the buyer/consignee's door. It is the shipper/seller's responsibility to insure the goods and absorb all costs and risks including the payment of duty and fees. Standard clauses of International sales Contract 1. INTRODUCTION Sales contracts, both domestic and international, are often concluded on the basis of standard terms, which are introduced by one of the parties and have not been the subject of individual negotiations. The use of standard terms raises a number of issues which have led to controversial debate in domestic legal systems. By contrast, the United Nations Convention on Contracts for the International Sale of Goods (hereinafter 'CISG' or 'Convention') does not provide specific rules for the use of standard terms. Nonetheless, this does not mean that the issue will be left to the applicable domestic law. In fact, some of the legal issues that can arise with regard to standard terms are widely regarded as being governed by the Convention, as has been pointed out by Peter Schlechtriem on various occasions. Opinions are divided regarding the details, and the issues are far from being settled. This is why the issue of standard terms despite not being a brand new phenomenon, is still on the CISG horizon for future work. This paper does not attempt to give a complete overview of the different approaches that have been suggested or of the problems that can arise. It aims to initiate debate on selected issues as to whether one should take steps to find harmonised solutions for them. 2. THE LEGAL FRAMEWORK 2.1 The legal scope of application of the CISG Most of the questions that may arise with regard to a sales contract are addressed by the CISG. There are however, certain issues which the CISG does not govern. The crucial provision for defining this 'legal scope of application' of the Convention is Art. 4 CISG:

This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise provided in this Convention, it is not concerned with: (a) the validity of the contract or of any of its provisions or of any usage; (b) the effect which the contract may have on the property in the goods sold. The first sentence of this provision defines the legal scope of application of the CISG positively by stipulating that it governs the formation of the contract and the rights and obligations of the parties. It is submitted as a general rule that the terms 'formation' and 'rights and obligations of the parties' should be understood as covering everything that the Convention actually addresses in Arts. 11-13, 14-24 CISG ('formation') and Arts. 25-88 CISG ('rights and obligations of the parties'). By contrast, the CISG does not cover those issues which neither belong to 'formation' nor to the 'rights and obligations of the parties'. By way of example and without being exhaustive, the second sentence of Art. 4 CISG names two areas which are not governed by the Convention, amongst them issues of validity. 2.2 The validity exception in Art. 4 CISG The validity exception in Art. 4 CISG has given rise to considerable amount of debate among scholars and courts. It is submitted that the provision should be given an autonomous interpretation (Art. 7(1) CISG), so that the term 'validity' does not simply mean what (the applicable) domestic law says, rather it has to be interpreted against the background of the CISG. In doing so, the validity exception must be brought in line with the positive statement that 'formation' issues are governed by the CISG. The predominant opinion correctly assumes that the term 'formation' refers to the so-called 'external consensus', i.e., the mechanics of how the contract is concluded (which is dealt with in Arts. 14-24 CISG). Other matters concerning the validity of the contract are explicitly stipulated to be outside the scope of the Convention under Art. 4(a) CISG and are therefore not governed by the CISG. These are, for example, matters referring to the so-called 'internal consensus' (i.e. incapacity, fraud and -- within certain limits --

also mistake and misrepresentation) or validity issues arising from legislation, such as legal prohibitions, ordre public, export bans. 2.3 Consequences for standard terms in a CISG contract How do the general principles outlined above affect the use of standard terms under the CISG? The Convention does not provide specific rules for the use of standard terms. According to prevailing opinion, the question of whether standard terms have been effectively incorporated into a contract is governed by the Convention (the specific rules being derived from Art. 8 CISG on the interpretation of contracts, and probably also from the formation rules in Arts. 14 et seq. CISG), whereas the material validity of the standard terms (e.g., a control of their content according to standards of fairness) is governed by the applicable domestic law. This distinction corresponds more or less to the distinction made above between 'external' and 'internal' consensus. 3. THE INCORPORATION OF STANDARD TERMS 3.1 The general principles Following the above suggested distinction between 'external' and 'internal' consensus, the incorporation of standard terms is an issue of 'external consensus' which is governed by the Convention rather than by the applicable national law. The German Supreme Court (Bundesgerichtshof) summarised in a famous decision the position regarding the incorporation of standard terms in a contract governed by the CISG as follows: 1. According to the general view, the inclusion of general terms and conditions into a contract that is governed by the CISG is subject to the provisions regarding the conclusion of a contract (Arts. 14, 18 CISG); recourse to the national law that is applicable based on a conflict of laws analysis is generally not available. [...] The CISG does not, however, contain special rules regarding the inclusion of standard terms and conditions into a contract. This was not deemed necessary because the Convention already contains rules regarding the interpretation of contracts.

2. Thus, through an interpretation according to Art. 8 CISG, it must be determined whether the general terms and conditions are part of the offer, which can already follow from the negotiations between the parties, the existing practices between the parties, or international customs (Art. 8(3) CISG). As for the rest, it must be analyzed [sic] how a "reasonable person of the same kind as the other party" would have understood the offer (Art. 8(2) CISG). It is unanimously required that the recipient of a contract offer that is supposed to be based on general terms and conditions have the possibility to become aware of them in a reasonable manner. It is submitted that, as a general proposition, this seems to be in line with the prevailing opinion in case law and legal writing. In so far as the concrete details are concerned, however, the situation is less clear. 3.2 Making the terms "available" or "mere reference"? What exactly does an effective incorporation of standard terms into a CISG contract require? In the above-mentioned decision, the Bundesgerichtshof took a rather restrictive approach towards the incorporation of standard terms by stating: An effective inclusion of general terms and conditions thus first requires that the intention of the offeror that he wants to include his terms and conditions into the contract be apparent to the recipient of the offer. In addition, as the Court of Appeals correctly assumed, the Uniform Sales Law requires the user of general terms and conditions to transmit the text or make it available in another way. According to the Bundesgerichtshof there are essentially two requirements for the incorporation of standard terms under the CISG: First, the 'offeror's' intention to incorporate its standard terms must be apparent to the recipient; this will generally require a clear and understandable reference to those standard terms. Second, the offeror must transmit the text of the standard terms to the recipient or make it available otherwise.

It is the second requirement ('making available') that has instigated some debate, for it may be stricter than solutions found in domestic laws. This requirement places on the offeror the burden to make the standard terms available to the recipient rather than require the recipient to enquire about the contents of the standard terms. The Bundesgerichtshof justified this on the basis that it is easier for the offeror to provide a copy of its standard terms than for the recipient to make enquiries as to their content and that while in domestic transactions the parties will often be familiar with 'typical' sets of standard terms, this will not usually be the case in the international context. This Bundesgerichtshof's [ 'making available' requirement has been criticised as being too strict; rather for a mere reference to the standard terms should suffice. Some courts seem to have adopted this more lenient approach. At any rate, even if one follows the stricter approach of theBundesgerichtshof, the 'making available' requirement should be interpreted generously. For example, if (the user can prove that) the other party knew the content of the user's standard terms, retransmission of those standard terms should not be required. Similarly, it should normally be sufficient for the standard terms to be provided to the other party at the beginning of a longer-lasting business relationship, so that it is not necessary to resend the terms every time a contract is concluded during that relationship (provided of course that reference is made to them). What is more, actual usages take precedence under Art. 9 CISG. 3.3 The language issue Language is another issue that arises with regard to the incorporation of standard terms into a CISG contract. In order for the standard terms to be effectively incorporated, in what language must the referring clause and/or the standard terms be drafted? Based on the standards set out in Art. 8 CISG it is submitted that one should ascertain whether the recipient understood or was at least in the given circumstances required to understand the language used. This will usually be the case if the reference and the terms are drafted in the language in which the negotiations were conducted. In addition, the use of the recipient's language will in most cases be acceptable. However, it is doubtful whether the recipient should be required to understand certain 'world languages', such as English.

3.4 The battle of the forms Specific problems concerning the use of standard terms arise in cases of the 'battle of forms', i.e., where both parties to the contract try to impose their own set of standard terms. A typical scenario would be where the buyer sends his printed purchase order form in response to a seller's catalogue and the seller responds by sending his printed acceptance, with both forms referring to their own standard terms which are printed on the back of their forms. If a dispute arises under such a contract, two issues will have to be addressed: the first issue will be whether a contract has in fact been concluded, and the second issue will be whether this contract was concluded on the seller's or buyer's terms. As the CISG does not contain any special rules concerning the battle of forms, recourse should be had to the general principles underlying the Convention (Art. 7(2) CISG). A variety of solutions have been suggested in case law or legal writing. Accordingly, the two most important approaches are the so-called 'last shot rule' and the so-called 'knock out rule'. According to the 'last shot rule', the contract is concluded on the terms of the final form used, without being objected by the other party. This view involves a straightforward application of Art. 19(1) CISG, in that it treats each subsequent form as a counter-offer, thereby rejecting the previous offer. Consequently, the terms of the contract result from the last form which was not objected by the offer's recipient and has thus been accepted by both parties; typically, the recipient of an offer accepts the offer by performance. It is submitted that this approach, while perhaps according most clearly with the language of the Convention, it is not satisfactory. If both parties were aware of how the 'last shot' principle worked, it might result in a 'ping-pong' series of communications intended to object to each other's standard terms (the so-called 'ping-pong' effect). It would be a difficult task to decide when the final curtain for such objections falls. According to the 'knock out rule', the contract is concluded on the basis of both parties' standard terms, in so far as they do not conflict with each other, whereas the conflicting parts of the respective forms are disregarded (i.e., 'knocked out'); the gaps in the contract resulting from the conflicting 'knocked out' standard terms are filled by applying the governing law of the contract,

i.e., the CISG. The rationale of this approach is that where the parties actually show (via performance) that they wish to enter into a contract despite their conflicting standard terms, the parties are deemed to have agreed to waive the application of their standard terms, in so far as they are in conflict with each other. The question remains whether this approach can be accommodated with the rule in Art. 19(1) CISG. It is submitted that this will be difficult, but that there is another way to apply the 'knock out' rule under the CISG. In fact, by virtue of their party autonomy (enshrined in Art. 6 CISG), the parties may be deemed to have departed from the Convention's rules on formation and in particular from Art. 19 CISG. On that basis, it is submitted that the 'knock out rule' is the better solution for the battle of forms under the CISG. Apart from being the law in a number of national jurisdictions, for example, in Germany, Austria and the United States (with the US Uniform Commercial Code), the 'knock out rule' is also the guiding (albeit not unqualified) principle of recent instruments for, inter alia, the harmonisation of international commercial laws, such as the UNIDROIT Principles of International Commercial Contracts (Art. 2.1.22 PICC), the Principles of European Contract Law (Art. 2:209 PECL) and the Draft Common Frame of Reference (Art. II.4: 209 DCFR). Therefore, application of the 'knock out rule' under the CISG would bring the Convention in line with recent legal developments. 4. THE MATERIAL VALIDITY OF STANDARD TERMS Once the standard terms are effectively incorporated into the contract, the question may arise whether their content should be subjected to some form of control according to standards of fairness. It is submitted that this is an issue of material validity which is not governed by the Convention but by the applicable domestic law, as provided for in Art. 4(a) CISG. Several domestic laws provide for such a control mechanism, even with respect to commercial contracts. One of the most prominent (and strictest) examples is German law. Accordingly, 307 of the German Civil Code (Brgerliches Gesetzbuch) states (in excerpts): (1) Provisions in standard business terms are ineffective if, contrary to the requirement of good faith, they unreasonably disadvantage the other party to the contract with the

user. An unreasonable disadvantage may also arise from the provision not being clear and comprehensible. (2) An unreasonable disadvantage is, in case of doubt, to be assumed to exist if a provision 1. is not compatible with essential principles of the statutory provision from which it deviates, or 2. limits essential rights or duties inherent in the nature of the contract to such an extent that attainment of the purpose of the contract is jeopardised. Hence, standard terms used in a sales contract which leaving aside the CISG, are governed by national German law and subject to the reasonableness test under 307 of the German Civil Code. More specifically, the court would analyse whether the standard terms are incompatible with the essential principles of statutory provisions from which they deviate ( 307(2) (no. 1)). In theory, it seems to be widely accepted that in case of a sales contract, governed by the CISG, the standard terms are to be measured against the provisions of the CISG as opposed to the German Civil Code. In practice however, courts at times simply tend to apply the reasonableness standards developed with regard to the national Civil Code, without undertaking a fresh analysis of the respective standard terms under the CISG. It is submitted that this is not appropriate and greater care should be taken in respecting the CISG's specific policy considerations. 5. INSTEAD OF A CONCLUSION: WHAT LIES AHEAD? These short submissions have illustrated a very old phenomenon; the use of standard terms which continue to raise a number of unresolved issues under the CISG, an issue which has long been identified and pointed out by Peter Schlechtriem. What lies ahead? It is submitted that it would be desirable to have clear and uniform solutions to the three issues which have been raised with regard to standard terms in this paper.

While it may be difficult to make a choice between the two competing approaches, it would be advantageous if incorporation of standard terms were more certain with particular regard to the 'making available' requirement. On the one hand, the lenient approach has its merits in light of the fact that CISG contracts are concluded between business entities which do not need as much protection as, for example, consumers. Moreover, a number of practical problems may arise under the 'making available' requirement, particularly in E-Commerce transactions which are concluded by exchange of emails: What does 'making available' precisely mean in that context? Is it sufficient for the user of standard terms to refer the other party to its website where the standard terms can be downloaded? Is it sufficient to send the website link by e-mail? Or must a copy of the standard terms be attached to the e-mail, by which the user of standard terms makes its offer? If the latter, must such an attachment be sent as a pdf file, and if so, should the user provide a website link for free access to download the Adobe Reader programme? Conversely, if one thinks about a plain and simple contract concluded by letter or fax, there is considerable force in the argument that it is easier and from an overall economic perspective cheaper for the user to attach its standard terms to its offer, rather than having the other party ask for it first which may cause delay. It should be possible to develop suitable standards for the 'making available' requirement for the particularities of electronic commerce. In the author's opinion, it is doubtful whether it is sufficient for the user of standard terms to simply send the other party a link to a website where its standard terms can be downloaded. To attach the standard terms to an e-mail in a format which the other party can easily access is preferable. Irrespective of which solution will finally be agreed, the first and foremost task is to develop one clear, precise and uniform solution, on which parties can rely. In addition, suffice it to briefly mention here that the same is true with regard to a rule on surprising standard terms. Here, too, a uniform solution should be developed; inspiration may be drawn, for example, from Art. 2.1.20 PICC. Secondly, it is highly desirable to put an end to the dispute between the 'last shot rule' and the 'knock out rule'. As has been explained above, the preferable solution is the 'knock out rule'. Inspiration can be drawn from the corresponding provisions in the PICC, or -- even better -- the

PECL or the DCFR, the wording of which is more precise than that of the PICC. However, both solutions have their merits and neither would be wholly inappropriate for international commerce so the crucial task again would be to agree on one of them so as to provide legal certainty. Thirdly, the law of international commerce and in particular the CISG would profit considerably from a rule which sets a uniform standard concerning the material control of standard terms (e.g. under a reasonableness or fairness test) and which thus takes this specific area of the law away from the national legislators. Ideally, it is submitted, such a rule would be very restrictive in its depth of control as party autonomy is the cornerstone of both international commerce and the CISG as per Art. 6 CISG. Finally, to become reality, in theory the first two submissions could largely be settled if courts and legal scholars agreed on and promoted a common solution. Nonetheless, this may be illusionary and insufficient for solving the third issue. Eventually, the only solution lies in some form of legislative guidance. As a revision of the CISG itself seems to be rather unlikely at present, one might think about creating a new instrument on the use of standard terms in international commerce, a project which admittedly would be a long shot but one which may be worthwhile. Role of Indian Council of Arbitration When different traders undertake business transactions, they certainly have good intentions to canny out their trade deals faithfully and smoothly to earn a well- deserved profit. However, it is matter of common experience that inspire of best efforts, disputes do arise during performance of business contracts and they arise for various reasons. Unresolved disputes tend to upset the smooth performance and successful completion of business contracts and may, therefore, render an otherwise profitable transaction into a probable loss. Therefore it is necessary for carrying on business transactions smoothly and profitably that the area of disputes during performance of contracts is narrowed down and provision is made for amicable and quick settlement of disputes that may still arise.

Drafting of Commercial Contracts To achieve the above purpose businessmen must devote proper attention at the time of drafting their business contracts, by including comprehensive and precise terms and conditions on all important aspects of the trade deal in the contract. Firstly, the contract should be drawn up in writing. In the absence of a written contract the nature and extent of the rights and duties of the parties to the trade deal will have to be gathered from circumstantial evidence or legal implications, which may give rise to a number of uncertainties and differences of opinion or disputes between the parties, during the performance of the contract. Secondly, the contract should be comprehensive and precise. I.e. It should cover all important points and contingencies In clear and unambiguous terms. And last but not least, it must contain an arbitration clause. Standard Contract Form In drafting of business contracts, the parties can also get useful guidance from model or standard contract forms drawn up by experienced commercial/ arbitration organisations. Standard contract forms generally contain all important points relating to a particular line of trade or important conditions required in all commercial contracts generally as the case may be. Standard contract forms can provide useful help in drawing up of business contracts and make the job quite easy and simple. Some traders do not execute any formal contract but carry on their business dealings by using order and acceptance forms. In such cases either the contract conditions Including the arbitration clause may be printed on the order or acceptance form itself or they may be drawn up In a separate sheet and Incorporated In the order or acceptance form. However, the contract conditions should be prominently printed, as far as possible, before the signatures of the other party on the order or acceptance form, to remove any doubt about their Incorporation In the contract. The ICA provides information and assistance towards formulation of standard forms with necessary terms and conditions which would reduce the chances for occurence of disputes during performance of the contracts to the minimum.

Arbitration Agreement As explained above, it is very necessary and useful to make use of arbitration in commercial dealings. It is very simple and can be arranged in the following ways: An arbitration clause may be Inserted in the contract itself, clearly providing for settlement of any disputes arising under the contract In future, by arbitration, or If no arbitration clause could be Included in the contract for any reason, an arbitration agreement may be entered into later at any stage before or after a dispute has arisen under the contract. The former method of including an arbitration clause in the contract itself is more expedient than entering into an arbitration agreement after a dispute arises. Advantages of arbitration court proceedings do not offer a satisfactory method for settlement of commercial disputes as it involves inevitable delays, costs and technicalities. On the other hand arbitration provides an economic, expeditious and informal remedy for settlement of commercial disputes. Proceedings in Courts also involve notoriety and expose the internal and private affairs of the parties to public. Arbitration proceedings are conducted in privacy and the awards are kept confidential. The arbitrator is usually an expert in the subject matters of the dispute. The dates for arbitration meetings are fixed with the convenience of all concerned. Therefore, arbitration is the most suitable way for settlement of commercial disputes and It must Invariably be used by businessmen In their commercial dealings. Institutional Arbitration Arbitration may be arranged by the parties themselves on ad-hoc basis or it may be conducted according to the rules of an arbitral institution. Arbitration under the rules of procedure of an arbitral institution provides several advantages and helps in quicker disposal of cases. The professional experience and expertise avail- able with an arbitral institution facilitates economic and expeditious conduct of arbitrations and adds to the certainly and finality of the proceedings. The Indian Council of Arbitration (ICA) being a specialized arbitration Institution provides arbitration facilities for all types of domestic and International commercial disputes. The parties are, therefore, advised to use the Institutional arbitration facilities under the auspices of ICA or

some other organisation, chamber of commerce. Export Promotion Council, trade association, etc. providing arbitration facilities in the sphere of their commercial activity. Action to be taken by the Trade As explained above. It is highly desirable and necessary for profitable and smooth conduct of business transactions that precise and comprehensive contract conditions including an arbitration clause are incorporated in commercial contracts. Indian traders are advised In their own Interest to persuade their Indian and foreign counter-parts to agree for arbitration as far as possible, under the auspices of the ICA, being a specialized arbitration body In India, or otherwise In appropriate cases. Important chambers of commerce, trade associations, export promotion councils, etc. have recommended the use of the ICA arbitration clause in all commercial contracts. The Expert Committee on Indian Council of Arbitration appointed by the Ministry of Commerce, Government of India has also recommended in their report ( January 1983) that Increasing use of the Council's arbitration services should be made by the trade, particularly the Public Sector undertakings and exporters for profitable and smooth conduct of their business dealings. Similarly the Abid Hussain Committee on Trade Policies appointed by the Government of India has recommended In Its Report (December 1984) for compulsory inclusion of an arbitration clause In all export contracts. Role of International Chamber of Commerce in solving Trade disputes. The Court performs the functions entrusted to it under the ICC Rules of Arbitration and continually strives to assist parties and arbitrators to overcome any procedural obstacles that arise. In performing its functions, the Court is mindful of its duty to make every effort to ensure that awards are enforceable at law. Importantly, the Court is not a court in the judicial sense of the term. It does not itself resolve disputes or decide who wins or who loses arbitration. It does not award damages or even costs. Those are all functions reserved for independent arbitral tribunals appointed in accordance with the Rules.

The Court's specific functions under the Rules include:

Fixing the place of arbitration Assessing whether there is a prima facie ICC Arbitration agreement Taking certain necessary decisions in complex multi-party or multi-contract arbitrations Confirming, appointing and replacing arbitrators Deciding on any challenges filed against arbitrators Monitoring the arbitral process from the filing of the request for arbitration to the notification of the final award to ensure that it proceeds in accordance with the Rules and with the required commitment to diligence and efficiency

Scrutinizing and approving all arbitral awards, in the interests of improving their quality and enforceability

Setting, managing and, if necessary, adjusting costs of the arbitration, including the ICC administrative expenses and the arbitrators fees and expenses

Overseeing emergency arbitrator proceedings