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OVERVIEW
INTERNATIONAL COMMERICAL
TRANSACTIONS 402.3.2
College of Law
University of Saskatchewan
STRUCTURE AND GOALS OF THE COURSE
The issues examined in this course arise in the context of private commercial
relationships that have interjurisdictional features. Some of these relationships involve
parties or performance in other provinces of Canada. However, the great bulk of them
will be international; they involve legal relations between persons in Canada and persons
in other countries. What distinguishes all international transactions from domestic
transactions is that the law applicable to the various aspects of international transactions
and their performance is not entirely domestic Saskatchewan or Canadian law. Aspects of
the relationship may be governed by the national law of another jurisdiction or by
transnational commercial law in one form or the other.
The goal of the course is to permit students to (i) examine many of the legal issues that
arise as a result of one of the parties to a contract of sale or the performance of the
contract being in another jurisdiction; and (ii) to identify and apply the law and structures
that address these issues. While the great bulk of the course material relates to sales of
goods and financing of such sales, many of the principles and approach examined in the
course apply to other types of transactions such as sales of services and project
performance and financing.
The course has two integrated features. The first is class discussion of the full range of
nation and transnational (private international law) law applicable to relationships
described in the preceding paragraph. Most of the materials (other than those that are
available on the internet) can be accessed by course participants through the University
on-line system PAWS that hosts the Blackboard program. In the second part of the course
- the Negotiation Exercise-, participants are given the opportunity to “apply” in the
context of scenarios the information addressed in the first part.
Assessment of the performance of participants in the course ise on the basis of an openbook examination (75%) and the preparation of the relevant documents and associated
brief of law involving a specific international sales transaction and/or related financing
transaction (25%).
AREAS EXAMINED IN PART I
Relevant statutes, Conventions and Caselaw (national and foreign) are provided for
each item listed below on Blackboard.
KINDS OF INTERNATIONAL LAW
BACKGROUND TO AND SOURCES OF TRANSNATIONAL COMMERCIAL LAW
INSTITUTIONAL SOURCES OF TRANSNATIONAL COMMERCIAL LAW
LAW REGULATING INTERNATIONAL SALES OF GOODS
• Background Factors Relevant To Contracts of Sale and Related Contracts
•
Basic Conflict of Laws Rules applicable to Contracts (Rules of Private
International Law)
•
Unidroit Principles of International Commercial Contracts
•
•
Regulation (EC) No 593/2008 of the EU (Rome I)
Commercial Law Conventions (Types)
Relationship Between Private International Commercial Law Conventions and
National Conflict of Laws Rules
Implementation of Commercial Law Conventions in Canada
•
•
UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS,
1980 (VIENNA SALES CONVENTION) or CISG
The Relevance, Scope and Application of the CISG
• When Does the CISG apply?
• Contracts to which the CISG does not apply
• Contract Formation
• Seller’s and Buyer’s Implied Obligations
• Buyer’s Remedies for Various Levels of Non-Performance –The issue of
avoidance
• Frustration and Force Majeure
ELECTRONIC COMMUNICATIONS IN LEGAL RELATIONS
•
•
The United Nations Model Law on Electronic Commerce and The Saskatchewan
Electronic Information and Documents Act, 2002
Confidentiality of Internet Communications – Public Key Infrastructure
REGULATORY RESTRICTIONS- Export and Import Permit Act
DELIVERY OBLIGATIONS (RISK AND INSURANCE)
•
•
•
ICC Incoterms
Types of Delivery Contracts
Regulation of Delivery Terms (Conventions)
PAYMENT
•
•
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•
•
Managing Foreign Currency Requirements
Payment Obligations under CISG
Payment Options
Payment by Bills of Exchange or Electronic Systems
Payment under Commercial Letters of Credit (UCP)
FINANCING INTERNATIONAL TRADE TRANSACTIONS
•
•
•
•
•
•
•
•
•
•
•
Types of Credit Arrangements
Role of Export Development Canadain the light of the features of the Bill
Export Credit Insurance
Line of Credit Financing
Factoring
Forfaiting
International Financing Leasing
Standby Letter of Credit
Domestic Secured Financing for Export Contracts (PPSA)
The Convention on International Interests in Mobile Equipment
Secured Financing in a Canada-US Context – What Law Governs (PPSA and UCC
Art. 9)
DISPUTE RESOLUTION THROUGH THE COURTS
•
•
•
Choice of Forum, Jurisdiction, Forum Non-conveniens and Anti-Suit Injunctions
Court Jurisdiction And Proceedings Transfer Act
Choice of Forum by Agreement
•
The European Approach to Jurisdiction—The Lugano Convention 2007
ENFORCEMENT OF JUDGMENTS
The Enforcement of Canadian Judgments Act, 2002
The Enforcement of Foreign Judgments Act, 2005
•
•
SOVEREIGN IMMUNITY – JURISDICTION AND RECOGNITION
The State Immunity Act.
DISPUTE RESOLUTION (ARBITRATION)
•
•
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Types of Arbitration: Institutional and Ad Hoc
Domestic Arbitration
International Commercial Arbitration
The Enforcement of Foreign Arbitral Awards Act, 1986
The International Commercial Arbitration Act
___________________________________________________________
PART 2
NEGOTIATION EXERCISE
The negotiation assignments represent 25% of the final grade in the course. Each
participant is marked on her or his individual contribution to the negotiations as displayed
in the contracts and the report to his or her client (described below).
The class participants are placed in groups of two or three student negotiators. A different
scenario is given to each group. A scenario involves a hypothetical set of transactions
involving a Saskatchewan party, a foreign party and, in most cases, a financing
organization. In each group, one student represents the seller (or equivalent) a second, the
buyer (or equivalent) and, where appropriate, the third the financing organization.
Each group of negotiators will negotiate the relevant contracts (sales contract and financing
contract). Each negotiator will assume the role of a solicitor who negotiates the legal terms
of the contracts and related undertakings as representative of his or her client. (You must
assume that, throughout the negotiation process you are in constant contact with your
client).
The negotiators will prepare basic contracts and explain to their clients what other
contractual arrangement will have to be made (e.g., shipping). The representative of the
financing agency will work with the representatives of the seller and or buyer to shape the
financing contract arrangements and prepare the relevant financing documentation.
The contracts must reflect the applicable national or transnational law and address all of the
relevant factors that have legal significance in the most efficient and effective way to
accomplish the parties’ goals. In so doing, each negotiator must anticipate legal problems
that could arise and try to build in protection against loss, inconvenience or extra cost to his
or her client should one or more of the problems arise. A negotiator should proceed on the
assumption that a dispute leading to judicial intervention (court or arbitrator) could well
occur.
The form contracts should contain all of the “crucial clauses” arising out the negotiation.
There is no need to include the “boiler plate” found in most precedents. “Crucial” clauses
are those that are particularly important in the context of the transaction.
Each negotiator will prepare a short electronic report to her or his client in which the
crucial clauses of the contracts (and associated factors) are identified and their legal
significance explained. A copy of it along with the negotiated contracts is made
available to the instructor.
A negotiator who gave concessions in the negotiation will explain the reason the
concessions were given and the risk (if any) that the concessions entail.
Participants can gain most of the needed information and guidance from the Course
Materials published in Blackboard. However, it will be necessary to access other sources
(e.g., library and webpages) to get precedent forms of contracts and to address matters that
are of particular relevance to the type of contracts or type of property involved.
I am willing to discuss your assignment with you should you encounter matters which
create significant problems. In particular, there may be a few technical issues associated
with the financing arrangements with respect to which you might need guidance.
Some of the negotiated arrangements will be presented to the class. (Time will likely not
permit presentation of all of them). The number of presentations will be determined by the
amount of class time available. Electronic copies of the written explanations (along with
the contract and all related documents) will be presented to all members of the class.
SCENARIO 1
Seller:
Saskatoon Agricultural Machinery Manufacturing Co. Ltd. (SAMMCO)
Head office and manufacturing facility in Saskatoon, Saskatchewan, Canada.
Buyer:
Marchuk Agricultural Machinery Importers “Виступи І Коментарі”
253 Parkovaya Doroga
Kiev, 01021, Ukraine
Subject-Matter
Twenty SAMMCO Air Seeders (computerized machines for use in placing seeds and
fertilizer in dry soil conditions.)
Delivery:
Negotiable as to method, but may be influenced by financing arrangement.
Financing and Payment:
The buyer has arranged for payment and financing through the Kredobank,
( "КРЕДОБАНК") Kiev, Ukraine. The seller has no expert knowledge of the Ukrainian
banking system and wants assurance of payment.
Special Considerations:
The equipment was originally designed for sale to farmers in Prairie Canada. It has not
been tested in Ukraine which has a wide variety of soil conditions.
Ukraine has not ratified either the Vienna Sales Convention or the Enforcement of
Foreign Arbitral Awards Convention.
Dispute Resolution:
The seller is not prepared to accept litigation in Ukrainian courts and the buyer will not
accept litigation in Canadian courts.
Solicitor for SAMCO
_____________________________
Lawyer for Marchuk Agricultural Machinery Importers
_____________________________
Lawyer for Kredobank ( "КРЕДОБАНК")
_____________________________
SCENARIO 2
Seller:
Prairie Spice Ltd.
Head office: Outlook, Saskatchewan, Canada
(Small “family” corporation grower and seller of spices)
Buyer:
American Spice Wholesale Ltd.
Head office: Chicago, Ill. U.S.A.
(Large wholesale importer and distributor of spices throughout the United States).
Subject-Matter:
Spices (detailed in the contract) grown in Saskatchewan, to be supplied over a 12 month
period beginning March 1, 2014.
Delivery:
Negotiable as to method and obligation.
Payment;
Open account, 180 days.
Financing:
Accounts factored with Canadian Factors Ltd., Toronto, Canada.
Special Considerations:
Growing conditions are variable and hard to predict.
As a small company, fair and accessible dispute settlement is a concern.
Solicitor for Prairie Spice Ltd.
______________________________________
Attorney for American Spice Wholesale Ltd.
________________________________________
Solicitor for Canadian Factors Ltd.
_________________________________________
SCENARIO 3
Seller:
Sask. Field Sprayers Ltd.
Head office: Regina, Saskatchewan, Canada
( A small manufacturer of computerized, multipurpose field sprayers)
Buyer:
Idaho Potatoes International Inc.
Head office: Boise, Idaho. U.S.A.
Large potatoes producer and distributor with operations in Idaho, Montana,
Saskatchewan and Manitoba.
Subject-Matter:
20 Field Sprayers to be used in Idaho, Saskatchewan and Manitoba.
Delivery:
Negotiable as to method and obligation.
Financing:
Bridge secured financing arrangement offered by seller providing for payment by
instalment over a period of three years. (Contract [chattel paper] to be bought by Export
Development Canada).
Solicitor for Sask. Field Sprayers Ltd.
________________________________________
Attorney for Idaho Potatoes International Inc.
___________________________________________
Solicitor for Export Development Corp.
_____________________________________________
SCENARIO 4
Seller:
Bavarian Machinewerks, Aktiengesellschaft AG
Head Office:36 Statstrass, Bemerhaven, Germany
Buyer:
Kamico Mining Company
Head Office: 123 Spring Road, Saskatoon, Saskatchewan
Financing:
Scotia Bank
Saskatoon, Saskatchewan.
Subject-matter:
Uranium processing machine.
Payment:
Payment when machine is installed and operable in accordance with contractual
standards.
Payment and Financing:
Sight Drafts drawn on buyer to be honoured by buyer’s bank (Scotia Bank) upon
presentation by seller’s bank. Arrangements between buyer and bank to secure the
bank’s position.
Delivery:
Negotiable as to method and obligation.
Special Considerations:
This machinery is of a new design.
Kamico requires a legal mechanism to ensure that it meets contract requirements.
All communications have been by e-mail.
Lawyer for Bavarian Machinewerks Aktiengesellschaft AG
_____________________________________
Solicitor for Kamico Mining Company
____________________________________
Solicitor for Scotia Bank
___________________________________
SCENARIO 5
Supplier:
American Oil-Field Equipment Ltd.
Head Office: 2000 Bush Drive, Huston, Texas, USA
Lessee:
Sask Hydrocarbon Explorations Ltd.
Head Office: 234 Souris Ave. Estevan, Saskatchewan
Lessor:
Lease International Ltd.,
1515 Broadway Ave. New York, N.Y. USA
Subject-matter:
AOE Drilling Rig, 5000 ft. vertical and horizontal drilling capacity.
Delivery:
Negotiated
Payment:
Pursuant to financing arrangement.
Financing:
Long term finance leasing provided by Lease International Ltd., New York, N.Y. USA.
Solicitor for Sask Hydrocarbon Explorations Ltd.
________________________________________
Attorney for American Oil-Field Equipment Ltd.
__________________________________________
Attorney for Lease International Ltd.,
__________________________________________