The opinions expressed here are those of the author alone. None of the bodies with which he is associated has any responsibility for those opinions or for any errors that may appear in this article.

In memory of Gunnar Lagergren 1

Introduction

The interpretation and standardization of contracts used in international trade have always been of interest to the International Chamber of Commerce.2 The legal uncertainty resulting from a lack of standard practices in the drafting of contracts and in the construction of contracts by State and private judges was one of the foremost preoccupations of ICC's founders. Resolution No. 13 adopted at ICC's Organization Meeting held in Paris in 1920 stated as follows:

CONSIDERING the inconveniencies resulting to all interested parties from the different interpretations given to shipping terms and quotations such as F.O.B., C.I.F., etc., the International Chamber of Commerce recommends:

That the exact significance of these and all other terms used in international transportation and sale contracts should be codified and clearly defined in an 'International Dictionary of Shipping and Quotation Terms' and be issued by the International Chamber of Commerce;

That the International Chamber of Commerce should take steps to secure the greatest publicity and utilization of such a dictionary; and further shall take appropriate steps to obtain the universal adoption of the definitions contained in said dictionary.3

The study of trade terms is one of ICC's raisons d'être. Although the body in charge of that study may have varied in the course of ICC's history, the subject itself has remained remarkably constant.4 The study of trade terms was one of ICC's founding purposes, handled initially by the working group on trade terms and then by the Commission on International Commercial Practice, now called Commission on Commercial Law and Practice, and its working group on Incoterms. It is believed in some quarters of the international trading community that the creation of the Incoterms rules in 1936, and their successive amendments in 1953, 1967, 1976, 1980, 1990 and 2000, resulted from a study of arbitral awards rendered by the ICC International Court of Arbitration.5 That belief, however, is mistaken. The confidentiality with which ICC treated the work of its [Page54:] Court of Arbitration and the cases submitted to the Court was until recently a bar to the detailed study of arbitral awards referring to Incoterms and to disclosing the results of such study anonymously to the drafters and users of the Incoterms.

The preparatory work conducted prior to the revision of the Incoterms rules in 2000 provided the first opportunity to examine 80 awards containing references to trade terms. The results of that study were presented orally on two separate occasions during the 70th anniversary celebrations of the Incoterms in 2006.6 Of these 80 awards, which were rendered between 1988 and 1999, half contained references to Incoterms.7 Whilst the term FOB was found in 70% of the awards referring to trade terms, 8 it appeared in only 20% of the awards referring to Incoterms.9 The Incoterms seem to be more widely used when the parties to a sales contract plan to have the goods transported by means other than seagoing vessels or by a combination of different means of transport, whereas the trade terms found in the awards studied almost exclusively concerned sales contracts providing for shipment by sea. There thus appeared to be a need to refine these observations so as to gain a better understanding of international contractual practices and also, if necessary, contribute to the rule-making activity of ICC, which had embarked upon a revision of its Incoterms 2000.

A systematic study of arbitral awards referring to Incoterms was all the more wanting as the few decisions that had hitherto been published were often incomplete with respect to the application of the Incoterms. For instance, they did not show that all issues concerning the Incoterms can be categorized into two main areas: (1) contractual aspects and (2) procedural aspects.

The present study is a continuation of that undertaken for the 70th anniversary of the Incoterms. It is in two parts, the first comprising this introduction to the subject and the reproduction of extracts from recent awards, hitherto neither published nor analysed and often referring to Incoterms 2000. The second part of the study,10 containing extracts from a number of awards rendered prior to the year 2000 and already analysed for an oral presentation made at the time of the 70th anniversary of the Incoterms, will seek to analyse the entire corpus of awards.

The study reveals the persistence of certain issues, regardless of which version of the Incoterms is applicable and the developments that have occurred in contractual and commercial practices since 1936.



1
Still remembered by some as the 'father' of the 1953 Incoterms.


2
Hereinafter, ICC.


3
ICC, Proceedings Organization Meeting, Paris, France, June 23-30 1920, Appendix B, Resolutions Adopted, p. 187.


4
Together with documentary credits, marketing and advertising, it is one of the few areas of study that has been part of ICC's activity since the very early years of its existence.


5
As currently known. When it was established in 1923, the Court of Arbitration did not carry the epithet 'international', which was added under the chairmanship of A. Plantey.


6
Addresses by E. Jolivet: (i) 'Incoterms in ICC Arbitral Case Law' delivered at a conference organized by ICC Italy in Venice on 22 June 2006, and (ii) 'Incoterms in ICC Arbitration - New Developments' delivered at a conference organized by ICC in Paris on 7 November 2006.


7
For a comprehensive study of Incoterms and, in particular, the distinction between trade terms and Incoterms, see E. Jolivet, Les Incoterms, Etude d'une norme du commerce international, foreword by P. Fouchard, preface by D. Ferrier, Series: Bibliothèque du droit de l'entreprise, vol. 62 (Litec, 2003).


8
The other terms, referred to by their abbreviations and listed in decreasing order of frequency in the awards studied, were: CIF, C&F, FOBT, CFR and Free at Factory.


9
The other Incoterms, referred to by their abbreviations or code word and listed in decreasing order of frequency in the awards studied, were: C&F, CIF, EXW, CFR, CIF FO, DAF, DDP, DDU, CPT, CAF and FCA.


10
Forthcoming in the ICC International Court of Arbitration Bulletin, Volume 21 No. 2.