1.3 Overview of International Trade Laws and Norms
International trade is carried out on the basis of related international laws and norms.There is an old Chinese saying: nothing can be done without rules. International trade legal norms are the rules of international trade. Under its guidance and jurisdiction, traders and related parties like carriers, insurers, banks, etc., can carry out international trade or provide services for international trade under a unified framework so as to ensure the smooth progress of trade.
Laws and norms of international trade are the general term for all kinds of legal norms governing international trade contracts. In practice, it mainly includes domestic laws, international trade customs, and international trade conventions.
1.3.1 Domestic Laws
Domestic laws refer to all kinds of laws and regulations enacted and promulgated by a country in accordance with its legislative procedures, which are effective within its sovereign jurisdiction. Domestic laws involve many aspects. The ones referred to in this context mainly include the ones related to international trade, such as contract law, trademark law, patent law, copyright law, transportation law, insurance law, arbitration law, customs law, etc.
Obviously, the domestic laws of different countries are different. In order to make the domestic laws of a country binding on contractual parties from different countries, it is necessary to adopt conflict rule. The general practice is to adopt the principle of party autonomy, namely, the relevant parties to the contract choose the domestic laws applicable to the contract. Accordingly, in the practice of international trade, the domestic law which has jurisdiction over the sales contract is usually determined by the way that the buyer and seller agree on the applicable laws in the contract. There are three specified choices for them:
① The contract shall be governed by the laws of the exporting country.
② The contract shall be governed by the laws of the importing country.
③ The contract shall be governed by the laws of a third country agreed upon by both parties.
In this way, the laws of the country agreed upon in the international trade contract will have jurisdiction over the contract and will be binding on both parties.
1.3.2 International Trade Customs
In the context of laws and norms, international trade customs refer to written rules formulated by international organizations or authoritative institutions based on international trade practices, which have universally guiding significance for international trade.
Many international organizations are active in publishing international trade customs.For examples, International Law Association published Warsaw-Oxford Rules 1932, Comité Maritime International(CMI) published CMI Uniform Rules for Sea Waybills, 1990, United Nation’s Conference on Trade and Development (UNCTAD) and International Chamber of Commerce (ICC) jointly published UNCTAD/ICC Rules for Multimodal Transport Documents, and ICC published the most international trade customs, including the famous ones like International Rules for the Interpretation of Trade Terms (INCOTERMS) , Uniform Customs and Practice for Documentary Credits (UCP) , Uniform Rules for Collection(URC) , Uniform Rules for Demand Guarantees(URD) , etc.
Popular as they are, international trade customs are not born laws by nature. However, there are certain ways making international trade customs become a kind of legal norm of international trade in practice. The popular ones are listed as follows.
(1) To Make Contractual Agreement
If traders agree with a certain international trade customs, they will stipulate in their contract that the customs is applicable. In this way, the agreed customs will be legally binding on the contract and the parties to the contract.
(2) To Invoke Representative International Rules
Such representative international rules mainly refer to the related rules of CISG. It is stipulated in Article 9 that:
①The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.
②The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.
It must be noted that the above rules use the expression of “usage” and “practices” instead of “customs”. “Usage” and “practice” are actually synonyms of “customs”. However, compared with “usage” and “practice”, “customs” is more standardized and the content is more definite
because it takes the form of written rules. Therefore, the above rules of CISG also apply to customs.
Through the above ways, international trade customs are given the legal effect to govern the sales contract and bind the buyer and the seller, providing guidance to the traders’ operation and legal basis for resolving related trade disputes. In practice, many international trade disputes are settled on the basis of one or several international trade customs.
1.3.3 International Trade Conventions
International trade convention refers to trade related agreements concluded by a group of sovereign countries, also known as international trade treaty.
After an international trade convention has been concluded and entered into force, it is binding on its member countries, becoming one of the legal norms to be observed in international trade, with the exception of the provisions over which countries declare reservations when they conclude or participate in the convention. Some of the international trade conventions are shown in Table 1.3.
Table 1.3 Some of the International Trade Conventions
For member countries of a same convention, the convention is their common legal norm, and traders should abide by the international trade conventions ratified and acceded to by their government.
Take CISG as an example, this convention was developed under the auspices of the United Nations Commission on International Trade Law (UNCITRAL) . It was adopted at a diplomatic conference held in Vienna in 1980 and officially entered into force on January 1, 1988. As of 29 December 2015, 84 countries had ratified and acceded to the convention. China deposited its instrument of ratification on 11 December 1986 and is a member of the convention. The legal norms established by the convention, except for the reservations of individual countries, are the common legal norms of China and the other 83 countries.
CISG’s reservation system:
Part IV of CISG provides the reservation system the convention in Article 95 and 96. Namely, when acceding to the convention, a member state can apply for reservations to the provisions clearly stipulated in the convention. After that, it will not be bound by the reservation clause(s) in specific practice.
China once made reservations to Article 1 (1) (b) and Article 11 in accordance with the reservation system of CISG.
Article 1 (1) (b) ：When the rules of private international law lead to the application of the law of a contracting state.
Article 11：A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.
Now the reservation to Article 11 has now been withdrawn, only the reservation to Article 1 (1) (b) is kept.
1.3.4 Comparison of Major International Trade Legal Norms
Comparing the above three types of legal norms, we can see that the biggest difference among them is the difference of binding force.
Domestic laws are binding on domestic traders. To make a specific domestic law binding on the parties of international trade, buyer and seller need to make agreement in their contract.
International trade customs are not legally binding, but buyers and sellers may agree on the customs to be applied to the contract, thus making the agreed customs binding. In addition, based on the related rules of CISG, the international trade customs commonly used in international trade should be observed by traders. Obviously, it is CISG’s point that the well-known international trade customs are binding on both buyers and sellers, especially for those from member countries of CISG.
International trade conventions are signed and acceded to only by sovereign governments. When a country accedes to an international trade convention, the convention becomes legally binding on the country’s foreign trade, including the contracts concluded by its companies.
To sum up, domestic laws, international trade customs and international conventions jointly govern international trade contracts, explaining how international trade should be conducted and determine how disputes in international trade should be resolved.