INTERNATIONAL COMMERCIAL LAW MLL336

FULL EXAM NOTES

TOPIC 1 – INTRODUCTION TO INTERNATIONAL COMMERCIAL LAW 8

SUBJECT OVERVIEW 8
PRIVATE INTERNATIONAL LAW V PUBLIC INTERNATIONAL LAW 8
INTERACTION BETWEEN PUBLIC AND PRIVATE INT’L LAW 9
CONFLICT OF LAW 9
‘Foreign element’ 10
Determination of jurisdiction 10
DETERMINATION OF GOVERNING LAW 10
MAJOR THEORIES OF CONFLICT RULES 11
i. International comity 11
ii. Economic interdependence 11
iii. Acquired or vested rights 12
iv. Local law theory 12
v. Public (government) interest theory 12
TRUE CONFLICT AND FALSE CONFLICT 13
CONFLICT RULES IN RELATION TO GOVERNING LAW 13
a) Lex domicilli 13
Distinguish nationality from domicile 14
b) Lex Causae 14
c) Lex fori 14
d) Lex situs 15
e) Lex loci 15
f) Renvoi 15
APPLYING THE CONFLICTS RULES IN THE CONTEXT OF CONTRACT LAW 16
Formation of a contract and governing law 17
Performance of contract and proper law 17
Location of the property 17
Discretion of the courts 17
NATURE OF INTERNATIONAL COMMERCIAL LAW 18
SOURCES OF LAW 18
THE ROLE OF DOMESTIC LAW AND DOMESTIC LEGAL SYSTEM 19
CONCLUSION 19

TOPIC 2 – INTERNATIONAL COMMERCIAL CONTRACTS UNDER DOMESTIC LAW 20

COMMERCIAL CONTRACTS 20
INTERNATIONAL SALE OF GOODS 20
SOURCES OF GOVERNING LAW 21
CUSTOMS 21
Effect of customs in the context of ICL 21
CISG 21
EX WORKS ‘EXW’ 22
DELIVERY DUTY PAID ‘DDP’ 22
FREE ON BOARD ‘FOB’ 22
COST, INSURANCE AND FREIGHT ‘CIF’ 23

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DOMESTIC LAW 23
APPLYING GENERAL CONTRACT LAW 23
APPLYING THE SALE OF GOODS LEGISLATION 24
PASSING OF PROPERTY 24
Goods Act 1958 (Vic), s23 Rules for ascertaining intention 25
PASSING THE RISK 26
DELIVERY OF GOODS 26
Presumed place of delivery - S36(1), para.2: 27
Presumed time for delivery - S36(2): 27
Delivery of wrong quantity – S37: 27
Instalment deliveries – S38: 27
Delivery to carrier – S39 28
Goods delivered at distant place – S40 28
Buyer's right of examining goods – S41 29
Acceptance – 42 29
Buyer not bound to return rejected goods - 43 29
Failure to take delivery of goods – S44 29
CONFORMITY OF GOODS 30
Implied undertakings – S17 30
Sale by description – S18 30
Implied conditions as to quality or fitness – S19 30
Sale by sample – S20 31
SELLER’S REMEDIES 32
Definition of unpaid seller – S45 32
Unpaid seller's rights – S46 32
Action for price – S55 32
Damages for non-acceptance – S56 33
BUYER’S REMEDIES 33
Damages for non-delivery – S57 33
Specific performance – S58 34
Remedy for breach of warranty – S59 34
Right to claim interests or special damages – S60 34
INTERACTIONS BETWEEN THESE SOURCES 35
CONCLUSION 35

TOPIC 4 - THE INTERNATIONAL CARRIAGE OF GOODS BY SEA 36

INTERNATIONAL CARRIAGE OF GOODS 36
CARRIAGE OF GOODS BY THE SEA 37
THE CONTRACT OF CARRIAGE BY SEA 37
BILLS OF LADING 38
THE B/L V THE CONTRACT OF CARRIAGE 38
‘CARRIER’ 38
Carrier as defined by the Conventions 39
Carrier as defined by domestic law 39
Carrier as defined by the contract 39
‘SHIPPER’ 39
‘CONSIGNEE’ (OR ENDORSEE) 39
‘CONSIGNOR’ (OR ENDORSER) 40
THE CHARACTERISTICS AND THE FUNCTION OF A B/L 40
DETERMINING WHETHER A DOCUMENT IS A B/L 40
IMPORTANCE OF THE B/L 40

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HAGUE-VISBY RULES ON B/L 41
CLEAN B/L, OR A CLAUSED B/L 41
NEGOTIABLE/NON-NEGOTIABLE B/L 42
CHARTERPARTY V BILL OF LADING 42
CHARTERPARTY BILL 43
Inconsistency between the charterparty and the B/L 43
Other categorisation of B/L 43
Other terms relevant to the B/L 43
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THE HAGUE-VISBY RULES 44
CARRIER’S LIABILITIES 44
‘Seaworthiness’ 45
‘Due diligence’ 45
CARRIER’S RIGHT TO INDEMNITY 45
Necessary or reasonable deviation – Art 4(4) 45
Limits of carrier’s financial liability – Art 4(5) 46
SHIPPER’S LIABILITY 46
THE CARRIAGE OF GOODS BY SEA ACT 1991 (CTH) ‘COGSA’ 46
THE STATUS OF THE HAGUE-VISBY RULES IN AUSTRALIA 47
CONFLICT OF LAWS 47
Exclusive jurisdiction under s11, COGSA 47
THE ROTTERDAM RULES 47
SIGNIFICANCE OF THE ROTTERDAM RULES 48
SCOPE OF OPERATION 48
TRANSPORT DOCUMENTS 48
OBLIGATIONS OF THE CARRIER AND RELATED PERSONS 49
Key provisions 49
OBLIGATIONS OF THE SHIPPER AND RELATED PERSONS 49
CONCLUSION 51

TOPIC 5 – MEANS OF PAYMENT IN INTERNATIONAL TRADE 52

PAYMENT 52
RISKS AND UNCERTAINTIES IN PAYING THE PRICE 52
THE SOURCES OF LAW 53
DIFFERENT MEANS OF PAYMENT 53
CASH IN ADVANCE 53
LETTER OF CREDIT/DOCUMENTARY CREDIT 53
BILL FOR COLLECTION 53
OPEN ACCOUNT 54
CONSIGNMENT SALE 54
VARIOUS ROLES OF BANKS AND OTHER THIRD PARTIES 54
DIFFERENCES IN ARRANGEMENT OF AN INTERNATIONAL SALE AND ARRANGING THE PAYMENT 54
BUYER AND SELLER PREFERENCE 55
LETTERS OF CREDIT/ DOCUMENT OF CREDIT 55
THE OPERATION OF THE DOCUMENTARY CREDIT 56
The Privity of a documentary credit 56
The doctrine of strict compliance 56
Limitations on the bank’s examination on the documents 57
CONSEQUENCES OF NON-CONFORMING DOCUMENTS 58
Exception 58
FRAUD 58
Remedies for the buyer 59

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BANK’S LIABILITY TO THE SELLER/ BENEFICIARY 59
BANK’S LIABILITY TO THE BUYER/ APPLICANT 59
Liabilities between banks 60
CATEGORIES OF DOCUMENTARY CREDIT 60
REVOCABLE/IRREVOCABLE CREDIT 60
IRREVOCABLE STRAIGHT CREDIT /IRREVOCABLE NEGOTIATION CREDIT 61
CONFIRMED/UNCONFIRMED CREDITS 61
Transferrable credit 61
Back-to-back credit 61
Other types 61
CREDITS DIVIDED ACCORDING TO THE PAYMENT ARRANGEMENT 62
THE IMPACT OF UCP500/600 62
CONCLUSION 62

TOPIC 6 – INTERNATIONAL & REGIONAL TRADE AGREEMENTS 63

GLOBALISATION & INTERNATIONAL TRADE BARRIERS 63
WORLD TRADE ORGANISATION 64
THE CORE FUNCTIONS OF WTO 64
MINISTERIAL CONFERENCE 65
GENERAL COUNCIL 65
DISPUTE SETTLEMENT BODY 65
Other bodies and persons involved 65
How to become a WTO member 66
KEY WTO AGREEMENTS: GATT AS AN EXAMPLE 66
KEY CONCEPTS AND PRINCIPLES REFLECTED IN THE WTO AGREEMENTS 67
A. Most Favoured Nation ‘MFN’ 67
B. National Treatment ‘NT’ 67
C. Non-Discrimination 67
Quantitative restriction 67
THE TRADE BARRIERS: ANTI-DUMPING AND COUNTERVAILING DUTY 68
DUMPING 68
ANTI-DUMPING MEASURES 68
COUNTERVAILING DUTY 68
SUBSIDY 69
DISPUTE SETTLEMENT BODY ‘DSB’ 69
PROCEDURE 69
Step 2: Panel Proceeding 69
Step 3: Appellate proceeding 70
THE CRITICISMS AGAINST THE DISPUTE SETTLEMENT BOARD 70
AUSTRALIA’S PARTICIPATION IN WTO 71
RECENT CASES IN WHICH AUSTRALIA AS A RESPONDENT 71

TOPIC 6.2 71
1. THE CONNECTION BETWEEN WTO AND OTHER RTAS 71
THE LIMITATION OF WTO 71
REGIONAL TRADE AGREEMENTS 72
RTAS AND WTO 72
Degrees of economic integration 72
2. THE EUROPEAN UNION 73
KEY AREAS OF COOPERATION IN RELATION TO TRADE 73
FREE MOVEMENT WITHIN THE EU 74

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THE EU AND THE WTO 74
ELIMINATION OF TRADE BARRIERS 74
3. ASSOCIATION OF SOUTH-EAST ASIAN NATIONS (ASEAN) 74
AIMS OF THE ASEAN 75
FRAMEWORK OF ASEAN 75
4. NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) 75
CONTENTS OF THE AGREEMENT 76
ORGANISATIONAL STRUCTURE 76
MAJOR PRINCIPLES 76
DISPUTE SETTLEMENT 77
NAFTA AND WTO 77
5. CHINA AUSTRALIA FREE TRADE AGREEMENT 77
Benefits 77
6. THE ISDS SCHEME 77
THE INTERNATIONAL INVESTMENT LAW 77
The Investor-State Dispute Settlement 78
Nature of the dispute 78
Eligibility of bringing a claim 78
AUSTRALIA’S HESITATION IN REACHING AGREEMENTS ON ISDS CLAUSES 78
Impact of such hesitation 78
ENFORCEABILITY OF THE RULING 79
TRANSPARENCY OF ISDS 79
Other doubts of the ISDS 79
CONCLUSION 79

TOPIC 7 – FOREIGN INVESTMENT LAW 80

FOREIGN INVESTMENT 80
FOREIGN DIRECT INVESTMENT (FDI) 81
FOREIGN PORTFOLIO INVESTMENT (FPI) 81
FORMS OF FOREIGN INVESTMENT 81
MULTINATIONAL/ TRANSNATIONAL CORPORATIONS 81
JOINT VENTURE 82
SOLE FOREIGN VENTURES 82
Other types of foreign investment 82
REGULATION AT INTERNATIONAL LEVEL 82
ISDS 82
CONDUCT OF THE ARBITRATION 83
Outcome of the arbitration 83
For Investors 83
REGULATION AT DOMESTIC LEVEL 83
AUSTRALIA’S DOMESTIC LAW 84
DEFINITION OF FOREIGN PERSON 84
DEFINITION OF INTEREST 84
DEFINITION OF SUBSTANTIAL INTEREST 85
Meaning of an Australian Business 85
Meaning of interest in a security 85
Current scope of sensitive business 85
APPLICATION OF THIS ACT 85
MEANING OF SIGNIFICANT ACTION-ENTITIES 86
THE FOREIGN INVESTMENTS APPROVAL 87
The current threshold for approval requirement 87

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THE NATIONAL INTEREST TEST 88
Penalty 88
INTERNATIONAL PROTECTION 88
FOREIGN ACQUISITIONS AND TAKEOVERS ACT 1975 (CTH) 88
ACQUISITION OF SHARES 89
APPLYING THE ACT 90
TREASURER’S POWERS UNDER THE FOREIGN ACQUISITIONS AND TAKEOVERS ACT 1975 (CTH) 91
APPLICATION OF THE FOREIGN ACQUISITIONS AND TAKEOVERS ACT 92
CONCLUSION 92

TOPIC 8 – INTERNATIONAL DISPUTE RESOLUTION 94

DISPUTE RESOLUTION IN THE CONTEXT OF INTERNATIONAL COMMERCIAL LAW 94
CATEGORIES OF PRIVATE DISPUTE RESOLUTION 94
The relevance of conflicts rules 95
CHOICE OF FORUM IN LITIGATION 95
WHY THERE IS A CHOICE? 95
THE DIFFICULTIES AND SIGNIFICANCE OF CHOICE OF FORUM 95
THE KEY QUESTION: APPROPRIATENESS/INAPPROPRIATENESS 95
TESTS 96
1. Oppression and vexation 96
2. Forum non conveniens 96
2.2 Clearly inappropriate forum test 97
Clearly inappropriate forum v forum non conveniens 97
Factors to be taken into account 97
ENFORCEMENT OF FOREIGN JUDGMENT 97
COMMON LAW PRINCIPLES 98
ENFORCEMENT IN AUSTRALIA 98
Refusing the registration of a judgment – ss 5, 6 99
Stay of enforcement of a registered judgment 99
THE HCCH AND ITS ‘JUDGEMENTS PROJECT’ 99
THE JUDGMENTS PROJECT 99
THE CHOICE OF COURT CONVENTION 2005 100
APPLICATION OF THIS CONVENTION 100
THE SINGAPORE INTERNATIONAL COMMERCIAL COURT (SICC) 100
THE JUDGES 101
JURISDICTION 101
Commentaries on the performance of SICC 102
INFORMAL DISPUTE RESOLUTION, AND INTERNATIONAL COMMERCIAL LITIGATION 102
INTERNATIONAL COMMERCIAL ARBITRATION, AND THE ENFORCEMENT OF AWARDS 104
CONCLUSION 106

TOPIC 8.2 – INTERNATIONAL COMMERCIAL DISPUTE RESOLUTION 107

INTERNATIONAL COMMERCIAL ARBITRATION (ICA) 107
KEY PRINCIPLES OF INTERNATIONAL COMMERCIAL ARBITRATION 107
1. PARTY AUTONOMY 107
Ad hoc v institutional arbitration 108
2. CONFIDENTIALITY 108
3. COMPETENCE-COMPETENCE 108
4. PROCEDURAL FAIRNESS 108
5. EFFICIENCY 109
LEGAL FRAMEWORK GOVERNING INTERNATIONAL COMMERCIAL ARBITRATION 109

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1. THE ARBITRATION AGREEMENT 109
Effect of a valid arbitration agreement 109
2. THE ARBITRATION PROCEDURE RULES 110
Important arbitration institutions and arbitration rules 110
Key issues governed by Arbitration Rules 110
3. THE LEX ARBITRI 110
Important provisions 111
The International Arbitration Act (1974) 111
4. THE ENFORCEMENT SCHEME 112
The New York Convention 112
Art V of the New York Convention 112
The Relationship between the Model Law and NYC 113
Drafting AA 113
5. THE TCL CASE 114
CHALLENGES ON JURISDICTION BEFORE HC 114
HIGH COURT RULING 114
GROUNDS FOR SETTING ASIDE/ DENYING ENFORCEMENT: FCA 114

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 Topic 1 – Introduction to International Commercial

Law

Subject Overview

• International commercial law is best thought of as a collection of several different

but related disciplines, rather than one specific area of law. In MLL336
International Commercial Law, the range of disciplines we cover is reflected in
the content of Topics 2 to 8 of this Unit. Over the course of those Topics, we will
be addressing:
o The international contracts under domestic law;
o The international contracts under major international regimes;
o The international carriage of goods;
o Letters of credit, and other means of payment in international trade;
o International trade and investment agreements;
o Regional trade and investment agreements;
o Foreign investment law, at the international and domestic level;
o International dispute resolution, focusing on international commercial
arbitration.

Private International Law v Public International Law

• First of all, it is important to understand different aspects of the international law,

particularly, the difference between private international law and public
international law, when attempting to understand the nature of international
commercial law. The private international law / public international law
distinction can be applied to the range of disciplines covered in MLL336
International Commercial Law.
Public International Law Private International Law
Interactions between different states Interactions between private parties in
international contexts
Reflections of sovereign power Rights and liabilities of private parties

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 Example of areas of Law: International
Criminal Law, Law governing war,
human rights, law of the sea, space law
Example of sources of public
international law: Conventions, treaties
Examples of areas of Law: international
commercial contracts, international
carriage
Example of sources of private
international law: international and
domestic legislation, custom, industrial
practice

Interaction between public and private int’l law

• In some circumstances, both can be applied in the context of international

commercial law.
o E.g. In the area of international commercial law, some activities are
between private parties and governed by private international law;
however, these rules were made by States via schemes provided by public
international law
• Also, public international law can be applied in the context of international
commercial transactions/disputes in supporting the private international law.
o Grace v MacArthur 170 F Supp 442 (1959) (US DCED, Arkansas):
service of a writ was made on board an areoplane when flying over
Arkansas; the decision of jurisdiction (a private international law issue)
was based on the law of territory (public international law issue)

Conflict of Law

• International commercial law implicates the interaction of many State legal

systems with each other, and with international legal instruments, it raises the
possibility of encountering conflicts of laws.
o The phrase ‘conflicts of laws’ broadly refers to legal principles that apply
to cases involving an international element, and it is a term sometimes
used to refer to situations where there are differences between potentially
applicable laws.
• Used in its first sense, there are three types of conflicts of laws issues that might
arise:

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 1. Identifying whether a court or a tribunal has jurisdiction to resolve a
dispute;
2. Identifying the law that a court or a tribunal will apply in resolving a
dispute; and
3. Identifying whether a court judgment or an arbitral tribunal’s award will
be recognised and enforced in different States.

‘Foreign element’

• Foreign element refers to any facts, connections or considerations that may raise
the issue of foreign law, foreign jurisdiction or international treaties that are not
part of domestic law.

Determination of jurisdiction

• Conflicts rules apply when the court needs to decide its own jurisdiction in
dealing with a foreign-related dispute.
• Whether the court of the competing jurisdictions is the best, or a clearly more
appropriate, or most convenient.
o Voth v MFM: the ‘clearly inappropriate forum’ test by the majority of the
HC
▪ NB: skipped in Topic 1, further discussion in Topic 8.

Determination of governing law

• Express ‘choice of law’ prevails.

o The ‘Anders Maersk’ [1986]: the US law applied, because it was
incorporated by express wording of the B/L
• Problem may arise if there lacks an expressed choice of law, even if there is
expressed choice of law, issues may arise:
o The chosen law may include ‘conflicts rules’ and redirect it to other sets of
law, if the clause is not clearly drafted (renvoi, to be discussed later).
o The choice of law may be illegal, or violates public policy.
• Balance of different rationales, rules, factors or considerations that may justify the
choice of one law over another
o The theories, key rules, factors and schemes to be introduced.

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Major Theories of Conflict Rules

• Explaining the reasons and rationale for the existence of conflicts of law, and how
these rules are applied
• Key theories include:
i. International comity
ii. Economic interdependence
iii. Acquired or vested rights
iv. Local law theory
v. Public (government) interest theory

i. International comity

• It is a theory to explain international law in general.

o Sovereigns/states respect each other
• Huber:
o ‘sovereigns act out of comity so that the laws of each nation, brought into
existence within its territory, may hold their force everywhere so far as
they do not prejudice the power of law of another sovereign and his
subjects. From which it follows that this is derived not merely from the
civil law, but from convenience and the tacit consent of nations.’
• Based on courteous conduct and discretion.
o Only explains the existence of conflicts rules from a moral perspective.
o Reciprocity, mutual convenience (further developed to the economic
interdependence theory).
o Cannot explain certain mandatory rules, or exclusive jurisdiction, in the
conflict rules
o Limited function in explanation and application.

ii. Economic interdependence

• The adoption of customs, usages, lex mercatoria by the Piepowder courts in the
UK.
• Application of foreign law between foreign merchants in seventh century China
(Tang Code).

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