International Trade Law

In today’s increasingly globalized world, cross-border commercial and business relations are rapidly expanding. This evolution necessitates the management of more complex and technical legal processes. Particularly, areas such as international sales contracts, delivery and payment methods, transportation and insurance documents, customs procedures, and the resolution of trade disputes are governed by specific regulations and international conventions.

In foreign trade transactions, parties are not only bound to each other but also to third parties such as banks, insurance companies, carriers, customs authorities, and governmental bodies. Therefore, accurate documentation, clearly drafted contracts, and adherence to international standards at every stage of foreign trade are crucial.

In this context, the scope of our legal consultancy services is extensive and includes the following key areas:

• Free Export, Registered Export, Consignment Export, Credit-Based Export, Free Zone Export,
  Re-export of Imported Goods, Countertrade Export, Export via Operational Leasing, Duty-Free Export
• Transit Trade
• VAT Exemption in Exports
• Import Duties
• Customs Warehousing: Private Warehouses, Public Warehouses, and Bonded Warehouses
• Certificates of Origin for ECSC (European Coal and Steel Community) Goods
• Delivery Terms in Foreign Trade (INCOTERMS)
  • Ex Works (EXW)
  • Free Carrier (FCA)
  • Free Alongside Ship (FAS)
  • Free on Board (FOB)
  • Cost and Freight (CFR)
  • Cost, Insurance and Freight (CIF)
  • Carriage Paid To (CPT)
  • Carriage and Insurance Paid To (CIP)
  • Delivered at Place (DAP)
  • Delivered Duty Paid (DDP)
  • Delivered at Frontier
  • Delivered Ex Ship
• International Payment Methods in Foreign Trade
  • Cash in Advance
  • Letter of Credit (L/C), including Red Clause and Green Clause
  • Documents Against Payment (D/P)
  • Documents Against Acceptance (D/A)
• Trade Documents
  • Proforma Invoice
  • Commercial Invoice
  • Packing List
  • Outer Packaging List
  • Specification Sheet
  • Inspection Certificates (by Manufacturer, Seller, or Third Parties)
  • Manufacturer’s Analysis Report, Vessel Measurement Report, Certificate of Circulation, Transport Documents
• International Transport Contracts
  • CMR Convention and related carrier liability
  • TIR Convention
  • FIATA Transport Documents
  • Road Waybill, Rail Consignment Note (CIM)
  • Container Bill of Lading
  • Charter Party B/L
  • Non-Negotiable Sea Waybill
  • Through Bill of Lading
  • Multimodal / Combined Transport Document
• Insurance Documentation
  • Insurance Certificate
  • Insurance Policy
  • Risks Covered by Insurance and Related Disputes
  • Bill of Exchange / Draft

Delivery Terms in International Trade (INCOTERMS)

Delivery terms in international trade are defined by the International Chamber of Commerce (ICC) through INCOTERMS rules, aiming to clarify the allocation of risk, cost, and responsibility between the seller and the buyer. The latest revision, INCOTERMS 2020, offers globally accepted commercial standards.

Each INCOTERM rule defines the moment at which:

1. Delivery obligation is fulfilled,
2. Costs are transferred,
3. Risk is transferred.

INCOTERM Definitions:

EXW – Ex Works:

• The seller fulfills the delivery obligation when the goods are made available at their premises.
• The buyer bears all costs and risks involved in transporting the goods from the seller’s premises to the final destination.

FCA – Free Carrier:

• The seller delivers the goods to the carrier at a named place.
• Export clearance is the seller’s responsibility; the risk transfers upon delivery to the carrier.

FAS – Free Alongside Ship:

• Delivery is fulfilled when the goods are placed alongside the ship at the designated port.
• The buyer bears the cost and risk from this point forward.

FOB – Free On Board:

• Risk transfers to the buyer when the goods are loaded on board the vessel.
• Commonly used in maritime transport.

CFR – Cost and Freight:

• The seller pays the cost and freight to bring the goods to the destination port.
• Risk transfers once the goods are on board.

CIF – Cost, Insurance and Freight:

• Same as CFR, but the seller must also provide insurance.
• Insurance must be arranged for the buyer’s benefit.

CPT – Carriage Paid To:

• The seller delivers goods to the carrier and pays the carriage to the named place.
• Risk passes upon delivery to the first carrier.

CIP – Carriage and Insurance Paid To:

• Similar to CPT, with the addition that the seller must provide insurance.
• Under INCOTERMS 2020, the seller must obtain comprehensive insurance coverage (Clause A).

DAP – Delivered At Place:

• The seller delivers when the goods are placed at the disposal of the buyer at the named destination.
• Import customs duties and taxes are borne by the buyer.

DDP – Delivered Duty Paid:

• The seller is responsible for delivering goods to the buyer, including payment of import duties and taxes.
• It places maximum responsibility on the seller.

International Payment Methods

The choice of payment method in international trade depends on the level of trust between parties and country-specific risks. Each method offers different levels of security and risk for both exporter and importer.

Cash in Advance:

• The buyer pays before shipment.
• It is the safest method for the seller but riskiest for the buyer.

Letter of Credit (L/C):

• A bank guarantees payment to the seller upon presentation of compliant documents.
• It protects both parties and is widely used in international trade.

Types of L/C:

• Red Clause L/C: Allows the beneficiary to receive advance payment before shipment.
• Green Clause L/C: Covers pre-shipment advances and storage costs.

Documents Against Payment (D/P):

• The bank releases shipping documents to the buyer only upon payment.

Documents Against Acceptance (D/A):

• The buyer accepts a bill of exchange and agrees to pay at maturity.
• Used for deferred payment arrangements; higher risk for the seller.

What is a Letter of Credit?

A letter of credit is a secure payment method widely used in international trade to minimize payment risk. From a legal perspective, a letter of credit is a form of remittance issued by a bank (issuing bank) at the request of the buyer (importer) in favor of the seller (exporter) and ensures payment upon submission of documents meeting the agreed conditions. The system operates under the principle of “payment against documents.”

Types of Letters of Credit (from a legal standpoint):

• Revocable Letter of Credit: Can be amended or canceled at any time by the issuing bank without prior notice to the beneficiary. Rarely used due to low security for the exporter.
• Irrevocable Letter of Credit: Cannot be changed or revoked unilaterally. Payment is guaranteed if the specified conditions are met. Most commonly used type in international trade.

Common Types in Practice:

• Revolving L/C: Renewed automatically within a defined time or amount, often used for continuous trade relationships.
• Transferable L/C: Allows the beneficiary to transfer the credit wholly or partially to another party. Must be explicitly stated in the credit.
• Standby L/C: Functions like a bank guarantee, activated in case of non-performance.

Can Payment Under a Letter of Credit Be Prevented?

Although letters of credit are based on document compliance and independent of the underlying contract, payment may be legally blocked under certain conditions:

• Invalidity of the underlying contract,
• Expiry or invalidity of the letter of credit itself,
• Statute of limitations,
• Court-ordered injunction or provisional attachment.

Any such measures must be enforceable and typically require security to be posted.

What is a Bank Guarantee (Letter of Guarantee)?

A bank guarantee is a security instrument issued by a bank or financial institution to protect one party in case the counterparty fails to fulfill contractual obligations.

Types based on risk nature:

• Direct Guarantees: Cover general business risks such as performance failure.
• Surety-type Guarantees: Issued when the debtor fails to meet obligations.

Types based on payment conditions:

• Payable on First Demand: Payment is made immediately upon request, without investigation.
• Conditional Guarantees: Payment is subject to proof of breach and evaluation by the bank.

Types based on purpose:

• Bid Bond (Temporary Guarantee): Provided during the bidding phase.
• Performance Bond (Final Guarantee): Ensures performance after contract is signed.
• Advance Payment Guarantee: Covers the pre-payment made at the start of a contract.

Other types include fixed-term, open-ended, revocable, irrevocable, confirmed, and unconfirmed guarantees.

Can Bank Guarantees Be Transferred?

Yes, depending on the type of risk and the structure of the guarantee. For a guarantee to be transferable:

• The agreement must not prohibit assignment,
• The content must allow for transfer,
• The issuing bank must approve the transfer.

Can Receivables From Guarantees Be Seized?

According to the Turkish Court of Cassation, guarantees are not considered negotiable instruments, so direct seizure is not possible. However:

• If a payment request has been made, receivables may be subject to seizure under general rules.
• If the receivable is contingent, a seizure notice under Article 89/1 may be issued to the bank.

Can Payment Under a Guarantee Be Prevented?

A guarantee is payable upon the occurrence of a specified risk or default. However, payment may be prevented by:

• Provisional injunctions,
• Demonstrating invalidity or expiry of the guarantee contract.

For an injunction to be granted, urgent circumstances must be proven, and usually security must be provided to the court. In cross-border situations, the enforceability of the court order is crucial.

Trade Documents in International Transactions

International trade operations are carried out through comprehensive documentation procedures. Each document serves both commercial and legal purposes. Properly prepared and timely submitted documentation is critical for smooth payment and customs procedures.

Commercial Documents:

• Proforma Invoice: An initial invoice issued by the seller as an offer. Commonly used to initiate letters of credit, apply for import licenses, or for preliminary orders.
• Commercial Invoice: The official invoice documenting the sale. Includes the type, quantity, unit price, and total value of the goods.
• Packing List: Details the contents of packages, including item descriptions and quantities.
• Outer Packaging List: Especially used in bulk shipments to list the contents of each package in detail.

Quality and Compliance Documents:

• Specification Sheet: Outlines the technical characteristics of the goods.
• Inspection Certificates: Issued by third-party inspection bodies or official institutions to confirm compliance and quality.
• Manufacturer’s Analysis Certificate: Provides chemical, physical, or technical analysis of the product.
• Vessel Measurement Report: Details related to the ship’s capacity and cargo, commonly used for bulk shipments.

Certificates of Origin and Transport Documents:

• Movement Certificates (e.g., A.TR, EUR.1): Used to claim exemption or reduction of customs duties under trade agreements.
• Transport Documents: Vary by transportation type and prove the legal status and ownership of goods in transit.

Transport Contracts and Documents

• CMR Convention and Waybill: Regulates the liabilities of the consignor, carrier, and consignee under the 1956 CMR Convention.
• TIR Carnet / TIR Convention: Facilitates cross-border transport exempt from customs duties.

Rail Transport:

CIM / Rail Consignment Note: Documents the contract between the consignor and the railway carrier.

Maritime Transport:

• Bill of Lading (B/L): A document of title, proof of shipment.
  • Container B/L
  • Charter Party B/L
  • Non-Negotiable Sea Waybill
  • Through B/L
  • Multimodal / Combined Transport Document

FIATA Documents:

• Issued by international freight forwarders to evidence transport arrangements and rights to goods.

Insurance Documents and Related Disputes

Insurance Documents:

• Insurance Certificate
• Insurance Policy

Risks Covered:

• Physical damage, theft, delay, natural disasters, force majeure.

Common Disputes:

• Inadequate insurance coverage,
• Non-compliance with L/C terms,
• Delayed notification,
• Failure to inspect upon delivery.