Cross-border contracts and payments

What is happening

An importer buys equipment from China through a trading intermediary in a third country, paying via a payment agent. The contract says nothing about the payment currency or what happens if the bank returns the money.

An exporter signed an English-language contract on the buyer's template: English law, arbitration in London, penalties running in the buyer's favour only. If it comes to a dispute, protecting its interests and enforcing an award may prove difficult.

A company is entering EAEU and Asian markets and wants a single contract template with clear terms on delivery, acceptance, payment and dispute resolution that does not have to be rewritten for every deal.

What the law says

• The parties to a foreign trade contract may choose the governing law (Article 1210 of the Civil Code); where they have not, it is determined under the rules of the Civil Code. International sales of goods between companies from contracting states are governed by the UN Convention on Contracts for the International Sale of Goods (Vienna).
• Payments under the contract must comply with Federal Law No. 173-FZ of 10 December 2003 "On Currency Regulation and Currency Control": deadlines for receiving proceeds and returning advances, registration of the contract with the bank and supporting documents.
• Disputes may be referred to international commercial arbitration, governed in Russia by Law of the Russian Federation No. 5338-1 of 7 July 1993 "On International Commercial Arbitration". The choice of seat directly affects where and how an award can be enforced.
• Where one party is sanctioned, the dispute may be heard by a Russian commercial court under Article 248.1 of the Commercial Procedure Code (APK), including where there is a foreign arbitration clause, if sanctions prevent it from being performed.
• Delivery terms are usually framed using Incoterms: the chosen rule determines when risk passes, who handles customs clearance and which costs form part of the customs value.

What we do

• We draft supply, distribution, agency and services contracts with foreign counterparties in Russian and English.
• We review counterparties' drafts and prepare a mark-up explaining each change.
• We choose the governing law and dispute resolution method with regard to where the parties' assets are and where a judgment or award will have to be enforced.
• We set out the payment terms: currency, routing, the role of agents, and what happens if a payment is returned or delayed.
• We include sanctions clauses and provisions on force majeure and suspension of performance.
• We check the contract against currency control and customs clearance requirements.
• We draft agency agreements and contracts with payment intermediaries.

What we will need from you

• The draft contract or the counterparty's template, if there is one.
• A description of the deal: goods or services, countries, volumes, timing, delivery terms.
• Details of the counterparty and its bank and the intended payment route.
• Your bank's documentary requirements for currency transactions, if known.
• The company's negotiating priorities: what is essential and where it can give way.