Incoterms® 2020
Cahit AğaoğluThe Incoterms® are internationally accepted standards defined by the International Chamber of Commerce (ICC) and is a trademark of ICC, which define the responsibilities of sellers and buyers depending on how the goods are delivered in sales contracts. These international resources were created to eliminate the differences of interpretation and to accurately and fairly share the costs and risks of goods delivery. The latest version of these rules was enforced from January 01, 2020. With the appropriate consideration for the current commercial practices, the Incoterms® 2020 rules aim to be useful to the practitioners by updating the previous version of the Incoterms® 2010 rules. Thus, Incoterms® 2020 amended one of the existing terms and enriched the content of some terms. In our article, we have attempted to demonstrate the type of changes occurring for each item for different types of delivery in the Incoterms® 2020.
Incoterms® 2020
Cahit AğaoğluIncoterms®, Milletlerarası Ticaret Odası (MTO) tarafından tanımlanan ve satış sözleşmelerinde malların teslim şekillerine bağlı olarak satıcıların ve alıcıların sorumluluklarını tanımlayan uluslararası kabul görmüş standartlar olup MTO’nun bir markasıdır. Malların teslimatından kaynaklanan maliyetleri ve riskleri doğru ve adil bir şekilde paylaşmak için yorum farklarını ortadan kaldırmak için çıkarılmış uluslararası kaynaklardır. Bu kuralların en son versiyonu 1 Ocak 2020 tarihinde yürürlüğe girmiştir. Incoterms® 2020 kurallarının amacı bir önceki versiyon olan Incoterms® 2010 kurallarını güncelleyerek günümüz ticari uygulamalarını net ve doğru bir şekilde yansıtarak uygulamacılara faydalı olmaktır. Bu amaçla Incoterms® 2020 mevcut terimlerden birinin ismini değiştirdiği gibi bazı terimlerin de içeriğini zenginleştirmiştir. Makalemizde Incoterms® 2020’de yer alan teslim şekilleri madde madde belirtilerek ne gibi değişikliklerin meydana geldiği gösterilmeye çalışılmıştır.
The Incoterms® rules are the world’s essential terms of trade for the sale of goods. The Incoterms® rules are can guide you on different aspects, such as filing a purchase order, packaging and labeling a shipment for freight transport, and preparing a certificate of origin at a port. The Incoterms® rules provide specific guidance to individuals participating daily in the import and export of global trade. The commercial terms set by the Incoterms® are interpretive sources for proper and fair sharing of the costs and risks arising during goods delivery.
The “Incoterms®” stands for international commercial terms and is a trademark of the International Chamber of Commerce (ICC) registered in several countries. The Incoterms® rules feature abbreviations for terms comprising three letters, such as Ex Works (EXW) or Free on Board (FOB), which have precise meanings in relation to the sale of goods worldwide. These terms have a universal meaning for buyers and sellers worldwide.
The ICC has been committed to facilitate international trade since its founding in 1919. Different practices and legal interpretations between traders worldwide necessitated a common set of rules and guidelines. In 1936, the ICC published the first Incoterms® rules as a response. The Incoterms® rules have been revised and updated chronologically in 1953, 1967, 1976, 1980, 1990, 2000, and 2010 depending on the development in the technology and international trade. On September 10, 2019, the ICC published the latest edition of the Incoterms® were enforced from January 01, 2020. The Incoterms® 2020 updates the Incoterms® 2010 and aims clearly and accurately reflect the present-day trade practices. The Incoterms® involve the responsibilities of the parties in a set of 10 articles numbered A1–A10 and B1–B10 for the seller and buyer, respectively.
The most crucial initiative behind the Incoterms® 2020 rules has been the focus on how the presentation could be enhanced to steer users toward the right Incoterms® rule for their sale contract.
The first change by the ICC to the Incoterms® 2010 rules in the Incoterms® 2020 is the provision of an additional option to issue bills of lading with an onboard notation when applying the free carrier (FCA) Incoterm. When goods are sold as FCA for carriage by sea, sellers or buyers’ bank with a letter of credit may request a bill of lading with an on-board notation. However, delivery under the FCA rules is completed before loading the goods on board. Moreover, the carrier is entitled to issue an onboard bill of lading only after the goods are actually on board. To cater to this requirement, the FCA Incoterms® 2020 provides an additional option wherein the buyer and seller can agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller after the loading of the goods, and the seller is obliged to tender that bill of lading to the buyer typically through the banks. The ICC recognizes that despite the somewhat unhappy union between an on-board bill of lading and FCA delivery, this caters to a demonstrated requirement in the marketplace.
Furthermore, costs appear at the A9/B9 of each Incoterms® rule in the new order of the articles as per the Incoterms® 2020 rules. This arrangement provides users with a one-stop list of costs, and thus, the seller or buyer can find all the costs for which it could be responsible under the particular Incoterms® rule in one place.
In the Incoterms® 2010 rules, according to the clauses C of the Institute Cargo Clauses with minimum numbered risks or similar clauses, CIF and CIP imposed the seller to obtain Cargo insurance complying at least with the minimum cover at their own expense. By contrast, the Institute Cargo Clauses A cover all risks. The drafting group of the Incoterms® 2020 decided to provide for different minimum covers in the CIF and CIP Incoterms® rules. In the CIF delivery, although the parties can agree to a higher cover, the status quo has been retained with the Institute Cargo Clauses C as the default position. In the CIP Incoterms® rule, the seller must obtain insurance cover complying with Institute Cargo Clauses A; however, the parties may agree on a lower level of cover.
In the Incoterms® 2010 rules, it was assumed throughout that the goods were to be carried from the seller to the buyer by a third-party carrier engaged by the seller or buyer depending on the Incoterms® rule used. The goods are not expected to be carried by the buyer’s or seller’s means of transportation. The Incoterms® 2020 rules now expressly allow for not only a contract of carriage but also an arrangement of the necessary carriage.
