Free Online Course in International BusinessICC International Court of ArbitrationThe International Chamber of Commerce has applications that can impact timely payments. In particular, there are arbitration mechanisms available that can help parties reach an amicable settlement for payment issues. A final and enforceable decision can generally be obtained only by recourse to the courts or by arbitration. Because arbitral awards are not subject to appeal, they are much more likely to be final than are the judgments of courts of first instance. Although arbitral awards may be subject to being challenged (usually in either the country where the arbitral award is rendered or where enforcement is sought), the grounds of challenge available against arbitral awards are limited.INCOTERMSThe Incoterms are internationally accepted commercial terms defining the respective roles of buyer and seller in the arrangement of transportation and other responsibilities and clarifying when the ownership of the merchandise transfers from seller to buyer. They are used in conjunction with sales agreements, payment terms and other methods of transacting sales. It is very important for an international manager to understand the relationship between Incoterms quoted in a transaction and their relationship to the payment terms that have been agreed to for the transaction, since risks may change for a buyer and/or seller when these issues are analyzed.For example, if the seller agrees to open account payment terms of Net 90 days invoice date and quotes Incoterms of CFR port of destination, the seller’s commercial risk has increased significantly. Why? In this scenario the seller will not be paid until 90 days after the invoice date and, per the Incoterms, will cover the transportation costs and maintain ownership of the goods while in transit to the port of destination; however, the seller will not be responsible for insuring the goods. Should the product be damaged during shipment, the seller is relying on the buyer to pay for the goods and submit the insurance claim and wait for reimbursement, which could happen if the buyer and seller have a good relationship. However, the seller could loose everything in this situation – the goods and payment. Specific Incoterms have application to timely payment. Some examples of Incoterms follow: 
WTOThe World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. The WTO can be involved in dispute settlements that may result from untimely payments. The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore ensuring that trade flows smoothly. A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. The authors of these agreements are the member governments themselves; the agreements are the outcome of negotiations among members. Ultimate responsibility for settling disputes also lies with member governments, through the Dispute Settlement Body.ResourcesInternational Chamber of Commerce – www.iccwbo.orgICC Resources – www.iccbooksusa.com The World Trade Organization – www.wto.org World Trade Press Publications – www.worldtradepress.com • Dictionary of International Trade • International Finance FCIB Online Resource Library, – www.fcibglobal.com Exporting from Start to Finance, Third Edition, L. Wells and K. Dulat.
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