Interlegal LegalCare for the trader: calm in a few cents per ton of cargo

• Shipping
• Transport & Logistics
• International Trade

Imagine yourself:

Friday, 5:00 PM. Trader finds out that its contract «10k UKR Corn//CPT Nikolaev» is under the threat of failure for various reasons: the buyer is unable to make payment, the vessel is not ready to sail or is arrested, and many others… It is difficult to treat the trader business as dull.

It will obviously break not only your plans for weekends but also your sales plan for the current season. In such case manager often needs only a proper assessment of the situation in order to understand, how serious this problem is and what to do to avoid negative effects and serious losses.

You may phone your colleagues but most of all are your competitors – you will not desire to share your problems with them. You may consult to the broker but its advice will be always more practical than based on law analysis. If a little problem will result in large arbitration proceedings, lawyers will certainly ask you: why did not you apply immediately?

If a company has a law department, of course they will work 24/7. And if does not have? Which foreign lawyer may provide a prompt, brief and practical advice in such situation and how much will it cost under such conditions?

For several years we help our Clients to perform commercial contracts by means of Interlegal LegalCare program – a system of legal support of GAFTA/FOSFA contracts on FOB, СIF, СFR terms of supply for a fixed subscriber’s fee.

Its main feature provides unification (for the first time) of speed, quality, results and the lowest ever cost of such legal service as proper and practical consulting upon the English law (service cost at the first stage makes up nearly 0.3-0.9 cents per ton of cargo).

Successful product components are obvious:

• - experience,
• - specialization,
• - number of experts,
• - preliminary analysis.

There are usually 2 scenarios of applying to foreign legal support in case of such disputes as non-payment, non-delivery of vessel, discrepancies in cargo quantity and quality, demurrage dispute under contract performance and others:

1. 1. dispute has just arisen and lawyers shall obtain promptly and analyze the documents  in order to settle the dispute as soon as possible,
2. 2. dispute lasts for a certain period (several days/weeks) and the parties had several mutual claims and kept their principal position, with unsuccessful attempts to reach a compromise (if any), while claim amounts exceeded ten/hundred thousand USD.

Both scenarios took place in our practice with varied success.

Interlegal LegalCare is a variant No. 3 – a way to reduce both legal support expenses and risks of essential obstacles in contract performance, resulting in decrease of loss probability and amount.

First and second case presumed analysis of documents and situation and plan development, only then followed by drafting the written documents and negotiations with counteragent for the purpose of dispute settlement. In case when the disputes arises on Friday evening, with limited term for drafting legal opinion, dispute settlement will have to be postponed till Monday, even despite that our lawyers are ready to provide services 24/7. Counteragents often are not ready to show such a humanity, state institutions do not operate and banks are at the weekends. Due to such forced pause, cost of dispute settlement and correlated expenses may significantly increase, moment may be lost and no solution may be found.

In the LegalCare program, lawyer obtains all the contractual documents in advance, makes a preliminary analysis of contract provisions and is aware (stays in copy) of the whole key correspondence upon the contract. The lawyer monitors promptly the current situation and, at the client’s requests, does not have much time for analysis of documents and drafting recommendations. Program basic terms provide enough time required for consulting and settlement of the most disputes. So legal services are much cheaper, with higher accuracy and certainty of answers and less time consumed for expert consulting.

5 reasons for using LegalCare

With this program, you will have the following opportunities:

1. 1. To obtain 24/7 professional practical advice from the expert being always aware of your certain situation, at small fixed cost.
2. 2. To adjust promptly the number of experts, including engaged in other specializations, in case of negative consequences of the situation (ship/cargo arrest etc.).
3. 3. To mitigate risks of accidental conflict with trade partner, often of other culture and mentality, followed by losses for this season or for a longer period.
4. 4. To know the exact legal service cost at all stages including arbitration support, if necessary.
5. 5. To provide an opportunity for your experts for gaining their own experience due to other’s one.

It will result in calm and confidence in contract performance under the scheduled scenario and with the expected financial result.

Which questions do the clients ask in the framework of operation under LegalCare? Various!

Here are only some of questions lately asked to experts in the process of contract support under this program:

• - Use of quality standards (the Ukrainian State Standard, ISO) to define the contractual quality of goods. Fixing the applicable quality standard if the parties failed to agree the applicable standard in the contract;
• - Consulting upon the moment of contract conclusion, procedure of accepting the nominated vessel under FOB contract and grounds for rejection in nominated vessel acceptance from the English law aspects;
• - Interpretation of force majeure clauses;
• - Arrangement of the list and procedure of submitting the documents require for payment;
• - Drafting the clause on the goods quality analysis, payment terms and methods (CAD and Letter of Credit);
• - Arrangement of documentary instructions and filling-in the Bill of Lading;
• - Consulting upon cargo retention on board of the vessel in case of the counteragent’s non-payment under the contract, return of Performance bond, cargo release against the Letter of Indemnity, difference between FOB and FOBST terms;
• - Consulting upon mitigation of risks related to potential ship arrest for calls at the Crimean occupied sea ports for the seller on FOB terms;
• - Drafting the wash-out agreement;
• - Executing changes in terms of supply after the fact of supply and many others.

LegalCare program has already facilitated settlement of over a dozen of disputes upon cargo quality, demurrage, non-supply, non-payment, cargo shortage in total amount of nearly 17.5 million USD.

What should you do to join the program?

You need only to call at Interlegal – and your next contract will be quieter! It is like an insurance for your mother’s ambulance: if there is a policy, her pressure is good.

Artem Skorobogatov

skorobogatov@interlegal.com.ua