International Business Law: Chin Wah Company Essay

Possible authorized actions of Chin Wah


The contract signed between Metorex (the shipper) and Chin Wah (the receiver of consignee) accommodates a clause that virtually permits Metorex to deny duty for failure to offer the required quantity of aluminum scrap to their enterprise associate. In explicit, in accordance with one of many provisions says that “The quantity of metal supplied shall be within 10% of the specified amount without penalty or cause for claim”. Judging from this clause, Chin Wah can’t take any authorized motion in opposition to Metorex. However, there are a number of circumstances that may invalidate this clause. First of all, in accordance with Hague-Visby Rules, set for worldwide carriage of products by the ocean, a shipper is obliged to specify the quantity, weight, and amount of products which are supplied to the consignee1. Moreover, the invoice of lading, which accommodates particulars about items, has to correspond to the outline supplied within the contract. It needs to be admitted that, Hague-Visby Rules are extra relevant after we are talking concerning the vendor’s obligations to the provider however to not the customer. In this case, the administration of Chin Wah has to refer to a different regulation regulating worldwide gross sales, particularly the UN Convention on Contracts for the International Sale of Goods (CISG). This treaty accommodates a number of vital provisions that describe the obligations of the vendor. First, this celebration “must deliver which are the quantity, quality, and description required by the contract”2. Furthermore, in accordance with Article 74, the damages which outcome from the breach of contract embody, embody the lack of revenue.

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It ought to be famous that Chin Wah had obligations to a different Korean metal producer. They needed to provide them with aluminum scrap of a sure high quality, Taldom; as a consequence of this breach of contract, they may not ship it on time and needed to pay penalties to their enterprise associate. Judging from the provisions of CISG, we are able to argue that Meterox must compensate Chin Wah for these losses. CISG conference additionally postulates that this provision is legitimate provided that the celebration, which breached the contract, had been warn concerning the attainable dangers of the customer or may fairly predict them. If Chin Wah failed to tell Metorex concerning the attainable losses beforehand, this enterprise will discover it tough to demand indemnity. If the events can’t resolve this battle via negotiation, the precise quantity of compensation will likely be decided by the arbitrage court docket. When talking compensation for attainable losses, we must also point out the variations in costs, set for aluminum scrap. We must do not forget that the value of “Taldon” aluminum scrap had risen by 25 %, for the reason that time when the contract was breached. The Article 76 of CIGG conference states that the celebration that sustained losses because of the breach of contract can get better this worth distinction. However, this situation won’t be attainable, if Chin Wah resell the products acquired from Metorex3. Thus, it’s attainable to say that the contract which had been beforehand signed between the 2 sides, doesn’t enable Meterox to deny legal responsibility and the Korean firm can take authorized actions. But on the similar time, we are able to say many circumstances of the case stay unknown to us, particularly the phrases of the contract associated to the dangers of each events. This data would have allowed us to make a extra particular advice to Chin Wah.

The Korean Development Bank

As it has been recognized within the case, Chin Wah intends to take authorized motion in opposition to the Korean Development Bank in an effort to return the fee which was submitted. However, one ought to do not forget that on this case banking establishments act in accordance with UCP (Uniform Custom and Practice for Documentary Credits) 600 rules. Their key duty is to make monetary transactions from the customer (Chin Wah) to the vendor (Merorex). Banks should not involved with the phrases of gross sales contract or the diploma to which events adjust to them.

According to the article 34 of UCP 600 a financial institution doesn’t assume any legal responsibility for weight, amount, description, packing or supply of the products or providers to consignee (International Chamber of Commerce, 2005, p 19; Burnett, 2004). The major obligation of the financial institution is to verify the paperwork adjust to the legislative norms. The Korean Development isn’t obliged to evaluate the reliability of the customer or examine the circumstances of the case. In different phrases, if the gross sales contract is breached and the corporate doesn’t obtain the products in specified amount and high quality, the financial institution won’t be compelled to return cash to the customer. Thus, the prevailing rules point out Chin Wah will be unable to file a lawsuit in opposition to the Korean Development Bank.

There are a number of the reason why International Chamber of Commerce adopts such an angle towards gross sales contract. First all, banks can’t probably be concerned into each authorized battle which arises out gross sales contract. This would have drastically slowed down their work. Apart from that, previous to returning cash to the customer, the group has to find out whether or not the contract was really breached. Thus, they must conduct an in-depth investigation of the case. Obviously, this isn’t a legal responsibility of the financial institution. Hence, we are able to argue that Chin Wah will be unable to take any authorized motion in opposition to the Korean Development Bank. This firm will be capable of obtain indemnity solely from Metorex however not from the financial institution. Thus, our main advice to Chin Wah is to deal with the negotiations with Metorex as an alternative of claiming reimbursement from the financial institution. This manufacturing firm has to gather proof, proving that the opposite celebration did breach the contract and that it will definitely resulted in monetary losses. This would be the most optimum answer for this enterprise.

Carriage Contract and attainable authorized actions of Chin Wah

The Carrier ALABMA

According to this case research, the second cargo obtained by Chin Wah was not delivered on time. Moreover, it has been recognized that among the containers turned rusted and loosened. The provider, an Australian firm ALAMBA doesn’t need to settle for duty for these damages and argues the bale rely supplied by Metorex was inaccurate. Under the circumstances, Chin Wah will likely be fairly able to taking authorized actions in opposition to the provider and demand indemnity from them. First of all, we have to notice that the provider accepted the invoice of lading on the departure; consequently this group assumed full duty for the cargo. The duties of a provider are regulated by the Hague-Visby Rules, Hamburg Rules and Rotterdam Rules. According to those worldwide norms, the provider is answerable for loading, transportation, dealing with, and unloading of products (Berlingieri, 2009, p 8). ALABMA had to make sure items have been delivered in the identical weight, measurement, high quality and amount.

This firm may very well be exempted from liabilities provided that the broken occurred to Acts of God, wars and hostilities or piracy, quarantine restrictions and many others. There is a good variety of provisions which can allow ALABMA to deny duty. In every situation, ALABMA has to show that they took all affordable effort to stop the harm to the products. Overall, we are able to say that Chin Wah will likely be in additional benefits place if the 2 events are unable to resolve this battle via negotiation. One ought to keep in mind that the lawsuit in opposition to the provider will likely be attainable, the shipper supplied him with full and correct descriptions of the products that should be delivered. This is likely one of the provisions within the so-called the Hague-Visby Rules4. Most doubtless, this subject will likely be investigated by impartial specialists to be able to decide whether or not the invoice of lading was correct or not.

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Another facet that we have to talk about is the delay of supply. According to the case, the ship needed to take a detour as a consequence of tough sea. In addition to that, previous to the departure, ALAMBA had dispute with the stevedoring firm. Given, we are able to say that the provider may be partially exempt from legal responsibility for the delay. Rough sea may be considered power majéur circumstances or Acts of God; aside from that detour was important for guaranteeing the protection of the crew and cargo (Berlingieri, 2009, p 9). If the detour was the one attainable method of avoiding peril, the Australian provider won’t be compelled to pay indemnity for the late supply.

At this level, we have to point out that such authorized phrases as Acts of God or power majéur circumstances may be interpreted as any occasion which couldn’t be predicted or averted to a celebration of the contract. If an organization may fairly anticipate or may discover another answer, they’d nonetheless be answerable for the damages. The similar precept may be utilized to this case: if ALABMA had details about climate circumstances and will select a unique route, this provider will likely be answerable for the delay.

The second vital subject is the stevedoring dispute. If loading was carried out by ALABMA or its subcontractor, this group will likely be totally answerable for the delay and potential losses of Chin Wah, the consignee. In flip, if the stevedoring was carried out by the shipper, the arbitrage tribunal would want to find out whether or not this dispute may very well be averted or not which celebration (the provider or the shipper) was answerable for it. On the entire, it’s attainable for us to say that Chin Wah will be capable of defend their rights within the court docket. However, a definitive reply may be given solely when in-depth examination of the case will likely be carried out by impartial specialists. The accountable events will likely be both the provider or the shipper. From authorized standpoint, the place of Chin Wah is rather more advantageous. In this case, their key activity is to offer ample proof that the products have been broken previous to the unloading of the ship. This will allow them to dictate their phrases throughout negotiations or higher shield their rights, if the negotiations don’t yield any outcomes.

Our key advice for Chin Wah is to settle this dispute via negotiation. There are a number of causes for it. First of all, Korean firm most likely has to fulfill a number of commitments to different native steel-manufacturers. They may have to produce aluminum scrap to them, they usually do need the products to be stored within the port for a very long time. This would be the case, if the dispute will likely be transferred to the court docket. Secondly, ALABMA must also attempt to keep away from a lawsuit. Provided that, the arbitrage tribunal finds them responsible of the damages, they must indemnify the Korean firm and pay authorized bills as properly. Legal battle will enhance their prices. Overall, the technique that now we have steered will allow either side to save lots of their time in addition to cash.

Place of Arbitrage

International legal guidelines and rules don’t present clear-cut pointers as to the choice of the place for arbitration. There are a number of choices that could be out there to each events:

  1. the place the place the contract was signed;
  2. the domicile of the provider,
  3. the place of discharge or supply (Berliengieri, 2009, p 47).

Currently, worldwide maritime legal guidelines such because the Hague-Visby Rules, Hamburg Rules and Rotterdam Rules. Traditionally, the place of arbitrage may be chosen by the celebration which intends to take a declare in opposition to the provider (Berliengieri, 2009, p 47).

However, in latest 12 months, the scenario has modified. In explicit, in accordance with Rotterdam Rules, the events can’t choose the place of arbitration if the selection of place was prescribed within the contract (Berliengieri, 2009, p 49). According to the contract concluded by Chin Wah and ALABMA, the disputes between the 2 sides will likely be resolved by “the Supreme Court of NSW to the exclusion of the jurisdiction of the courts of another country”. This contract clause implies that this dispute is extra prone to be resolved in Australia, specifically, by the Supreme Court of New South Wales.

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Yet, one ought to bear in mind that on the given second Rotterdam Rules weren’t ratified by the governments of South Korea or Australia. Therefore, on this case the claimant has the fitting to decide on the place of arbitrage. It can be higher for either side to resolve this dispute in Korea, the place items are at present saved. The key benefit is that either side could have extra alternatives to gather proof concerning the high quality and packaging of products. This might be one of the best ways for Chin Wah to guard their pursuits.

Alleged violation of copyright regulation

The First Scenario: Registered User Agreement between the Two Sides

Provided that Chin Wah and Metorex entered right into a registered consumer settlement with each other, the Korean firm would have a proper to make use of the particular matt end on their metallic retail items. In such situation, Chin Wah can the applied sciences developed by Metorex in Australia and in different nations as properly. The use of matt end is sort of professional, if Korean firm gives specifies that this matt end has been developed and owned by Metorex. Traditionally, copyright license agreements present the licensee (Chin Wah) with a proper to fabricate and market the merchandise of a licensor (Metorex). However, these contracts are relevant solely to a specified territory or nation (Battersby & Grimes, 2001, p 602). However, because it has been recognized within the case, the registered consumer settlement permits Chin Wah to make use of licensed merchandise globally. Hence, it’s attainable to say that the Australian firm will be unable to sue their Korean firm for the infringement of copyright.

Yet, now we have to confess that the case doesn’t present full details about the copyright contract concluded by the 2 events. It is alleged within the case research that Chin Wah is allowed to “use” this know-how. However, we have no idea what’s implied by this phrase. It could embody solely manufacturing of merchandise, however not their distribution in Australia. Thus, to be able to advise Metorex, one has to look at the contract that they beforehand concluded.

We can say that such agreements often present clear provisions concerning the rights and duties of either side. They don’t depart room for any misunderstanding or misinterpretation of the doc. There are a number of the reason why this battle may have occurred. First, one of many events, particularly Chin Wah may violate the phrases of the settlement, both deliberately or unintentionally. Secondly, the doc itself was poorly drafted. These two explanations appear to be most credible. The most optimum answer for either side is to start out negotiations and rethink the registered consumer settlement. This doc should clearly clarify the rights that are conferred to Chin Wah, the licensee. This will allow them to keep away from disputes sooner or later. This is the primary situation that we needed to talk about. Its key peculiarity is that there was a pre-existing settlement between the 2 sides. Thus, if this battle is transferred to the court docket, the judges will discover it simpler to find out which of the 2 events was proper, since they are going to have a doc, clearly prescribing the rights and duties of Chin Wah and Metorex.

The Second Scenario. Trademark registration

If Metorex had solely registered their trademark in Korea, this firm will be capable of take authorized actions in opposition to Chin Wah. One ought to bear in mind that there are a number of worldwide legal guidelines which shield the rights of copyright holders. One of them is Madrid protocol, which is also referred to as the Madrid System. This settlement was ratified by the federal government of South Korea and Australia.

The key peculiarity of Madrid System is that an organization or celebration, which has obtained registration in one of many member jurisdiction, will obtain safety in different member jurisdictions (World Intellectual Property Organization, 1989). Therefore, even when Metorex had registered their trademark solely in Korea, they are going to be capable of defend their rights in Australian courts as properly. At this level, Madrid System is the preferred mannequin of trademark registrations. It has been adopted by the vast majority of WTO members. Therefore, if Chin Wah illegally manufactured or distributed the merchandise of Metorex, this firm will likely be answerable for copyright infringement not solely in Australia however in lots of different nations as properly. Overall, it’s attainable for us to say that the prevailing worldwide legal guidelines, ratified by the vast majority of economically-advanced nations, protect the proprietor of the patent or trademark. One can argue that Metorex is in a extra advantageous place, they usually can file a lawsuit in opposition to their former associate, in the event that they imagine that Chin Wah makes use of their applied sciences with out correct authorization. From authorized standpoint, their place will likely be rather more strong.

Still, to be able to present any definitive reply one has to know extra concerning the product or know-how, itself. It is sort of attainable that related merchandise have been developed earlier than, and beneath such circumstances, Metorex will be unable to sue Chin Wah for the alleged violation of copyright. If Chin Wah did infringe upon the copyright, this firm must indemnify the Australian firm. The actual quantity of reimbursement will likely be depending on the gross sales revenues of the Korean enterprise.

It is somewhat tough to offer suggestions to Metorex at this level. This firm has to fastidiously consider the consumer settlement reached by the 2 sides. They must do not forget that authorized battle won’t essentially result in optimistic outcomes for them, particularly if Chin Wah manages to show that they didn’t infringe upon their patent. We can argue that it’s tougher to guage the circumstances of the second situation. First of all, we have no idea the extent to which the copyright was violated if it was violated. It is important to match the matt finishes, manufactured by Metorex and Chin Wah to be able to perceive whether or not they’re an identical or not. Without this data, one can hardly advise both Australia or Korean Company.

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Battersby G. & Grimes C. 2001. License Agreements: Forms & Checklists. Aspen Publishers Online.

Berlingieri F. 2009. A Comparative Analysis of the Hague-Visby Rules, the Hamburg Rules, and the Rotterdam Rules. Web.

Burnett, R. 2004. Law of International Business Transactions. Sydney: Federation Press. International Chamber of Commerce. 2007. “UCP 600”. Web.

United Nations Commission on International Trade Law. 2010. The United Nations Convention on Contracts for the International Sale of Goods. Web.

The Hague Rules as Amended by the Brussels Protocol 1968.

World Intellectual Property Organization. 1989. “Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks”.

Zeller, B. 1999. International Commercial Law for Business. Sydney Federation Press.


  1. The Hague Rules as Amended by the Brussels Protocol 1968, Article III.
  2. United Nations Commission on International Trade Law. 2010. The United Nations Convention on Contracts for the International Sale of Goods. Chapter 3, Article 30.
  3. CISG, Article 76.
  4. the Hague-Visby Rules, Article III.

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