In this article, we will discuss about the methods of Internatinal Payments. Cross-border business actions of private parties are governed by a body of applicable laws, concepts, and common practices known as international commercial law. As a result, international commercial law is a subset of private international law, whereas its counterpart, international trade law, which regulates interstate commerce, is a subset of public international law known as international economic law.
There is a significant propensity for harmonization and unification of these norms, concepts, and customary practices since they apply to cross-border transactions and vary throughout cultures.
This research manual serves as an introduction to the field of international commercial law. It offers the fundamental legal resources that are available in print and electronic form at the Peace Palace Library. The Selective Bibliography area includes handbooks, notable articles, bibliographies, periodicals, serial publications, and documents of importance. There are inserted links to the PPL Catalogue.
To search the Catalogue, use the topic header (keyword) International Commercial Law of the Library. Our subscriptions to databases, electronic journals, electronic books, and other electronic resources receive particular attention. In addition, this research guide provides links to additional websites and online sources that may be of particular interest.
International Commercial Law.
Laws pertaining to international trade are those sections of the law that deal with specific regulations and practices for regulating trade between nations. Trade between two private sector businesses in two different nations is another use for it.
Due to the fact that practically every nation is now a member of the World Trade Organization, this area of law has now gained independence (WTO). Since 1948, the General Agreement on Tariff and Trade (GATT) has served as the cornerstone of global trade regulations. It has a clause addressing prohibitions on “unfair” trade practises, dumping, and subsidies. To replace GATT, the World Trade Organization (WTO) was founded in 1994. This is so because the GATT was only intended to be a temporary solution to trade problems; the founders required something more substantial.
Methods of International Payments
There is always a certain amount of danger and trust required when trading commercial items. When dealing with overseas transactions, you are almost certainly going to be exposed to some risk, whether you are the buyer or the seller. The mode of payment you choose has a significant impact on the level of risk involved.
There are many international payment options available to importers and exporters worldwide. We are also witnessing an increase in foreign payment methods as the globe continues to become more globalized. But much like with Incoterms, the parties at the opposite extremities of the spectrum have conflicting goals and objectives to achieve and safeguard.
The primary forms of foreign payment now in use include:
- In advance money
- Letter of Credit
- Documentary Collections
- Open Accounts
- In Advance Money: Cash in advance is an attractive option for sellers but presents a significantly high risk for buyers. Other cash-in-advance payment methods include credit card payment and wire transfers.
- Letter of Credit: With a Letter of Credit, payment is made through both the buyer’s and seller’s banks. Payment is only remitted after all stated conditions are met by both parties and the shipment has been shipped. Letters of Credit are also sometimes known as LC, bankers’ commercial credit, or documentary credit.
- Documentary Collections: The documentary collection is a process in which both the buyer’s and seller’s banks act as facilitators of the trade. The seller submits documents needed by the buyer, such as the Bill of Lading, to its bank. Documents are only released in exchange for payment, which can be remitted immediately or at a later date.
- Open Accounts: Under Open Accounts, merchandise is shipped and delivered prior to payment. With this payment option, the seller ships the goods to the buyers with a credit period attached. This is usually in 30-, 60- or 90-day periods, during which the buyer must carry out the full payment.
- Consignment: Consignment is an international payment method where the foreign buyer retains ownership of the merchandise until it has been sold. Given the high risk involved, sellers should make sure they have adequate insurance coverage that can cover both the goods from transit to final sale and mitigate any damages caused in the event of non-payment by the buyer.
There are many provisions for dispute resolution under international trade law, which is carried out with the aid of the WTO and GATT. Articles XXII and XXIII of the GATT, which established a mechanism of consultation for the resolution of disputes among the member countries, governed it. Over time, the conflict resolution process changed, and new legal agreements and instruments were produced to reflect the changes. The dispute resolution method was deemed unsatisfactory even after certain improvements.