Peter Taylor (Solicitor, Business and Commercial law, Gibbons Taylor, Chairman, Sobal) Ricardo A. Spotorno (Argentine Attorney, International Trade and Commerce) Agustin R Spotorno (Associate, Winston & Strawn LLP)
- Introduction
The oft-spoken adage that it takes two to tango remains true till this day. We should add that a compelling motivation and enchanting music are also a crucial part of it. In a similar vein, to achieve high levels of investment and trade, a favourable legal climate is imperative. Just as in tango a sequence of notes unfolds within a distinct sonic landscape so a series of events which strengthened the UK-Argentine relationship coincided with the Victorian era, marking the height of Pax Britannica between 1837 and 1916, the fuelling of the Industrial Revolution and the development of Argentina’s agro-export model making it a leader in the world economy and among the world’s ten wealthiest states.[1]
Since the Napoleonic wars until 1950, the UK and Argentina had strong commercial and cultural ties. Already during the reign of Queen Victoria from 1837 to 1901, Argentina had become a spot for important British investments.[2] It was a period characterised by extensive production, enormous European investment, and a relatively liberal economy. The investment flowed into agriculture, the livestock, modernization of transport networks, trains, trams, gas, and electricity. In turn, Argentina’s Buenos Aires, was the commercial, political and cultural hub for Europeans.[3]
Argentine and UK businesses are involved in numerous international commercial transactions.[4] Argentina is currently the UK’s 68th largest trading partner. In the last four quarters of 2023, the total value of trade in goods and services between the two countries was £2.1 billion, of which total UK exports to Argentina amounted to £819 million and total UK imports from Argentina amounted to £1.3 billion. Interestingly of all UK imports from Argentina, £903 million were goods and £399 million services. Further, the top goods exported by the UK to Argentina ranged from mechanical power generators to medicinal and pharmaceutical products to refined oil; while the top goods imported by the UK from Argentina consisted of animal feeding stuffs, beverages and tobacco and crude oil. As for services exported to Argentina these were travel, telecommunications, computer and information service, insurance and pension, and transportation, while those going to the UK ranged from travel, to telecommunications, to computer and information services. Noteworthy is that most of the trade in services took place remotely as opposed to in person services trade.[5]
II. Legal Regime Applicable to UK-Argentina International Trade and Commerce
a. Macro Legal Framework
Commercial parties involved in trade and international commerce want to experience a smooth and swift experience in their cross-border dealings.[6] They need certainty and predictability to achieve that aim. International commercial law and international treaty law serve as the cornerstone of trade and commercial relations between English and Argentine businesses and industries aiming at providing a solid legal framework to facilitate commerce and the wishes of commercial parties.[7]
The legal regime governing Argentina-UK’s trade relations dates back to the 1825 Treaty of Friendship, Commerce and Navigation which contained protections for ensuring fair trade between the two countries.[8][9] A more ambitious legal framework was established in 1948 with the signing of the General Agreement on Tariffs and Trade (“GATT”) governing international trade.[10] Recognizing the importance of leveraging competitive advantages of countries through trade, GATT was designed to reduce tariffs and other trade barriers and to promote international economic cooperation. It not only provided a legal framework but also a forum for negotiation and resolution of trade disputes among its members. GATT functioned as a legal framework consisting of rules for international trade, and operated through a series of trade negotiation rounds which were the mechanisms that facilitated the reduction of tariffs and other trade barriers. The World Trade Organization (“WTO”) was established in 1994 and, as a standalone institution, provided a more permanent framework for regulating international trade, covering not just goods but also services and intellectual property.[11] WTO also incorporated provisions to address the needs of developing countries and incorporate environmental concerns into its agreements.[12]
The WTO’s operation is based on several foundational principles that guide UK-Argentine trade, including (a) non-discrimination, by, for example, favouring certain foreign products from a particular country over another’s or even favouring national over foreign; (b) reciprocity as regards trade liberalization (c) transparency across trade regulations, policies, and practices (d) trade liberalization encouraging the gradual reduction of tariffs quotas and other trade barriers through negotiations.[13]
Argentina and the UK are parties to other treaties governing international trade. One such treaty is the International Convention for the Unification of Certain Rules Relating to Bills of Lading[14], also known as the Hague Rules of 1924 (the “Hague Rules”).[15] Their aim was to establish uniform regulations governing issuance, transfers, and enforcement of bills of lading, as well as carriers’ liability for the loss or damage of cargo at sea.[16] Previously, cargo owners’ protection was mainly governed by common law which often allowed shipowners to exclude themselves from liability. The Hague Rules came to impose a minimum mandatory liability on carriers, attempting to strike a balance between the interests of shipowners and cargo owners.[17]
(b) At a Micro-Private Level
(i) Brief Introduction
Outside macro-trade relationships, there exists a complex web of cross-border commercial relationships by which goods and services are traded from and to the United Kingdom and Argentina.
In addition, a range of businesses are involved in the trade process, including (a) exporters/importers, that is, the businesses or individuals initiating the trade of goods or services; (b) freight forwarders which are companies that arrange the transport of goods, including logistic and documentation; (c) shipping companies/carriers which are responsible for transporting the goods by sea; (d) customs brokers; specialists in ensuring that goods meet all regulations and are properly declared for customs in both the exporting and importing countries; (e) banks which provide financial services such as letters of credit, loans, and currency exchange; (f) insurance companies offering coverage for the goods while in transit; and (g) regulatory bodies both countries’ customs and trade authorities regulate everything that concerns imports and exports of goods for compliance of local laws and international agreements.
(ii) Instruments of Trade
Sales contracts refers to an agreement between the buyer and the seller of goods, outlining terms of sale, delivery, payment, and other conditions. Bills of lading, on the other hand, serve as a receipt for the goods shipped and a document of title facilitating the transfer of goods; they evidence the contract of carriage between the shipper and carrier. Then, there come the letters of credit, which are often used to guarantee payment from the buyer to the seller issued by the buyer’s bank to the seller’s bank providing a layer of security in trade. Further, insurance policies come next, to cover the risk of loss or damage to the goods during transport. Finally, the customs declaration required for both export from the UK and import into Argentina, detailing the nature, quantity, and value of the goods being shipped.
(iii) Legal Considerations
Considering that the primary mode of trade in services between Argentina and UK is remote services (an Argentine providing services to a UK-based operating company with a focus on Argentina) one may wonder which legal regime would apply to its situation. The first consideration is what employment regime and legal framework (Argentina’s or UK’s) will govern the rights and obligations of the parties involved in the employment relationship. For example, Argentine Teleworking Law No. 27,555 governs remote services contracts with both workers and employers having rights and obligations under the Argentine Employment Contract Law No. 20,744.
Other considerations include the data protection and privacy legal regime, intellectual property considerations, cybersecurity in order to ensure compliance with those laws.
(iv) Conflicts
In terms of conflicts, issues can arise ranging from (i) contractual disputes such as conflicts over the terms of sales contracts, service contract, bills of lading, or insurance policies; (ii) payment issues, concerning failures in payment or delays in such payments typically mitigated by the use of letters of credit; (iii) customs and regulatory compliance, bringing potential challenges related to tariffs, import/export restrictions or documentation requirements; and (iv) transportation and logistics issues which include damage to goods, delays and liability for loss whether as a result of one of the parties’ fault or due to external events over which parties had no foreseeable control.
(v) Dispute Settlement
If parties are unable to resolve a conflict through mediation or negotiation, they could resort to more formal processes such as arbitration or court litigation both of which provide a binding resolution allowing the parties to turn the page and look into the future.
Many international trade contracts include arbitration clauses specifying the set of rules and venue for arbitration often under the auspices of reputable institutions such as the International Chamber of Commerce (ICC)’s Court of International Arbitration and London Court of International Arbitration (LCIA) which will administer the case for a relatively predictable fee. Complications can arise if the parties did not choose a governing law or jurisdiction clause in their agreements, which leads to decision-makers applying their own discretion and/or rules of private international law and commerce to determine which forum the dispute should be decided in, and which country’s laws i.e. English/Argentine will govern the contractual and statutory liabilities. This latter point is relevant because legal regimes can differ in important ways with a direct impact on the rights and obligations of the parties.
Transnational trade and commerce institutions, like the ICC, play an important role in ensuring certainty, predictability and clarity in international commerce relations. One such example are the so-called Incoterms, short for International Commercial Terms.[18] The ICC publishes regularly a set of standardized three-letter trade terms which are widely used in international commercial transactions. Their role is to, depending on which Incoterm is used in a certain contract, and the specific trade transaction, modality of transport, location of delivery and preferences regarding risk and cost allocation, clarify the responsibilities, costs, and risks associated with the delivery of goods from sellers to buyers.[19] In turn, the Grain and Feed Trade Association (“GAFTA”), created in 1971, published standardized contracts and arbitration procedures in the grain and feed trade, which is inherently international.
The legal framework applicable to Argentine and UK companies agreeing to trade goods by sea will depend on the choice of law and forum in their agreements, whether the charterparty, bill of lading, or shipping contract.[20] Unlike Argentina, the UK is not a party to United Nations Convention on Contracts for the International Sale of Goods (CISG).[21] The UK’s framework involves the Carriage of Goods by Sea Act dated 1971 which incorporates the Hague Rules and its subsequent protocol (“Hague-Visby Rules”) into English law, which govern the rights and responsibility of carriers and shippers in international maritime contracts of carriage.[22] In England, the Marine Insurance Act 1906 governs marine insurance contracts providing rules and principles related to marine insurance policies, coverage, rights and obligations of the parties involved.[23] Where there is no governing law in the relevant contracts between UK-Argentine commercial parties, the rules of private international law of both English common law as well as in the Argentine Civil and Commercial Code will become relevant. Much will depend on the specific substance of the contract such as its object and the rights and obligations under it.
III. Conclusion
This short article is the first of a series, intended to improve knowledge of the Argentine-UK trade relationship. There is still an enormous scope to strengthen trade, investment and cooperation between the two jurisdictions. In this sense, one should not overlook the important role that embassies, lawyers’ associations and legal societies play in serving as hubs to promote dialogue, improve communication and exchange useful information. Similarly, chambers of commerce act as hubs for networking, providing valuable resources, market insights and networking opportunities, for those looking to make relationships and engage in cross-border trade and investments.
[1] Spruk, Rok (2019). “The rise and fall of Argentina”. Latin American Economic Review. 28 (1); PwC, ‘Doing Business in Argentina’ (PwC, 2023) https://www.pwc.com.ar/es/doing-business/db-argentina.pdf accessed 26 February 2024
[2] Atul Kohli, ‘Greed and Guns: Imperial Origins of the Developing World’ (Cambridge University Press, 2022) https://www.cambridge.org/core/elements/abs/greed-and-guns/26E1A77B554F22CEB8F1225825142C9B accessed 26 February 2024
[3] V. Bulmer — Thomas, The Economic History Of Latin America Since Independence, Cambridge 1994, Pp. 46–48. Open Access 72 Prague Papers On The History Of International Relations 2/2016
[4] UK Department for Business & Trade, ‘Trade and Investment Factsheets: Argentina’ (UK Government, 2024) https://assets.publishing.service.gov.uk/media/65d4915c1419100015f452d3/argentina-trade-and-investment-factsheet-2024-02-22.pdf accessed 26 February 2024
[5] WTO’s General Agreement into two modes of supply which depend upon on the territorial presence of the supplier and the consumer at the time of transaction. Thus, Mode 1 relates to remote trade i.e. a supplier in one country sells a service to a customer in another, without the movement of people. Mode 2, in turn, is where consumption takes place abroad, the person receiving the service travels to the supplier’s country. Interestingly, 75.5% of UK services exports to Argentina were delivered by Mode 1 and 9.9% by Mode 2. In turn, 83.7% of UK services imports from Argentina were delivered by Mode 1 followed by 6% in Mode 2. See UK Department for Business and Trade, available at https://assets.publishing.service.gov.uk/media/65d4915c1419100015f452d3/argentina-trade-and-investment-factsheet-2024-02-22.pdf
[6] Plusius, ‘Challenges of Cross-Border International Trade’, (Plusius, 2023) https://plusius.io/news/challenges-of-cross-border-international-trade/ accessed 26 February 2024
[7] StudySmarter, ‘International commercial law’ (StudySmarter, 2024) https://www.studysmarter.co.uk/explanations/law/international-and-humanitarian-law/international-commercial-law accessed 26 February 2024
[8] Keith Mitchell, ‘Britain and an independent South America’ (GOV.UK, 2016) https://history.blog.gov.uk/2016/08/18/britain-and-an-independent-south-america/ accessed 26 February 2024
[9] Herman Walker Jr., ‘Modern Treaties Of Friendship, Commerce And Navigation’ (Minnesota Law Review, 1958) https://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=2490&context=mlr accessed 26 February 2024. “The Bilateral “Treaty Of Friendship, Commerce And Navigation” Is One Of The Most Familiar Instruments Known To Diplomatic Tradition. The Title, Commonly Used To Describe A Basic Accord Fixing The Ground-Rules Governing Day-To-Day Intercourse Between Two Countries, Designates The Medium Par Excellence Through Which Nations Have Sought In A General Settlement To Secure Reciprocal Respect For Their Normal Interests Abroad, According To Agreed Rules Of Law.”
[10] WTO, ‘Press Brief: Fiftieth Anniversary of the Multilateral Trading System’ (WTO, 2024) https://www.wto.org/english/thewto_e/minist_e/min96_e/chrono.htm accessed 26 February 2024
[11] The WTO’s framework includes three agreements; namely (i) General Agreement on Tariffs and Trade (“GATT”) which was originally established in 1947 and then incorporated into the WTO framework in 1995 focusing on international trade in goods; (ii) General Agreement on Trade in Services (“GATS”) concerning trade in services; Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) covering aspects of intellectual property rights in the context of international trade.
[12] WTO, ‘Trade and environment’ (WTO, 2024) https://www.wto.org/english/tratop_e/envir_e/envir_e.htm accessed 27 February 2024
[13] WTO, ‘Principles of the trading system’ (WTO, 2024) https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm accessed 27 February 2024; WTO, ‘WTO IN BRIEF’ (WTO, 2024) https://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr_e.htm accessed 27 February 2024.
[14] Law Explorer, ‘A short history of the bill of lading’ (Law Explorer, 2016) https://lawexplores.com/a-short-history-of-the-bill-of-lading/ accessed 27 February 2024. The bill of lading is a document of ancient lineage tracing its roots back to the medieval trading practices in the Mediterranean. Initially it served purely as a receipt for goods shipped, acknowledging that a carrier (such as ship’s master) had received goods and promised their delivery to a specified destination, under certain conditions. This document evolved over centuries from a simple receipt to a complex instrument serving multiple functions: it is a receipt for goods shipped, a document of title enabling the transfer of ownership of goods and a contract for carriage stipulating the carrier’s obligations and the conditions under which goods are to be transported. By the sixteenth century the bill of lading started to assume a contractual role alongside its function as a receipt. This transition reflected the growing complexity of trade and the need for a document that not only acknowledged the receipt of goods but also detailed the terms under which they were to be carried. This evolution was partly due to the increasing impracticality of entering into separate charter party agreements with each shipper once the number of cargoes per vessel grew. Consequently, the carriage contract came to be embodied within the bill of lading itself, especially in cases where no charter party was concluded. The 17th century mercantile law treatises further illuminate the bill of lading’s role. Although initially not universally conceived as embodying a carriage contract, especially when a charter party was present, the practice of issuing bills of lading as standalone contracts gradually gained ground. This was particularly true when the merchandise sent onboard constituted only part of the cargo, highlighting the bill of lading’s dual nature as both a contract and a document of title. Historically, the evolution of the bill of lading reflects broader shifts in commercial practices and the legal landscape of maritime trade.
[15] FC James, ‘Carriage of Goods by Sea – The Hague Rules’ (Penn Law Legal Scholarship Repository, 1926) https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=8109&context=penn_law_review accessed 28 February 2024
[16] T. K. Thommen, ‘Carriage of Goods by Sea – The Hague Rules and Hamburg Rules’ (Journal of the Indian Law Institute, 1990) http://www.jstor.org/stable/43952305 accessed 28 February 2024
[17] T. K. Thommen, ‘Carriage of Goods by Sea – The Hague Rules and Hamburg Rules’ (Journal of the Indian Law Institute, 1990) http://www.jstor.org/stable/43952305 accessed 28 February 2024
[18] ICC, ‘Incoterms Rules’ (ICC, 2024) https://iccwbo.org/business-solutions/incoterms-rules/ accessed 28 February 2024
[19] Troy Segal, ‘Incoterms Explained: Definition, Examples, Rules, Pros & Cons’ (Investopedia, 2023) https://www.investopedia.com/terms/i/incoterms.asp accessed 28 February 2024
[20] George A. Zaphiriou, ‘Choice of Forum and Choice of Law Clauses in International Commercial Agreements’ (Maryland Journal of International Law, 1978) http://digitalcommons.law.umaryland.edu/mjil/vol3/iss2/3 accessed 28 February 2024
[21] UNCITRAL, ‘International Sale of Goods (CISG) and Related Transactions’ (United Nations, 2024) https://uncitral.un.org/en/texts/salegoods accessed 28 February 2024. The United Nations Convention on Contracts for the International Sale of Goods (“CISG”) was established to provide a comprehensive legal framework for the international sale of goods. It aims to introduce uniform set of rules to govern contracts for the international sale of goods, thereby reducing barriers to international trade and promoting economic development. The CISG covers aspects like the formation of contracts, rights and obligations of buyers and sellers, and remedies for breach of contract. Its benefits include legal uniformity predictability in trade, and reduced transaction costs, though it also faces criticisms such as potential conflicts with domestic and its applicability in various legal systems.
[22] Carriage of Goods by Sea Act 1971
[23] Marine Insurance Act 1906
SOBAL 