With a revision of the ICC Distribution Model Contract coming out today, we asked Emily O’Connor, Senior Policy Executive for the Banking Commission and Commercial Law and Practice Commission to explain what goes into the making of these contracts and why they are so valuable.
What is the purpose of ICC Model Contracts and who are they created for?
The aim is to provide business professionals with easy-to-use tools that help them with their legal business matters. They will already have some understanding and knowledge of the legal subject, but are not experts. The ICC Model Contracts primarily target small- and medium-sized companies as larger enterprises tend to have their own in-house counsel or an outside law firm.
How are topics chosen?
The commission discusses current and pressing issues and then decides what would be most useful. Some contracts, for instance the ICC Model International Sale Contract or ICC Model Confidentiality Contract , are very basic and have a broad appeal. Others are more sector or discipline- specific, like the ICC Model International Trademark License or the ICC Model Turnkey Contract for Major Projects . By creating a range of models, all types of demands are met.
Who participates in the development?
Once a particular subject is decided upon, experts are sought out internationally from various backgrounds to join a small working group. For example, if there is a series pertaining to building, experts on construction, planning, projects and subcontracts are brought in to work together. These groups tend to remain constant, but sometimes it is necessary to simply find the right person at the moment they are needed.
For someone who has never used the ICC Model Contracts, how would you describe their advantages?
Often, if professionals do not have their own model and they are entering into a contract, the counter-party provides one for them. Though, generally, they are drafted from that party’s perspective. If this is not the case, a quick search on the Internet often brings up an array of results. However, be aware that this can be dangerous. If professionals do not have enough expertise in the subject, they cannot judge the terms well enough to know if the contract is right for them or not. The advantage of using ICC Model Contracts is that the commission makes certain that they are not too buyer or seller friendly. The goal for these models is to be theoretically used anywhere in the world. Having a group of qualified experts prepare a well-balanced and international friendly agreement is the real benefit.
How would you recommend using a model in a series of ICC Model Contracts, for example, the ICC Model Contract Occasional Intermediary?
The commission has a series of model contracts that are related to each other on a topic: Commercial Agency Contract , Distribution Contract , International Sale Contract and the Occasional Intermediary Contract . Although they have similar features, the implications are different depending on how professionals want to structure a deal. Clients should review the descriptions and introductions to these contracts and choose one that best corresponds to their level of involvement. As for the Occasional Intermediary Contract, it is one model in a series of ICC Model Contracts that handles commercial distribution. This contract is for professionals who are occasionally involved in international trade. It takes into account the interests of all groups and includes important provisions, such as non-disclosure and fee protection agreement.
What is important to consider when drafting international contracts?
The differences in legal perspectives are paramount for people to understand. This is especially so with cross-border agreements. Should a dispute arise, it is necessary to examine where the dispute will be settled, by whom – whether it be the ICC Court of Arbitration or another International Court – and what laws would apply. Also, ICC Model Contracts are essentially teaching tools. They all contain notes throughout the text so parties can properly decide which path is best for them. Nevertheless, parties are still urged to use an expert to best determine that whatever law is chosen, applies.
To see all of ICC Model Contracts and series, please visit the ICC Knowledge 2 GO .
The ICC Institute will be hosting its next Level 1 Training on International Contracts 30 May- 2 June, 2016 in Paris, France. Legal directors, corporate counsel from companies involved in international trade, practicing lawyers, legal practitioners advising international trading companies and other business professionals involved in international trade and dispute resolution are invited to attend.