Environmental liability under the incoterms : a South African perspective

Abstract

International trade is an important aspect of development in the South African constitutional state. Section 24 of the Constitution of the Republic of South Africa, 1996, embodies the principle of sustainable development that is also applicable to international trade. The aim of this dissertation is to investigate how trade can be made more sustainable by way of the incorporation of environmental liability provisions under the lncoterms to provide for instances where environmental damage is caused during the trade and transport of hazardous substances. lncoterms are a set of international rules for the interpretation of the most commonly used trade terms in foreign trade, and were developed under the auspices of the lnternational Chamber of Commerce (ICC). lncoterms are recognised by the United Nations Commission on International Trade Law (UNCITRAL) as the global standard for trade term interpretation. They define the transfer of risks for loss or damage of goods between the seller and purchaser. They are the definitive text for the determination of costs and risks allocated to the parties. lncoterms are regularly incorporated into sales contracts worldwide and have become part of the daily language of trade. The use of lncoterms permits that the uncertainties of different interpretations in different countries be avoided or at least reduced to a considerable degree. However, environmental damage may occur during the transport of goods. This damage may include aspects such as hazardous and noxious substance spills on land and in water, which may have a detrimental effect on the environment and which may also give rise to significant costs to rectify and rehabilitate the environment. Liability for environmental damage may cause uncertainties in international trade relationships, especially between parties from different countries. It may accordingly be a useful strategy if lncoterms were to incorporate and provide for the determination of risk and liability in the case of environmental damage caused during international trade practices. In light of the above, this dissertation investigates whether provisions under the lncoterms provide for liability for environmental damage caused during international trade practices, and if so, to what extent.