Liverpool cotton body urged to improve rules<\/p>\n
JAKARTA (JP): Indonesia has urged the Liverpool Cotton
\nAssociation Ltd (LCA) in England to improve its arbitration and
\ntrading rules in anticipation of contract disputes in the cotton
\ntrade with ASEAN countries.<\/p>\n
Husein Aminuddin, chairman of the Indonesian Spinners
\nAssociation (Sekbertal), said at the annual meeting of LCA in
\nLiverpool recently that Southeast Asia was now facing one of its
\ntoughest challenges, due to the impact of the currency and stock
\nmarket turmoil since July.<\/p>\n
\"Set against this background, it is clear that there is every
\nlikelihood that contract disputes will increase in the cotton
\ntrade with ASEAN countries,\" said Aminuddin, who is also an
\nassociate director of LCA for Southeast Asia.<\/p>\n
Aminuddin anticipated that LCA arbitration procedures would be
\nin greater demand and LCA should therefore be more alert to
\nensure that its procedures were accessible and relevant to the
\nneeds of the marketplace.<\/p>\n
LCA, set up in 1842, is the world's leading international
\ncotton trade association with over 400 members in 60 countries.
\nLCA trading rules and arbitration procedures govern around 60
\npercent of all raw cotton traded internationally.<\/p>\n
Indonesia and other Southeast Asian countries depend largely
\non imported cotton to feed their textile industries. Indonesia
\nitself imports more than 850,000 bales annually, or 98 percent of
\nits needs.<\/p>\n
Aminuddin urged LCA to review its rules on both delayed
\nshipments and delays in the opening of letters of credit because
\nspinning mills mostly operated on a just-in-time basis.<\/p>\n
\"Delays in shipment can be disastrous if they are longer than
\nthe coverage provided by the smaller inventories that mills
\nprefer to hold,\" he said here over the weekend.<\/p>\n
Citing Indonesian experiences, Aminuddin said that if a
\nshipper encountered a delay, then the buyer had no choice but to
\naccept it as something that was irreversible.<\/p>\n
\"LCA should therefore consider amending its rules to limit
\nshipment delays to a certain period of time after the agreed upon
\nshipment period. After this time, which I believe should be two
\nweeks, automatic penalties should result,\" he added.<\/p>\n
Conversely, he argued, the same rules should be adopted for
\nthe opening of letters of credit by buyers so as to protect
\nexporters from late payments.<\/p>\n
Aminuddin also suggested that in order to speed up the dispute
\nresolution process, the buyers and sellers identify in their
\ncontract and in the letter of credit the name of the surveying
\ncompany they would assign should a dispute arise regarding
\nshipment.<\/p>\n
\"This enhancement of LCA's standard contract should cut down
\ntime delays, communication problems and paperwork involved in the
\ndispute resolution process,\" he said.<\/p>\n
In a related development, Aminuddin urged Indonesian companies
\nto master LCA's trading rules and arbitration procedures to
\nprevent disputes or to minimize costs in case of a dispute.<\/p>\n
\"Sekbertal has just published a book on cotton trading
\ncontracts and arbitration based on the proceedings from a seminar
\nin Jakarta in July held in cooperation with LCA,\" Aminuddin
\nadded. (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/liverpool-cotton-body-urged-to-improve-rules-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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