STANDARD FORM COAL CONTRACTS (SFCC)
By Singapore Academy of Law
The Singapore Academy of Law (“SAL”), with generous support from legal professionals, industry players and other ecosystem stakeholders, has developed a new suite of standard form coal contracts (“SFCC”) that cater to industry corporations, including suppliers and buyers of coal.
In the complex world of coal sale and purchase, ensuring clarity and consistency in contractual agreements is of paramount importance. The SFCC fosters uniformity in coal transactions that often involve international parties, lending itself to simplifying the negotiation process and facilitating transparent and efficient deal-making.
Background
The idea of creating the SFCC was initiated in 2021 by Ms Rebecca Andersen, then General Manager, Head of Legal, Compliance & Sanctions of Hengyi Industries International Pte. Ltd., as leader of the SFCC working group. Rebecca is a senior in-house counsel experienced in commodities trading generally and coal trading specifically. Apart from Rebecca, the working group comprises members from Helmsman LLC, the leading Singapore commodities trading firm, in particular Mr Ian Teo and Ms Maureen Poh. The SFCC is thus the externalisation of the combined effort, expertise and experience of private practitioners and in-house counsel who are industry insiders.
At the same time, the SFCC working group collaborated with major local and international coal corporations as well as Singapore government agency Enterprise Singapore and held many rounds of consultations and discussions with them on the SFCC. The comprehensive feedback received from the consultations has positively shaped the development of the SFCC.
Objectives
The SFCC has two primary objectives.
First, it aims to provide a consistent framework and a common language for coal suppliers and buyers to help minimise or avoid disputes between parties. Second, it aims to help narrow the scope of negotiation to allow parties to focus their attention on critical commercial aspects and on negotiating more bespoke and deal-specific issues for incorporation into their documents.
Advantages of the SFCC
The SFCC offers the following advantages to coal traders (both suppliers and buyers):
- Risk Mitigation: The SFCC’s terms include pre-defined risk mitigation clauses that address common issues in coal transactions. This helps parties anticipate and manage risks effectively and enables them to manage unforeseen events or disputes in a fair and equitable manner.
- Legal Compliance: Benefiting from legal expertise in drafting, the SFCC’s terms are compliant with relevant laws and regulations. This minimises the risk of legal challenges and ensures the enforceability of contractual terms.
- Industry Best Practices: The SFCC’s terms incorporate industry best practices and reflect evolving market standards, in an effort to help parties stay current with prevailing practices on the market.
- Reduced Costs: The SFCC helps reduce legal and administrative costs often caused or aggravated by protracted contract drafting and negotiation.
- Dispute Resolution: The SFCC includes pre-defined dispute resolution mechanisms, such as arbitration or mediation clauses. This expedites the resolution of conflicts, reducing downtime and potential financial losses.
- Global Applicability: The SFCC is developed in Singapore by Singapore legal practitioners and business counsel, but can be adapted to suit local requirements overseas where necessary, making it a versatile tool for international coal trade.
SFCC comprises:
At present, two different types of standard form contracts with variable terms suited under two different Incoterms as are available:
The SFCC is drafted based on Singapore law, and therefore incorporates Singapore law as the chosen governing law and Singapore as the chosen dispute resolution forum.
Disclaimer
Please note that the SFCC does not provide the entire exhaustive range of potential terms or appropriate terms in a coal trading transaction as each commercial transaction is specific to the parties involved.
Parties should carefully consider their circumstances before deciding whether and how the SFCC could be utilised or tailored to suit their specific situations. Additional contractual terms may also be required in certain circumstances. It is the sole responsibilities of users to ensure that any agreements based on the SFCC are in compliance with all applicable laws and regulations.
The SFCC is not a substitute for legal advice and users should seek independent legal advice, if necessary. The information provided on this webpage does not, and is not intended to, constitute legal advice.
The authors and the publisher of the SFCC disclaim any and all liability and responsibility for any error, omission or inaccuracy in the SFCC, as well as in respect of anything, or the consequences of anything, done or omitted to be done by any person in reliance, whether wholly or partially, upon the whole or any part of the contents of the SFCC and information on this webpage.
Feedback
Feedback and comments regarding the SFCC can be directed to [email protected].
Acknowledgment
SAL wishes to record its appreciation to the following parties who have participated in consultations during drafting of the SFCC:
- Adani Global Pte Ltd
- Tiger Energy Trading Pte Ltd
- Hengyi Industries International Pte Ltd
SAL also takes this opportunity to express its gratitude to all the other consultation participants who wish to remain anonymous.
15857