1

The The International Cotton International Cotton Association LtdAssociation Ltd

Your Partner in International Cotton Business

2

On 9th December 2004, the name Liverpool Cotton Association

was changed to the International Cotton International Cotton

AssociationAssociation

3

Our Standards:-

Integrity

Reliability

Impartiality

Service

4

International MembershipMembers from about 60 countries involved in the

Cotton business:-

GrowersSpinners

MerchantsControllers

BanksInsurance companies

All these are represented on our Board of Directors, to ensure impartiality and balance

5

International Membership

Currently estimated 70-80 percent all the raw cotton

traded internationally, bought and sold subject to the

International Cotton Association Rules – otherwise known as the-

“INTERNATIONAL RULES”

6

The International Rules are designed to be fair to both buyer and seller protecting and reflecting

their interests on a totally impartial basis.

The ICA provides support to an Industry whose value in trade exceeds

20 billion U$ yearwithout a single bale of this cotton,

physically passing through Liverpool. The location of Liverpool as a neutral location,

guarantees our impartiality.

7

Our ObjectivesTo serve buyers and sellers of raw cotton by facilitating and promoting fair trading.

To reduce the risks involved in international trading by providing a clear framework of rules within which both buyer and seller can operate

To support the philosophy of sanctity of contracts for all parties, on an international level

8

Our Objectives

To provide Trading rules supported by a standard, simple proforma ICA contract

An Arbitration service producing Awards that can be enforced in the courts of most countries in the world

To provide Protection for all parties, by way of a clear, internationally recognised set of Trading Rules and Arbitration procedures.

9

PROTECTION FOR INTERNATIONAL COTTON BUSINESS

INTERNATIONAL COTTON RULES

10

The International Rules are intended to apply to all parties involved in the cotton chain:

GrowersGinnersShippersAgentsSpinners

Who benefits from using the International Rules?

11

International Rules

ProtectionProtectionCotton Grower

Cotton Ginner

Cotton Shipper

Cotton Spinner

12

THE INTERNATIONAL RULES AND BYLAWS OF THE ICA:

“THE INTERNATIONAL RULES”

13

International Rules

You may not be able to see into the future…but you can prepare for it.

14

The ICA Trading Rules anticipate what can go wrong with a contract- and provide Rules that let both Buyers and Sellers, to deal with it.

These Rules act as PROTECTION for your business, by setting out your RIGHTS

The Rules can supplement your contract, or form the basis of your contract. This is looked at later in more detail.

The International Rules

15

By adopting and applying the ICA Rules to your contract, you will know what your rights are in the case of any:

•Late shipment •Late opening L/C’s •Sampling of cotton •Quality Problems•Underweight, or overweight shipments•Insurance for shipments •Closing out contracts

The International Rules

16

The Bylaws and Rules book

17

The Rules are a framework recommended for the purchase and sale of raw cotton.

International Football- both sides agree to play to the same rules.

International Trade - buyers and sellers can agree to trade on the same rules

The International RulesThe International Rules

18

The Referee in a football match is there to ensure that both teams play by the rules- and if they do not, that the other team’s rights are to

be respected

The ICA offers this service - to referee the “game” of

cotton

19

REMEMBER!!REMEMBER!!The Trading Rules provide the framework for a contract. But the parties must decide if they are acceptable in every detail. This means that they can, if they agree, exclude some of the Rules.

“ICA Rules and Arbitration” in your contract means both parties must apply and observe these Rules UNLESS both parties have also agreed that a RULE should not apply, or should be altered in some way.

20

The International RulesThe International Rules

What happens if a contract breaks down?

Rules 225 provides for closure and invoicing back.

“If for any reason a contract has not been, or will not be, performed (whether due to a breach of the

contract by either party or due to any other reason whatsoever) then that contract must be closed by

being invoiced back to the seller in accordance with our rules in force at the date of the contract”

21

Arbitration

Arbitration

The Role of the Association as an Arbitral Authority

22

Arbitration is by definition: -

‘The voluntary submission of a dispute between two parties for a decision by a third party or two other parties of their choice’

ARBITRATION

23

ICA cannot advise arbitrators what to decide, or even to assist them to decide.

The Association’s role is to facilitate, and manage the arbitration process

ARBITRATION

ICA procedures are based upon the Arbitration Act 1996, and incorporate the

mandatory provisions of this Act.

24

Why choose Arbitration?

1) privacy

2) convenience

3) cost

4) speed

5) expertise

6) satisfaction

25

By specifying “Arbitration” in your contracts- you are agreeing to chose Arbitration to resolve your disputes

There must first be an agreement between the parties that the dispute will be decided by Arbitration – The Arbitration Agreement

Where might you find an Arbitration Agreement?

Choosing Arbitration

26

The Arbitration Agreement

It can be written in to the Contract

Or evidenced in writing, as agreed between the parties

27

ARBITRATIONThere must be something in writing which evidences the fact that arbitration was agreed by the parties. This could be recorded by:

Fax Correspondence Email

28

We recommend using the following wording from our ICA Contract, as your Arbitration Agreement:

“All disputes relating to this contract will be resolved through arbitration in accordance with

the bylaws of the International Cotton Association Limited.”

This wording incorporates the Bylaws whichset out the Association’s arbitration procedure.

ARBITRATION

29

ARBITRATION

Your Contract (and Arbitration agreement) may be on one piece of paper, but they are considered to be separate agreements.

This means that Arbitration Agreement is not affected if the Contract is unenforceable for some reason

30

ICA MEMBERS

No application fee/or

A reduced application fee

NON-MEMBERS

Application fee

This will be reduced if decide to also become a member when apply for Arbitration

ICA ARBITRATION

31

ARBITRATION

Who CANNOT use ICA

Arbitration?

.

32

ICA Members that have been expelled or suspended may be prevented from commencing arbitration under the Association’s Bylaws

ICA Members who have traded with a defaulter

If a non-registered firm has traded with firm listed on the ICA or CICCA default list then it too will be refused arbitration facilities.

33

“Disputes will be resolved in a fair and impartial manner”

ARBITRATION

34

The ICA List of Unfulfilled Awards

35

The ICA can offer further protection to the International Trade

The ICA List of Unfulfilled Awards (or “Default List”)

36

ICA list of “Unfulfilled Awards”

The ICA expects parties to honour Arbitration Awards

If an Award is not honoured, the ICA can take steps to publish the details of the other party or (“Defaulter”) on a List, which is sent to the Membership.

ICA Members may be subjected to disciplinary action if they trade with a Defaulter

37

How does this work?

A Party must fail to honour an Award

If complaint is upheld: ICA Members and CICCA Member Associations may be informed.

The ICA must receive a request to list the defaulter

The ICA will check the facts

38

The ICA Default List is NOT a substitute for formal enforcement of an Award

If you have not been paid, you will have to pursue the payment through the courts

Enforcement of Awards

39

1958 New York Convention (The Convention on the Recognition and Enforcement of Foreign Arbitral Awards).

Under the Convention signatory will require that the country under which the arbitration

was conducted must also be a signatory.

Most of the countries in the world are signatories.

Enforcement of Awards

40

International Rules

Cotton ShipperCotton Grower

Cotton Ginner Cotton Spinner

English Law &

Arbitra

tion Act 1996 1958 New York Convention

ProtectionProtection

41

Our Membership is growing internationally

More countries are trading on ICA Rules

If you choose not to- you may be left behind

42

Acceptance, Understanding, Application

of the International Rules, means we have a level playing field for International Trade

43

Inte

rnat

iona

l Cot

ton

Rul

es

Always be prepared

44

The International Cotton Association has

members all over the world…

…and more people are adopting the International Rules

45

OUR OTHER SERVICES

Publications and circulars. Membership directory contact addresses members

Laboratory fitted with HVI Spectrum

Full range of standard boxes

Quality arbitration facilities

On-line Guidebook to Arbitration Procedures

Opportunity to Train as a Technical Arbitrator

46

International Cotton Trade Seminar

• Educational two week conference on all aspects of the raw cotton trade

International Cotton Trade Conference and Dinner

•Keynote presentations from international speakers. • Dinner for 800 delegates and guests

OUR ANNUAL EVENTS

47

Change is constant, we need to embrace the world.Communications are instantaneous, cost are rising,

and markets growing.

We welcome new members to join us and reinforce this vital ingredient of our business

48

TheInternational Cotton Association

of the future

Let us get togethermake a strong Association for the long term protection

of our industry.

49

WorldwideharmonyInternational Cotton

Trading Rules

50

The International Cotton The International Cotton Association LtdAssociation Ltd

Your Partner in International

Cotton Business