July 6, 2018 is a date that will fall into historical records. On this day, US implemented the largest trade war in world economic terms by administrative measure of collecting tariffs at the rate of 25% against Chinese goods worth of US$ 34 billion, and Chinese government will retaliate by imposing the same rate of import tariffs against US goods of same quantity, in order to protect its development interest (the “Trade War”).  The US Trump Administration also expressed that US will increase the leverage by adding more China sourced goods to the quantity of Chinese goods subject to the tariffs if China takes retaliatory measures. 2018年7月6日，终将载入史册。此日，美国开始实施针对中国340亿美元的进口商品实施加征25%关税的行政措施，中国政府为保护其“发展利益”也将以牙还牙地采取保护措施，针对相同数量的源自美国的产品实施加征25%相同税率关税的措施（下称“贸易战”）。美国特朗普政府之后表示，若中国采取报复措施，则美国会进一步加码，对更多的源自中国的商品实施增加关税的措施。

It is very unfortunate that this type of administrative measures were not got under control for negotiation by the respective governments, who have failed to prevent the trade disputes from escalating to trade war. On the macro level, trade war has just started and is continuing. From micro point, what impacts will it have on entities and individuals? Different people have different views. This article will discuss how trade contract disputes might be resolved through well-thought-out process and methodology. 很不幸的是，这样的国与国之间的行政关税措施没有能够控制在政府协商层面，没能在两国政府层面通过协商避免贸易争议上升至贸易战。宏观上来看，贸易战已经打响，并且在继续进行。那么微观上来看对企业和民众会有哪些影响呢？仁者见仁。本文想谈谈进出口商之间贸易合同争议，如何可以通过适当程序和方法予以解决。

On the micro level, importers in China who happen to import those goods that are subject to the retaliatory tariffs (say beans or vehicles) will inevitably take measures to consider dispute resolution mechanisms in their contracts. If the imported goods are subject to the retaliatory tariffs imposed by the Chinese government, the importers cannot avoid the legal duty under applicable rules and regulations, and have to pay such tariffs to the Chinese customs. Who will undertake these tariffs as between the importer/buyer and the exporter/seller? 微观上来看，中国的进口商们如果在进口相关从美国生产的产品（比如“大豆”或者“汽车”），相信一定会采取相应的合同争端处理机制。若有关合同的进口产品正好被加征中国进口关税，则该进口商无法规避法律法规，只好向中国海关缴纳增加了的25% 的进口关税。这25% 的进口关税，需要由谁来承担呢？

Theoretically speaking, it depends on what the contract says about who undertakes the import tariffs. In practice, where the contract does not have such express provisions, it will depend on what price terms the trade deal was based, whether it is priced on FOB (Free on Board) or CIF (Cost Insurance and Freight) and additional terms between the parties. If it is on FOB term, then the importer/buyer will need to pay import tariffs and handle the import formalities. Under CIF term, unless the parties agree the seller/exporter takes care of customs and duties, it is also on the shoulder of the importer/buyer to clear customs and pay import duties. These terms show that the importer/buyer will pay the tariffs and hence the purchase costs will be higher, which means that the goods from the US, be it bean or vehicle, will be less competitive than the same goods from other markets to China. 理论上来看，这取决于合同如何约定。如果合同没有约定关税承担条款，则实务中需要看双方进口合同所适用的价格条款，是FOB或者CIF等价格术语所表达的买卖双方承担税款的惯例和其他明示约定。若约定FOB，则买方需承担进口报关和办理进口报关手续。在CIF条款下， 除非卖方明示承担报关和支付关税的义务，否则这个责任也是由进口商／买方承担。这些条款表明关税将由进口商/买方承担，从而导致购买成本增加。这就意味着从美国进口的商品，无论是大豆还是汽车，相比较从其他国家进入中国市场的相同产品来说竞争力会有所下降。

If the price term is DDP (Named Place of Destination), for example, the exporter/seller will undertake the export and import custom duties and tariffs until the goods reach the place of destination designated by the buyer. 如果价格条款是诸如DDP（指定目的地完税后价格），则卖方需要承担出口和进口的关税和税费。

If the importer/buyer undertakes the import tariffs, the import costs increase by 25%. Such increased portion will translate into higher price of the goods in the domestic distribution channel and ultimately reflect themselves in the retail price of these goods. This means that consumers will pay more for these goods in the domestic market at varied levels depending on the location of the consumption. 如果买方承担了关税，则买方的进口成本就会增加25%。该增加了部分的成本也会在买方进口后在国内销售时作为增加成本转移给国内的供货商，最终会反映在大豆或者汽车在国内市场上的零售价格。这意味着，如果继续这样的生意进口的话，国内的美国产的大豆或者价格会上涨，爱好美国产的大豆和汽车的国内居民的日常大豆消费生活成本或者汽车消费成本会根据所处国内城市和市场有不同程度的增加。

If the importer/buyer refused to perform the contract due to tariff increase, the buyer effectively repudiates the contract and the seller (be the US farmer or the vehicle dealer) will have to resort to dispute resolution provisions in the contract to seek remedies under the contract. 如果买方因为关税的增加而拒绝进口的话，买方就是取消了该份大豆或者汽车进口合同。在这种情况下，卖方（美国的农场主或者汽车厂商或其出口商）就会循合同约定的争议解决程序，寻求合约救济。

Let us assume the import contract has a dispute resolution clause such as below. The parties agree as follows: 假如该进口合同中有一条仲裁条款，双方约定如下：

ARTICLE 12  Settlement of Disputes

第十二条  争议的解决

1. All disputes arising from the execution of, or in connection with, the Contract shall first be settled through Friendly Consultation followed by Facilitated Mediation between the Parties. 因合同履行产生的或与合同有关的所有争议应由双方首先通过友好协商之后通过促进式调解方式解决。

2. Friendly consultation starts when one Party gives the other Party a Notice requesting Friendly Consultation. The Parties shall meet directly in a friendly manner to resolve the disputes within 30 days from the date of the Notice for Friendly Consultation. 一方给另一方通知要求开始友好协商时，友好协商期间开始。双方应当在友好协商通知日后30日内直接会谈，在友好气氛中解决争议。

3. If no result was achieved after the Friendly Consultation, both Parties may agree to invite a third neutral mediator to conduct Facilitated Mediation for the Parties. The Parties will enter into an agreement with the Mediator for the latter to facilitate as a mediator for a settlement agreement between the Parties within sixty (60) days after the date of agreement for Facilitated Mediation is signed. If a settlement agreement is reached between the Parties, the Parties shall perform the settlement agreement within the period of performance under the settlement agreement in good faith. 如果友好协商没有结果，则双方可以邀请第三方中立人士作为促进式调解员进行调解。双方应与调解员签订一份调解程序协议，约定在该协议日后60日内通过中立调解员解决争议。如果双方达成和解协议，则各自应当在和解协议约定履行期间内诚信履行和解协议。

4. If no settlement is reached through Facilitated Mediation within the sixty (60) days of the date of mediation agreement or within ninety (90) days after either Party has given written notice to the other Party for Friendly Consultation, or if the Parties fail to perform the Settlement Agreement within the period of performance, the dispute shall finally be submitted to arbitration before China International Economic and Trade Arbitration Commission according to its Arbitration Rules then in force. The place of arbitration shall be HongKong, China(1). The language of the arbitration shall be English. The arbitral award shall be final and binding on the Parties to the Contract. The losing Party shall bear the expenses of the arbitration, if not otherwise decided by the arbitration tribunal. 若双方通过促进式调解未能在60日内达成和解协议，或者在一方向对方发出友好协商通知后90日内不能通过协商解决，或者在双方已经达成的和解协议情况下在履行期限届满时一方未能履行和解协议，则争议应最终提交中国国际经济贸易仲裁委员会按该委届时有效的仲裁规则进行仲裁。 仲裁地点为中国香港。仲裁语言为英语。仲裁裁决为终局裁决，对合同各方均有约束力。除非仲裁庭另有裁定，否则仲裁费用由败诉方承担。

5. During the arbitration proceeding, the Contract shall continue to be executed by the Parties except for the part which is under arbitration. 在仲裁过程中，除交付仲裁部分外，各方应继续执行本合同。

6. In any arbitration proceeding, any legal proceeding to enforce an arbitral award and in any other legal action between the Parties relating to this Contract, each Party expressly waives the defense of sovereign immunity and any other defense based on the fact or allegation that it is a political subdivision, agency or instrumentality of a sovereign state. 在仲裁过程中、在执行仲裁裁决的法律程序中以及各方就本合同产生的其他法律诉讼中，各方均明示地放弃主权豁免的辩诉以及任何基于其事实是或自称是主权国家的政治机构、代理机构或国家机器的辩诉。

According to this dispute resolution provision, the parties will first have friendly consultation, followed by facilitated mediation, and then if the parties do not settle the dispute, they will then refer the dispute to CIETAC for arbitration. The provision anticipates that they will use pre-arbitration mechanisms, including Friendly Consultation, and Facilitated Mediation, to settle their disputes. This is a good example to allow the parties to resolve their disputes themselves as a priority. Because the disputes are owned by the parties themselves, they should be encouraged to resolve the dispute by directly engaging with each other on possible settlement discussions. Friendly Consultation is a method where the parties direct engage with each other to talk about the dispute and possible solutions themselves. This gives the parties themselves the opportunity to get things done by themselves in the first place. 根据该争端解决条款，双方将首先进行友好协商，然后进行促进式调解，如果争端仍未得到解决，则提交中国国际经济贸易仲裁委员会（CIETAC）进行仲裁。该条款预期双方将使用仲裁前机制，包括友好协商和促进调解，来解决他们的纠纷。这是允许双方优先自行解决争端的典范。因为争端存在于各方当事人之间，应当鼓励他们通过直接进行可能的和解讨论来解决争端。友好协商是一种双方直接互相讨论争议和自行寻找可能的解决方案的方法。这使得各方有机会首先自行解决问题。

If the Friendly Consultation does not result in any settlement, the parties may agree to sign a mediation agreement to enter into Facilitated Mediation with a third party neutral to act as the facilitated mediator between the parties. The mediator meets the parties separately and jointly in various meetings and help the parties explore a settlement agreement. If the parties agree on settlement agreement, they will perform the agreed within the scheduled framework in good faith. 如果友好协商未能解决争端，双方将同意签订调解协议，邀请中立的第三方作为促进式调解员介入促进式调解机制。调解员分别单独或共同与各方会面，促进其达成和解协议。如果双方达成和解协议，则各方应当在和解协议约定的期间内诚信履行和解协议。

If there is no settlement or where there is settlement, but the settlement agreement is not performed according to the schedules, then the parties may refer the disputes to arbitration before CIETAC for final and binding arbitration. The arbitration award will be binding on the parties. 如果和解协议未能达成，或虽已达成，但未能按协议约定履行，则各方可以将争端提交中国国际经济贸易仲裁委员会进行终局的、有约束力的仲裁。该仲裁裁决将对各方具有约束力。

According to such arbitration clauses, CIETAC can accept such trade contract disputes according to the relevant agreed procedures, but it must be based on the premise that the two parties have already conducted friendly consultation and facilitated mediation. 根据这样的仲裁条款，则CIETAC（贸仲）根据有关约定程序可以受理这样的贸易合同争议，但是必须以双方已经进行过友好协商和促进式调解为前提。

Such arbitration clauses contain a procedure for the parties to negotiate a dispute settlement, which is a more pragmatic approach. Let’s assume the price term agreed between the buyer and the seller in the aforementioned contract is DDP (Named Place of Destination), then the relevant increased tariff shall be borne by the seller. However, because the seller is seated in the US, while the tariff payment should be conducted in China, so if the seller does not pay such tariff, the buyer still needs to advance the tariff, and then settle such bill with the seller. If no agreement is reached through direct consultation between the parties, they can find a neutral mediator, sign a mediation process agreement, and explore a settlement through facilitated mediation. If there is no settlement or where there is settlement, but the settlement agreement is not performed according to the schedules, then the parties may refer the disputes to arbitration. The arbitration tribunal will make a final award as to which party shall bear the relevant tariff. This pre-arbitration mechanism can help the parties settle the disputes in a quicker and lower cost way. If the dispute is not so settled, the arbitral procedure, as a last resort, can always protect the procedural rights of arbitration between the parties. 这样的仲裁条款包含了当事人自己协商解决争议的程序，是比较务实的一种约定。假设在前述进口合同中买卖双方约定的价格条款是DDP（指定目的地完税交货价），那么有关增加的关税应该由卖方承担。但是，由于卖方在美国，关税需要在中国完税，卖方如果不支付的话，买方仍然需要预支关税，再与卖方结清。在当事人自己直接协商未成时，他们可以找到一位中立的调解人，签订调解程序协议，通过调解的促进式调解寻找一种和解方案。若和解方案未达成或虽已达成但是未能按时履行的，则各方都可以提起仲裁，由仲裁机构作出最后的裁决，决定有关税款到底是需要谁来承担。这种仲裁前的程序可以有效地协助当事人提前并且低成本地解决争议。若没能解决的话，仲裁程序作为最后的救济一直可以保护当事人的程序权利。

What is the point of the provision “waiver of sovereign immunity” provided in the aforementioned clause “Settlement of Disputes” ? We will come to this clause and related cases in our next issue of articles. 上述争议解决条款中的那一条“放弃主权豁免”的条款，有何意义吗？我们今后在相关文章中再看此条款以及有关的判例。

Faced with macro trade war, at the micro level, we need to take party autonomy into account while considering how to set procedural rights for dispute settlement. From friendly consultation, facilitated mediation to international arbitration, we believe that colleagues in the import and export trade industry must move forward with caution and optimism. Open forum of international arbitration can resolve various contractual disputes. Let alone the parties may set pre-arbitration consultation and mediation procedures in the dispute resolution provisions. With these in mind, the parties can confront with trade disputes more effectively and confidently. By taking procedure as a priority, parties will resolve their issues in orderly manner.  面对宏观的贸易战，在微观层面，我们需要当事人意思自治来考虑如何设定各方争议解决的程序权利。从友好协商、促进式调解到国际仲裁，相信进出口贸易的同仁们一定审慎行事，乐观前行。开放的国际仲裁，可以解决各种合同争议，更何况仲裁前我们设定前置协商和调解程序，当事人可以更有效地坦然直面贸易争端。程序优先，处事有序。

（1）注：The place of arbitration can also be Vancouver, Canada.仲裁地点也可以为加拿大温哥华。