New European Standard Contract for Coffee (ESCC)
The European Standard Contract for Coffee came into application on 1 September 2018, after formal approval of the ECF Council on the 19th of June 2018.
The objective of the ESCC is to amalgamate the 4 current European Coffee Contracts rather than introduce a full-scale review even though some amendments have been adopted.
The European Contract for Coffee (ECC), European Free Carrier Contract for Coffee (FCA), European Contract Spot Contract (ECSC) and European Delivery Contract for Coffee (EDCC) have therefore been broken down into three sections covering Shipment (FOB, C&F, CIF and FCA), Spot/Delivery and General Conditions. The Shipment section will be of relevance for exporters as they cover coffee to be dispatched from origin while the Spot/Delivery section will deal with the trade in coffee within import markets resulting of major interest to importers and traders rather than exporters.
In relation to the introduced amendments please note the following:
- Shipment: The time limit for weighing has been increased to 21 from 14 calendar days after discharge. As a consequence, the time limit for drawing arbitration samples has been increased from 21 to 28 calendar days after discharge and the time limit for making quality claims has been increased from 21 to 28 calendar days from discharge. The reason being the regular occurrences of congestion in mayor European ports.
- Terminology. To avoid confusion, Landed weight will be referred to for FOB, C&F and CIF contracts whilst Loaded weight will be used for FCA contracts.
- Spot/Delivery. The sampling/quality conditions for delivery coffee have been brought into line with those for spot coffee. The relevant time periods for the sellers to despatch samples and for the buyers to require samples are all now counted from the date of Tender. The time period for buyers to inform sellers of their wish to accept/reject coffee is extended from 2 to 4 working days from receipt of sample. The time limit for drawing arbitration samples has been increased to 21 days from tender to give parties a little more time to negotiate before the necessity of drawing arbitration samples.
- General. Introduction of an Insolvency Clause. Should a party become insolvent, all outstanding contracts are discharged at the current market prices and damages shall be set off. The practical effect is that when a party is in financial difficulties well into the future, the other party will not have to await until the time for performance arrives to see whether the contract will in fact be performed. Please be advised that the laws in various jurisdictions covering insolvency differ and therefore enforcement of the article may vary.
Click here to see the different editions of the coffee contracts.