WORLD COTTON EXPORTERS ASSOCIATION
88 UNION CENTER – SUITE 1204 MEMPHIS, TENNESSEE 38103
TELEPHONE (901) 525-2272 – FAX (901) 527-8303
Procedures For The Maintenance of a Default List
In order to promote, improve and further the export of raw cotton and cotton products in international trade, to encourage compliance with contractual obligations and adherence to arbitration awards, to protect the financial interest and economic well-being of the exporters of Non-U.S. growths of cotton, and to preserve the principle of the sanctity of contracts, the World Cotton Exporters Association will maintain a current list of those parties engaged in the purchase and/or sale of cotton who have been reported by an exporter as being in default on an outstanding export contract and, where indicated, also have failed to honor a technical arbitration award issued by a recognized arbitral body.
Participation is open to all individuals, partnerships, companies, cooperatives and corporations engaged in the export of cotton.
The mere listing of a party in default is not to be construed as a prohibition against dealing with that party. Each participant should exercise his own business judgement as to the use of the list, taking into consideration all relevant factors such as creditworthiness and reliability and the sanctity of contracts in international trade.
The following procedures have been adopted for determining whether a buyer or seller is in default such that the fact of that default will be circulated by the WCEA.
DEFINITION OF DEFAULT
For the purpose of the operation of these procedures, a party shall be deemed to be in default when:
(A) In the case of contracts calling for the opening of a letter or letters of credit for the benefit of the exporter, the purchaser has failed to open a letter of credit in accordance with the terms of the contract or other agreements on or prior to the last day of shipment month; or refused to extend an L/C if requested by the exporter; or opened the L/C with insufficient time to load; or added other clauses designed to make the L/C inoperable;
(B) In the case of contracts made on CAD, COA, FOB, FAS, C & F, and CIF terms, payment has not been received by the exporter in the ordinary and usual course of business;
(C) In the case of contracts calling for shipment to the exporter, the seller fails to make shipment according to the terms of the contract or other agreement on or prior to the last day of the shipment month;
(D) In any case where the party has definitely notified the exporter of his intention not to honor the contract.
(E) Notwithstanding the above, if the party has agreed to submit the dispute to arbitration, and to abide by the award, the exporter shall not add such party to the Default List.
1. An exporter will notify WCEA of the fact of a default. Any such complaint shall identify clearly the party against whom the Complaint is made (providing mailing, fax and cable addresses) and the facts and reasons giving rise to the Complaint and shall include a statement by the exporter that the Complaint is wholly true and genuine, that the exporter or his agent has on file evidence that a contract was concluded with (NAME OF PARTY) and that such party has not agreed to settle the dispute by arbitration.
2. WCEA will immediately contact the party alleged to be in default and request information within fifteen (15) days contrary to that provided by the exporter.
3. If no response is received within the fifteen (15) day period, or if the response is patently inadequate, WCEA will add the name of that party to the Default List.
4. If, within ninety (90) days after the initial complaint, the exporter has not advised the WCEA that arbitration [or legal] proceedings have been instituted, or has advised WCEA that the arbitral authority has declined to conduct a technical arbitration, WCEA will send a follow-up notice advising that it no longer has sufficient information to consider that party in default.
However, in case the party in default has declared bankruptcy, or has gone out of business, the time limit to initiate arbitration may be extended indefinitely by the Association upon request by the exporter.
5. The exporter will advise WCEA promptly of the rendition of any arbitration award [or legal decision] and satisfaction thereof. WCEA will advise that the party is no longer in default if the arbitration [or legal proceeding] is in favor or it has satisfied an arbitration award [or legal decision] entered against it.
WCEA will also include in its list of parties in default any party whose name is reported to it by any other recognized cotton association or organization following the above procedures for determining whether a buyer or seller is in default.
PARTIES IN DEFAULT
The list of parties in default will contain the names of those parties who are still in default on contracts from previous cotton marketing years.
Additions to and deletions from the Default List should be made to the WCEA by fax or email and such changes will be transmitted to interested parties in the manner determined most expedient by the Association’s officers.
Periodic revisions of the Default List will be issued by the WCEA Office to interested parties.
SPECIMEN FORM FOR REPORTING DEFAULT
1. Exact Name of Party Complaint is against:
2. Mailing Address:
3. Phone/Fax/Email Address:
4. Contract Number(s):
5. Number of Bales and Growth:
6. Shipment Period:
7. Specified Reason(s) for Reported Default:
8. STATEMENT: “This complaint is wholly true and genuine. We or our agent have on file evidence that a contract was concluded with __ (Name of Party) __ and that such party has not agreed to settle the dispute by arbitration.”
9. Firm Name of Complainant:
10. City and State:
11. Name of Principal: