Does Receiving an EFT Bank Receipt from the Buyer Mean that the Sales Price Was Paid for International Trade?

I would like to inform you, my valuable readers that I have encountered an event to a company that I consult and would like to share the legal position we had.

I would like to inform you, my valuable readers that I have encountered an event to a company that I consult and would like to share the legal position we had.

Firstly, let me explain the event:

“An exporter Turkish Company got in touch with a Middle East Country to sell a product. Companies agreed on the goods, price and delivery and came to terms about cost of goods would be completely paid before the delivery. The payment was sent via SWIFT system to a Turkish Bank by the buyer and then EFT receipt was obtained and shared with the exporter Turkish company. Within the following week, the price that had been sent was not transferred to Turkish Company’s accounts. As a reason, the company was informed that the amount was stuck in the investigations made on the accounts. The Turkish Company, i.e. Seller demanded repayment for delivery of the goods subjected to an international agreement from receiver company. The importer company declared that they made the payment and shared the receipt and that the remaining process is under the responsibility of the seller and want the delivery of their goods. When an legal action would be taken between the two companies, the payment which came from the corresponding bank was credited the seller’s account at end of the third week.”

This kind of case could be reason of several legal disputes in payment methods like EFT which are used much frequently. The main subject between Turkish exporter and Foreign importer is the question of “At which stage should the buyer complete its liability to pay the goods when EFT is used as a method?”. We can use our following arguments through some main works, case laws, monography and compositions from the international commercial law against a foreign importer.

Firstly, when the 54th article of the UN Convention on International Sales of Goods (CISG) which regulates the debts of the buyers is examined we face with a regulation indicating that the buyer must bear all costs and obstacles related to the payment. From this regulation, there are comments of some writers indicating that the buyer must also deal with the procedures related to the payment of the obligations for the court decisions and this obligation can be considered as a breach of the agreement made between the seller and the buyer (The Buyer’s Performance Under the CISG Article: 53-60 Trends In Decisions. Henry Deeb Gabriel, Journal of Law and Commerce (2005-06) 277-283).

Secondly; in the study of honourable Yeşim Atamer analysing the interest demands in the commercial disputes, she did not find the order given to the credit institutions by the debtors for the payments made through fund transfers and determined that it is necessary to take the accounts becoming creditor and the interests into consideration, and thus she provided a different perspective for the issue (Interest Claims under the CISG: Uniford of Domestic Law Approach? Yeşim M. Atamer, Current Issues in the CISG and Arbitration eds. Ingeborg Eleven, Yeşim M. Atamer ve Petro Butler Eleven International Publishing: The Hague 2014).

Thirdly; a new study conducted on the Sanctions of United Nations, it is necessary for the Buyer to make the payment related to the obligations arising from the sales agreements under any circumstance by finding another funding source even though the balance is closed for access as a result of a sanction imposed on it since it guarantees the financial capacity (Research Handbook on the UN Sanctions and International Law, Edited Larissa van den Herik, Elgar Publishing: Cheltenham: 2017 ge 362-363).

Finally, the principle of “the transfer will be considered as completed as a result of crediting of the account of the bank of the buyer from the balance of the debtor of the transfer of the debt payment providing to analyse each of the concrete issues carefully” indicated in the article 6.1.8. of the “2016 UNITROIT Principles for the International Commercial Agreements” which is the main source for the comment on the commercial relations and resolution of the disputes related to the international commercial law was adopted.

Result and my suggestions:

Majority of our companies carrying out international commercial activities get paid and render payment with the method of electronic funds transfer (EFT) to take advantage of its ease and cost effect. According to examples that I experienced in practice, there an opinion which is generally accepted indicating that by sending the bank receipt the buyer completes its obligation to make the payment related to the agreement. However; unless there is another agreement within the frame of the above mentioned explanations, it is not legally possible to say that the buyer completes its obligations by sharing a receipt related to its payments. I think that our clients who deal with such issues should demand their rights to the end. In order to be able to avoid from the unexpected problems and disputes like indicated above, I recommend them to make an agreement by preliminarily agreeing on the rules related to the meaning and stage of the payment through the rules explained.

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