September 2024

The 2025 Globalaw Americas Meeting (GLARM) took place in San Juan, Puerto Rico, from February 19 to 22. Many thanks to Globalaw member firm EDGE Legal LLC for hosting a fantastic meeting.

 The meeting began with remarks from Pablo José Hernández Rivera, Resident Commissioner for Puerto Rico, who welcomed Globalaw members and discussed ways to strengthen global and economic connections. This was followed by sessions led by Carlos R. Cobian, Founder & CEO of Cobian Media LLC & Gravital Agency, addressing social media strategies for lawyers, and Jim Cochran of Cochran Client Development, a leading global consultant, speaking on business development. The meeting offered members practical and strategic insights into social media, business development, corporate governance, and an overview of the political and economic outlook in the Americas region.

During a separate track of the meeting, 16 Managing Partners from across the Americas (and Europe) convened for a Leadership Summit. Guided by Jim Cochran, a leading global business development consultant, and Eduardo Arroyo, a top business coach and strategic planner, the Managing Partners focused on law firm success and providing effective client service, beginning with the health and focus of their leadership.  In the words of EDGE Legal, “The summit reinforced how our global partnerships provide unparalleled reach for our clients, combining local expertise with an international perspective.” 

Last but certainly not least, Globalaw continued its tradition of raising funds through the Globalaw Foundation to support a local charity. The highly successful auction of a piece of art created by renowned Puerto Rican artist Jorge Zeno enabled the Foundation to donate $15,000 to Fundacion Banco Popular. This organization seeks to improve the quality of life of Puerto Ricans by promoting access to educational and self-management opportunities that foster excellence, ethics, and civic responsibility.

An increasingly complex landscape for international trade is presenting new challenges for cross-border business. Geopolitical tensions, fluctuating tariffs, and diverging trade policies have introduced significant uncertainty for buyers and sellers internationally. The prospect of increased tariffs disrupts pricing expectations and predictability around international commercial arrangements. In this environment, the mitigation and management of potential tariff risks are paramount for cross-border businesses.

To this end, Incoterms (International Commercial Terms) are important tools to help mitigate risks associated with increased costs caused by tariffs. Incoterms are a set of globally standardized contractual terms used for risk and responsibility management between international commercial entities.

While Incoterms do not directly address tariffs themselves, they can be used to allocate cost and payment obligations to minimize trade disruptions caused by tariffs.

BACKGROUND

Originally developed by the International Chamber of Commerce (ICC) in 1936, Incoterms have evolved over time to address the changing demands of global trade. There are currently a set of eleven (11) internationally recognized Incoterms that are used to provide clarity and consistency in international trade contracts.

The latest iteration, Incoterms 2020, has been updated to reflect modern trade realities.

COMMON INCOTERMS AND TARIFF MITIGATION STRATEGIES

Some of the most common Incoterms used in commercial contracts for tariff mitigation strategies include:

1. Delivered Duty Paid (DDP)

In an unpredictable tariff environment, Delivered Duty Paid (DDP) is an ideal Incoterm for use by buyers seeking price certainty and risk protection from fluctuating tariffs.

Under DDP, the seller delivers goods cleared for import and ready for unloading at a named location. The seller is responsible for the costs and risks associated with final delivery, including the payment of tariffs.

DDP can assist buyers in uncertain tariff situations in multiple ways. Firstly, DDP provides price stabilization for the delivered goods by ensuring that the seller covers any import tariffs. This mitigates against price increases necessitated by changes in tariffs in the destination country. DDP also provides predictable costs by allowing the buyer to know the total landed cost before delivery. Finally, DDP can help to shield the buyer from uncertainty around the risk of increased tariffs during the transportation process. These factors make the use of DDP in commercial contracts particularly helpful for buyers by providing predictability around prices and costs.

2. Ex Works (EXW)

Ex Works (EXW) is an Incoterm that can be used by sellers who want to limit their tariff exposure. EXW is also helpful to buyers interested in managing tariff risks by taking advantage of potentially favorable tariff rates, depending on their location.

Under EXW, the seller ensures that goods are available for shipment at their premises, or another agreed-upon location. The buyer then assumes full responsibility for arranging shipment, transport and meeting customs regulations, including paying applicable tariffs in the importing country.

Under EXW, the seller’s responsibilities end once the goods are made available for transport, thereby limiting their tariff exposure. EXW also gives the buyer control to manage tariff risks based on their location. For example, if the buyer is located in a region with favorable tariff rates or subject to a free trade agreement, the buyer can import the goods at a lower tariff rate than may exist in other regions. EXW also presents opportunities for the buyer to arrange shipping routes with advantageous tariff rates.

3. Free on Board (FOB)

Free on Board (FOB) is technically an Incoterm applicable only to inland waterway transport but used commercially for other modes. FOB is particularly beneficial to sellers looking to minimize their tariff exposure throughout the shipping process.

Under FOB, the seller is only responsible for the costs of clearing goods for export and for their delivery onto a vessel for transport at a named port of departure. As soon as the goods are over the ship’s rail when loaded on to the transport vessel, the buyer becomes liable for risks and costs, including import clearance and tariff payment in the destination country.

Using FOB in commercial contracts minimizes the seller’s tariff risk. It also allows the buyer flexibility to take advantage of shipping destinations that may benefit from lower tariff rates and free trade agreements.

4. Free Carrier (FCA)

Free Carrier (FCA) is an Incoterm that provides flexibility to both the buyer and seller to collaborate on tariff mitigation strategies around advantageous delivery points that may benefit from lower tariff regions or trade agreements.

FCA allows the seller to deliver goods to a carrier at an agreed location, that can be chosen strategically to minimize tariffs for the buyer. Once transferred at the delivery point, the buyer assumes responsibility for import tariffs and customs clearance. FCA allows the buyer more control over customs procedures and can facilitate the use of shipping routes that minimize tariff exposure, depending on the agreed delivery point. Under FCA, both the seller and buyer can benefit from tariff risk minimization.

The use of Incoterms provides businesses with the opportunity to be proactive in managing commercial activities in the face of increasing tariff threats. Counsel can assist in identifying and implementing appropriate Incoterms to address specific considerations around optimizing supply chains, leveraging trade agreements and other risk allocation strategies to ensure smooth international transactions in the current global trade environment.

As one of Iceland’s leading corporate advisory law firms, ADVEL Attorneys at Law has earned a reputation for international expertise, a strong network, and exceptional services tailored to clients' needs.

In a recent interview, Stefán Þór Ingimarsson, LL.M., partner and associate at ADVEL since 1999, shed light on the firm’s evolution, specialization, and commitment to nurturing talent.

The Firm’s Evolution

Based in Reykjavik, the firm traces its roots back to 1966 with the creation of Logvisi Law Firm, which in 1999 formed the backbone of Fulltingi Legal Services. Fulltingi split into two specialized entities in 2008, creating ADVEL, a pivotal moment that allowed ADVEL to sharpen its focus on corporate advisory services.

Despite its smaller size post-split, the firm thrived. Its dedication to excellence has been recognized repeatedly, earning high rankings in prestigious legal directories like Legal 500 and Chambers and Partners.

Diversity Across Sectors

ADVEL offers services in company law, commercial law, financing and banking law, mergers and acquisitions, securities market law, (re) insurance, European law, competition law, tax law, restructuring and bankruptcy law, maritime law, and litigation. 

Its litigation team provides specialized advice on EU law from partners with firsthand experience in Brussels. The firm also plays a vital role in Iceland’s high-energy sector, advising companies engaged in hydro and geothermal energy projects—two cornerstones of the nation’s renewable energy landscape.

International Expertise

One of the firm’s most defining traits is its international expertise. Many of its partners and associates have studied or gained professional experience abroad, bringing their clients a wealth of knowledge and a global perspective. This international acumen proved invaluable during Iceland’s 2008 economic collapse when the firm was critical in restructuring and relisting companies on the Stock Exchange.

The Globalaw Advantage: Facilitating Success for Global Clients

ADVEL stands out for its robust cross-border work. The firm’s ability to navigate the complexities of multinational operations stems from its long-standing connection to the Globalaw network. Stefán, who forged this relationship with the association in 2007 during his PhD studies in the Netherlands, emphasized the association's importance in quickly providing high-quality information, support, and connections to clients. The firm frequently collaborates with Globalaw members, particularly in Denmark and the Netherlands, as well as Luxembourg and the UK, to offer seamless, comprehensive legal support to companies with multinational operations.

One example is ADVEl’s work with Hampidjan Group, a NASDAQ Nordic-listed company and global supplier of fishing gear, aquaculture equipment, and super towing ropes. In collaboration with Globalaw members, the firm has facilitated several multinational M&A transactions and advisory for Hampidjan, including the acquisition of an 80% controlling stake in two Scottish companies. Globalaw advice has been sought in several jurisdictions for Hampidjan Group, including in Denmark, Faroe Islands, Lithuania, Spain, and the Netherlands.  

A Culture of Growth and Inclusion

Perhaps ADVEL’s most significant differentiator is its commitment to cultivating talent from within. Many partners began their careers as associates and have been with the firm for 10 to 20 years, with several professionals returning after gaining experience elsewhere. This dedication to internal growth has fostered a loyal, close-knit team and built a culture of inclusion and organic development that has become central to its success and longevity.

Visit https://advel.is/ to learn more.

Russell Weir, a partner at Simpson Western, spoke with me about the firm and its history. The firm opened in 1985 and is now regarded as the North Shore of Auckland’s leading law firm. Next year, Simpson Western will celebrate 40 years in business!

For the past forty years, Simpson Western has been providing tailored and personalized services to clients onshore and offshore. I asked Russell what clients love most about the firm. He passionately said, “We are focused on and look to establish long-term relationships with our clients, rather than working for people on a one-off transactional basis.”

The firm prioritizes strong connections with clients and colleagues. To do this, when possible, they leverage their geography to forge relationships, creating opportunities for people to meet in person, whether that be clients or colleagues. The firm has a culture committee that helps foster an approachable environment and serves as an open forum for everyone to get together.

New Zealand's Economic Strengths

Tourism, along with agriculture, makes up a large part of the country’s economy. And green business is important and viable in New Zealand. Many New Zealand businesses are incorporating ESG into their business practices – In fact, Simpson Western published a business brief on legislation that was passed in 2023. The Companies (Directors’ Duties) Amendment Act 2023 stipulates that company directors can consider matters other than profits when acting in the best interest of the company. And, New Zealand is also highly regarded from a business transparency perspective.

Sustainability Focus

Simpson Western is also committed to being a responsible and sustainable business, with a strong sense of community and social responsibility. The firm supports various local initiatives and charities, such as the North Harbour Club, and the North Shore Hospice.

Practice Areas

Simpson Western has diverse practice areas. From employment, corporate/commercial, M&A, and business litigation to marriage dissolution and family law, the firm advocates for every client. Their team of 40 is large enough to handle complex matters yet small enough to offer personalized services. This specialty of dealing with businesses of scale allows them to handle transactions from a few million to a few hundred million.

Since 1985, the firm has stayed true to its client-centric approach. As the firm celebrates its anniversary and reflects on the past forty years, we look forward to seeing what they do over the next forty years.

Visit www.simpsonwestern.co.nz/ to learn more.