Export Credit Insurance, Legal Issues In International Trade Research

Export credit insurance is the insurance provided by the insurer aiming at protecting export and export-related bank financing. According to insurance policy, the insurer should compensate economic loss of the insured caused by failure of importers in making payment on a timely basis as agreed as result of commercial or political risks. As an important manner adopted by a lot of governments, export credit insurance plays a significant role in encouraging export, eliminating risks in getting payment of goods consideration and repayment of bank financing.Export credit insurance distinguishes itself from commercial insurance by the nature of policy-related. States usually grant subsidiaries to entities which offer export credit insurance. At the same time, the provision of export credit insurance by such entities also deviates from the profit-making purpose. Therefore, the risks covered by export credit insurance are unique in two respects. First, political risks are covered by export credit insurance no matter whether such business is profitable or not from an economic perspective, which acts as the essential difference between export credit insurance and ordinary commercial insurance. Second, the foreign elements in exported goods or service are basically insured with limitations, which is also understandable in that no country is obligated or motivated to grant protection to goods or services of foreign origin. It is worth attention that the policy-related nature of short-term export credit insurance is weakened to some extent in developed countries which have longer histories of export credit insurance, along with the commercial factors enhanced as well. However, by and large the mid/long-term export credit insurance in each country still feeds on the support from government.Export credit insurance has its own characteristics compared with other various manners promoting export and enhancing payment safety. Taking export credit guarantee and international factoring as examples, with respect to legal relationship, export credit guarantee is based on guarantee relationship, while international factoring and export credit insurance is based on transfer of account receivables and insurance relationship respectively. Despite of overlapping of functions of foregoing manners which might be offered by the same entity, the difference in their legal relationship distinguish them in several respects. Moreover, although export credit insurance definitely possesses and follows the same essential characteristics and fundamental principles as ordinary insurance, it still has some unique principles such as risks sharing principle, buyer' s credit cap application principle, claim waiting period principle and consolidated insurance principle, which embodies difference between export credit insurance and ordinary commercial insurance.Export credit insurance, as the insurance for export purpose, bears obvious international nature. From the angle of subject, Berne Union with a history over 70 years consists of various major export credit insurance entities, functions at facilitating information exchange among export credit insurance operation entities in member countries. From the angel of applicable law, Arrangement on Officially Supported Export Credits issued by OECD has obtained universal acknowledgement and has been quoted by WTO in Agreement on Subsidies and Countervailing Measure, which is emerging as international customs in aspect of export credit (including export credit insurance). Comparatively speaking, Chinese domestic legal regime lacks regulation on export credit insurance, leaving legal relationship of export credit insurance almost in blank despite of series of administrative regulations with respect to legal status of export credit insurer and beneficial policies they enjoy. Chinese export credit insurance mechanism should urge immediate rectification for such shortcomings.