Lawyers Risk Management Services
Political Risk and Trade Credit Insurance
We specialise in analysing and arranging cover for the risks of trading and operating overseas. The protections we put in place for our clients fall into two categories: trade related and asset based.Trade-related risks
Trading under contracts with companies overseas generates risks due to political and economic instability and, in many regions, an uncertain legal framework:
• Contract Frustration insurance, including:
- Unilateral termination of contract and licence cancellation by government buyer
- Failure of government buyer to perform contractual obligations, including non-payment
- Import/Export embargo
- Frustration of the contract due to war and hostile acts, terrorism.
- Wrongful calling, and fair calling due to political risk events, of on demand bonds
- Inability to convert local currency into hard currency, and to transfer monies to home account
• Trade disruption insurance (whether goods are in production or transit. Cover can include insolvency risk)
• Pre export finance, counter trade and barter
• Trade and project finance
• Export finance
• Trade credit insurance (including protracted default and insolvency of private debtors)
Additionally, for financial institutions, we arrange trade finance cover to protect their receivables against risks including sovereign party default, majority government owned party default, and private obligor/financial institution default.
Asset-based risks
All foreign investment entails political and economic risks. Often these risks need to be assessed on a longer term basis than trade risks, and from a lender’s perspective:
• Confiscation, expropriation, nationalisation of company or investor assets overseas
• Deprivation of mobile assets (e.g. contractors’ plant) or inability to export goods from foreign government action which renders the operation unviable
• Licence cancellation (operating, export, import)
• Inability to convert local currency receivables and dividends into hard currency and transfer home
• Political violence and war:
- The physical damage of assets due to war, terrorism, revolution and similar hostile acts
- Public liability due to political violence and terrorism
• Forced abandonment of assets due to the area of operations becoming unsafe
• Emergency repatriation of personnel
• Kidnap and Ransom (K&R) insurance for corporations whose staff travel or work overseas