International Commercial Law - International Trade Fraud

International Trade Fraud

International trade fraud is an incident of international commercial transactions. It affects traders through loss of cargo, increased insurance premiums and shipping expenses, as well as the cost to final consumers. The types of fraud vary from documentary fraud; charter-party fraud; fraudulent insurance claims; scuttling; diversion of cargo; counterfeiting, and money laundering.

A notable case in international trade fraud is the Salem Case. This case involved the scuttling of a ship carrying more than 200,000 tons of crude oil. Millions of pounds were lost by the cargo owners, being the highest value conspicuously lost in history. Although US$56 million was claimed from rights assigned under the insured cargo, little has been recovered from the fraud. The case alerted governments and multinational corporations of the inherent risks involved in international operations. It further highlights that complications of international jurisdiction make it difficult to successfully prosecute fraudsters.