ICC Opinions are ICC Opinions are ICC Opinions
Yesterday we had a
meeting in ICC Denmark Trade Finance Forum. The main topic for the meeting was
(of course) the ICC Opinions to be discussed at the next meeting in the ICC
Banking Commission (end April in Singapore).
I was reminded how the
ICC Opinions are really a “love/hate” task of mine. On one hand I really enjoy
analysing these (nerdy) issues … turning and twisting each stone – considering
each argument – finding similar practice ….
However …. And there
really is a however ….:
There are for sure so
may “issues” that just makes me tired ….. and a bit sad. Let me elaborate:
1: The ones that
should not be there!
There are at least 3
queries that should – in my opinion – have been rejected by the ICC Technical
Advisers; i.e. TA815, TA821 and TA824. Those are presented like DOCDEX cases –
just without the documentation allowing one to actually evaluate the issue at
hand. What is worse however is that the ICC Technical Advisers seems to be
“playing alone.” I.e. make conclusions that actually sound like guess work – because
one would need a lot more information to reach such conclusion.
For example the
Conclusion of TA824 includes the following statement:
“….regarding “PL and weight note evidencing
additional order no.14059 and 14051 which is not covered in invoice” – so long
as these documents stated the „order numbers‟ specified in the credit, the
additional order numbers would be treated as additional information as long as
they did not conflict either with other related details within the document or
with any other document and the credit.”
I really think that
one would need to see the full presentation in order to make such judgment.
Also reading through
TA821 leaves you with the impression that there is lots of information that you
simply do not have – that may or many not have an impact on the Conclusion.
2: The analysis is ….
!!!!
In many ways it is
interesting. When discussing these Opinions – the discussion seems to circle
around the Conclusion: is this – or is it not a discrepancy?
However; almost more
important is the Analysis that leads to the conclusion. The Analysis simply is
crucial in understanding the Conclusion. Therefore it is important that the Analysis
is clear and well drafted.
In some cases that is
however not the case:
2.1: Facts are
wrong
In TA.817 and TA.820
there are factual mistakes in the Analysis.
In TA.817 they seem to
have misunderstood CY and FCL (This Draft Opinion will be the subject for a
future Blog Post).
In TA.820 it is stated
that since the beneficiary has not accepted or rejected the amendment at the
time of presentation – the amendment is “rejected as on the date of
presentation.” It is even stated that this is “inferred by UCP 600 sub-article
10(c).”
This of course is
wrong. An amendment is not rejected until it is actively rejected. It may
however be approved if a presentation complies with the LC and the amendment.
2.2: Where is
the Analysis?
In other cases it is
hard to find the Analysis. It seems to be merely a re-statement of the facts.
Interesting here is
TA.816 – where one can argue both ways. This of course makes the Analysis “critical.”
The scenario is the following:
LC information:
32B (Amount) USD
60,000,00
39A (Amount tolerance)
0/0
43P (Partial
shipments) Permitted
45A (Goods
description) 500 bags of dried grain
Additional conditions:
1. Where there will be
further shipment, beneficiary must present a certificate stating that there
will be further drawings under the LC.
2. Upon final drawing,
a certificate of final shipment should be presented
Presentation:
Drawing USD 50,000
Goods shipped: 360
bags of dried grain
The presentation
included a certificate issued by the beneficiary stating:
“We confirm that there
will be no further shipments.”
Refusal:
“Short shipment and short drawing as the
beneficiary has presented a certificate confirming that there will be no
further shipment”
The Conclusion is that
this is not a valid discrepancy. Part of the Analysis reads:
Quote
As requested by the
credit, a certificate of final shipment was presented stating that there would
be no further shipments. Accordingly the drawing for USD 50,000 is to be the only
one under the credit.
The credit permits
„partial shipments‟, and there always exists the possibility of only a partial
utilisation of the Credit for very many reasons. This may result in a breach of
contract between the applicant and the beneficiary due to the full contracted
quantity not being shipped but such matters and the resulting action would be
outside the purview of the credit and UCP 600.
Unquote
Hmm I thought that
amount tolerance “0/0” meant that no tolerance was allowed. For this case they
do draw significantly less than the required by the LC: This is evidenced by
the certificate presented. The previous sentence was actually an argument for
supporting the refusal by the issuing bank. In the Analysis I see no real argument
for supporting the Conclusion.
The fact is however –
that it is possible to argue convincing for the Conclusion …
Let’s open a contest:
I will send an
LC book to the person that – in the comment field below – offers the most
convincing argument for the conclusion given by the ICC: I.e. that this is NOT
a valid discrepancy. (Please include
your e-mail address so that I can contact the “winner.”)
3: The language
There are now 3
technical advisers – and it is clear that there is no “firm line” in the
language used throughout the ICC Opinions. There are even examples of Draft
Opinions that do not use the correct LC terminology – leaving doubt as to
whether a new practice is being implemented.
For example TA.820
uses phrases “due compliance” and “due rejection” what does that mean? Is “due
compliance” similar to “complying presentation” – or different? Is “due
rejection” different or similar to the refusal process laid out in UCP 600
article 16?
4: The not to ask
questions
There is a saying to
the effect that there are no stupid questions. Hmm – I am not so sure about
that! Or rather – when working with LC’s there may be questions you ask to your
supervisor when being trained – that may seem simple – but make sense as part
of understanding the product as such for a newcomer.
However – there are
questions that one should NOT ask the ICC! There should be at least one in the
bank / country that should have stopped this – and simply answered …No need to
bother the whole world about this …:
TA.827 is about the
requirement for signing a COPY bill of lading, and whether or not such may is issued
by a freight forwarder.
In TA.818 there is a
need for the ICC to state that:
“Neither UCP 600
nor ISBP 745 stipulates that the name and address of the applicant be present
in a specific location, field or box on the invoice, or that any name thereon
be distinctly identified as the applicant.”
This is like having
President Obama clarifying that the earth is round!
There are other examples
– but I think that the above will do.
As indicated above – I
will revert on TA.817 in the next Blog Post ….
So watch out for that
one – and meanwhile take care of each other and the LC …
Kind regards
Kim