The new opinions have landed
Last week the ICC held their technical meeting. It was split into two slots. One covering a presentation (and discussion) of the new Draft ICC Opinions. The other was the plenary session.
This blog post will focus on the first, because already last Friday the final Opinions landed in the inboxes of the ICC National committees.
A total 6 new Draft opinions were presented and discussed, i.e., TA915-920.
TA911 has been withdrawn.
Comments to the Draft Opinions were received from 33 National Committees.
TA915rev: Administrative conditions
This query deals with so-called administrative conditions, such as:
“A PHOTOCOPY OF ALL DOCUMENTS REQUIRED IS REQUESTED FOR ISSUING BANK’S FILE, OTHERWISE USD 25.00 (OR EQUIVALENT) WILL BE DEDUCTED FROM THE UTILIZATION AMOUNT.”
and
“DOCUMENTS MAY NOT BE STAPLED, OTHERWISE USD 25.00 OR EQUIVALENT) WILL BE DEDUCTED FROM THE UTILIZATION AMOUNT.”
In a nutshell the questions asked were if 1) a missing extra set of photocopies is a valid discrepancy? and 2) if the fact that some documents remained stapled is a valid discrepancy?
TA916rev: No refusal No payment
TA916rev is a classic case where an issuing bank has not refused the presentation – but does not honour. This one is “spiced” up with information that the Port customs authority of had suspected and informed that the consignments contain forbidden and harmful swine/ porcine and anthrax/bovine and for this reasons customs temporary suspend/ stopped to release the imported consignment.
The questions to the ICC were both in respect of the behavior of the issuing bank – but also if the issuing bank is obligated to honour under UCP 600.
TA917rev and TA919: DA basis under an avalised draft
There were two Collection questions that seemed to relate to the same transaction; but from the perspective of different parties. The case is rather interesting and were the one that attracted most discussion during the meeting.
Here is an overview transaction (compiled from both queries):
The Collection (subject to URC 522) was sent to the collecting bank with the following conditions
* Please confirm due date by Tested/Authenticated SWIFT.
* Documents to be delivered against acceptance.
* Please acknowledge receipt of documents.
Part of the documents was a document titled “Draft” which included the following wording “270 days from the date of B/L Avalized Draft Maturity Date 23-Nov-2020”.
Apparently, there was no instruction to the collecting bank to avalize the Bill of Exchange (after it being Accepted).
Almost a month later the remitting bank send a message to the collecting bank stating that documents had been sent “on DA basis under the avalised draft”. The message requested immediate advice of the maturity date and stated, “make sure that the advice of acceptance is avalised by your good office”.
After some dialogue back and forth, the collecting bank stated the following: “We want to confirm the acceptance of draft by drawee, their signature on draft. This is to be paid by November 23, 2020. This has been avalized by us.”
Payment of the bill was not received on the maturity date.
The key question asked was if the collecting bank was obligated to pay at maturity. However, it was also asked if this was a proper way to enforce an amendment to a Collection – just as it was raised if such Draft was appropriate for a Collection subject to URC 522.
TA918rev: No payment by the issuing bank
TA918rev is yet another one where it is questioned if the issuing bank is obligated to honour.
The variations to this one was the following:
* Some of the goods has been cleared at the port of discharge.
* Some of the goods has been released; via an endorsement by the consignee (the issuing bank).
* Some of the goods has been stopped
Likewise, 6 questions were asked, i.e.,
1: Not having refused the presentations, is the issuing bank obligated to honour?
2: May the issuing bank release the documents and not pay the presenting bank?
3: What is the presenting bank’s obligation?
4: What can first- and second beneficiaries do to obtain payment?
5: Does the shipper have the right to take hold of the cargo?
6: Is there a “blacklist” for issuing banks that do not honour their payment obligation?
TA920rev: Sanctions Clauses
The query takes outset in two specific sanctions clauses:
Clause 1:
BREACHES OF LOCAL AND INTERNATIONAL ANTI-MONEY LAUNDERING OR ECONOMIC SANCTIONS LAW AND REGULATIONS ADMINISTERED BY, INCLUDING BUT NOT LIMITED TO CHINA, UNITED NATIONS, UNITED STATES, ARE NOT ACCEPTABLE. OUR BANK MAY REJECT ANY TRANSACTION IN VIOLATION OF ANY OF THESE LAWS AND REGULATIONS WITHOUT ANY LIABILITY ON OUR PART.
Clause 2:
PURSUANT TO THE UNITED NATIONS SANCTIONS AND THE RELEVANT REGULATIONS, THE SANCTIONS IMPOSED BY THE OFFICE OF FOREIGN ASSETS CONTROL OF THE UNITED STATES OF AMERICA, TERRORIST LISTS ISSUED BY THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA, THE SANCTIONS IMPOSED BY THE EUROPEAN UNION AND THE RELEVANT SANCTIONS LISTS APPLICABLE TO THE JURISDICTION OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FROM TIME TO TIME, WE SHALL NOT HANDLE OR DEAL WITH ANY DOCUMENTS, SHIPMENTS, GOODS, PAYMENTS AND/OR TRANSACTIONS THAT MAY RELATE, DIRECTLY OR INDIRECTLY, TO ANY SANCTIONED COUNTRIES/REGIONS, PERSONS OR PARTIES. ACCORDINGLY, ANY PRESENTATION THAT MAY VIOLATE THE AFORESAID CONDITION MAY BE REJECTED BY US OR ANOTHER REMITTING, RECIPIENT OR INTERMEDIARY BANK AT ANY TIME WITHOUT ANY LIABILITY ON OUR PART.
And raises the following questions:
1: Can the quoted clauses be defined as “problematic”?
2: May payment under an LC be delayed because of sanctions that are unrelated the particular LC?
3: Do clause like the ones quoted above override the examination period according to UCP 600?
4: Should sanctions clauses referring to “indirect risks” be avoided?
These are some highlights from the new ICC Opinions. And as always; reviews of the Opinions are added to lcviews premium duly linked to the relevant articles, paragraphs and topics.
Kind regards
Kim