First Technical Advisory Briefing has been released
This week the ICC circulated its first Technical Advisory Briefing. The topic is Non-documentary conditions in Documentary Credits.
This Briefing will be the first in a series. However, let’s first turn our heads 180 degrees and look back to see where the idea was born.
Around 2017 (10 years after UCP 600 came into force), a discussion started if it was time to revise the UCP 600. The issue was discussed at the ICC Banking Commission meeting held in Jakarta April 2017. The general consensus at the meeting was that there is a lack of understanding in the market in respect of the application and practice of UCP 600. There also was an understanding that the issue – or rather problem – was much wider than the UCP 600. I.e., that a revision of the UCP 600 would not solve the problem – or rather problems! As the identified problems would stem from (poor) drafting of LCs, old and outdated LC application forms, a general lack of understanding of the UCP 600 and how LCs work as well as the (sad) fact that in many parts of the world there is only restricted access to the ISBP 745. Just to mention some. For that reason, the ICC initiated a number of initiatives.
One of those is the Technical Advisory Briefings which has now emerged as something concrete and tangible.
The purpose is for the ICC to deliver briefings on particular circumstances outlining the recommended handling solution and best practice. These briefings are educational only.
For the purpose; to ensure broad range of input from ICC membership, the existing Techinal Advisor members form the core of the team to draft the Briefings and will be supplemented by nominated members of various ICC National Committees (NC’s).
That is the group, that has not produced “Technical Advisory Briefing No 1: Subject: Non-documentary conditions in Documentary Credits”.
Technical Advisory Briefing No 1 includes the following:
* “Issue”; setting the context by outlining the issue and making the appropriate references to UCP 600.
* “Introduction”; where there is more “meat” to the bone, in that some relevant examples are given.
* “Analysis”; where the issue is further analysed considering current documented practice, such as relevant ICC Opinions as well as ISBP 745 practices.
* “Summary”; combining and summarising on the above. Here are some quotes from the Summary:
“Issuing banks should exercise due care in ensuring that a documentary credit does not include a non-documentary condition as this may lead to unnecessary disputes or incorrect identification of discrepancies.”
“If a documentary credit does include a non-documentary condition, the beneficiary would be entitled to disregard it. A bank may not refuse to honour or negotiate a presentation on the basis that a non-documentary condition is not addressed in any stipulated document that is presented.”
“Should a stipulated document that is presented contain data relating to a non-documentary condition, a beneficiary must ensure that the data is not in conflict with that non-documentary condition.”
“ […] it is recommended that if a documentary credit application form includes a condition that could be complied with by the presentation of a specific document, or evidence of compliance with the condition could be incorporated into the wording of an already stipulated document, then it should be so mentioned in the application form and the documentary credit, and not included so that it becomes a non-documentary condition that will be disregarded.”
On 26 January 2022 there will be an ICC session that will be dedicated to a brief summary of the first briefing as well as update on the future briefings.
In any case, I look forward to future Technical Advisory Briefings – and hope that the ICC will make those available on their website.
Take care of each other and the LC; with the Technical Advisory Briefings the ICC is doing their best to do just that….
Kim