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

 




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