ICC Draft Opinions (March 2021) circulated
In April, 5 new ICC Opinions were circulated by the ICC. The 5 new ICC Opinions were approved by the ICC Banking Commission meeting which was held virtually 30 March 2021. The new ICC Opinions are in the sequence TA909-910 & 912-914. TA911 was held-over pending further information.
TA914 had also been reviewed by the Guarantee Task Force.
Below please find a short overview of the new queries raised:
TA.909 - First paragraph of Article 35 of UCP 600
This query seeks clarification of the two ICC Banking Commission documents:
“Guidance Paper on the impact of COVID-19 on trade finance transactions subject to ICC rules” (released on 6 April 2020) – and in particular, to sections B (iii)-(v) and C (iii)-(v).
And
“The Interpretative Paper on the correct interpretation of the first paragraph of
UCP 600 article 35”
Questions asked:
* Is interpretation of the term “transmission” (in UCP 600 article 35) considered a question of international standard banking practice?
* Does the term “transmission” include failure of transmission for any reason not caused or exacerbated directly or indirectly by the actions of the sender?”
* Does failure of transmission for this purpose refer not only to physical letters and documents but also to electronic records and messages?
TA.910 - No payment at maturity
Two LCs were issued and relayed by the advising bank, to a second advising bank (via SWIFT MT710). Subsequently, the LCs were received by the beneficiary via their own bank. Both LCs were available by negotiation with any bank.
In the sequence of events, the beneficiary made a presentation under both LCs. The beneficiary’s bank forwarded both sets of documents to the Country D office of the issuing bank according to the mailing instructions in the credit.
Case No.1
No refusal notice was sent by the issuing bank. The maturity date was advised to the beneficiary’s bank in a SWIFT message that included the following wording:
“Subject to our further authentication and payment from applicant, ….” And “Applicant has agreed for the payment of the A/M bill for USD 112,000/- on maturity dated 2018 July 04, and we will remit payment, …”.
Case No.2
Discrepancies had been identified and a refusal notice had (presumably) been issued. There appears to be no dispute as to the validity of those discrepancies or the content of the refusal notice, and it is assumed that the refusal notice included a status of holding documents pending further instructions from the presenter or that the issuing bank was holding the documents until it received a waiver from the applicant.
For both cases.
Who is liable to pay the beneficiary’s bank and the beneficiary?
Can the beneficiary’s bank claim interest from the issuing bank?
TA.912rev - Issuing bank did not honour due to fraud
The nominated bank received (SWIFT MT998 message) an advice from the advising bank, indicating that the issuing bank accepted the presentation for USD 582,125.00, and citing the payment maturity date.
Later, the issuing bank apparently learned that the transaction was fraudulent and offered a scheduled settlement.
Questions asked:
Is the issuing bank liable to pay (including interest due to delay in payment)?
What is the responsibility of the advising bank and second advising bank in this case?
TA.913rev - Pre-printed text on insurance document
The LC (subject to UCP 600) required (amongst other documents):
“Full set of original Insurance Policy/Certificate in assignable form and endorsed in blank, covering Institute Cargo Clause A for at least 110PCT of invoice value, showing “Claim payable in [Country] in invoice currency” and stating total number of original insurance policy/certificate issued.”
The presented insurance certificate stated in the pre-printed text:
“Claims must be advised with 3 months from the date of discovery of loss/damage.”
The presentation was refused citing the following discrepancy:
“Insurance Cert: showing ‘Claims must be advised within 3 months from the date of discovery of loss/damage’”
The main question asked is if the statement in the insurance document equate to an expiry date for the presentation of any claim?
TA.914rev - Injunction against the counter guarantor
A counter-guarantee was issued by a bank in Country K (the Counter-guarantor), for the amount of EUR 155,000.00 in favour of Bank B in Country I (the Guarantor) requesting same to issue a Warranty Guarantee in favour of a Country I beneficiary.
According to the instructions in the counter-guarantee, the Warranty Guarantee was issued subject to URDG 758. The counter-guarantee did not mention the URDG 758 as the applicable rules. Rather it stated that it was subject to Country I law, with place of jurisdiction the Court of City M, Country I.
Subsequently, the Guarantor received a complying claim, and made a claim under the counter-guarantee.
The Counter-guarantor advised the Guarantor that the applicant had presented a request to the local Court of City U in Country K, for a precautionary order to suspend the payment of the amount claimed under the counter-guarantee, pending a judgment from the same Court.
Questions asked
Does URDG 758 apply to the Counter-guarantee?
Was the refusal of payment by the Counter-guarantor unfounded?
Did the Counter-guarantor respect the URDG 758 article 20 and sub-articles 24 (d) and (e).
Did the Counter-guarantor act ”unlawful” in awaiting the Court decision?
Reviews of the new ICC Opinions, duly linked to relevant articles, paragraphs and topics, are available in lcviews premium.