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ICC Banking Commission London Technical Meeting - Comment summary and proposed changes to ICC Draft Opinions

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1516 1 aug_2016
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ICC Banking Commission London Technical Meeting - Comment summary and proposed changes to ICC Draft Opinions

  1. 1. N O V E M B E R 2 0 1 7 I C C B A N K I N G C O M M I S S I O N L O N D O N 1 Comment summary and proposed changes to ICC Draft Opinions T E C H N I C A L A D V I S O R S : G L E N N R A N S I E R / K I M S I N D B E R G S E N I O R T E C H N I C A L A D V I S O R : D A V I D M E Y N E L L E D I T O R : G A R Y C O L L Y E R
  2. 2. Summary Opinions 2 1 draft opinion re-submitted: TA865 8 new draft opinions to review: TA870-873, TA875-TA878 TA874 withdrawn TA879 has been postponed until the Miami meeting in April 2018 Comments received from 31 NC’s: Australia, Austria, Belgium, Canada, China, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, India, Iran, Israel, Italy, Japan, Netherlands, Norway, Portugal, Qatar, Russia, Singapore, Sweden, Switzerland, Taipei, Thailand, Turkey, Ukraine, UK, U.S.
  3. 3. ICC Official Opinion Handling Procedure and Terms of Reference, Section 4 (g): 3 An ICC NC wishing to address any comments relating to a Draft Opinion at a Banking Commission meeting must designate one representative to outline any viewpoint(s) of that ICC NC. The representative of an ICC NC may only provide further comment once all National Committees with a viewpoint have had an opportunity to speak, unless requested by another ICC NC or by a Technical Adviser to provide further clarification. Depending on applicable expertise, the country representative may be changed for each individual query, but will still be restricted to just one.
  4. 4. TA865 – Re-cap 4 Query: Copy of Customs Export Declaration The amendment permitted an original or copy of the declaration. 31 NC’s agree with conclusion (15 with added comments)
  5. 5. TA865 – Comments 5 Note to National Committees: It has been agreed with the initiating NC that this query will not solve the wider issue of more generic electronically generated documents. As such, this issue has been referred to the recently formed Digitalisation Working Group. The aim will be to create more clarity and guidelines with regard to the acceptance of electronically generated documents with means of authentication being a bar code, a website URL, QR codes and the like. • Inclusion of ‘MRN’ bar code. • Delete the explanation of the components of the MRN barcode. • Document checkers do not have to be familiar with each and every method of authentication used by corporations/organisations/etc. all over the world. • Place more stress on the fact that the credit allowed a copy. • Delete 1st and 2nd paragraphs as they relate to conventional signatures.
  6. 6. TA865 – Suggested Changes 1/2 6 Changes in Analysis Penultimate paragraph to read: ‘The inclusion of an MRN bar code will be considered as an electronic form of authentication.’
  7. 7. TA865 – Suggested Changes 2/2 7 Changes in Conclusion None
  8. 8. TA870 – Re-cap 8 Query: Discrepancies in documents 31 NC’s agree with conclusion (12 with added comments)
  9. 9. TA870 – Comments 9 • Final two sentences of analysis 4th paragraph are redundant. • Rephrase quotations of confirming bank. • Issuing and confirming banks are obligated to honour. • Analysis only refers to ISBP 745 paragraph A21 sub (e) and completely ignores sub (a). • A query that appears to evidence how a little more familiarity with the published opinions would avoid situations of misunderstandings with pretense data conflicts in a presentation.
  10. 10. TA870 – Suggested Changes 1/2 10 Changes in Analysis Amend 3rd paragraph to read: “The credit is clearly available by deferred payment at 30 days from bill of lading date and the issuing and confirming banks is are obligated to honour only in accordance with the payment terms and conditions of the credit.” Amend 4th paragraph to read: “Any other Other commercial aspects unique to a beneficiary’s industry, or their document preparation, and their internal needs do may not necessarily make a document discrepant. However, a beneficiary should consider avoiding excessive detail when preparing its documents to avoid creating unnecessary confusion.” Amend 6th paragraph, 4th line, to delete “this seems to be the case in that”
  11. 11. TA870 – Suggested Changes 2/2 11 Changes in Analysis Last paragraph of Analysis to read “… ISBP 745 paragraph A21 (a) states that where the language of the documents is stated in the credit (in this case English), the data required by the credit or UCP 600 is to be in that language, and paragraph A21 (e) ….” Changes in Conclusion None
  12. 12. TA871 – Re-cap 12 Query: Calculation of maturity date 31 NC’s agree with conclusion (13 with added comments)
  13. 13. TA871 – Comments 13 • UCP 600 sub-article 7 (a) (iv) applies. • Only ISBP 745 paragraph B5 (b) (ii) applies. • ISBP 745 paragraph B5 (b) does not apply. • Based on ISBP 745 paragraph B12 (a) (iii), the issuing bank is the drawee bank because the nominated bank did not accept their nomination. • Suggested that the Analysis is enhanced to suggest that it is good practice for nominated banks to advise the date when they received the presentation and whether or not discrepancies were noted. • ISBP 745 paragraph B5 (b) (ii) applies to the case described by an analogy. • No mention is made in the analysis whether the date of presentation was noted on the nominating bank’s schedule.
  14. 14. TA871 – Suggested Changes 1/2 14 Changes in Analysis Amend 1st paragraph as follows: “As noted above, the nominated bank did not act upon its nomination at the time of presentation of the documents, despite finding the documents to be compliant and the draft being drawn on it. They did …… for honour. However, the nominated bank did indicate that it was willing to act on its nomination to accept the draft once the issuing bank had provided its acceptance of the documents.”
  15. 15. TA871 – Suggested Changes 2/2 15 Changes in Conclusion None
  16. 16. TA872 – Re-cap 16 Query: Tolerance within a credit 24 NC’s agree with conclusion (6 with added comments) 7 NC’s disagree with conclusion
  17. 17. TA872 – Comments 17 • Notwithstanding the tolerance of 10% refers to the total quantity only, this does not automatically imply that the quantity of individual items may be unlimited. • Previous opinions R238 and R688 do not apply due to the word ‘total’. • Previous opinions R238 and R688 do apply with regard to partial delivery. • Poorly drafted credit. • One line item has been shipped in excess of 110% quantity and shipping 0.55% more over 50+5 MTs is a discrepancy. • We maintain and strongly recommend applying the same tolerances for individual lots/sizes as defined for total amounts/quantities unless expressly specified otherwise. • The word “total” is not solely enough to infer the tolerance stated in the credit is only applicable to the total quantity.
  18. 18. TA872 – Suggested Changes 1/2 18 Changes in Analysis None
  19. 19. TA872 – Suggested Changes 2/2 19 Changes in Conclusion None
  20. 20. TA873 – Re-cap 20 Query: Inconsistent goods description and missing Incoterms 29 NC’s agree with conclusion (8 with added comments) 1 NC disagrees with 2nd issue 1 NC disagrees
  21. 21. TA873 – Comments 21 • Delete reference to ‘Bratislava’. • Under ‘refusal notice’, condition not acceptable to beneficiary. • Discrepancy notice incomplete and not precise enough. • ICC Publication N°. 680, states about article 16 that “The (refusal) list must be complete and be specific as to the reason each is considered to be a discrepancy. Discrepancies such as “invoice not as per LC” or “conflicting data between documents” would not be considered to be specific reasons for refusal.” • We find question 2 to be ambiguous. • Not enough indication that the issuing bank intended to modify UCP 600.
  22. 22. TA873 – Suggested Changes 1/2 22 Changes in Analysis In query and analysis, change ‘DAP Bratislava’ to ‘DAP [Place B]’. Refusal notice, 2nd paragraph, final sentence, amend to: ‘Should this particular condition not have been acceptable to the advising bank beneficiary, a suitable amendment should have been obtained.’ Refusal notice, 3rd paragraph, 2nd line, amend to read “… listed each discrepancy which could be related to the description of goods appearing in field 45A of the MT700, and stated …”
  23. 23. TA873 – Suggested Changes 2/2 23 Changes in Conclusion None
  24. 24. TA874 – Re-cap 24 Query: WITHDRAWN
  25. 25. TA875 – Re-cap 25 Query: Company designation and mathematical calculations 27 NC’s agree with conclusion (12 with added comments) 2 NC’s disagree with 1st discrepancy and agree with 2nd discrepancy 1 NC agrees with 1st discrepancy and disagrees with 2nd discrepancy 1 NC disagrees
  26. 26. TA875 – Comments 26 • For a document checker, Company SA-NV is different from Company NV. • Not necessarily common knowledge that a country is multilingual and that abbreviations mean legally the same. • Replace ‘company designation’ with ‘company legal form’. • ISBP 745 paragraph A22 is vague as to whether banks are prohibited to use mathematical calculation. • After ‘both designations have the same meaning’, add ‘according to official records available in that country’. • Opinion R687 is directly applicable to the first alleged discrepancy. • It is the mistake of the beneficiary. • It is acceptable only if the document shows “Company NV” in one language and Company SA in another language. • Delete paragraph regarding previous ISBP.
  27. 27. TA875 – Suggested Changes 1/2 27 Changes in Analysis 2nd paragraph, 1st & 2nd sentence, change ‘company designation’ to ‘company legal form’. 2nd paragraph, 3rd sentence, change to: ‘As is mentioned in the query, NV is a reference to the company’s legal form in Dutch language and SA is a reference to the same legal form in French language’. 3rd paragraph, change ‘company designation’ to ‘company legal form’. 3rd paragraph, change ‘both designations’ to ‘both legal forms’. 4th paragraph, at the end add “as required by UCP 600 sub-article 18 (a) (i).”
  28. 28. TA875 – Suggested Changes 2/2 28 Changes in Analysis Last line of penultimate paragraph to read: ‘As such, the rounding up or down of individual line items or an invoice value is acceptable.’ Changes in Conclusion None
  29. 29. TA876 – Re-cap 29 Query: Credit number on documents 31 NC’s agree with conclusion (6 with added comments)
  30. 30. TA876 – Comments 30 • Delete final paragraph of analysis. • By drawing reference and inspiration from earlier ‘legally untested and untried’ opinions, we are attempting to endorse a probable incorrect earlier opinion.
  31. 31. TA876 – Suggested Changes 1/2 31 Changes in Analysis None
  32. 32. TA876 – Suggested Changes 2/2 32 Changes in Conclusion None
  33. 33. TA877 – Re-cap 33 Query: Port of discharge differs 30 NC’s agree with conclusion (4 with added comments) 1 NC disagrees
  34. 34. TA877 – Comments 34 • Add that as the bill of lading indicates two different port of discharge and that those are in conflict (two different locations), the bill of lading is discrepant based on UCP 600 sub-article 14 (d). • A statement made on the B/L will be binding and addresses the required purpose of the credit term.
  35. 35. TA877 – Suggested Changes 1/2 35 Changes in Analysis None
  36. 36. TA877 – Suggested Changes 2/2 36 Changes in Conclusion None
  37. 37. TA878 – Re-cap 37 Query: Clarification regarding notice of refusal 31 NC’s agree with conclusion (10 with added comments)
  38. 38. TA878 – Comments 38 Note to National Committees: Although not clear from the pdf version, ‘emphasis added’ in the opening paragraph of the analysis refers to ‘Banks are in no way concerned with or bound by such contract, even if any reference whatsoever to it is included in the credit’, and in 3rd paragraph to ‘basis of the documents alone’. • 5th paragraph of analysis should read ‘failing to indicate’. • Query does not ask specific questions. • Issuing bank takes the risk for poorly drafted credit terms. • Issuing bank must honour the presentation. • Bad banking practice for which an amendment should be sought. • Add to end of 2nd conclusion that sub-article 16 (f) is applicable.
  39. 39. TA878 – Suggested Changes 1/2 39 Changes in Analysis 5th paragraph, change ‘indicating’ to ‘failing to indicate’.
  40. 40. TA878 – Suggested Changes 2/2 40 Changes in Conclusion Item 2, add at the end “and UCP 600 sub-article 16 (f) is applicable.”

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