Documentary Compliance in a Recession

Thu, 04/08/2010 - 21:45 admin

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Standard for Examination of Documents

Fri, 02/27/2009 - 09:29 admin

Since coming into existence of the ICC guidelines regarding the examination of documents, the main duty of the LC bank consists of determining whether the documents appear on their face to comply with the LC provisions. The obligation to strictly follow the issuer's instructions is a consequence of the credit being an instrument of documentary payment.

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North Carolina Business Court accpets forum clause for issuing bank
Fri, 02/20/2009 - 08:30 admin

The North Carolina Business Court ruled yesterday onteh issue when a North Carolina Court should apply the law of a foreign country and concluded that it would apply North Carolina law to a forum selection clause requiring the parties to litigate their dispute in the Commercial Court of Paris, under French law.

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Use of a reimbursing bank and the URR 725

Thu, 02/19/2009 - 11:19 admin

Article 13 UCP 600 was drafted in order to conform with the URR Uniform Rules for Bank-to-Bank Reimbursement (URR 525). The URR 525 were in need of reform and have been replaced by the URR 725 which entered into effect as of October 1, 2008. This means, that the URR are still separate from the UCP and have to be specficially referenced in order to make them part of the agreement. Unless such a reference exists Article 13 UCP 600 governs the obligations of the banks regarding reimbursement.

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Bank-to-Bank Reimbursement Arrangements

Fri, 02/13/2009 - 15:58 admin

Issuing or confirming bank often use and authorize secondary banks to perform certain task when processing a letter of credit (typically examination of the documents or payment). Issuing and confirming banks are obligated to reimburse a secondary bank for any costs associated with fulfilment of these tasks; furthermore, as a consequence of the obligation to reimburse issuing and confirming bank are obligated to accept documents if the secondary bank has already performed the obligations due under the credit.

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Crisis, What Crisis ?

Thu, 02/12/2009 - 08:12 admin

This pop-cultural reference to Supertramp's 1975 album raises some questions regarding the perception of current events. On the one hand I have the impression that everyone talks about the crisis but the understanding of its causes and consequences is equally limited as Franz Kafka's reaction to Germany's declaration of war against Russia on August 1, 1914: "Germany has declared war on Russia.-Afternoon swimming lessons".

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Nominated bank and prepaymnet (Article 12 UCP 600)

Wed, 02/04/2009 - 14:43 admin

Nomination means that the issuing bank request the help from a secondary bank which in turn does not enter into an obligation to honour or negotiate (unless it expressly agrees to doing so). The task undertaken by the nominated bank typically are the acceptance of drafts or incurring a deferred payment undertaking. Regarding its substance Article 12 a and c UCP 600 are idential with Article 10 c UCP 500. Article 12 c UCP 600 clarifies that a nominated bank is not liable for payment or honour even if it received and examined the documents.

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Teletransmitted and Preadvised Credits and Amendments

Mon, 01/26/2009 - 11:50 admin

Article 11 UCP 600 is identical to Article 11 a and 11c UCP 500. Article 11b UCP 500 had been moved to Article 9 d UCP 600 ("A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.")

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The treatment of Amendments in Article 10 UCP 600

Tue, 01/20/2009 - 16:49 admin

Article 10 a - c UCP 600 repeats with small stylistical modifications the provision of Article 9 d(i) to (ii) UCP 500.

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UCP 600 Article 9: Advising of Credits

Wed, 01/14/2009 - 14:01 admin

Article 9 UCP 600 is a combination of Article 7 and Article 11b UCP 500. Article 9 however emphasizes stronger than before that a bank advises "without any undertaking to honour or negotiate".

Bank Training Guide on Trade Finance now available

Fri, 01/09/2009 - 08:32 admin

Many of us have come to appreciate Peter M, whose posts have answered authoritatively many questions raised in the forum. Peter has disclosed that he is a Senior manager in the Commercial Financial Services section of a major North American Bank and has agreed to share with us his "Trade Finance - A User Guide". letter of credit admin's blog 37 comments Read more

The role of the Confirming Bank under the UCP 600

Mon, 01/05/2009 - 19:27 admin

Joint and Several Liability letter of credit admin's blog 23 comments Read more

The role of the Issuing Bank under the UCP 600

Tue, 12/23/2008 - 17:21 admin

Article 7 UCP 600 provides for the obligations of the issuing bank as did Articles 9 a(i) to (iv) of the UCP 500. The revision was necessary to coordinate Article 7 with Article 2 UCP 600 which defines among others terms like complying presentation, confirmation, credit honour, issuing bank, negotiation, nominated bank, presenter and presentation.

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Who is going to pay for all of this ?

Wed, 12/17/2008 - 10:21 admin

Uncle Sam wants you (r money) . Anyone remember the times when health care reform for 30 billion was too expensive ? Now that the TARP flood gates of 700 billion dollars are being opened (car manufacturers are on the list, porn industry wants some, anybody else out there ?) some US policy makers devise plans to fill the treasury coffers. letter of credit admin's blog 2 comments Read more

Availability, Expiry Date and Place for Presentation; obligations of Issuing and Confirming Bank
Thu, 12/11/2008 - 17:45 admin

A Credit transaction will be substantially determined letter of credit admin's blog 12 comments Read more

Credits v. Contracts; Documents v. Goods, Services or Performance

Mon, 12/08/2008 - 17:43 admin

Article 4 UCP (entitled "Credits v. Contracts") confirms (as did Article 3 UCP 500), that a "A credit by its nature is a separate transaction from the sale or other contract on which it may be based." In this regard there is no change to the UCP 500: a letter of credit is not a contract to the benefit of a third party; under no circumstances can the beneficiary avail itself of the relation between applicant and issuing Bank. letter of credit admin's blog 1 comment Read more

Letters of Credit blamed for collapse of international trade

Mon, 12/01/2008 - 12:09 admin

Letters of Credit blamed for collapse of international trade Several bloggers (see here) claim that the collapse of the Baltic Dry Index (an index of the cost of chartering bulk cargo vessels for goods like ore, cotton, grain, etc.) is the result of the collapse of trade credit based on letters of credit. letter of credit admin's blog Login or register to post comments Read more

A gentle introduction: UCP 600 Article 3: Interpretations

Mon, 11/24/2008 - 15:07 admin

Similar to the definitions of Article 2 UCP 600, Article 3 UCP 600 concentrates all the rules for interpretation in a single article. Whether this leads to the simplification, as the ICC intended, remains to be seen. As with the definitions, the practicioner might not always easily see to which passage to apply these interpretations. letter of credit admin's blog Login or register to post comments Read more

A Gentle Introduction: The definitions: Article 2 UCP 600

Mon, 11/17/2008 - 19:46 admin

a) new organization of the material One of the most important structural changes of the Uniform Customs and Practices consists of the concentration of the definitions in article 2. In the UCP 500 these definitions had been mentioned for each transport document and thus the same text was repeated. The objective of the UCP 600 was to reduce this redundancy. admin's blog 2 comments Read more

Application of the UCP, a gentle introduction to Article 1 UCP 600

Wed, 11/12/2008 - 11:42 admin

The UCP 600 have been upon us for a couple of months, and it seems a good time to review some of the articles in greater detail.

Jobs
Fri, 11/07/2008 - 09:45 admin

The signs of a recession are deepening as the new numbers for unemployment figures in the United States show. For anyone still employed or a job-seeker this means getting prepared and I would like to encourage everyone to post their resumes in our jobs section. Do not include too many personal details, since employers are free to register and search resumes. We have been able to attract employers to post jobs (whereas in the past it was only me searching and posting).

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ICC published new edition of DOCDEX

Wed, 11/05/2008 - 17:11 admin

Several news outlets report that on November 3, 2008, the ICC published its "Collected DOCDEX Decisions 2004-2008" edited by Gary Collyer and Ron Katz. The ebook comprises 40 decisions ranging from from Uniform Customs and Practice for Documentary Credits (UCP 500 and UCP 600), to Uniform Rules on Collections (URC 522) and Demand Guarantees (URDG 458).

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All the things that can go wrong (part one of many)

Wed, 10/29/2008 - 10:03 admin

Exportlaw Blog reports that the Office of Antiboycott Compliance of the Bureau of Industry and Security (BIS) reached a settlement with an exporter who failed to report that in connection with exports of rice to the United Arab Emirates it had been requested in a letter of credit issued by a UAE bank to supply a certificate issued by owner/master or agent stating that the ship is allowed by the Arab authorities to call at Arabian ports. This failure cost the exporter $ 30,000.

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More mixed economic news for LC business

Fri, 10/24/2008 - 09:33 admin

This blog reports that GE has flatly refused to honour an LC until the applicant provide more cash collateral. From the little facts known, it seems that GE prefers to breach its obligations and is waiting to spend money on attorneys. This article reports that Indian banks refuse to deal with lesser known US and European banks.

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Letter of credit fraud

Mon, 10/20/2008 - 10:23 admin

Law and order news Hongkong reports that a 29 and a 37 year old HongKongese set up various shell companies. Then, the pair used forged documents, including invoices and cargo receipts, to defraud nine banks who issued 158 Letters of Credit worth a total of $360 million from June 27, 2006 to June 13, 2007. The punishment: 40 and 48 months of jail time.

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Shipping line intends to file for bankruptcy on economic slump

Thu, 10/16/2008 - 09:54 admin

The markets switched from irrational exuberance to irrational pessimism as amply evidenced by the decline of the major stock indices. We have reported on banks not granting credits despite the applicant demonstrationg sufficient collateral. This blog reports on the Baltic index, a measure of commodities-shipping costs, plunging 82 % in the last year and, as a consequence, a Swedish shipping line filing for bankruptcy.

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Job searching in the recession

Tue, 10/14/2008 - 18:57 admin

A friend of mine, PhD in economics from Berkeley, Master in economics from Harvard received the following email: Dear ...., We currently have an opening with one of our clients that we are trying to fill. I believe you might be a terrific match due to your credentials. The previous experiences you have working within the business is exactly what my client is looking for. Above Average Salary with growth incentives. Candidates should be self starters with a desire to grow within their field.

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Financial Crisis and Letters of Credits

Tue, 10/07/2008 - 18:22 admin

Everybody talks about the crisis: shares loose value fast and banks are unwilling to lend to each other and are ever more reluctant to lend at all. For the LC business I see two developments: 1) The costs for LCs are rising. This website reports of rising costs and fees for letters of credit in the oil trade. These higher costs simply reflect a perceived higher credit risk.

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Letters of Credit and Bankruptcy

Fri, 10/03/2008 - 17:03 admin

The treatment of creditors of a bankrupt bank does not offer any surprises: The beneficiary is going to be offered the treatment as an unsecured creditor. I do not qualify this as the good news, BUT, the United States legal system, with its sense for individual justice and (thus) unpredictability treats L/Cs issued by a bankrupt applicant sometimes in surprising ways.

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New Uniform Customs and Practices for Letters of Credit, UCP 600
New Uniform Customs and Practices for Letters of Credit, UCP 600 Attorney at Law Dr. Jens Nielsen, Hamburg, Germany The never ending attempt to adapt to new technologies and the simplification of rules.

Regards, Sanjay Sudhakaran