Sanctions clauses that are wisely or imprudently constructed continue to be inserted into trade finance instruments and may heavily impact the legal rights and transactional obligations of involved parties.
Various articles from the June 2024 edition of DCW caught the attention of ICC Banking Commission Senior Technical Advisor Dave Meynell who offers the following comments.
Baltimore’s Bridge Collapse: Force Majeure Event (or Not)?
At 1:29 AM on 26 March 2024, the 300-meter container vessel Dali lost power as it was departing from Baltimore (Maryland) harbor. Does this constitute a force majeure event?
At 1:29 AM on 26 March 2024, the 300-meter container vessel Dali lost power as it was departing from Baltimore (Maryland) harbor. The vessel was reportedly traveling at 8 knots and without power lost steerage. It directly hit a main concrete column of the Francis Scott Key Bridge (Key Bridge) which caused the highway span of 366 meters with a vertical clearance of 56 meters to immediately and completely collapse. An estimated 4,000 tons of debris fell onto the bow of the Dali with thousands of additional tons into the Fort McHenry Channel which is the only waterway that ships can enter and exit the Port of Baltimore. The depth of the channel is 15.2 meters and this incident has effectively closed the Port of Baltimore to major shipping. The forecasted reopening of the channel is at the end of May 2024. There is no estimate as yet on the time to replace the bridge that required five years to build. There are six cargo ships currently in the Port plus five gigantic Navy reserve transport and troop-carrying vessels. In addition there are two cruise ships that cannot return. Most tragically six highway workers who were on the bridge lost their lives.
Baltimore's Key Bridge before collapse on 26 March 2024
The Port of Baltimore is a major US East Coast port that is the ninth largest for foreign cargo in USD value. It is first in the United States for volumes of autos, light trucks, roll/on roll/off heavy farm and construction equipment, sugar and gypsum. In 2023, 19 million short tons of coal was exported from the Port. On an annual basis, 1.1 million TEUs (20-foot) containers are handled plus nearly 12 million tons of general cargo. The Port of Baltimore has railroad spurs directly into it that cannot be utilized.
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Exploring the steps and considerations for banks to effectively navigate the complexities of true sale unfunded risk participation, identifying product and regulatory nuances, and understanding practical applications through use case scenarios.
Fraud prevention is a crucial pursuit, but is an interim/hybrid solution requiring a beneficiary’s bank to vouch for the beneficiary the answer? Or does it introduce added risks?
ICC TAB 9 points out that there is a risk of documents being presented to more than one bank at the same time, especially under an LC that is freely negotiable, but it stops short of making any recommendations for avoiding this risk. Here’s my suggestion.