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.
In a high profile case involving standby letters of credit issued in connection with aircraft leases to Russian airlines and
UCP600 interpretation challenges arise as banks often misconstrue article purposes. Beneficiaries risk losing payment guarantees due to misinterpretation during credit-complying presentations
When it comes to interpretation of UCP600 articles, one of the biggest issues is banks’ misunderstanding of the key purpose of various articles and beneficiaries putting themselves in positions where they lose their payment guarantee on their failure to make a credit-complying presentation due to misinterpretation.
In this regard, one of the most common dangers for a beneficiary is needlessly losing the protections provided under UCP600 Article 35 which is one of the backbone articles of these practice rules.
A very useful case study for illustrating one of the basic protections UCP600 provides is addressed in ICC Official Opinion TA926rev (2022).
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.
UCP Revision – Hot Topics from Practitioners! DCW is pleased to present the next instalment of its discussion series where experienced
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