Global Trade Advisory

The International Chamber of Commerce’s (ICC) Commission on Banking Technique and Practice and the International Forfaiting Association (IFA) have agreed to jointly undertake the task of writing rules for Forfaiting. 

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“Negotiation” may be the most abused, misused and misunderstood word in the letter of credit business. In this regard, I am speaking only as an L/C practitioner – I am not a lawyer and not attempting to deal with the term in a legal sense or with the “holder in due course” doctrine. UCP 500 sub-article 10(b)(ii) states: “Negotiation means the giving of value for Draft(s) and/or document(s) by the bank authorised to negotiate. Mere examination of the documents without giving of value does not constitute a negotiation.”  Read the rest of this entry »

ICC Austria May 2009

Donald Smith will be speaking on Fraud in Bank Guarantees, the UNCITRAL Convention on Independent Guarantees and Standby Letters of Credit, and Standby LC vs Commercial Credits.   ICC Austria International Trade Finance Conference Week,  May 11 – 15, 2009. 

 www.ecla.org/documents/activities/ECLA.ICC.pdf

Introduction

I recall an eye-opening experience as I was thumbing through an article in an older copy of the National Geographic Magazine recently, a picture of some clay tablets captioned something to the effect: “used by merchant traders in the Phoenician days.”

I thought, “WOW! Letters of Credit! They’ll be around forever.”

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In July 2007, the latest revision to the Uniform Customs and Practice for Documentary Credits (UCP 600) took effect. UCP 600 is a set of rules on the issuance and use of letters of credit (LC). It is estimated that up to 15 percent of global trade utilizes LCs, totaling over a trillion U.S. dollars annually. The techniques and methods for handling LCs in International trade finance have been standardized by the International Chamber of Commerce (ICC). After a full year, what has been the experience of global trade pros and their bankers with UCP 600? This article summarizes 10 key lessons that will be expanded on in upcoming articles for MIE readers. (See Part 2 for lessons 5-10) Read the rest of this entry »

6) What lawyers and bankers do not know helps lawyers and hurts banks.

Recent comments from the ICC Transport Commission and ICC Commercial Law and Practice (CLP) Commission regarding whether a party was signing as the carrier or as an agent for the carrier provide a good example. LC bankers in the banking commission were undecided and turned to their colleagues in transport and CLP for aid. The resulting feedback on “carrier” and “agent” will likely lead to more confusion and needless litigation. Read the rest of this entry »