Comments on ICC DOCDEX Rules Based on Draft of 18 March 1996

Comments on ICC DOCDEX Rules
Based on Draft of 18 March 1996.

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April 13, 1996
Mr. Winfried Holzwarth, Counsel
Head of Legal Department, Deutsche Bank AG
Frankfurt,
Germany

Dear Mr. Holzwarth,
ICC Documentary Credit Dispute Expertise Rules Draft 18.3.1996
Further to our comments on the 01.02.1996 draft of captioned Rules, we are pleased to provide further comments below on the 18.3.1996 draft of these Rules which we have received from the ICC Office in Paris by priority airmail:

Article 1.2 Second Line
To replace "and" with "and/or".
Some disputes may only concern the D/C itself and may not necessarily involve the UCP.

Article 1.2 Third Line
To add "appropriate ICC Publication No. of the" in front of "...Uniform Customs and Practice for Documentary Credits (UCP")...".
We must not forget that:

Theoretically, the parties, if they so wish, do have the liberty to make the D/C subject to the UCP 400 even in 1996, when the UCP 500 is in force.

Certain countries, such as the People's Republic of China, have not attested to the UCP. Hence banks in China may not be bound by the UCP or any ICC Publication No. of the UCP.

Certain D/Cs advised by the SWIFT system may not have the stipulation "subject to UCP 500" on its face because according to the SWIFT Manual, this is an implied condition for all D/Cs advised by it. Confusions may sometimes arise if the Advising Bank does not add "subject to UCP 500" manually upon receipt.

It also denotes that the Appointed Experts, whilst providing the DOCDEX Decision, will automatically decide which ICC Publication No. of the UCP will be adopted in solving the dispute, when the parties have disagreements over the ICC Publication No. of the UCP.

Article 2.2.2 First Line
To add "Decision made" immediately after "...DOCDEX...".
To make it clear that the DOCDEX Decision, other than DOCDEX "services", is requested. DOCDEX, whilst standing alone, is not a "decision" or a "service". It is only the name of the group of ICC Experts.

Article 2.2.4 Third Line
To add "appropriate ICC Publication No. of" in front of "... the UCP...".
To cover those situations where the ICC Publication No. of the UCP is not certain, as explained in item 2 above.

Article 2.2.6 Third Line
To add "in accordance with Articles 10.2 and 10.3 of these Rules" after "...in writing to the Respondent."
To specify that:

the "format" of the copy of such Request, i.e., "a complete record thereof".

the "manner" in which it has been sent, i.e., "without delay by teletransmission or other expeditious means".

Article 3.2.2 First Line
To add "Decision made" immediately after "...DOCDEX...".
The reason is the same as that explained in item 3 above.

Article 3.2.3 First Line
To add "counterclaims" after "...claims...".
Some claims from the Respondent may not be made independently, but rather made in response to the claims by the Initiator. Those claims should be termed more accurately as "counterclaims", which may be withdrawn if the claims from the Initiator have been withdrawn, particularly after a successful mediation before a DOCDEX Decision is made.

Article 3.2.3 Second Line
To replace "and" with "and/or".
Some disputes may only concern the D/C and not necessarily the UCP.

Article 3.2.3 Third Line
To add "the appropriate ICC Publication No. of" in front of "...the UCP...".
In practice, there may be arguments amongst the parties as to which ICC Publication No. of the UCP should be applicable to the dispute, particularly when the D/C is advised by the SWIFT system, or during the transit period when a new ICC Publication No. is to be introduced. For example, a D/C issued in 1993 is subject to UCP 400 whereas some traders, and certain bankers too, think that amendments issued in 1994 would be subject to the UCP 500.
By asking the Respondent to specify the applicable ICC Publication No., the Appointed Experts may see the root of the dispute at an early stage. This may save both time and money for the parties.

Article 3.2.5 Fourth Line
To add "in accordance with Article 10.2 and 10.3 of these Rules" after "...if any".
For the same reason as explained in item 5 above.

Article 4.2 First Line
To replace "and" with "and/or".
The Centre may only invite the Initiator or the Respondent, and not necessarily both parties, to submit the Supplement.

Article 4.3.3 Third Line
To add "in accordance with Articles 10.2 and 10.3 of these Rules" after "...in writing to each Initiator and Respondent."
The reason is the same as in item 5 above.

Article 4.7.1 Third Line
To replace "and" with "and/or".
The reason is the same as explained in item 8 above.

Article 4.8 First Line
This article should be reworded as "The Request, the Answer(s) and the Supplement(s) shall be final as received."
Adding "the" in front of "Answer(s)" and "Supplement(s)" makes it more precise the specific documents this sub-Article refers to. This can avoid confusions.
By deleting one of the two "and's" makes it more crispy.
A transferable D/C may involve many Second Beneficiaries. If the Applicant is the Initiator, then there may be many Respondents, who are the Beneficiaries, to provide Answers. In a back-to-back D/C, there may be two Applicants and two Beneficiaries. Hence it is necessary to use "Answer(s)".
Sometimes, it may be necessary for the Centre to request more than one Supplement in a very complicated dispute. Hence "Supplement(s)" takes care of those situations. Otherwise the parties may take the narrow meaning, adhering to the exact wording of this sub-Article and may refuse to submit a second Supplement.

Article 5.1 First Line
To replace "taken" with "selected".
"Select" has the implication of "chosen with reasonable care, after deep thoughts, considering all aspects of the dispute" whereas "taken" may convey the impression of "chosen at random, solely relying on the computer software to do the job".

Article 5.3 Second Line
To add "in accordance with the Articles 10.2 and 10.3 of these Rules" after "...immediately give written notice to the Centre.".
To clarify the manner in which such notice should be given.

Article 5.3 Fifth Line
To replace
"...return the Request and any Answer thereto, including all documents annexed to such Request and any Answer, to the Centre."
with
"...return the Request, the Answer(s) and the Supplement(s), including all documents annexed thereto, to the Centre.".
The purpose is to:

Make this sub-Article more crispy by avoiding repetition of the words "Request" and "Answer".

There may be more than one Answer if a transferable D/C or a back-to-back D/C is involved as explained in item 14 above.

The Supplement(s) should also be returned by the Appointed Expert(s) that has been terminated by the Centre. The word "Supplement" has been left out in the original text of this sub-Article and should be replaced.

Article 5.3 Seventh Line
To add "The Appointed Expert terminated by the Centre must also be bound by the confidentiality requirements in accordance with sub Article 5.5 of these Rules." at the end of this sub-Article.
This is to clarify and emphasize that an Appointed Expert, even after his termination, has the duty to keep everything in strictest confidence.
Another alternative is to add ",even after termination by the Centre," after "An Appointed Expert..." in the first line of sub-Article 5.5.

Article 6.1 First Line
To add "independently" after "...shall render his decision...".
To stress the importance of decision being made in an independent manner, without any conflict of interest or under the influence of any party.

Article 6.2 Second Line
To replace
"...to the rendering of a decision,..."
with
"...for the purpose of rendering of a decision,...".
To clarify the purpose for requesting the Supplement(s).

Article 6.4 Fourth Line
To replace "may" with "must".
To make the intention of this sub-Article more clearly and to limit the power of the parties for such action. "May" implies "free choice". It is too feeble as far as enforceability of this sub-Article is concerned.
If "must" cannot be used due to conflicts with certain local legislations, then "should" can be a better word than "may".

Article 6.4 Fourth Line
To add "...and/or any Official of the Banking Commission who has given consultation to the DOCDEX Decision..." after "...The parties may not seek to have an Appointed Expert...".
Otherwise the parties may seek to have an Official of the Banking Commission who has been involved in the DOCDEX Decision as the witness. This is against the intention of this sub-Article.

Article 6.4 Sixth Line
To add "subpoena" after "...a court of arbitration...".
To avoid the situation where the Appointed Expert be called upon by the writ as a hostile witness.

Article 7.3.1 First Line
To add "and their function in the documentary credit" at the end of this sub-Article.
Otherwise the roles played by the Initiator and the Respondent may not be very clear, particularly in a back-to-back D/C that has been transferred to other second Beneficiaries. Under such circumstance, a party may be an Applicant as well as a Beneficiary, depending on which D/C is involved.

Article 7.4 First Line
"decision" should be "Decision".
This is obviously a typographical error.

Article 7.4 Third Line
To add "who has submitted an Answer" after "...and each Respondent...".
The advice of fate should only be sent to those Respondents who have submitted an Answer. In a transferable D/C there may be more than one Respondent and those Respondents who have not submitted any Answer should not be entitled to the advice of fate.

Article 7.6 Fourth Line
To replace "issued" with "submitted".
To make it consistent with other sub-Articles such as 3.1 and 7.2.3.

Article 9.3 First Line
To add "therefrom" after "...deduct...".
To make the meaning more clear.

Yours faithfully,
T. O. LEE CONSULTANTS LTD.

T. O. Lee
Managing Director
C.C. Mr. Carlos Velez-Rodriguez

(416) 298-5881

(416) 292-5535

Comments on ICC DOCDEX Rules Based on Draft of 18 March 1996.

Comments on ICC DOCDEX Rules
Based on Draft of 18 March 1996.