Further Comments to UCP Revision

Further Comments to UCP Revision
- June 2006 Draft

Disclaimer

The names of the parties, as well as the data and information in the cases stated below, have been sanitized in order to protect the identity of the parties involved. The complexities of the cases have also been simplified to facilitate easy understanding of the key issues involved.
Our expert's opinions do not necessarily reflect the views of the ICC or the ICC Commission on Banking Technique and Practice. No legal imputation should be attached to any of the contents of the cases and no legal responsibility is accepted for any errors, omissions or misleading statements or opinions caused by negligence or otherwise. Our expert's opinions are given for your reference only and you should not rely upon or act on our opinions, of which we are not held liable. You should consult your legal counsel or other experts for their opinions in your specific cases.
No article, opinion, or comment can be reproduced in whole or in part without our express written permission.

18 July 2006

To: The Chair and Members
Canadian Working Party on the
ICC Commission on Banking Technique and Practice

Dear All,
Below are my further comments to UCP Revision June06 Draft.

Line Numbers Comments

166 Add the word "and" after ";".

207 - 208 Sub-article 8 (a) (i) (e) is a duplication of sub-article 8 (a) (ii), both stating the obligation of the confirming bank on negotiation. Suggest to replace sub-article 8 (a) (i) (e) with sub-article 8 (a) (ii).

210 - 213 According to the opinions of ICC Banking Commission, a bank negotiates a draft when it is drawn on another party and discounts a draft when it is drawn on the bank itself. For a confirmed credit, the drafts should be drawn on the confirming bank, and hence the confirming bank cannot negotiate the drafts but can only discount the drafts.
When no drafts are involved, according to the Santander case, the confirming bank cannot negotiate the documents and can only discount the documents since by such action, it has discharged its own payment liabilities as a confirming bank.
We have two solutions before us. The first solution is to replace the word "negotiate" with "discount" in lines 207, 210 - 213 and 215.
If the Draft Group wishes to keep the word "negotiate", the second solution is to re-define "negotiation" to make the confirming bank being able to negotiate a draft drawn on itself or to purchase the documents.

312 The first word "issue" should be "issuing" to comply with grammar rules.

430 "Presentation" should be capitalized.

445 "Determine" should be "determines".

453 "Decide" should be "decides".

543 & 546 In line 543 there is no comma before the word "or" but in line 546 there is a comma before "or".

579 Add "multimodal" before "transport document" for clarity.

607 Reduce two "or"s to one "or".

675 Reduce two "or"s to one "or".

684 Put a comma before "unless" to be consistent with line 557.

981 "Prices" should be "price" to be consistent with other words in this title all in singular number.

1041 - 1042 Reduce two "or"s to one "or".

1169 In sub-article 48 (j) of UCP 500, only for PAYMENT and NEGOTIATION credit, the counter for presentation and expiry can be moved from the place of the first beneficiary to the place of the second beneficiary. For ACCEPTANCE credit, the counter cannot be moved.
Now due to the introduction of "honour", that includes PAYMENT and ACCEPTANCE, the counter for presentation and expiry can also be moved. Please check if this is the original intention of the Drafting Group.

Best regards,
T. O.

<< Back to Initial Comments to this UCP Revision Draft

(416) 298-5881

(416) 292-5535

Line Numbers	Comments
166	Add the word "and" after ";".
207 - 208	Sub-article 8 (a) (i) (e) is a duplication of sub-article 8 (a) (ii), both stating the obligation of the confirming bank on negotiation. Suggest to replace sub-article 8 (a) (i) (e) with sub-article 8 (a) (ii).
210 - 213	According to the opinions of ICC Banking Commission, a bank negotiates a draft when it is drawn on another party and discounts a draft when it is drawn on the bank itself. For a confirmed credit, the drafts should be drawn on the confirming bank, and hence the confirming bank cannot negotiate the drafts but can only discount the drafts. When no drafts are involved, according to the Santander case, the confirming bank cannot negotiate the documents and can only discount the documents since by such action, it has discharged its own payment liabilities as a confirming bank. We have two solutions before us. The first solution is to replace the word "negotiate" with "discount" in lines 207, 210 - 213 and 215. If the Draft Group wishes to keep the word "negotiate", the second solution is to re-define "negotiation" to make the confirming bank being able to negotiate a draft drawn on itself or to purchase the documents.
312	The first word "issue" should be "issuing" to comply with grammar rules.
430	"Presentation" should be capitalized.
445	"Determine" should be "determines".
453	"Decide" should be "decides".
543 & 546	In line 543 there is no comma before the word "or" but in line 546 there is a comma before "or".
579	Add "multimodal" before "transport document" for clarity.
607	Reduce two "or"s to one "or".
675	Reduce two "or"s to one "or".
684	Put a comma before "unless" to be consistent with line 557.
981	"Prices" should be "price" to be consistent with other words in this title all in singular number.
1041 - 1042	Reduce two "or"s to one "or".
1169	In sub-article 48 (j) of UCP 500, only for PAYMENT and NEGOTIATION credit, the counter for presentation and expiry can be moved from the place of the first beneficiary to the place of the second beneficiary. For ACCEPTANCE credit, the counter cannot be moved. Now due to the introduction of "honour", that includes PAYMENT and ACCEPTANCE, the counter for presentation and expiry can also be moved. Please check if this is the original intention of the Drafting Group.

Further Comments to UCP Revision- June 2006 Draft

Further Comments to UCP Revision
- June 2006 Draft