Risk Management on Transferable and Back-to-Back L/C

(T. O. International Trade Seminars)

Introduction
In the commodities trade, to minimise exposures on credit facilities and cash flow, letters of credit are often transferred amongst the brokers or middlemen, or back-to-back letters of credit are issued. However, the side effects are a host of risks, for example, market risk, country risk, discrepancies, terms modification risk, document substitution, amendments, multi-parties transfers, different legislations, jurisdiction, so on and so forth. Mr. T. O. Lee, a Member of the ICC Consulting Group on UCP 500 Revision from Toronto, is invited to share with us his experience gained from resolving disputes on transferable and back-to-back credits, highlighting the risks exposed to the issuing bank, confirming bank, transferring bank and negotiating bank, as well as to the applicant and the first and second beneficiaries. His analysis and recommendations are of immense value to banks, commodities brokers and other players to avoid disputes and financial losses in these trouble-laden transactions.

Target Audience
Bank officers, risk managers, commodities brokers, importers, exporters, finance controllers, auditors, trainers and lawyers.

Contents Outline

Analytical comparison of transferable L/C, back-to-back L/C and assignment of proceeds.
Risks in transferable L/C: unreliable second beneficiaries, discrepancies, document substitution, amendments, multi-parties transfers, authorisation, countries, markets, legislations, jurisdiction and assignment in transferable credits.
How to eliminate the transferable L/C risks for the banks?
Risk management for the applicant in transferable L/C.
Risk management for the first beneficiary in transferable L/C.
Risk management for the second beneficiary in transferable L/C.
Specimens of transfer instructions, letter of transfer, transferring bank's endorsements on back of credit adopted by international banks in Manhattan, New York.
The right of the second beneficiary in a transferable credit and in a baby credit.
Risk management for back-to-back credits.
Right procedures in assignment of proceeds.
Case studies.
Appendices.

Duration
One-day workshop

Speaker
Mr. T. O. Lee FAE, MCIArb, MITD
Mr. T. O. Lee is a world-class letter of credit expert representing Canada in various ICC Commissions, such as Banking, International Commercial Practice (Incoterms 2000) Electronic Trade, Mediation and Arbitration. He is invited by ICC to comment on the drafts of banking and trading rules, such as the UCP 500 Position Papers, URC 522, URR 525, DOCDEX, ISP 98, eUCP, Transferable Credits & UCP 500, Discrepant Documents, Waiver and Notice, International Standard Banking Practice (ISBP 645) and ICC Banking Commission Official Opinions. He is a Member of the UCP 500 Revision Consulting Group and is actively involved in ICC Commercial Crime Bureau investigations. He is a member of the Editorial Board of the ICC Publication "Documentary Credits Insight" (1994 -1999) and a Technical Adviser of "L/C Monitor" in Canada. Mr. Lee is a member of the Canadian Working Party on the ICC Commission on Banking Technique and Practice administered by the Canadian Bankers Association. Being an Accredited Arbitrator nominated by the International Center for Letters of Credit Arbitration, Inc. USA, he is also a Fellow and an Accredited Expert (Letter of Credit) of the Academy of Experts, Gray's Inn, London, a Member of the Chartered Institute of Arbitrators, England, a Member of the United Nations International Multimodal Transportation Association, Geneva and a Member of the Institute of Training and Development, England.

He was a columnist in the Lloyd's of London Press "Maritime Asia/Intermodal Asia" magazine during the period of June 1993 to March 1995. He has been contributing since August 1993, a Friday column in the "Hong Kong Economic Journal". He is a co-author with Eric Ellen in ICC Publication No. 548 "Special Report on China Trade - The Risk Factor". He chairs public seminars in China, Hong Kong, other ASEAN and Middle East Countries and is a panelist in North America, providing in-house training and consultancy services to Fortune 500 corporations and banks globally. His professional workshops are known for the 5 "i's" - interesting, informative, interactive, innovative, and inspiring. He also provides expert witness services to international legal firms in letter of credit litigations.

Details of Articles he wrote for ICC, Paris, Lloyd's of London and highlights of dispute cases resolved can be viewed in his letter of credit website www.tolee.com.

What Others Have To Say:

"A brief discussion with Mr. Lee will convince you of his expertise on International Trade particularly for his knowledge and experience in maritime chartering, multimodal transport, marine cargo insurance, trade frauds, the China Trade, mediation and arbitration".
Charles del Busto - Chairman of ICC Banking Commission (1990-1996)
"Mr. Lee's presentation is thought provoking and original in its content. It brings to light not only problems with documentary credits but also solutions that you could obtain only from practical experience working in the field. I highly recommend it to both bankers and traders who are serious about letters of credit".
Jacob Katsman - Managing Editor, LC Monitor, Canada
"Most comprehensive information in the handouts, inspiring presentation, professional in every respect, introducing the latest international trade fraud cases with in-depth analysis".
S. C. Kwok - Vice President, Citibank, Hong Kong
"Clear and focused line of thoughts, lively presentation, experienced in handling questions, lots of case studies from the speaker's own work file to be shared with us".
Ding Bo - Director, Zhum Heng Development Ltd., Guangdong Group, Hong Kong

"Handouts are clear, concise and focused, with lots of real life cases to reflect the current trading environment and the important changes in the market place".
Kenneth Y. M. Lee - Senior Consultant, Bank of Communications, Manhattan, New York, USA

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