BANK'S MANUAL FOR INTERNATIONAL TRADE FINANCE

Bank's Manual for International Trade Finance

Bank's Manual for International Trade Finance

Introduction

The purpose of this paper is to discuss the rewriting of Bank's Manual for International Trade Finance by the Finance Manager of the International Trade Department at Enterprise Bank. This paper prepares an appropriate advice explaining the operation of the UCP 600 since its commencement on 1 July 2007. Numerous changes in principle and construction from the UCP 500 were made.

Uncertainty & Controversies in Changing

Responsibility and accountability that the new UCP imposes on bankers, promotes LC's acceptability and popularity among traders. New UCP makes the advising bank responsible for accurate advice. It makes the bankers responsible for determining complying presentation as per the standard it now elaborates more and clearly for document examination. It makes the banker responsible to honor the presentation if it is determined complying as per the revised standard for document examination(Asch 2001). Kim Christensen rightly says that the new thing in new UCP is more transparency of responsibility and liability. The Transparency facilitates responsibility performance and accountability.

New UCP is now in open air. Now it is open to review by the people outside the ICC world. Now it is in the court of public opinion. Whenever a new UCP comes out of ICC cocoon it faces controversies. It is rightly said UCP will never be perfect because it cannot be perfect because it cannot be made perfect. Unanimous approval of UCP draft does mean UCP is perfect. To repeat or continue the history of controversial UCP, the new UCP too becomes controversial even before it becomes effective. Here the debate is only on one article - article 10 - and only on one word “accurately” in article 10b. Jia Hao's sharp eyes notice the word “accurately” and his brilliant mind compares UCP 500 and UCP 600 in advising matters to pinpoint that new UCP puts the additional responsibility of “accurately”, which UCP 500 did not. UCP 500 talks about only the task of “apparent authenticity”. UCP 600 repeats this task but in addition also says “accurately reflects” (Berry 2004). What's accuracy? How to determine “accuracy”? Who will determine accuracy? What's the position of the advising where the advice is determined or adjudicated “inaccurate”? The new UCP does not tell all this. The word ''accurately” is fountainhead of queries, a hotbed of controversies. May be the new UCP expects us to use “common sense” to self-answer the questions, to self-understand “accurately”. “Accurately” is a new banker's responsibility, which bankers need to understand clearly and completely. They can understand if they come together to understand each other's viewpoints. And, LC VIEWS attempts to bring them together to use their common sense for common understanding of “accurately” (Bermingham 2005).

Nature & Extent of the Change

In an official opinion ICC concluded that “UCP Article 7, while addressing the advice of a credit and its authenticity, does not address the accuracy of an advice; however, accuracy may be addressed by local ...