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( Source of the document: ICC Digital Library )
Some subjects have a way of appearing over and over in DCInsight, as each writer approaches them from a different angle. One of these is the UK court case of Banco Santander v. Banque Paribas, where the issue was whether a nominated bank could discount its own deferred payment undertakings free of the issuer's fraud defence, that is, whether the nominated bank was a "protected party". The decision caused quite a stir in L/C circles and was, in part, the reason for language in UCP 600 sub-article 12 (b) stating that "By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank."
In this Insight, John Dolan, in Expert commentary, argues that while UCP 600 resolved the authorization issue, it was a false issue. The real issue, in his view, was determining the scope of the exceptions to the fraud defence.
It seems these arguments will go on and on, so don't expect that you've seen the last of Santander in these pages.
In our Insight interview, Georges Affaki, who shepherded the revision of the URDG through the Banking Commission, assesses the impact of the new rules after a year. In his view, the rules have had a considerable success, having already been translated into 21 languages and endorsed by UNCITRAL. Asked to name the most important changes in the URDG, Affaki, without hesitation, points to article 7 that bans non-documentary conditions and to article 24, which is expected to put an end to unfair practices in which presentations were formerly rejected piecemeal.
What's clear is that the new URDG draws heavily on similar provisions in UCP 600. This is all to the good, as it means that different ICC rules are converging, making it easier for the user to move from one to another.
Ron Katz Editor