The International Chamber of Commerce (ICC) has published a compendium comprising a set of four updated guidance papers on trade finance providing best practices on the usage of documentary credits and compliance with ICC banking rules.

The compendium contains guidance for trade finance practitioners on requirements in four papers, covering: on board notation; the principle of strict compliance; use of drafts under documentary credits, and simple documentary credit format.

Notation and compliance

The correct interpretation and application of the UCP 600 rules in relation to on board notations for bills of lading, sea waybills and charter party bills of lading, and for multimodal or combined transport documents, where the first part of the carriage is by sea is outlined in the first paper.

The second aims to clarify the meaning of strict compliance with evidence supported by relevant ICC opinions and case studies.

Drafts and simple credits

The guidance paper focused on the best practices around the use of a draft outlining past and current usage of drafts in relation to documentary credits recognises that a draft is optional for negotiation to occur under a documentary credit by negotiation. But it emphasises that drafts serve no useful commercial purpose for credits available at sight.

The final paper looks at how the simple documentary credit is a value-added option in well-established relationships between an applicant and a beneficiary, and provides references to best practices to achieve a straightforward, uncomplicated documentary credit format.

Further details of, and a link to download the ICC's Set of Guidance Papers on Recommended Principles and Usages around UCP 600, can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.