With respect to para 186 of the ISBP and Opinions TA576 & 589, do you (yes, you) read these opinions as saying that even ‘if a credit is explicit with regard to risks to be covered’ but there actually ‘are exclusions referenced in the document with respect to those risks’ that are Institute Classification Clause, Cargo ISM Endorsement Clause, Institute Radioactive Contamination, Chemical, Biological, Biochemical and Electromagnetic Weapons Exclusion Clause, Institute Cyber Attack Exclusion Clause or Termination of Transit Clause (Terrorism) the insurance document is NOT discrepant?
Grateful if you will kindly let me know. Thanks in advance.
A typical 'Banking Commission' puzzler
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
A typical 'Banking Commission' puzzler
Hi Jerermy
Okay, I read those as follows:
The scenario is where the credit is explicit to the risks to be covered e.g. "Insurance document covering Institute Cargo Clause (A)"
From that point on it is a question whether the exclusions are DIRECTLY LINKED to the insurance clause.
EXAMPLE:
“Institute Cargo Clause (A) excluding radioactive contamination”
Would NOT be acceptable, while
“Institute Cargo Clause (A)”
“Institute Radioactive contamination exclusion clause"
Would be acceptable!
hmm and best regards
Kim
[edited 3/5/2006 7:29:58 AM]
Okay, I read those as follows:
The scenario is where the credit is explicit to the risks to be covered e.g. "Insurance document covering Institute Cargo Clause (A)"
From that point on it is a question whether the exclusions are DIRECTLY LINKED to the insurance clause.
EXAMPLE:
“Institute Cargo Clause (A) excluding radioactive contamination”
Would NOT be acceptable, while
“Institute Cargo Clause (A)”
“Institute Radioactive contamination exclusion clause"
Would be acceptable!
hmm and best regards
Kim
[edited 3/5/2006 7:29:58 AM]
A typical 'Banking Commission' puzzler
Kim,
Thanks for taking the time to respond & on a Sunday as well!
I certainly agree that that is what these opinions ought to be saying, but I cannot agree that this is what they appear to be saying.
Given the terms of para 186 whether or not an ‘exclusion’ is an insurance industry standard requirement is irrelevant. The sole criterion is if an exclusion of WHATEVER NATURE is ‘referenced in the [insurance] document to ‘explicit … risk to be covered’ stipulated in the credit. TA577 gets this right when it states that:
“where the insurance clauses are stated in the insurance document exactly as required in the credit, but the exclusion clause does not form part of that insurance clause, i.e., WHEN IT IS STATED ELSEWHERE IN THE DOCUMENT, the document would not be discrepant. It is not for a document checker to determine the status of an exclusion clause stated in this manner nor its effect on a stated clause that was required by the credit” [MY EMPHASIS]
Therefore I can only see:
1. the statement in TA576 (which is also -bizarrely- quoted at the end of TA577) that:
“insurance documents showing exclusion clauses such as Institute Classification Clause … are now INSURANCE INDUSTRY STANDARD REQUIREMENTS and are acceptable” [my emphasis] and:
2. the statement in TA589 that:
“insurance documents showing exclusion clauses such as Institute Classification Clause … are deemed acceptable UNLESS THE CREDIT SPECIFICALLY STATES OTHERWISE” [my emphasis],
are saying that if an insurance document contains an exclusion that is actually referenced in the insurance document with respect to a risk that a credit is explicit has to be covered but that exclusion is one of those listed in TA576 & 589 the document is NOT discrepant.
Thus, if a credit stipulated the insurance document had to cover ICC(A) and the insurance document presented stated ‘ICC(A) subject to Institute Cyber Attack Exclusion Clause’ it would be acceptable under Opinions TA576 etc even though this conflicts with para 186.
In other words, I believe TA576 & 589 can only be read as directly contradicting para 186. (If any can demonstrate to the contrary I’d be more than happy.) Given the typical quality of ICC opinions this situation would certainly not be unsurprising to me.
Regards, Jeremy
[edited 3/6/2006 10:49:58 AM]
Thanks for taking the time to respond & on a Sunday as well!
I certainly agree that that is what these opinions ought to be saying, but I cannot agree that this is what they appear to be saying.
Given the terms of para 186 whether or not an ‘exclusion’ is an insurance industry standard requirement is irrelevant. The sole criterion is if an exclusion of WHATEVER NATURE is ‘referenced in the [insurance] document to ‘explicit … risk to be covered’ stipulated in the credit. TA577 gets this right when it states that:
“where the insurance clauses are stated in the insurance document exactly as required in the credit, but the exclusion clause does not form part of that insurance clause, i.e., WHEN IT IS STATED ELSEWHERE IN THE DOCUMENT, the document would not be discrepant. It is not for a document checker to determine the status of an exclusion clause stated in this manner nor its effect on a stated clause that was required by the credit” [MY EMPHASIS]
Therefore I can only see:
1. the statement in TA576 (which is also -bizarrely- quoted at the end of TA577) that:
“insurance documents showing exclusion clauses such as Institute Classification Clause … are now INSURANCE INDUSTRY STANDARD REQUIREMENTS and are acceptable” [my emphasis] and:
2. the statement in TA589 that:
“insurance documents showing exclusion clauses such as Institute Classification Clause … are deemed acceptable UNLESS THE CREDIT SPECIFICALLY STATES OTHERWISE” [my emphasis],
are saying that if an insurance document contains an exclusion that is actually referenced in the insurance document with respect to a risk that a credit is explicit has to be covered but that exclusion is one of those listed in TA576 & 589 the document is NOT discrepant.
Thus, if a credit stipulated the insurance document had to cover ICC(A) and the insurance document presented stated ‘ICC(A) subject to Institute Cyber Attack Exclusion Clause’ it would be acceptable under Opinions TA576 etc even though this conflicts with para 186.
In other words, I believe TA576 & 589 can only be read as directly contradicting para 186. (If any can demonstrate to the contrary I’d be more than happy.) Given the typical quality of ICC opinions this situation would certainly not be unsurprising to me.
Regards, Jeremy
[edited 3/6/2006 10:49:58 AM]
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
A typical 'Banking Commission' puzzler
Dear Jeremy,
At some level your ”evaluation” is of course correct. I do not think however that it is absolutely fair.
I think that you have to consider the context of which those opinions as well as ISBP paragraph 186 was written.
The “exclusions” mentioned in opinions TA.576 and TA.589 was introduced into the insurance documents for rather specific reasons – AFTER the introduction of the ISBP.
So what we have is a change in industry practice; which at first glance is violating the wording of paragraph 186 – I doubt however that it is violating the intention of it: Bear in mind that ICC(A) includes a number of “exclusions”.
As I see it there were basically two ways to solve this:
1) to read it “the lawyer way” (no offence indented) – which would deem basically every single insurance document discrepant, or
2) to take a “pragmatic” approach – accepting that this is industry practice – thus accepting it.
The banking commission have obviously chosen number 2 – and I really can not find it in me to blame them for it.
Best regards
Kim
At some level your ”evaluation” is of course correct. I do not think however that it is absolutely fair.
I think that you have to consider the context of which those opinions as well as ISBP paragraph 186 was written.
The “exclusions” mentioned in opinions TA.576 and TA.589 was introduced into the insurance documents for rather specific reasons – AFTER the introduction of the ISBP.
So what we have is a change in industry practice; which at first glance is violating the wording of paragraph 186 – I doubt however that it is violating the intention of it: Bear in mind that ICC(A) includes a number of “exclusions”.
As I see it there were basically two ways to solve this:
1) to read it “the lawyer way” (no offence indented) – which would deem basically every single insurance document discrepant, or
2) to take a “pragmatic” approach – accepting that this is industry practice – thus accepting it.
The banking commission have obviously chosen number 2 – and I really can not find it in me to blame them for it.
Best regards
Kim
A typical 'Banking Commission' puzzler
Kim,
1. If I understand correctly, you now agree with my analysis that paragraph 186 -at least in the Banking Commission’s view- no longer applies in all circumstances.
2. If we do have a change in banking industry practice, it seems to me:
A. seriously remiss of the Commission not to highlight expressly this in TA576.
B. extremely odd that such a dramatic change could occur in the space of just two years (the ISBP were approved at the Oct 2002 ‘Banking Commission’ meeting and TA576 was approved at the October 2004 meeting).
C. these opinions are a recipe for dispute as:
I. certain beneficiaries / banks may claim other ‘exclusions’ are now insurance industry standard.
II. many banks (or applicants) may continue to adhere para 186 in its ‘unamended’ form.
3. I do not agree that what ought to have been the correct approach would be the ‘lawyers’ way’. Rather it would have been the ‘keep document examination as certain and risk free as possible way’.
4. Unlike you Kim, I easily find it within me to blame the ‘Banking Commission’ for the approach it has taken in these, and many other, opinions. To me this is yet another illustration of the profound flaws in the ‘opinion’ process.
Once again, your input is appreciated. See you in Prague?
Regards, Jeremy
[edited 3/6/2006 12:39:13 PM]
1. If I understand correctly, you now agree with my analysis that paragraph 186 -at least in the Banking Commission’s view- no longer applies in all circumstances.
2. If we do have a change in banking industry practice, it seems to me:
A. seriously remiss of the Commission not to highlight expressly this in TA576.
B. extremely odd that such a dramatic change could occur in the space of just two years (the ISBP were approved at the Oct 2002 ‘Banking Commission’ meeting and TA576 was approved at the October 2004 meeting).
C. these opinions are a recipe for dispute as:
I. certain beneficiaries / banks may claim other ‘exclusions’ are now insurance industry standard.
II. many banks (or applicants) may continue to adhere para 186 in its ‘unamended’ form.
3. I do not agree that what ought to have been the correct approach would be the ‘lawyers’ way’. Rather it would have been the ‘keep document examination as certain and risk free as possible way’.
4. Unlike you Kim, I easily find it within me to blame the ‘Banking Commission’ for the approach it has taken in these, and many other, opinions. To me this is yet another illustration of the profound flaws in the ‘opinion’ process.
Once again, your input is appreciated. See you in Prague?
Regards, Jeremy
[edited 3/6/2006 12:39:13 PM]
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KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
A typical 'Banking Commission' puzzler
Dear Jeremy,
I accept your points made – as well as the challenges these opinions create. I am merely saying that this seems to be a choice between two evils. One may agree or disagree – but never the less as choice was made.
The good thing is however this it seems that this will be “fixed” in the UCP revision.
And yes – I will be in Prague … so we can continue …
Best regards
Kim
I accept your points made – as well as the challenges these opinions create. I am merely saying that this seems to be a choice between two evils. One may agree or disagree – but never the less as choice was made.
The good thing is however this it seems that this will be “fixed” in the UCP revision.
And yes – I will be in Prague … so we can continue …
Best regards
Kim