Deletion of claue 3.14
-
AntoinetteWynn
- Posts: 1
- Joined: Fri Apr 05, 2019 5:16 pm
Deletion of claue 3.14
I've never had a client that requested this be done, but am wondering what the ramifications would be if this was removed, basically who would benefit from its removal.
Deletion of claue 3.14
The ISP drafters easily rejected the UCP force majeure forfeiture rule, which was routinely replaced with something like the ISP rule in UCP governed financial standbys.
ISP Rule 3.14 was drafted as a useful default rule based on the substitute provisions routinely written into financial standbys. The effect of the rule can easily be changed, e.g., by changing 30 to 60 days, to suit the parties needs or preferences in any particular LC.
Deletion of Rule 3.14 without substituting something equally comprehensive is an option for those who like uncertainty in the unlikely event that a bank's closure affects presentation under the LC. For openers, everybody gets to argue whether closure of the relevant bank branch resulted from force majeure or something else and then argue about the consequences.
It's hard to see why an issuer, beneficiary, or nominated person would welcome that kind of uncertainty.
Maybe the applicant can exploit the uncertainty, but then the applicant would be risking having to pay other parties' legal fees if the matters were litigated either between the issuer and the presenter or the the issuer and the applicant.
Regards, Jim Barnes
ISP Rule 3.14 was drafted as a useful default rule based on the substitute provisions routinely written into financial standbys. The effect of the rule can easily be changed, e.g., by changing 30 to 60 days, to suit the parties needs or preferences in any particular LC.
Deletion of Rule 3.14 without substituting something equally comprehensive is an option for those who like uncertainty in the unlikely event that a bank's closure affects presentation under the LC. For openers, everybody gets to argue whether closure of the relevant bank branch resulted from force majeure or something else and then argue about the consequences.
It's hard to see why an issuer, beneficiary, or nominated person would welcome that kind of uncertainty.
Maybe the applicant can exploit the uncertainty, but then the applicant would be risking having to pay other parties' legal fees if the matters were litigated either between the issuer and the presenter or the the issuer and the applicant.
Regards, Jim Barnes
Deletion of claue 3.14
Agree with Jim Barnes. Issuers who delete provisions of the ISP or the UCP and do not replace the provisions are left with a hole in the rules and will likely end up in litigation.