ICC Digital Library Forum

We have been received LC stating that it is subject to UCP500 and Docdex rules publication no. 577.

If we have disputes with the LC Issuing bank for documents drawn under this LC, are we obliged to go to Docdex for resolution? Can we have other options?

Thanks

ICC DOCDEX applies for disputes related to documentary credits under UCP 500 and URR 525; therefore it is not confined to UCP application only.

DOCDEX decision is not binding on the parties, therefore if the credit did not stipulate otherwise the DOCDEX decision is not an arbitration award.

if a party in the letter of credit goes to DOCDEX the other party (respondent) may refrain from providing an answer to the initiator’s request as per Art. 3-
3.2.3 "a statement of the respondent formally requesting a DOCDEX decision in accordance with the ICC Documentary Credit Dispute Expertise Rules"

3.3 "If the Respondent does not provide a statement pursuant to Art. 3.2.3, then the final DOCDEX decision will not be made available to him"

I take on board the contents of the above posting. Also, while I do not have any great expertise in Docdex, I nonetheless believe that I understand its principles. However, I regret it is not clear to me whether or not it is being suggested above that (at least initially) the nominated and issuing banks would be obliged to use Docdex, in the event of a dispute between them, given the credit terms.

My impression (possibly erroneous) is that if a credit is stated to be subject to Docdex, i.e. it is incorporated into the contract between the nominated bank and the issuing bank, then the nominated bank and issuing bank are at the very least obliged first to go through the Docdex process before resorting to any other action. Otherwise, what is the point of its incorporation in the credit?

In the case of my own bank, we refuse to handle any credit that is stated to be subject to Docdex, as we wish to be certain of having the option of pursuing disputes by any means we see fit from the outset.

[edited 10/30/01 2:26:35 PM: refining posting]

My posting was intended to shed light on certain articles of DOCDEX. It should be clear that DOCDEX is not binding on parties nor it oblige them to resort to it. Therefore the point is again why they are included in the credit, GOD NOWS?

IF it comes to me i would specifically request an amendment to allow a binding decision and obligation to resort to these rules or delete this stipulation from the credit or perhaps some other second way out of this unclear instructions.

We have lots of experience in DOCDEX, being a "salesman" of the DOCDEX. We give at least one case to ICC although no commission is given.

DOCDEX RESOLUTION IS DIFFERENT FROM DOCDEX DECISION

If the LC says it is subject to UCP 500 and DOCDEX, then the DOCDEX must be used to resolve the disputes. But whether the DOCDEX Decison is binding or not, it is another cup of tea, unless the L/C ALSO says that the DOCDEX Decision is binding. So parties should not confuse "DOCDEX resolution" with "binding power of DOCDEX Decision".

DOCDEX is also Greek to a lot of DC practitioners as nobody would study the life buoy until the ship is sinking.

ICC DOES NOT ENCOURAGE TO PUT DOCDEX IN DC

A word of caution here. The ICC Banking Commission also does not recommend to put DOCDEX into a DC. Why? Because for some disputes, DOCDEX may not have jurisdiction, for example, frauds, or where verbal evidences are important (DOCDEX does not deal with verbual evidences, only dealing with documentary evidences). One never knows whether the three Batmen (doing good things but with their identities hidden) are strict compliance guys or substantial compliance guys.

DOCEX CAN HELP BUT IT CAN KILL TOO

So it is dangerous to put DOCDEX in DC. If there are frauds, and according to the DC, parties must go to ICC DOCDEX for resolution. Then parties would lose at least USD5,000 (minimum charge) without getting a resolution. Maybe there is refund, we don't know?

Therefore if the issuing bank wants to come back to arbitration, litigation or other forms of dispute resolution, the Applicant, Beneficiary or the Nominated Bank may say: "Hey, the DC says DOCDEX and if you change your mind, you have to get our agreement first and it is not going to be given". Then everything would be stuck there.

As we participate in drafting the DOCDEX Rules we know the landmines there.

Fasten your seat belt for those banks who love to put DOCDEX in the DC, an action not recommended by ICC.

BETTER TAKE THE "WAIT AND SEE" APPROACH

As the Chinese ancient scholar of wisdom said: "Water can float a boat. It can also sink a boat". So is DOCDEX. So for DOCDEX, it works like water and it all depends on whether you can master it or not. If you cannot, better keep away from it in the DC.

Why not give yourself more flexibiliy and decide this only after seeing the disputes. You still have a lot of time.

http://www.tolee.com

[edited 10/31/01 8:39:52 PM]

Thanks.

We will ask the Issuing bank to remove the DOCDEX clause from the LC.

DOCDEX IS EXPANDING TO INCLUDE URC 522 AND URDG

By the way, ICC is now expanding the DCODEX scope of services to include the URC 522 collections and the URDG guarantees. The updated version should be able to be adopted in the ICC Banking Commission meeting in Frankfurt in early November.

In the same way, a collection instruction should not name DOCDEX as the dispute resolution. Otherwise the same problem will emerge.

Sooner or later the DOCDEX may include also ISP 98 and eUCP.

http://www.tolee.com

[edited 10/31/01 8:48:38 PM]