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DCW, THE SOURCE FOR LC AND TRADE NEWS & ANALYSIS. LCs can often involve more than a dozen people from account and credit managers to document examiners and the legal department. All these people need to know and understand the latest developments in law and practice. Documentary Credit World (DCW) is published monthly by Documentary Credit World.
To find out more about DCW please visit the LIBF website.
View Documentary Credit World
by Zahoor DATTU
Banks have been issuing so-called silent confirmations for decades. When an issuing bank does not request or authorize an advising or nominated bank to add its confirmation, but the beneficiary desires an undertaking from its bank, it may ask for a “silent confirmation”. The concept falls outside the framework of UCP. As a result, the approaches taken by banks in crafting agreements when engaging in silent confirmations can differ. The countries where silent confirmations are most common and frequency of practice has also varied. When done properly and with adequate care, silent confirmations represent a valuable and useful tool to facilitate international trade. Drawing on his knowledge of the industry, Zahoor Dattu explores the subject, including benefits to the beneficiary, compliance considerations, key factors for a silent confirmer, wording of a silent confirmation agreement, and execution of undertaking.
by Jun XU
Digital transition in trade and trade finance has gained unprecedented attention over the past three years and great efforts have been made by international organizations, states, and industries to raise the profile of
digital mechanisms in trade and trade finance. However, trade digitalization is advancing slower than expected. In this article, Jun Xu addresses the current status of trade finance digitalization in China and beyond, focusing attention on reasons why electronic bills of lading are not widely used in LC and collection transactions. Xu then examines the environment for other electronic transferable records, including use in supply chain finance, and the treatment of electronic insurance documents. Ultimately, greater strides need to be made not only in achieving legislative reforms in most countries regarding electronic transferable records and broader adoption of MLETR, but also in adjusting practice rules to better accommodate electronic presentations.
by Roger FAYERS
Celestial Aviation Services Ltd. v. UniCredit Bank, London Branch, decided by the English commercial court earlier this year, will be heard by the court of appeal. In advance of this judgment anticipated sometime in the coming year, Roger Fayers shines light on one issue of the case concerning application of UK Regulation 28
pertaining to financial services and funds relating to restricted goods and technology, in this case, aircraft leases. Specifically, Fayers confronts the question whether or not this regulation renders illegal the payment by UniCredit Bank of demands made under standby letters of credit which the bank confirmed. Fayers first identifies key dates and definitions of the case and relevant wording of the Regulation. He then sets out the judge’s approach and conclusions as regards the Regulation before considering English law and how he thinks it applies in this case. He goes on to analyze the pertinent wording of Regulation 28(3) as relates to the standby and, in particular, to when UniCredit’s obligation to pay Celestial arose. Drawing on the findings of other cases on exceptions to the autonomy principle, Fayers then offers his comments why he sees the issues differently from the judge.
by Dr. Anna - Mari ANTONIOU
On 20 September 2023, the UK Electronic Trade Documents Act 2023 will enter into force. The Act provides legal status to electronic trade documents by making them equivalent to paper trade documents. In her analysis of the Act, Dr. Anna - Mari Antoniou examines what the Act does, why it is important, what it means in practice, perceived limitations, and previews the future under the Act. Many trade specialists are optimistic that the Act will usher in an era where electronic trade becomes commonplace, but the Act can only serve as an enabler for such practice. Consenting parties still need to agree to engage in electronic trade transactions. The issue now is whether implementation of the Act will inspire confidence among the stakeholders involved in
trade to utilize electronic trade documents. The Act can facilitate; will electronic trade transactions flow?
After Dr. Antoniou’s article, the full text of the UK Electronic Trade Documents Act 2023 follows.
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