A critical analysis of ICC TA 717 rev.2[1]

by

Rupnarayan Bose[2]

The ICC Banking Commission’s Opinion to query [TA717rev2] was published in the January-March 2011 issue of the DC Insight. The Banking Commission in its ‘Analysis and conclusion’ stated that, “…A number of these do not reflect good banking practice ….It would not, therefore, be appropriate for ICC to offer any opinion as to whether the assumptions that have been made are correct when some of the examples do not reflect the expectation under the UCP…”. The fact is that these examples, irrespective of whether they reflect “good banking practice” or “the expectations under the UCP”, are well within the existing rules. Hence, in the opinion of this writer, the query deserved a more detailed response.

The reason why “a number of these [in the examples] do not reflect good banking practice” originates from the definition by SWIFT of MT700 Field 31D (Date and Place of Expiry) which states, “This field specifies the latest date for presentation under the documentary credit and the place where documents may be presented...”. The havoc that this particular definition has created is not only reflected in the query to the Banking Commission, but had also been discussed in two separate articles published in DC Insight and LC Monitor-Trade Services Update[3]. The Banking Commission Analysis itself admits that a credit “which contains an expiry in one place…and the availability with a bank located in another causes unnecessary, and often, unwarranted complications for the beneficiary…(emphasis added)”. Further, “For the nominated bank…this may seriously affect its ability to act under its nomination by honouring or negotiating.” Too true! The Analysis reaffirms that, “The basis for the UCP, in Article 6, ….is that the expiry place and place for availability are the same.” Therefore, it defies logic and common sense why no step has been taken to delete “and place” from the definition of Field 31D in MT 700, 705, 710, 720 and 740.

This paper, a response to the Query, is a technical analysis within the framework of the current rules, suggesting possible alternatives to each of the examples in the Query.

Guidance note for expressions used in this analysis: ....(continued...)

[This article is continued in the book 'Beyond Trade Finance', 

published on 13-Apr-2021 by Notion Press, 

and available at https://notionpress.com/read/beyond-trade-finance or at https://www.amazon.in/dp/1638508666]

[1] Published in DCInsight, page 18-22, Vol 17 No. 4, October-December 2011.

[2] CEO, Institute of banking studies. Website: http://www.rnbose.net; e-mail: rnbose@gmail.com.

[3] “Does a credit need a 'place of expiry'?”, Wang Shanlun, DC Insight, Volume 15, No. 3, and “Availability and expiry under Article 6, UCP 600”, Rupnarayan Bose, LCM-Trade Services Update, Volume 12, Issue 3, May–June 2010.