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1、ContentsiiiThe Guide toDocumentary CreditsLakshman Wickremeratne&Michael RoweThis edition updated byStephen Berrisford CDCSContents pageThe guide to documentary creditsivApart from any fair dealing for the purpose of research or private study, or criticism orreview, as permitted under the Copyright,
2、 Designs and Patents Act 1988, this publicationmay be reproduced, stored or transmitted, in any form or by any means, only with theprior permission in writing of the publisher, or in the case of reprographic reproductionin accordance with the terms and licences issued by the Copyright Licensing Agen
3、cy.Enquiries concerning reproduction outside those terms should be addressed to thepublishers agents at the address below:Institute of Financial ServicesIFS House4-9 Burgate LaneCanterburyKentCT1 2XJT 01227 818649F 01227 479641E editorialInstitute of Financial Services publications are published by
4、The Chartered Institute ofBankers, a non-profit making registered educational charity.The Chartered Institute of Bankers believes that the sources of information upon whichthe book is based are reliable and has made every effort to ensure the complete accuracyof the text. However, neither CIB, the a
5、uthors nor any contributor can accept any legalresponsibility whatsoever for consequences that may arise from errors or omissions orany opinion or advice given.Typeset by Kevin OConnorPrinted by Antony Rowe Ltd, Wiltshire Institute of Financial Services/Chartered Institute of Bankers 2003, with the
6、exceptionof North and South America wherein copyright lies with the International FinancialServices AssociationISBN 0-85297-720-4ContentsvAcknowledgements_ To Wicky for providing such comprehensive material to update and to all ofthose acknowledged as providing input into the first edition._ To Phil
7、ip Blake and Jo Richardson of the ifs Publishing Department for keepingme on schedule._ To all of my friends and colleagues who have been part of the CDCS journey todate especially those international trade banking volunteers who continue tobe actively involved in the maintenance and development of
8、the qualificationframework, particularly:_ Maria Adamczyk CDCS_ Lowell Campbell CDCS_ Steve Cooke CDCS_ Barbara Lotrionte CDCS_ David Morish CDCS_ Rita Nielsen CDCS_ Tineke Overvliet CDCS_ Victor Pena CDCS_ Steve Thompson CDCS_ Gareth Watts CDCS_ Charnell Patrick Williams CDCS_ Paul Williamson CDCS_
9、 To Dan Taylor for his unfailing support, encouragement and good humour.The guide to documentary creditsviContentsviiPrefaceDocumentary Credit Specialists should be aware that there are constantly changingissues that have implications on documentary credit operations. These include newlegal cases in
10、 various jurisdictions around the world, ICC DOCDEX decisions, ICCBanking Commission Opinions and ICC Banking Commission Decision Papers.It is advantageous for anyone working in documentary credit operations to keepthemselves current on these issues that impact operations. Below is a partial list of
11、where current information on these issues is available:Websites Sources_ International Chamber of Commerce www.iccwbo.org_ DC Pro _ Institute of International Banking Law and Practice www.iiblp.org_ International Financial Services Association www.ifsaonline.org_ Institute of Financial Services Publ
12、ication Sources_ ICC DC Insight (Available by subscription from the ICC )_ Documentary Credit World (Available by subscription )_ ICC publications of Official Opinions (Available from the ICC )_ Annual Survey of Letter of Credit Law and Practice (Available from the Instituteof International Banking
13、Law and Practice www.iiblp.org)The guide to documentary creditsviiiContentsixContents1 Documentary credits an overview 12 The sales agreement 93 Documentary credits types, uses and characteristics 374 Parties to documentary credit transactions roles andresponsibilities 1355 Issuance and amendment 17
14、36 Transport documents 1977 Other documents 2998 Presentation, examination and settlement/rejection 3459 Bank-to-bank reimbursements under documentary credits 42710 Related products 45511 Risk issues 469Recertification guidelines 481Bibliography 489Index 493CDCS STUDY GUIDEThe guide to documentary c
15、reditsxContents pageChapter One1 Documentary credits an overview1OneDocumentary credits an overviewChapter Outline1 Introduction and Learning Objectives2 Brief History and the Basic Documentary Credit Operation3 Generic Flow Chart of the Documentary Credit Process4 Definitions A Generic Understandin
16、g5 Questions1 Introduction and Learning Objectives1.1 IntroductionThe aim of this chapter is to introduce the Documentary Credit Specialist to theconcept of a Documentary Credit by:- providing the necessary background by way of a brief history- a generic flow chart of the Documentary Credit process-
17、 a generic meaning of the word Credit as an instrument used in tradeIt should be noted that the different types of Documentary Credits are defined andexplained in Chapter 3.Contents pageThe guide to documentary credits21.2 Learning ObjectivesThe learning objectives are:(i) To enable the Documentary
18、Credit Specialist to understand the termDocumentary Credit in its generic setting(ii) To introduce the Documentary Credit Specialist to the basic DocumentaryCredit process2 Brief History and the Basic Documentary CreditOperation2.1 Brief HistoryThe term Letter of Credit was perhaps first used with T
19、ravellers Letters of Creditissued by banks in the western world to provide their clients with a means of obtainingcash from banks abroad for use during their foreign travel and so obviating the needto carry large sums of money upon their person with the attendant risks of loss orrobbery.A prerequisi
20、te of such Travellers Letters of Credit which were issued in the eighteenthcentury was a formal letter of introduction addressed to the Issuing Bankscorrespondents and agents abroad.The letter of introduction addressed to the correspondents or agents would indicatethat the client/traveller was a val
21、ued customer and requested the correspondents oragents to provide any possible assistance. Often copies of the letter of introductionwere sent ahead of the traveller to the correspondents or agents.The Travellers Letter of Credit addressed to correspondents/agents would beissued in the form of a let
22、ter. It indicated that in consideration of such correspondentsand agents paying cash to the named client, the Issuing Bank would pay bills of exchangedrawn by the correspondent/agents on the Issuing Bank for amounts paid pluscorrespondents/agents charges.The Travellers Letter of Credit indicated a m
23、aximum amount available under theCredit and expiry date of the Credit. Each correspondent/agent was required toindicate details of amounts paid and the dates so that the next correspondent/agentto whom the client presented the Letter of Credit would be able to ascertain thebalance available to be dr
24、awn.The client always retained possession of the original Credit. The Documentary CreditSpecialist should see the origin of the Letter of Credit in that a letter is provided bythe Issuing Bank to correspondents and agents upon the basis of which credit is tobe provided. It also described how the cor
25、respondent/agent was to obtainreimbursement from the Issuing Bank and this usually took the form of a bill of exchange1 Documentary credits an overview3as indicated earlier. The Documentary Credit in its modern form developed fromthese beginnings in the mid-19th century. It first appeared as a vehic
26、le for effectingpayments on foreign trade transactions among banks in London in the 1840s.It may well be that as a result of personal contacts made by travelling as describedabove or by other means, merchants were able to arrange for goods to be sent fromabroad. The movement of goods from one countr
27、y to another is more complicatedthan buying goods from within the local marketplace. Often there are documentsrequired for the transport of goods and payment has to be made across borders.In order to gain a global understanding, interpretation and application of DocumentaryCredit usage the Internati
28、onal Chamber of Commerce (ICC) developed and publishedtheir first version of the Uniform Customs and Practice for Documentary Credits(UCP) in 1933. UCP 500 is the current version of this publication and since itsintroduction in 1993 has been supplemented and amplified by the ICC BankingCommission in
29、 their decision on the determination of an Original document in thecontext of UCP sub-Article 20b, the publication of their Uniform Rules for Bank toBank Reimbursements under Documentary Credits (URR), their Supplement toUCP500 for electronic presentations (eUCP), and, most recently their Internatio
30、nalStandard Banking Practice for the examination of documents under DocumentaryCredits (ISBP). All of these are covered in some detail within this Study Text, as arethe four Position Papers issued by the ICC after the last UCP revision. The subjectmatter of these Position Papers, however, has been s
31、ubsequently covered by individualICC Opinions.The different methods by which payment is made for goods are explained in Section4 of Chapter 2 under the heading Methods of Payment. The different methods bywhich goods are transported are explained in Chapter 6, Transport Documents.This publication is
32、concerned with the use of Documentary Credits and Standby Lettersof Credit (Credits) as a means of settlement for goods, services and/or otherperformances.2.2 The Basic Documentary Credit OperationThis is outlined below in its simplest and most common form and Documentary CreditSpecialists should no
33、te that variations of this common form are explained in the laterchapters of this publication.The basic operation, which covers the movement of goods, services and/or otherperformances, is as follows:_ The Buyer (as Applicant) completes a standard bank application form requestingthe Applicants bank
34、(as Issuing Bank) to issue an Irrevocable Credit in favour ofthe seller (the Beneficiary).The guide to documentary credits4The application form should specify:(a) the documents that have to be presented(b) the terms and conditions that have to be complied with._ The Issuing Bank issues its Irrevocab
35、le Credit in favour of the Beneficiaryincorporating the banks irrevocable and independent undertaking to pay theBeneficiary.- provided all documents as stipulated in the Credit have been presentedand- all terms and conditions of the Credit are complied with._ The Irrevocable UndertakingA Documentary
36、 Credit is independent of goods, services and/or otherperformances and any other consideration outside the actual Credit as issuedand is an undertaking which is enforceable against the Issuing Bank even if thebuyer is unable or unwilling to pay the Issuing Bank._ The Advising BankIn the case of an i
37、nternational transaction, the Issuing Bank usually asks a bank inthe sellers country with which it has a correspondent banking relationship (theAdvising Bank) to notify the Credit to the Beneficiary._ The Nominated BankThe Credit may be payable(i) at the counters of the Issuing Bankor(ii) at the cou
38、nters of a specific Nominated Bank in the sellers countryor(iii) at the counters of any bank in the case of a freely negotiable Credit.The Nominated Bank in (ii) above is usually (but not necessarily) the AdvisingBank.Where the Credit is confirmed by a bank in the sellers country, the Credit maybe p
39、ayable at the counters of the Confirming Bank.The Confirming Bank (which is often the Advising/Nominated Bank but notnecessarily so) provides the Beneficiary with an additional irrevocable andindependent bank undertaking separate from that of the Issuing Bank._ The Seller (as Beneficiary)Dispatches
40、the goods as required and presents the stipulated documents to theNominated Bank whether it be the Issuing Bank, a specific Nominated Bank (anybank if the Credit is freely negotiable) or Confirming Bank if any.The stipulated documents may include a bill of exchange to be drawn on a bankas indicated
41、in the Credit._ The Documents and PaymentThe Nominated Bank may pay the Beneficiary provided the stipulated documentshave been presented and the terms and conditions of the Credit have beencomplied with. The Nominated Bank would, at the same time, dispatchdocuments to the Issuing Bank, which would e
42、ffect reimbursement, provided1 Documentary credits an overview5the stipulated documents have been presented and the terms and conditions ofthe Credit have been complied with. The Issuing Bank would then forward thedocuments, other than for any bill of exchange that may have been required, tothe buye
43、r against agreed settlement terms. Often, arrangements within the Creditprovide for reimbursement to be obtained by the Nominated Bank claimingupon a third bank._ The GoodsThe goods which are represented by the documents are dispatched by the sellerto the buyer, who will frequently need these to obt
44、ain clearance and delivery.Payment is exchanged for documents in the Documentary Credit cycle provided thestipulated documents are presented and the terms and conditions of the Credit arecomplied with.3 Generic Flow Chart of the Documentary CreditProcessFigure 1.1: Summary of procedure where the Adv
45、ising/Confirming Bank isthe Nominated BankThe guide to documentary credits64 Definitions A Generic UnderstandingA Documentary Credit as an instrument of settlement of the payment obligationbetween buyer and seller is also known in the following terms:Letter of Credit As a Credit is issued by the Iss
46、uing Bank and addressedto the Beneficiary in the form of a letter; the termLetter of Credit is often used.Commercial Credit As a Credit is issued by the Issuing Bank in settlementof a commercial transaction; the term CommercialCredit is also used.Documentary Credit As a credit is issued by the Issui
47、ng Bank and requiresthe presentation of stipulated documents forcompliance, the term Documentary Credit is used.Standby Letter of Credit As a credit is issued by the Issuing Bank to be usedfor settlement only where there has been some formof default or financial guarantee the term StandbyLetter of Credit is usedAll four terms generically refer to the same product which undertakes payment tothe Beneficiary on the conditions that the