Responding to the urgent need to address the disruptions facing the trade finance market as the world grapples with the novel coronavirus (COVID-19) pandemic, the International Chamber of Commerce (ICC) has today provided holistic guidance to the market, governments and regulators through the publication of this paper.
Trade finance transactions rely almost exclusively on hard-copy paper documentation to process payments and, ultimately, clear the release of goods to buyers. This is because, in many jurisdictions, electronic trade documents are either prohibited or their legal status is unclear. Yet with banks unable to handle documents in-person as government authorities seek to limit COVID-19 transmission, there is a risk that the underlying trade in goods, including essential medical and food products, will be further disrupted.
ICC has responded to this issue with technical guidance to practitioners.
The Guidance paper on the impact of COVID-19 on trade finance transactions issued subject to ICC rules, provides technical guidance to the market on elements to consider in adapting ICC rules for specific trade finance instruments, gives a certain level of flexibility in the monitoring of transactions in respect of ICC rules, and outlines common scenarios experiences in the delivery of documents during the public health measures undertaken in response to COVID-19.
Comprehensive in its guidance, the paper reviews provisions from several ICC rules, namely the Uniform Customs and Practice for Documentary Credits (UCP 600) and its eRules (eUCP Version 2.0), the Uniform Rules for Demand Guarantees (URDG 758), the Uniform Rules for Collections (URC 522) and its eRules (eURC Version 1.0), the Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits (URR 725) and the Uniform Rules for Bank Payment Obligations (URBPO 750).
Gary Collyer was a major contributor to this paper.