Vincent O’Brien, First Director of eBSI delivered a very successful seminar on this important subject on 28 November with ICC Hungary in Budapest.
The Independent Bank undertaking plays an evolving role as a key mechanism to secure international trade transactions. This seminar examined the development of the Standby Documentary Credit in International Business, together with the development of Demand Guarantees and applicable rules. It included a practitioners comparison between the Standby Credit, the traditional Documentary Credit and Bank Guarantees.
The seminar was attended by some 50 participants, with some 35 participants from the banking sector and the remainder coming from the export and import community.
The highlight of the seminar was a ‘step by step’ walkthrough of the 28 Articles of the Uniform Rules for Demand Guarantees, Publication No 458 of the International Chamber of Commerce, Paris.
This step by step ‘walkthrough’ of URDG 458 by a seasoned practitioner was greatly appreciated by the participants as it provided an insight into the application of URDG in the light of modern cross border International Trade.
Mr. O’Brien conceded that there has been some controversy about the application of URDG and in particular the articles dealing with the form of ‘demand’ to be provided by a beneficiary under an URDG guarantee (Article 20) and the ‘governing law’ (Articles 27 and 28).
However, while highlighting the benefits of clarity that these articles bring to international demand guarantee practice, O’Brien made it clear that should it happen that certain URDG articles are not suitable for a particular transaction then the particular article may be expressly excluded from the guarantee instrument itself.The benefit or Sub-Article 14 (c ) which directs the principal to indemnify the guarantor ‘against all obligations and responsibilities imposed by foreign laws and usages was highly appreciated by the participants.
One participant from a major Hungarian Bank mentioned that this particular article will facilitate the adoption of URDG on a much broader scale within the International Banking Community.
Mr. O’Brien contented that in his opinion greater awareness of the URDG articles will have a significant impact on their widespread application in everyday demand guarantee practice.
Mr O’Brien encouraged all practitioners to have a copy of the URDG at hand and highly recommended the publication of Dr. Georges Affaki, a leading World expert on Demand Guarantees ‘A Users Handbook to the URDG’ Dr. Affaki’s publication and the URDG themselves should be obtained from your local ICC National Committee or by visiting www.iccbooks.com