TRADE DISPUTE RESOLUTION

PROCESS AND INTERNATIONAL

PRACTICES WITH A CASE STUDY

Md. Jahurul Haq CDCS, CAMS

FAVP & Foreign Exchange Incharge
Islami Bank Bangladesh PLC
Kawran Bazar Branch
Mob: 01712132192
E-mail: [email protected]
 Humble Questions
Have your ever faced a dispute in your
personal life?

How have you solved it?

What is the size of Trade in Bangladesh?

What is the percentage of trade dispute in

Bangladesh?
2
 TRADE

Buying/Import or
Selling/Export of Goods,
Services or
Performances.
 TRADE DISPUTE

TRADE DISPUTE MEANS

DISAGREEMENT OR ARGUMENT
RELATED TO TRADE.

WHETHER IT IS RELATED WITH

GOODS/ SERVICES/
PERFORMANCE OR DOCUMENTS?
4
METHODS OF DISPUTE RESOLUTION

CONSULTATION.

NEGOTIATION/MEDIATION

ARBITRATION

ADJUDICATION 5
 RULES FOR DISPUTE RESOLUTION

ICC RULES FOR DOCUMENTARY

INSTRUMENTS DISPUTE RESOLUTION
EXPERTISE (DOCDEX) IN FORCE FROM
1ST MAY 2015.

ICC RULES FOR ARBITRATION.

6
 CONSULTATION

A MEETING WITH AN EXPERT

OR PROFESSIONAL IN ORDER
TO SEEK AN ADVIVCE.

No hard and fast rule for

Consultation.
7
 MEDIATION

MEDIATION IS A STRUCTURED, INTERACTIVE,

PROCESS WHERE AN IMPARTIAL THIRD
PARTY NEUTRALLY ASSISTS TO RESOLVE A
CONFLICT BETWEEN THE DISPUTED PARTIES.

No hard and fast rule for Consultation.

8
 ARBITRATION

IT IS A DISPUTE SETTLEMENT PROCESS IN

WHICH AN INDEPENDENT PERSON OR
BODY IS OFFICIALLY APPOINTED TO
SETTLE A DISPUTE.

Applicable Rule: ICC Rules for

Arbitration.

9
 ADJUDICATION

THE FORMAL PROCESS OF

ADJUDICATING A CASE IN A COURT.

•Applicable Rule/Law:
Municipal/Domestic Law of a
country.

10
PROCESS FLOW IN ARBITRATION

1. REQUEST FOR
ARBITRATION/
FILING OF REQUEST

2. APPOINTMENT
5. AWARD OF ARBITRATORS

3. PRELIMINARY
4. HEARING CONFERENCE

11
ICC RULES FOR DOCUMENTARY
INSTRUMENTS DISPUTE RESOLUTION
EXPERTISE (DOCDEX)

No. of Article: 12

DOCDEX is administered by ICC

International Centre for Arbitration.

IN FORCE FROM 1ST MAY 2015.

06/27/19
DEFINITIONS: ARTICLE 1

Banking Commission
Claimant
Decisions
Respondent
ICC Banking Rules
Technical Adviser
06/27/19
 SCOPE: ARTICLE 2

DOCUMENTARY CREDIT

STANDBY LETTER OF CREDIT

BANK TO BANK REIMBURSEMENT

DOCUMENTARY COLLECTION

DEMAND GUARANTEE

FORFAITING TRANSACTIONS

BANK PAYMENT OBLIGATION 14

 CLAIM: ARTICLE 3

CLAIM THROUGH FORM 1

PAYMENT OF FEES

SENDING THE COPY OF CLAIMS TO THE RESPONDENT BY THE

CENTER.

THE CENTRE MAY REJECT THE CLAIM

BEFORE APPOINTMENT OF EXPERTS, IF CENTRE WANTS TO REJECT

THE CLAIM, IT SHALL TAKE ADVICE OF TECHNICAL ADVISER.
 SUPPLEMENTARY INFORMATION
ARTICLE-5
THE CENTRE MAY SEEK ADDITIONAL

SUPPLEMENT TO BE SUBMITTED WITHIN

14 DAYS REQUEST Through Form 3

NO REQUEST, NO SUPPLEMENTARY
SUBMISSION
•NO SUBMISSION BY A PERSON OTHER THAN
CALIMANT OR RESPONDENT. 17
 FILING AND FINALITY OF
SUBMISSION. ARTICLE 6

THE CENTRE MAY REQUIRE HARD COPY

LANGUAGE SHALL BE ENGLISH

IF DOCUMENT IS NOT IN ENGLISH, IT SHALL

HAVE AN ENGLISH TRANSLATION

CLAIM, ANSWER AND SUPPLEMENT SHALL BE

FINAL. 18
 APPOINTMENT OF EXPERTS.
ARTICLE 7

1. Banking Commission maintains a list of experts

2.The Chair of the Banking Commission is the repository of the List

3.The Centre shall transmit a copy of the Claim to the Technical Adviser
after verifying the Technical Adviser’s independence.

4.Having regard to this guidance, the Centre shall make the appointments
and designate one of the Appointed Experts to act as president

5. Must be impartial and independent

6. Expert shall not act for any party

19
 THE PROCEEDINGS. ARTICLE 8

Transmission of the Claim, any Answer and

any Supplement(s) to the Appointed Experts.

If Claim is beyond ICC Rules, Appointed

Experts shall inform so.

Preparation and submission of draft decision

to the Centre.

No oral hearing
20
 THE DECISION. ARTICLE 9

The Decision shall be in English using Form 4

Transmit it to the Technical Adviser for

scrutiny.

No Decision by the Appointed Experts until

approval by the Technical Adviser.

The Decision may be unanimously or on a

majority basis. 21
 COSTS: ARTICLE 10

STANDARD COST.

IT IS NON REFUNDABLE.

MAY REQUIRE ADDITIONAL FEES

PROCEEDINGS MAY BE SUSPENDED IF ADDITIONAL FEES IS NOT

PROVIDED.

FEES: UPTO $1 MILLION: $5000, ABOVE $1.00 MILLION: $10000.00

ADDITIONAL FEE: UPTO 50% OF STANDARD FEES

22
Notification or
Communications: Article 11

 A hard copy of claim to be sent

 Communication shall be made
through email or any other
telecommunications excluding
fax
 Calculation of time from the first
following business day.
 DISCLAIMER. ARTICLE 12

The Technical Adviser, the Appointed

Experts, the Centre, the ICC and its
employees, and the ICC National
Committees and Groups and their
employees and representatives shall not
be liable to any person for any act or
omission in connection with any
proceedings or Decision under the Rules,
except to the extent such limitation of
liability is prohibited by applicable law.
24
CASES RELATED TO ARBITRATION

SAMSUNG - APPLE CASE: STARTED IN 2011.

PATENT INFRINGEMENT

MULTIPLE JURISDICTIONS

IN 2012, AGREED TO REFER TO ICC ARBITRATION

THREE MEMBER ARBITRAL TRIBUNAL.

FINAL AWARD IN 2015

$120 MILLION DAMAGE WAS ORDERED TO PAY TO SAMSUNG.

25
CASE RELATED TO ADJUDICATION

Regent Spinning Ltd.

26
 DOCDEX CASE EXAMPLE

DOCUMENT WAS PRESENTED TO ISSUING BANK.

MATURITY WAS CONVEYED.

APPLICANT OBTAINED COURT ORDER FOR

PREVENTING PAYMENT.

AS A LAST RESORT COURT ORDER MAY BE OBTAINED.

A COURT ORDER WILL OVERRIDE THE UCP RULE.

27
 Q &A
28
PRESENTATION ON OVERVIEW ON UCP-
600 (Article 1-13)

Md. Jahurul Haq CDCS & CAMS

FAVP & Foreign Exchange Incharge,
IBBPLC, Kawran Bazar Branch.
E-mail: [email protected]
Mob: 01712132192
WHAT ARE THE METHODS OF
PAYMENT?
WHAT IS UCPDC?
 METHODS OF PAYMENT
 Advance payment  Open Account

 Documentary  Documentary Credit

Collection
 UCPDC
A set of rules for governing letter of credit.

The Uniform Customs and Practice for Documentary Credits.

First Version: in 1933
Second version: in 1951
Third version: in 1962
Fourth version: in 1974
Fifth version: in 1983 (UCP 400)
Sixth version: in 1993 (UCP 500)
Latest version: in 2007 (UCP-600)
Latest version is in force from 1st July 2007
Number of Articles: 39
 Article 1
Application of UCP

The Uniform Customs and Practice for

Documentary Credits.
Applicable for both Commercial Letter of
Credit & Standby Letter of Credit.
Reference of UCP is mandatory in LC.
It can be modified or excluded.
To what extent can be modified or excluded?
 Article 2
Definitions
For the purpose of these rules:
Advising bank means the bank that advises the credit at the request of
the issuing bank.
Applicant means the party on whose request the credit is issued.
Banking day means a day on which a bank is regularly open at the
place at which an act subject to these rules is to be performed.
Beneficiary means the party in whose favour a credit is issued.
Complying presentation means a presentation that is in accordance
with the terms and conditions of the credit, the applicable
provisions of these rules and international standard banking
practice.
Confirmation means a definite undertaking of the confirming bank, in
addition to that of the issuing bank, to honour or negotiate a complying
presentation.
 Article 2
Definitions
Confirming bank means the bank that adds its confirmation to a
credit upon the issuing bank’s authorization or request.
Credit means any arrangement, however named or described, that
is irrevocable and thereby constitutes a definite undertaking of the
issuing bank to honour a complying presentation.
Honour means:
a. to pay at sight if the credit is available by sight payment.
b. to incur a deferred payment undertaking and pay at maturity if the
credit is available by deferred payment.
c. to accept a bill of exchange (“draft”) drawn by the beneficiary and
pay at maturity if the credit is available by acceptance.
Negotiation means purchase of documents/drafts by the nominated bank
other than the drawee by advancing or agreeing to advance funds.
Whether Issuing Bank can negotiate?
 Article 3
Interpretations
For the purpose of these rules:

Where applicable, words in the singular include the plural and in the plural
include the singular.

A credit is irrevocable even if there is no indication to that effect.

A document may be signed by handwriting, facsimile signature, perforated

signature, stamp, symbol or any other mechanical or electronic method of
authentication.

A requirement for a document to be legalized, visaed, certified or similar will be

satisfied by any signature, mark, stamp or label on the document which appears
to satisfy that requirement.
 Article 3
Interpretations

Branches of a bank in different countries are considered

to be another bank separate banks.

Terms such as "first class", "well known", "qualified",

"independent", "official", "competent" or "local" used to
describe the issuer of a document allow any issuer
except the beneficiary to issue that document.

Unless required to be used in a document, words such as

"prompt", "immediately" or "as soon as possible" will be
disregarded.
 Article 4
Credits v. Contracts

Credit & Contracts are separate.

Credit is independent.
 Article 5
Documents v. Goods, Services or Performance

Banks deal with documents and not with goods, services

or performance to which the documents may relate.
Whether a bank never deals with goods or services
or performances?
 Article 6
Availability, Expiry Date and Place for
Presentation
Availability means availability of payment.
A credit must state the bank with which it is available or
whether it is available with any bank. A credit available with a
nominated bank is also available with the issuing bank.
If a credit does not state with which bank it is available, it
is only available with the issuing bank. In a freely available
credit, any bank is a nominated bank.
A credit must state whether it is available by sight payment,
deferred payment, acceptance or negotiation.
A credit must state an expiry date for presentation.
 Article 7
Issuing Bank Undertaking
Provided that the stipulated documents are presented to the nominated bank or
to the issuing bank and that they constitute a complying presentation, the issuing
bank must honour if the credit is available by:
i. sight payment, deferred payment or acceptance with the issuing bank;
ii. sight payment with a nominated bank and that nominated bank does not pay;
iii. deferred payment with a nominated bank and that nominated bank does not
incur its deferred payment undertaking or, having incurred its deferred payment
undertaking, does not pay at maturity;
iv. acceptance with a nominated bank and that nominated bank does not accept
a draft drawn on it or, having accepted a draft drawn on it, does not pay at
maturity;
v. negotiation with a nominated bank and that nominated bank does not
negotiated by any nominated bank.
An issuing bank is irrevocably bound to honour as of the time it issues the credit.
 Article 8
Confirming Bank Undertaking

Honour or Negotiate without recourse.

Forward documents to Issuing Bank for reimbursement
or payment.
 Article 9
Advising of Credits and Amendments
A credit and any amendment may be advised to a beneficiary
through an advising bank.
By advising the credit or amendment, the advising bank
signifies that it has satisfied itself as to the apparent
authenticity of the credit or amendment and that the advice
accurately reflects the terms and conditions of the credit or
amendment received.

An advising bank may utilize the services of another bank.

Advise through/Second Advising Bank in F57.

Can an amendment be advised through a different bank?

 Article 10
Amendments
Except as otherwise provided by article 38, a credit can
neither be amended nor cancelled without the agreement of
the issuing bank, the confirming bank, if any, and the
beneficiary.
An issuing bank is irrevocably bound by an amendment as of
the time it issues the amendment.
Partial acceptance is rejection.
A provision in an amendment to the effect that the
amendment shall enter into force unless rejected by the
beneficiary within a certain time shall be disregarded.
 Article 11
Teletransmitted and Pre-Advised Credits and
Amendments
Pre-advise may be sent.

But operative credit must be sent. It will not be

inconsistent with the pre-advise.
 Article 12
Nomination
Nominated Bank is not bound to act but if it expressly agrees to
then it is binding upon it.

By nominating a bank to accept a draft or incur a deferred payment

undertaking, an issuing bank authorizes that nominated bank to
prepay or purchase a draft accepted or a deferred payment
undertaking incurred by that nominated bank.
 Article 13
Bank-to-Bank Reimbursement Arrangements

Payment of a credit can be settled through a third bank.

Name of Reimbursing Bank to be mentioned in F53.
QUESTION AND ANSWER
 THANKS FOR
PATIENCE HEARING