The International Chamber of Commerce (ICC) has revised its DOCDEX rules, a dispute resolution mechanism that aims to address trade finance concerns.
DOCDEX is described by the ICC as “a rapid, cost-effective, document-based procedure offering international bankers and traders a means to settle documentary instruments disputes – not only helping parties minimise the disruption caused by a dispute but also eliminating the need to settle the claim in court.”
Decisions are reached by a panel of three independent and impartial experts, and later scrutinised by an ICC Banking Commission technical advisor. These decisions are non-binding unless both parties agree otherwise – freeing the independent experts from “due process”, and adding flexibility.
In addition to widening its scope to address any trade finance dispute, the ICC believes that the new rules will also increase transparency and enhance time efficiency.
“Documentary disputes can severely impact, and often entirely halt, trade finance proceedings,” said Daniel Schmand, head of trade finance and cash management corporates, Europe, the Middle East and Africa (EMEA), Deutsche Bank and incoming Banking Commission chair. “Resolving them is not only a costly and lengthy process, it can also – if taken to court – irreparably damage relationships with trading partners.
“By quickly and inexpensively managing claims, DOCDEX helps minimise the disruption caused by a dispute – not only eliminating the need for protracted litigation, but also safe-guarding the partnerships that are so crucial to the banking and trade finance sectors.”
The recently-revised rules, which come into force on 1 May 2015, will significantly enhance the already advanced dispute resolution mechanism.
Among the changes, they extend the DOCDEX scope to address any trade finance-related dispute, including trade loans, syndications, negotiable instruments, risk purchase agreements, conflicts of priority and fraud in letters of credit (LCs) – all areas that are not otherwise covered by existing ICC banking rules. As such, disputants previously left outside the ambit of DOCDEX will now be able to benefit from the service.
In a separate announcement, the ICC named Schmand as chair of the Banking Commission for a three-year term effective May 1 2015. He succeeds Kah Chye Tan, managing director of JP Morgan Chase, who has chaired the Commission since September 2010.
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