Pavel Andrle is Secretary of the Banking Commission of International Chamber of Commerce-Czech Republic (ICC-CR) and regularly represents ICC-CR at the ICC Banking Commission meetings abroad. He has been deeply involved in the revision of UCP as a member of UCP 600 consulting group formed by over forty experts from all over the world. Andrle has also been closely involved in the revision of URDG 758. He has participated in the development of ICC-CR certified course Incoterms 2010 Masterclasses and currently serves as one of the ICC-CR official trainers for Incoterms 2010. He has been appointed ICC-CR expert to reply to enquiries related to Documentary Credits and Trade and Structured Finance development of technical assistance consultancy services of ICC-CR to banks, carriers, insurance companies and traders. Andrle was in Kathmandu recently and led a two day seminar for bankers on Incoterms 2010 and Documentary Payment instruments, ICC Rules for Documentary Credits UCP 600 and Demand Guarantees  URDG 758 organised by National Banking Training Institute (NBTI). In an interview with New Business Age, he talked about the features and benefits of the banking commission documents he trained the seminar participants on. Excerpts:

Please tell us about this seminar that you had for the Nepali bankers.

Well, it was a very successful two day seminar and about 30 bankers representing more than 20 banks participated in this programme. We focused on issues such as Incoterms 2010 and Documentary Payment instruments, ICC Rules for Documentary Credits UCP 600 and Demand Guarantees URDG 758. The seminar was very useful for professionals working in the trade finance sector and dealing with documentary collections and documentary credits that a bank guarantees.

Could you please elaborate on Incoterms 2010?

Incoterms which translates to International Commercial Terms are developed by International Chamber of Commerce. Incoterms are part of Uniform Customs Practice (UCP) 600 widely practiced and followed by banks worldwide for mostly out of country transaction through Letter of Credits. The Incoterms rules are intended primarily to clearly communicate the tasks, costs and risks associated with the transportation and delivery of goods and are accepted by governments, legal authorities and practitioners worldwide for the interpretation of most commonly used terms in international trade. The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13 used in Incoterms 2000. In the prior version, the rules were divided into four categories, but the 11 pre-defined terms of Incoterms 2010 are subdivided into two categories based only on method of delivery. The larger group of seven rules applies regardless of the method of transport, with the smaller group of four being applicable only to sales that solely involve transportation over water.

How important is URDG (Uniform Rules for Demand Guarantees) 758 and what does it imply?

The URDG 758 is a set of contractual rules that apply to demand guarantees and counter-guarantees. As the URDG are contractual by nature, they apply only if the parties to a demand guarantee or counter-guarantee so choose. The URDG can adequately provide an operational framework for any situation where a demand guarantee is required, whatever the situation is in the public or the governmental sector involved. Agreeing to issue a guarantee according to URDG spares the parties the effort of drafting extensive clauses to describe the independence of the guarantee, its irrevocability, its non-assign ability and the guarantor's duties and more.

What are the benefi ts with using URDG 758?

Once the URDG are incorporated in the guarantee or counter-guarantee text by contractual reference to the URDG, they are deemed to be entirely incorporated, unless specific article(s) are expressly excluded or amended. A URDG guarantee and counter-guarantee enter into effect from the date they are issued, unless their terms expressly postpone their entry into effect to agree with a later date or the occurrence of an agreed event. Accordingly, no demand for payment can be presented until the guarantee enters into effect following the occurrence of a specified date or event indicated in the guarantee.

How will these programmes help the Nepali banks and bankers?

The bankers who participated in the seminar already had a fair knowledge of the issues that we discussed. However, the increased awareness of the said topics would certainly help local banks to exercise acceptable international norms in issuing and accepting Letter of Credits. Besides, many issues arising out of international trade can be mitigated. The programme will help the banking staff working at the Trade Finance Department of their respective banks on recent issues related with issuing and accepting Letter of Credits and how to quote and implement Incoterms in the Letter of Credits.