|Publication type||Guidance, Addendum|
|Publication date||2014, 05.2020|
|Number of pages||7, 4|
International Chamber of Commerce (ICC) published the Guidance Paper on the use of Sanctions Clauses in Trade Finance-Related Instruments Subject to ICC Rules with updated additional Addendum.
The use of clauses in relation to trade, economic or financial sanctions or embargos (“sanctions”) in trade finance-related instruments that are subject to the rules drafted by the ICC Banking Commission (“ICC rules”), stating banks’ intention to comply with sanctions regulations, has become a problematic issue for banks involved in trade finance transactions, including, particularly, irrevocable, independent documentary and standby letters of credit, demand guarantees and counter-guarantees.
Sanctions are imposed by the United Nations, the EU Council or individual countries to achieve political and economic ends. They may prohibit dealings with specific countries, persons or property. The need for sanctions is a political matter outside the realm of the ICC. The enforceability of sanctions is a question to be decided by courts, national regulators or administrative agencies; it is not an issue that can be addressed by rules of banking practice such as ICC rules. Accordingly, ICC rules do not address how sanctions should be interpreted or their impact on the trade finance-related instrument in which they are incorporated.
Sanctions may restrict a bank’s ability to perform its role under ICC rules. International banks may be confronted with different sanctions regimes imposed in the multiple jurisdictions in which they operate. As a result, those banks may be subject to conflicting regulatory requirements, and consequently be amenable to formulating internal policies to mitigate the resulting legal risks. Some banks have chosen to control these legal risks by use of sanctions clauses.
The International Chamber of Commerce (ICC) is the institutional representative of more than 45 million companies in over 100 countries. ICC’s core mission is to make business work for everyone, every day, everywhere. Through a unique mix of advocacy, solutions and standard setting, ICC promotes international trade, responsible business conduct and a global approach to regulation, in addition to providing market-leading dispute resolution services. ICC members include many of the world’s leading companies, SMEs, business associations and local chambers of commerce.
1. International Chamber of Commerce (ICC), Policy and Business Practices, Guidance Paper on the use of Sanctions Clauses in Trade Finance-Related Instruments Subject to ICC Rules (2014),
2. International Chamber of Commerce (ICC), Knowledge Solutions Department, Finance for Development, Addendum to Guidance Paper on the use of Sanctions Clauses 2014 (05.2020).
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