Payment Instruments and Other Trade Related Documentation Seminar 24... · › Article 15 (Force Majeure) URR 725 provides that a reimbursing bank assumes no liability or responsibility

Payment Instruments and Other Trade Related Documentation

Talk by Simon Cook, Partner,

Sullivan & Worcester UK LLP

Breakfast seminar on 24 November 2016

at Pinners Hall, 105-108 Old Broad Street, London, EC2N 1EX

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What the talk will cover Introduction and overview

› Issues/characteristics of Letters of credit, guarantees, BPOs, SWIFT loans and other payment obligations

› Negotiable instrument vs contract receivables

Other trade documentation › eg B/Ls, warehouse receipts, bills of exchange etc › is the current legal e-regime sufficient?

CRR › What’s required for payment instruments › ICC rules

Conflicts of laws – what are the rules?

Recent cases/ICC opinions

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Independence from underlying trade

To what extent might a future dispute between the buyer and seller in the underlying transaction prevent payment of the receivable?

Some payment instruments are more “independent” than others › Bills of exchange, promissory notes and letters of credit create

independent payment obligations › Invoices issued pursuant to a commercial contract – the debtor may

assert defences under that contract (e.g. set off, not the right goods)

Solutions? › Buyer accepts payment obligation as unconditional › Recourse to the seller?

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Letters of Credit Issues for documentary and standby

› the same?

UCP 600 and ISP 98 › both require unconditional payment upon “complying presentation”

Should issuing bank protect itself further? › e.g. right not to pay

Risks for confirming banks

Fraud risk

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Documentary letters of credit and deferred payment undertakings

Characteristics › Irrevocable undertaking to pay (or incur deferred payment

obligation) on presentation of documents/claim › Discharges payment obligation in underlying commercial contract › Subject to uniform rules (e.g UCP 600/ISP98) › Can be entered into on paper or electronically

Transferability › Assignment of deferred payment obligation › Transfer of draft accepted by issuing bank

Credit enhancement techniques › Confirming bank (documentary letter of credit)

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Guarantees – payment and performance

What obligations are being guaranteed?

Ultimately guarantor will make a payment

Does URDG help or hinder? › it has its place

Could guarantor’s obligation go beyond the primary obligor?

What is “first demand”

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Bank payment obligations (BPOs) What is their current status?

A replacement “electronic” letter of credit, or something else?

A comparison of benefits and differences

Can you/should you seek greater protection in light of new laws and regulations?

Can you finance using them?

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Bank payment obligations Characteristics

› Irrevocable undertaking to pay (or incur deferred payment obligation) on data match

› Discharges payment obligation in underlying commercial contract › Subject to uniform rules (URBPO) › Exist electronically

Transferability › Bank is the beneficiary › Possibility of assigning right to receive payment › The bank who is the recipient of the BPO could offer

financing/credit to its customer (the seller)

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SWIFT loans

Characteristics › Banks can create receivables from their own lending books › Loan is a receivable to the bank › Evidenced by loan agreement setting out repayment terms

Transferability › Transferred in same way as other non-negotiable receivables › Payment risk can be transferred by sub-participation – can be just

risk or funded

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Negotiable instruments Characteristics

› Under English law, requirements of Bills of Exchange Act 1882 must be satisfied

› Bill of exchange: an order by the seller to the buyer to pay a certain amount (i.e. the purchase price) either on demand, or on a fixed future date

› Promissory note: a written promise by the buyer to pay the seller a certain amount (i.e. the purchase price) either on demand, or on a fixed future date

› An unconditional and independent payment obligation of the debtor in favour of the beneficiary.

› Practical considerations: Electronic signatures

o is this sufficient? o does a physical document need to be presented for payment?

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Negotiable instruments Transferability and tradability

› Can be transferred by delivery, or by endorsement and delivery › May be transferred without recourse › Parties may enter into separate agreement providing for some

recourse to seller (for example, for breach of representation) – common practice in forfaiting arrangements

› Tradable: secondary trading

Credit enhancement techniques › Transferable and irrevocable bank guarantee › Adding aval – not expressly recognised under English law

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Contract receivables Characteristics

› Generated by commercial contract › Seller might deliver invoices for each delivery › Not independent from underlying transaction – buyer may have

contractual defences to payment › Contracts can be entered into and invoices can be issued

electronically

Transferability › Legal or equitable assignment › Under English law, requirements of The Law of Property Act 1925

must be satisfied for a legal assignment › Silent or disclosed assignment - notice to debtor? › Possible to assign future receivables under English law

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Contract receivables Credit enhancement techniques

› Bank guarantees › Security or corporate guarantees If originally given in favour of the seller, the purchaser of the

receivable may not be able to take the benefit › Substitution of “better” payment instrument such as a letter of credit

or bank-guaranteed promissory note › Undertakings from the debtor to pay into specified account › Waiver of defences from debtor (acceptance of unconditional payment

obligation)

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E-regimes - overview Lots has been done, but…

What is needed to make them work? › Effective legal regimes › Physical infrastructure › Joined up thinking

Current macro issues › Lack of cohesive systems globally › Lack of availability of systems throughout supply chain › Legal regimes can be insufficient › Contrasting views/support at global level

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E-regimes – some progress Examples of where progress has been made

› Warehouse receipt programmes

› Bills of lading systems

› eUCP

› BPOs

BUT…


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E-regimes – continuing risks/issues (1)

Document of title not applicable everywhere

Not always a better option (availability, effect, expertise mismatch)

Number and ability of parties involved

Financer/corporate infrastructure and expertise


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E-regimes – continuing risks/issues (2)

Lack of clarity on who takes risk/responsibility › Automation and fraud

› Data matching vs physical checks

› Inability to rely on rules by some parties

› Platform providers’ role

Legal regimes › Can they support adequately?

› Example of English law issue…


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A note from the Law Society

Documents subject to a statutory requirement to be in writing and/or signed and/or underhand (e.g. statutory requirements for bills of exchange, guarantees or promissory notes):

› a contract executed using an electronic signature (and which may exist solely in

electronic form) satisfies a statutory requirement to be in writing and/or signed and/or under hand.

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Signatures and emails In Golden Ocean Group Limited v Salgaocar Mining Industries PVT

Ltd and another [2012] EWCA Civ 265 the Court of Appeal had to consider a chain of emails in which reference was made to the charter of a vessel being “fully guaranteed by” the Defendant

When the Claimant looked to recover from the Defendant under the purported guarantee, the Defendant claimed that the guarantee was unenforceable under s.4 Statute of Frauds 1677, which provides that guarantees must be in writing and signed

The CoA found that: › the exchange of emails could lead to the conclusion of an agreement in writing

for the purposes of the Statue › the “signature” requirement was satisfied (even though the email in which the

guarantee was concluded simply contained the sign-off “Guy” (being the Defendant's broker))

Prudent course of action may be to mark all email correspondence “subject to contract”

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Bills of Exchange (BoEs) and Bills of Lading (B/Ls) (1)

Byles on Bills of Exchange and Cheques says that, for the purposes of the Bills of Exchange Act 1882, “in writing” cannot include something written electronically – our view differs to some degree: › with BoEs, the difficulty is not whether they are “in writing”, but whether it is

possible to determine the original for the purposes of it functioning as a document of title or negotiable instrument

› as such, we take the view that BoEs could not be created over email as at least two copies would exist at any time (i.e. inbox and outbox)

› Electronic BoEs could however exist within a secure platform that attached the “original” to a single user but it is difficult to see how an e-platform fits with the 1882 Act, which simply requires a BoE to be an original in writing (which can be on paper, parchment or linen, but not metal (!)) and signed in order to be negotiable

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Bills of Exchange (BoEs) and Bills of Lading (B/Ls) (2)

eB/Ls: › as with BoEs, the difficulty with B/Ls is not whether they are “in writing”, but

other issues: whether it is possible to determine the original for the purposes of it

functioning as a document of title or negotiable instrument what if someone is not a member of the “club” Can paper B/Ls from a “club” give the same rights as an original B/L would

have done? When is it dated? How does this compete with the electronic system? Can you create security over an eB/L or the printed paper version? Will all relevant jurisdictions come to the same view on enforcement

processes etc? › ICC work in progress

In light of the above, and until a solution is found through the “clubs”, e-BoEs (and e-BLs) may need new laws

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CRR and payment instruments - overview Payment undertakings are used to mitigate against the risk of default in a

transaction.

Could be used as credit risk mitigation (CRM) for the purposes of calculating capital requirements under EC Regulation (EU) No 575/2013 (the CRR).

“unfunded credit protection” means a technique of credit risk mitigation where the reduction of the credit risk on the exposure of an institution derives from the obligation of a third party to pay an amount in the event of the default of the borrower or the occurrence of other specified credit events (Article 4(59) CRR).

Documentary credits are not a CRM technique as these payment undertakings are traditionally used to support underlying commercial trade transactions, rather than as credit risk mitigation for banks against the risk of default, and are unlikely to meet the relevant CRR criteria.

Payment instruments that could be used as CRM: › standby letters of credit; › demand guarantees; and › reimbursement undertakings

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CRR - relevant criteria Not expressly listed as an eligible protection agreement for

unfunded credit protection › “Guarantees” are eligible › No definition of what is meant by “guarantee”, but reasonable to conclude that

not limited to English law guarantees in the strict legal sense › Standbys and demand guarantees effectively function like guarantees

Key criteria for guarantees (not exhaustive): › “direct” obligation of the issuing bank (or equivalent party) to pay the

beneficiary on occurrence on certain events, which should include the default of the underlying obligor

› “clearly defined and incontrovertible” › must not contain any clause of provision, the fulfilment of which is outside the

direct control of the beneficiary, that would: allow the issuing bank to cancel unilaterally; increase the cost of the protection; and/or prevent the issuing bank from paying out in a timely manner

Relevant terms of the payment instrument? › The analysis needs to include any terms incorporated by reference into the

payment instrument, such as UCP 600, ISP 98, URDG 758 and URR 725

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Issues specific to payment instruments (1) Force majeure clauses

› Article 36 (Force Majeure) UCP 600 provides that upon resumption of its business, an issuing bank will not honour a credit that expired during an interruption of its business due to causes beyond its control.

› Article 15 (Force Majeure) URR 725 provides that a reimbursing bank assumes no liability or responsibility for the consequences arising out of the interruption of its business by causes beyond its control.

› The effect is to excuse the issuer of the payment undertaking from performance in limited circumstances where events have occurred which are outside its control and which prevent it from performing its obligations.

› There is no settled concept of “force majeure” as a matter of English law.

› Are force majeure provisions compatible with the CRR?

The guarantee must be an explicitly documented obligation. Additionally, for IRB banks, the terms and conditions of credit protection arrangements must be legally confirmed in writing by both the protection provider and the institution › “in writing” – what about SWIFT? Article 11a UCP 600 envisages authenticated

teletransmission of standby credits issued under UCP 600

› “by both parties” – this is not always market practice

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Issues specific to payment instruments (2)

Any waiting periods for making demands or payments in relation to the undertaking must comply with the CRR requirements that payment under the protection arrangement is made in a “timely manner”. › For example, Rules 2.01(c) and 5.01(a)(i) ISP98 provide that an issuer acts in a “timely

manner” if it honours a complying presentation within seven business days following the business day of presentation.

› We are not aware of any applicable guidance on what time period might be “timely” for the purposes of the CRR.

› The time periods we see in standbys and demand guarantees are generally shorter than waiting periods under insurance policies, which are typically 180 days.

Non-EU instruments and the “bail in” provisions. A bail-in provision may fall foul of the CRR requirements.

S&W opinions on ICC rules (UCP 600, ISP 98, URDG 758 and URR 725)

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Conflict of laws - overview Jurisdiction

The common law and European law rules on jurisdiction

The new Brussels Regulation

Some examples in the context of payment undertakings

Governing law

General principles for determining governing law of contractual relationships

Position under the ICC Uniform Rules

How the principles apply the relationships in a payment undertaking structure (e.g. applicant-bank, bank-bank, bank-beneficiary)

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Common law rules The common law rules are residual and only apply if the European

regime does not apply

Basic principle: jurisdiction based on valid service of process against defendant › Defendant located in England (even if only temporary) › Permission to serve outside jurisdiction

Alternative: Voluntary submission to the courts of England › A jurisdiction clause

Court’s jurisdiction may be challenged and proceeding stayed › e.g. on grounds on a more appropriate forum or where parties have agreed to

refer disputes to another forum – i.e. by virtue of a jurisdiction clause

Parallel claims in different jurisdictions? › Non-exclusive jurisdiction clauses

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Defendant located abroad? Permission from the court required to serve out of the jurisdiction

Need to show reasonable prospect of success and that England is the proper place to bring the claim

“Jurisdictional gateways” listed in the CPR: › Examples: contract made within jurisdiction contract contains exclusive jurisdiction clause governing law is English breach of contract was committed in England

› Standard Bank PLC v Just Group LLC and Others [2014] EWHC 2687 (comm)

› Goldman Sachs International SA v Novo Banco SA [2015] EWHC 2371 (Comm) and [2016] EWCA Civ

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The European regime (1) Mandatory rules – apply when defendant domiciled in an EU

member state (inc. Denmark), Iceland, Switzerland, Norway or certain dependant territories

Take precedence over common law rules

The Brussels Regulation, the Lugano Conventions and the Brussels Convention › Applies to “civil and commercial matters” › Some specific provisions relating to insurance, consumer contracts, employment › Does not apply to insolvency proceedings (Article 1(2)(b)) › Does not apply to arbitration (Article 1(2)(d))

Prescriptive and automatic – no room for Courts to exercise discretion (compare the common law rules)

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The European regime (2) Basic principle: defendant should be sued in country of domicile

The domicile rule overridden in some circumstances

Jurisdiction rules: › Jurisdictions have exclusive jurisdiction over certain matters (e.g. immovable property

located in that jurisdiction) › Parties have agreed a jurisdiction (Article 23) – e.g. a jurisdiction clause › Governing law of contract not a jurisdictional ground (compare English common law

position)

Connection between claim and member state (Article 5) › For a contract: place of performance (e.g. where goods delivered or services provided) › Where dispute arises out of operations or branch or agent, the place where such

branch or agent located

Connected claims (Article 6)

Where parallel proceedings in two or more member states, priority to the court where proceedings commenced first (first seised) › Stay or dismissal of proceedings

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Jurisdiction and payment undertakings (1) Submission to jurisdiction

› Uniform Rules? › URDG 758 Article 35: Specifies jurisdiction in absence of choice › Separates jurisdiction of guarantee and counter-guarantee

Defendant located in EU: The European regime › Payment undertakings: for “matters relating to a contract” “place of performance

of the obligation in question” › Judicial / academic support that contractual disputes arising from LCs are “matters

relating to a contract” › “Obligation in question”: will almost always involve the bank’s obligation to pay › “Place of performance”: Place where services provided (or should have been

provided), unless otherwise agreed › What is the action being performed? Examination of the documents? Payment of

the funds?

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Jurisdiction and payment undertakings (2) If the European regime does not apply: common law rules

Likely gateways: Contract made within jurisdiction, contract governed by English law, contract has exclusive jurisdiction clause or breach of contract committed within jurisdiction › E.g. Seaconsar Far East Limited v Bank Markazi Jomhouri Islami Iran [1994] 1 AC

438, HL – unconfirmed LC available at sight at counters of advising bank in London. Permission given to serve out of jurisdiction on basis of issues to be tried regarding whether or not valid rejection of documents presented

Related contracts (applicant-bank, bank-beneficiary): each autonomous contract could in theory give rise to separate jurisdictional enquiry

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Brussels Regulation Council Regulation (EU) 1215/2012 – the “Brussels Regulation (recast)”

Applies to all legal proceedings instituted on or after 10 January 2015

Repeals existing Brussels Regulation

Default rule on domicile retained

Jurisdiction rules retained (e.g place of performance)

Arbitration exclusion clarified › Courts can stay or dismiss proceedings in favour of arbitration › New York Convention takes precedence (i.e. arbitral awards can be enforced even

where conflicting court judgement)

The Rothschild issue has not been resolved

New international lis pendens rule – member state courts can stay proceedings to take into account proceedings in a third state. › Risk for non-exclusive jurisdiction clauses?

Article numbering has changed

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Governing law (1) Regulation 593/2008 on the law applicable to contractual

obligations – Rome I

Applicable to EU member states (except Denmark)

Applies to contracts entered into after 17 December 2009

Applies to civil and commercial matters › Specific rules for insurance contract, consumer contracts, employment

Applicable law governs interpretation and performance, consequences of breach of obligations (assessment of damages), ways of extinguishing obligations and consequences of invalidity (Article 12) › Position unclear regarding equitable remedies. Under English law, injunctions and

specific performance customarily determined by law of the forum.

Exclusions include: › Arbitration and jurisdiction agreements › Contractual obligations arising out negotiable instruments (BOEs , prom notes)

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Governing law (2) Express choice of law (Article 3)

› Limited possibility of implying / inferring a choice of law › Possible to choose a governing law with no connection to the contract (subject to

some modifications) › Express choice may be modified by mandatory provisions of law of forum or contrary

to public policy

Applicable law in absence of choice (Article 4) › Specific rules for some contracts (Article 4(1)) E.g. for a sales or services contract, the law of the country where the seller/service

provider has “habitual residence” In absence of special rule: governed by the law of country where the characteristic

performer has habitual residence (Article 4(2)) “Habitual residence” – place of central administration, or place of branch/agent

(Article 19) Taurus Petroleum Ltd v State Oil Marketing Company of the Ministry of Oil, Republic

of Iraq [2013] EWHC 3494 (Comm) and [2015] EWCA Civ 835 › Law of country with which most closely connected (Article 4(4)) › “Escape clause” – disregard other rules where “manifestly more closely connected”

with law of different country (Article 4(3))

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Governing law and payment undertakings An express choice of law clause

Choice of law through incorporation of Uniform Rules › UCP 600: no provision › ISP98: no provision › URDG 758: Location of guarantor’s (or counter-guarantor’s) branch or office that

issued the guarantee (or counter-guarantee) (Article 34) Guarantee and counter-guarantee likely to be governed by different laws

› URBPO: Location of branch or office of Obligor Bank as specified in the Established Baseline (Article 15)

Where no provision: Rome I › How does it apply to the different relationships?

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BREXIT???


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Recent cases/ICC opinions - guarantees and sanctions Libyan Investment Authority v Glenn Maud [2016] EWCA Civ 788

› Court of Appeal allowed an appeal in July 2016 against the setting aside of a statutory demand in relation to a guarantee

› Burden of proof

› Restriction on dealing with asset vs funds

› What constitutes a claim

› Pre-existing contract exception

› DVB Bank SE and others v Shere Shipping Company Ltd and others (2013)

› Scope of application


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Recent cases/ICC opinions - letters of credit and injunction claims for fraud (1) The tests for injunction claims

› General – not frivolous or vexatious (American Cyanamid Co v Ethicon Ltd [1975]

AC 936)

› Letters of credit – clear evidence of fraud and knowledge of the bank that any demand will be clearly fraudulent (Bolivinter Oil SA v Chase Manhattan Bank NA [1984] 1 WLR 393)

› Both – claimant to show the balance of convenience lies with granting the injunction, having regard to the cross-undertaking in damages and any other relevant circumstance


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Recent cases/ICC opinions - letters of credit and injunction claims for fraud (2) Alternative Power Solution Ltd v Central Electricity Board and

another (Mauritius) [2014] UKPC 31 › Contractual right to inspect pre-shipment; no inspection

› Goods shipped and payment under letter of credit claimed

› Mauritian court of first instance (and subsequently Court of Appeal) held

arguable case fraud exception applied and balance of convenience was in favour of granting the injunction

› Privy Council held: taking underlying dispute into account wrong in law when applying Bolivinter balance of convenience not in favour of injunction

› Decision shows narrow application of fraud exception and importance of unconditional and independent nature of letters of credit


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Recent cases/ICC opinions - letters of credit and injunction claims for fraud (3) Petrosaudi Oil Services (Venezuela) Ltd v Novo Banco SA and others

[2016] EWHC Comm 2456 › Facts: Petrosaudi issues invoices to a Venezuelan state entity for services rendered Contract under Venezuelan law said invoices to be paid even if disputed,

subject to dispute resolution Letter of credit issued as security for invoices Invoices disputed; arbitration determined contract provisions regarding “pay

subject to dispute resolution” null and void => payment not due at that time Petrosaudi subsequently claimed under the letter of credit stating monies due

and payable under the contract › Decision: Invoice payments have to be due immediately at time of presentation Payments in the future or potential payments did not comply Signatory of demand under letter of credit, whilst he hadn’t considered

whether due for payment meant due now or at some point, did not believe payment was due in the obvious way the claim statement intended =>the statement was false or reckless so the fraud exception applied


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Recent cases/ICC opinions - letters of credit and partial shipments (1) ICC opinion R843/TA816 Rev 2012-2016 (UCP 600 Article 31)

› Facts - extracts from the letter of credit: 32B (Amount) US60,000 39A (Amount tolerance) 0/0 43P (Partial shipments) Permitted 45A (Goods description) 500 bags of dried grain 47A (Additional conditions): (i) where there will be further shipment, beneficiary must present a certificate stating that there will be further drawings under the letter of credit; and (ii) upon final drawing, a certificate of final shipment should be presented Presentation requested a drawing of US$50,000 for 360 bags of dried grain

and included a certificate stating “We confirm that there will be no further shipments”

Issuing bank refused to pay saying presentation discrepant since it was a short shipment and short drawing because of the confirmation of final shipment

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Recent cases/ICC opinions - letters of credit and partial shipments (2)

› ICC view: Badly issued, self-contradictory credit for which the issuing bank will have to

accept the consequences Issuing bank and nominated bank must examine a presentation to determine

based on only the documents whether on their face they appear to be a complying presentation

Credit requested presentation of a final shipment certificate and one was presented so the drawing for US$50,000 would be the only drawing

Credit permits partial shipments and there is always the possibility of partial drawings under a credit for a variety of reasons, including those resulting from or triggering a breach of the underlying contract (eg full contracted quantity not delivered) but this is outside the scope of the credit and UCP 600

Discrepancy cited was incorrect and therefore the presentation was not discrepant


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Recent cases/ICC opinions - bills of lading and incorporation of time charters (1) Essar Shipping Ltd v Bank of China Ltd [2015] EWHC

› Facts: Vessel time chartered by Essar to Ocean Bulk Shipping who voyage chartered

the vessel to Atlas Iron Ltd Both charterparty agreements were dated 27 November 2013 and were

subject to English law and arbitration in London under LMAA rules Bills of lading were “to order” and stated freight was payable as per

“Charterparty dated 27 November 2013” and all terms and conditions, including as to governing law and jurisdiction, of the charterparty were incorporated

Bank of China financed the purchase of the voyage cargo via a LC facility and, following a default, became the holders of the bills of lading

Cargo discharged against LoI in favour of Essar from the time charterer Bank of China arrested the cargo in March 2014 and the vessel in September

2014 to cover its claims under the LC facility and the bills of lading and started proceedings against Essar in China

Essar challenged jurisdiction, lost and appealed Essar subsequently applied for an anti-suit injunction in the English courts


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Recent cases/ICC opinions - bills of lading and incorporation of time charters (2)

› Decision - the English courts held: that there was too long a delay in issuing anti-suit proceedings as:

o It only challenged jurisdiction in China 2 months after proceedings commenced in China; and

o It only sought an anti-suit injunction in the English courts 7 months after that

that it was not clear that any challenge in China would succeed and this was not good enough a reason for the delay in applying to the English courts

› What have we learnt? parties involved in international trade prefer to (and are willing to) initiate

litigation in their home jurisdiction irrespective of the terms of a contract Perhaps unusually, the English courts won’t always assist a party arguing

breach of a jurisdiction clause where they do not attempt to seek redress in good time even where there is, on the face of the bill of lading, an express jursdiction clause in its favour

Time appears to be of the essence


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Recent cases/ICC opinions - bills of lading and incorporation of time charters (3) The Anna Bo [2015] 2 Lloyd’s Rep 578 and the Congenbill 2016

› Questions:

If a charterparty agreement’s terms are expressly incorporated into a bill of lading but the date of the agreement is left blank, what is the effect? Is it any different if there are two charterparty agreements with the same date?

Should the starting point be that the relevant charterparty is the one to which the shipowner is party? Does it depend whether the charterparties are time or voyage charterparties?

What effect does terminology have in the drafting (eg reference to “freight being payable”)


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› Pre-existing authorities (San Nicholas [1976] 1 Lloyd’s Rep 8; SLS Everest Case [1981] 2 Lloyd’s Rep 389)

If a single charterparty exists, then it will be incorporated even if the date

reference on the bill of lading is blank and irrespective as to whether it is a time charter or a voyage charter Where there is more than one charterparty, then it will come down to the facts and the wording of the bill of lading. However, the general rule is that the head charterparty is the relevant one as the shipowner is party to that charterparty

If the head charter is a time charter and the sub-charter is a voyage charter, then there is more of an argument for the voyage charter to be the relevant one, indeed that is what the court held in the SLS case


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› In the Anna Bo, the court decided: The reference to “freight”, a term more applicable to voyage charters than

time charters was not in itself sufficient to mean the reference was intended to be to the voyage charter

The fact that the date of the charterparty referred to in the bill of lading was the date of the time chaterparty was clear and could not be overturned by the use of a potentially inappropriate term such as “freight”

› What has happened since? In terms of the Congenbill 2016 form, nothing has changed. Was a chance missed by those drafting the model form? Probably yes, but it is a standard form so could be amended to remove

inappropriate terms on a case by case basis the Anna Bo case seems clear (at least for now) and was a practical decision

giving effect to what the parties are almost certain to have meant


Simon Cook Partner Simon Cook is a partner in the Trade & Export Finance Group in the London office of Sullivan & Worcester UK LLP. He has experience in a wide variety of banking and finance transactions, including in particular in relation to structured trade finance, trade finance, project finance, invoice discounting facilities and borrowing-base facilities in Africa, the Middle East, Asia and the CIS. His work in the structured trade area covers a range of pre-export and prepayment financings acting for both lenders and borrowers notably in oil, telecoms, soft commodities and metals sectors with particular experience in Africa and the Middle East.

Simon has worked and travelled extensively in Africa and the Middle East, having spent over three and a half years in Dubai. He has participated in a number of structured trade finance and project finance conferences and seminars throughout Europe, the Middle East and Africa, including speaking at conferences on PPP in South Africa; on project finance and structured trade finance at Afrexim's annual structured finance conferences in Cairo, Ghana and South Africa; and at structured trade finance seminars and general finance in London, Paris, Lisbon, Geneva, South Africa, Zambia, Kenya, Uganda, Ghana and Dubai.

Sullivan & Worcester UK LLP Tower 42 25 Old Broad Street London EC2N 1HQ

T +44 (0)20 7448 1002 F +44 (0)20 7900 3472 [email protected]

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Awards & Recognition TFR “Best Law Firm in Trade Finance”

Trade & Forfaiting Review (TFR) named Sullivan & Worcester "Best Law Firm in Trade Finance" in its 2014, 2015 and 2016 TFR Excellence Awards GTR “Best Law Firm 2015 Poll”

Sullivan & Worcester UK LLP was top ranked firm in the Global Trade Review (GTR) Best Law Firm 2015 poll The Legal 500 UK 2016

Sullivan & Worcester UK LLP was ranked in the following category in The Legal 500 UK:

› Trade Finance (Tier 1)

Chambers UK 2016

Chambers UK ranked Sullivan & Worcester UK LLP, along with Geoffrey Wynne and Simon Cook in the following area:

› Commodities: Trade Finance (UK-wide)

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Sullivan & Worcester advise clients concerning their activities throughout the world, with a special emphasis on the emerging markets of Africa, Asia, the CIS countries and Latin America.

Our practice is multi-disciplinary, involving attorneys and solicitors expert in trade, banking, securitization, securities law, project finance, insurance, tax, compliance issues and dispute resolution.

In addition to trade and commodities finance, the firm intends to build up a London practice linked closely to our U.S. practice and the needs of our clients worldwide. The office will also benefit from our joint venture in Israel, ZAG-S&W, and significant client activity across Europe and Asia. We will broaden and enhance our existing practices in cross-border finance, mergers and acquisitions, tax, banking and international arbitration.

© 2013 Sullivan & Worcester Sullivan & Worcester is the collective trade name for an international legal practice. Sullivan & Worcester UK LLP is a limited liability partnership registered in England and Wales under number OC381549 and is a practice of registered and foreign lawyers and English solicitors. Sullivan & Worcester UK LLP is authorised and regulated by the Solicitors Regulation Authority (“SRA”). The term partner is used to refer to a member of Sullivan & Worcester UK LLP. A list of the names of all the partners is available for inspection at our registered office, Tower 42, 25 Old Broad Street, London, EC2N 1HQ. Please see sandw.com for Legal Notices, including further information on our professional obligations. This presentation is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. We are providing information to you on the basis you agree to keep it confidential. If you give us confidential information but do not instruct or retain us, we may act for another client on any matter to which that confidential information may be relevant.

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