Service launched for resolving international letter of credit disputes
Paris 26 September 1997- A new global service for the resolution of international letter of credit disputes was announced today. The ICC's new DOCDEX system builds on the ICC's premier role in international commercial dispute resolution, but introduces several striking innovations. DOCDEX, in contrast with the more well-known ICC arbitration, is strictly limited in subject matter - it only involves disputes involving documentary credits and their reimbursement. Note that documentary credits, also known as letters of credit, are a sector which has been estimated to represent more than US$ 100 billion in banking obligations annually. Documentary credits are an essential part of the export process.
Because DOCDEX defines its subject matter so tightly, the ICC has been able to recruit for its DOCDEX panels a pool of more than 80 highly-specialized and experienced experts from 16 countries. This responds to a request on behalf of international bankers for expert-based dispute resolution. Bankers often complain that many judges, arbitrators and lawyers have difficulty understanding the intricacies of everyday letter of credit practice, and therefore frequently come to incorrect decisions. The ICC's expert-based system - which includes a review by three experts, plus a final review by the ICC Banking Commission officers -- will preclude the problem of uninformed decisions. As the developer of the global standard rules for documentary credit practice (viz., the ICC's Uniform Customs and Practice for Documentary Credits 500, also known as UCP 500), the ICC has unparalleled prestige in the field of international trade banking and finance.
Moreover, the ICC has committed itself to providing a speedy, high-quality service at a strictly limited price. Thus, for credits under US$ 100 000 in value, the DOCDEX administrative fee is set at US$ 5000 and the panel will respond with its official opinion in most cases within six to twelve weeks after receipt by the ICC of the completed application. For credits exceeding US$ 100 000 in value, the ICC may request an additional deposit of US$ 5000.
DOCDEX decisions are in principle non-binding (although parties may override the basic provision by stipulating that decisions will be legally binding). The non-binding nature of the basic procedure is intended to provide banks with the alternative to litigation of a highly-reliable expert system which is nonetheless not obligatory. The ICC expects and urges banks to voluntarily comply with DOCDEX decisions, but it is likely in any event that any court called upon to hear a case involving a credit would give great weight to any DOCDEX decision introduced into evidence. The ICC recommends that all banks involved in international trade begin to insert a reference to DOCDEX in their documentary credit applications, as well as in the advices or other communications. A possible formulation would be as follows : "This credit is issued subject to the ICC's Uniform Customs and Practice for Documentary Credits 500 and the DOCDEX Rules."
The ICC expects that DOCDEX wi
ll help solve a problem that has been plaguing international trade in recent years - misunderstandings and delays by certain traders and banks in dealing with documentary credits. When the documentary credit system breaks down, international trade as a whole suffers.
The ICC intends its new DOCDEX system to serve as the linchpin of its continuing global effort to maintain the integrity of the immensely valuable documentary credit system.
For more information, click here for the DOCDEX fact sheet or consult the ICC DOCDEX rules (ICC Publication N577), which can be obtained from the ICC at the following numbers:
ICC International Centre for Expertise - DOCDEX