AN INQUIRY INTO THE STRICT COMPLIANCE OF THE INTERNATIONAL CHAMBER OF COMMERCE TRADE RULES IN FINANCING PROCESS
Waynesburg University, USA
This article addresses the phenomenon of document discrepancies in international trade financing as a significant worldwide issue resulting in unnecessary delays, refused payments, and financial loss when banks discover discrepancies in required trade finance documents presented under the International Chamber of Commerce trade rules known as Uniform Customs and Practice. While this problem has grown in the past thirty years, no research has been undertaken to address this problem. Drawing on e-research, documentary survey, and descriptive research methodologies, the findings reveal that the unusual requirements of documentary credit and the ambiguity of the Uniform Customs and Practice 500 caused discrepancies when the required documents examined by the banks. To solve these problems, this article recommends changes include elimination of unusual requirements of documentary credit and concise articulation of the context of each article to facilitate easy understanding of contractual terms. Additionally, the personnel involved in the process must be trained to ensure they have the required skills to properly manage relevant documents for international trade financing.
Key Words: international trade finance, International Chamber of Commerce, Uniform Customs and Practice, discrepancies, and banking.
JELCodes: 40, G21, and M21