At the ICC Banking Commission meeting held in Miami on 3-6 April, the results of a survey on usage of URDG 758 was shared with the audience.
A summary is given below:
- There were 92 respondents from 37 countries (19 of which were located in Western Europe).
- There have been 20 translations made of the rules.
- Court decisions, in respect of transactions subject to URDG 758, were reported in 13 countries.
Questions (for which respondents did not provide answers to each):
Does any government organisation, in your jurisdiction, recommend the use of URDG?
YES - 15 respondents
NO - 65 respondents
Are there any statutory or other obstacles of a legal nature preventing the use of URDG?
General consensus is that there are no legal obstacles, but many public authorities and state-owned companies have their own templates and insist on the application of local law.
Are there any rules of URDG that should be reformed?
YES - 12 respondents
NO - 73 respondents
Articles mentioned for reform were 15, 17, 22, 23 and 25
Are there any issues not currently dealt with in URDG and should be considered in a future revision?
YES - 17 respondents
NO - 59 respondents
To be considered: Examination of documents; article 33 - transfer of counter-guarantee; article 21 - change of currency rule might conflict with local exchange control; article 20 - 5 business days examination period vs. period for payment; article 23 - period of suspension; how to deal with sanctions
Does your organisation encounter any difficulty in understanding any provision of URDG?
YES - 5 respondents
NO - 87 respondents
Articles 11, 22, 23, 25 (b) and 33
Are the model forms appended to URDG 758 used?
YES - 29 respondents
LIMITED - 18 respondents
NO - 41 respondents
For NO, most banks use own templates. When used, some were refused by beneficiaries, as well as customers, as they “do not look like normal guarantees”.
Have you encountered refusal by a correspondent bank, guarantor or corporate entity to use URDG?
YES - 49 respondents
NO - 29 respondents
Rejected by beneficiaries as they do not know URDG, public authorities prefer own templates, customs authorities insist on guarantees subject to local law, text of guarantee in a contract refers to local law.
Do you, as a bank, use URDG as standard or only if instructed by the applicant?
YES - 63 respondents
NO - 21 respondents
Some banks only use URDG for cross-border transactions.
Percentage of guarantees issued subject to URDG.
Large deviation of answers. For example, 2 banks in the same country indicated less than 1% as majority of trade finance with USA whereas another bank indicated 90%. Range of domestic guarantees = 0-20% and cross-border = 70-90%. Sri Lanka reported 100%.