CBN, ICC Nigeria To Evaluate Revised Uniform Rules

The Central Bank of Nigeria (CBN) and the International Chamber of Commerce Nigeria (ICC) have concluded plans to hold a sensitisation seminar on the revised version of the Uniform Rules for Demand Guarantees.

ICC rules are globally accepted in the fields of banking, customs, marketing, advertising and trade finance.

Consisting of 35 articles, the URDG rules set out the liabilities and responsibilities of the parties at each key stage of the lifecycle of the guarantee. The changes include innovative treatments of payment contingencies and more precise language for determining whether a presentation made under a guarantee or counter-guarantee, whether paper-based or electronic, is a complying presentation. These changes are expected to curb the rate of rejection of demands and increase the certainty of the instrument.

The sensitisation seminar is scheduled for early June in Lagos.

The URDG has gained increasing worldwide acceptance over the years. According to ICC Nigeria, URDG essentially applies to hundreds of billions of dollars of demand guarantees in monetary and performance obligations in a wide array of international and domestic contracts.

The revised URDG rules are the latest example of ICC‘s leadership in writing the rules that govern about $14 trillion of international trade. This new URDG is clearer, more precise, comprehensive, offering the fairest balance in an innovative way to the parties and competing interests

Internationally, the revised edition of the URDG, including model forms, is expected to enter into force on July1, 2010. According to a statement by ICC Nigeria in Lagos on Thursday, the seminar on the new 758 URDG, to be facilitated by renowned international and local experts, has been planned to “provide sensitisation opportunity for key stakeholders, like the authorised dealers, international operations and trade exchange executives, bankers, lawyers, audit and risk management officials.”

The URDG rules have also been endorsed by the United Nations Commission on International Trade Law and national lawmakers have used them as a model for independent guarantee statutes.

The statement by the Secretary General, ICC Nigeria, Mrs. Olubunmi Osuntuyi, read, “Since its founding in 1919, ICC has been writing rules to facilitate cross-border trade and investment. ICC rules are globally accepted in the fields of banking, customs, marketing, advertising and trade finance.”

In international sales, whereas a documentary credit assures the exporter of being paid upon the presentation of complying documentation showing that shipment is made, a demand guarantee provides protection to the importer against non-performance, or late or defective performance, by the exporter. The revision of the URDG spanned two and a half years, and was a cooperative effort by ICC‘s Banking Commission and its Commission on Commercial Law and Practice, which are made up of representatives from banks, companies and law firms worldwide. The revision was conducted under the stewardship of the ICC Task Force on Guarantees, a standing body of experts from 26 countries.

Sogbeba Dokubo