The world of international trade and trade finance can be confusing, and filled with many detailed processes.
Naturally, this can lead to disputes between two or more parties, which requires an impartial body to help litigate the problems. As a response to these issues, the ICC created Documentary Instruments Dispute Resolution Expertise (DOCDEX).
The ICC DOCDEX is a dispute resolution procedure specifically designed for trade finance, whereby a panel of three independent and impartial experts renders a decision on a dispute arising out of a trade finance instrument or undertaking.
The DOCDEX service is administered by the ICC International Centre for Amicable Dispute Resolution (ICC International Centre for ADR) (referred to hereunder as the “the Centre”), a separate administrative body within the ICC.
The ICC set the DOCDEX Rules to be used in DOCDEX proceedings. The DOCDEX rules provide for an entirely administered procedure, in which the main task of the panel of appointed experts is to render a written DOCDEX decision after giving each party of a dispute a reasonable opportunity to present its case.
The current DOCDEX rules came into force on 1 May 2015. The rules are available for any dispute which the Centre may agree to administer and which relates to:
- a documentary credit (referred to also as a letter of credit).
- a standby letter of credit.
- a bank-to-bank reimbursement.
- a documentary collection.
- a demand guarantee or counter-guarantee.
- a forfaiting transaction.
- a bank payment obligation (BPO).
- any other trade finance-related instrument, undertaking, or agreement.
The DOCDEX rules arrange to resolve disputes arising out of or in connection with trade finance instruments, undertakings, or agreements that provide for the application of ICC Banking Rules (e.g., UCP 600 or URDG 758).
However, if a dispute arises from a trade finance instrument that does not provide for the application of ICC Banking Rules, the parties must first agree in writing that such dispute shall be administered under the DOCDEX rules.
Otherwise, the Centre will refuse to administer the claim under the rules and reject the claim.
The DOCDEX procedures usually take two to three months, compared to years of court proceedings.
The submission of a claim for DOCDEX proceedings
The paragraphs hereunder summarise the main procedures required to submit a claim under the DOCDEX rule to simplify the idea for the purpose of this article. However, the detailed procedures of the DOCDEX are available through DOCDEX rules published on the ICC suite.
A claimant shall apply for a DOCDEX decision by submitting a claim using a standard form designed for this purpose to the Centre. The claim shall be accompanied by all documents the claimant considers necessary to support its claim.
The claim and all accompanying documents shall be supplied to the Centre in electronic form, with one hard copy for each respondent (i.e., the party or parties against which a claim is made in DOCDEX proceedings).
All submissions in DOCDEX proceedings should be rendered in English language only. At the time of submitting a claim, the claimant shall pay the fee specified in the appendix of the DOCDEX rules entitled “Fees and Costs.”
After a claimant completes a submission, the Center checks the submitted claim to determine whether or not it falls within the scope of the DOCDEX rules.
The version of the DOCDEX rules applicable at the time of submitting a claim shall apply to the proceedings unless otherwise agreed by each claimant and respondent.
Where the DOCDEX rules are applicable, and upon receipt of a complete claim and filing fee, the Centre will send a hard copy of the claim and any accompanying documents to each respondent identified in the claim for its answer.
The claim and documents shall be sent by delivery against receipt, registered post, or courier to the address of the respondent provided by the claimant in the claim. Respondent(s) need not pay any fees to participate in the DOCDEX proceedings.
The answer of the respondent and all accompanying documents shall be supplied to the Centre only in electronic form. The Centre shall forward the answer and accompanying documents to the claimant and any other respondent.
If a respondent does not submit an answer, the DOCDEX proceedings shall nonetheless continue. However, the respondent(s) who fail to submit an answer shall not receive a copy of the DOCDEX decision.
The Centre must receive any answer from the respondent within the period it specifies when sending the claim to each respondent, which shall not exceed 30 days. Any answer received by the Centre after the expiry of the specified period shall be disregarded.
The processing of the DOCDEX decision
A panel of three impartial experts with extensive experience and knowledge of trade finance transactions study the DOCDEX case and make the relevant decision. These experts are selected from a list maintained by the ICC Banking Commission.
There is no direct communication between the parties and the appointed experts, whose identities shall remain confidential.
The appointed experts shall render the DOCDEX decision exclusively based on the claim, any answer from a respondent, supplemented data, the terms and conditions of the trade finance instrument, the ICC Banking Rules that may be applicable, and international standard practice in trade finance.
Following deliberations among the appointed experts, the president of the panel prepares and submits to the Centre a draft of the decision.
The draft of the decision shall be submitted to the Centre within 30 days of receipt by the appointed experts of all information and documents they consider necessary for determining the issues in dispute. The decision shall be in the English language.
After the panel decides on a specific case, one of the banking commission’s technical advisers, appointed by the Chair of the ICC Banking Commission, personally reviews the decision to certify that it is in line with ICC Banking Rules and/or international trade finance practice standards.
The technical adviser may lay down modifications as to the form of the draft decision and, without affecting the appointed experts’ liberty of decision, may also draw their attention to points of substance.
The Centre, the technical adviser, and the appointed experts shall not reveal the identities of the appointed experts and the technical adviser to any claimant, respondent, or any other person.
Once a decision has been made, the Centre sends a copy to each claimant and to any respondent that has submitted an answer. The decision shall be deemed to have been made on the date stated therein.
The nature of the DOCDEX procedures and decisions
The DOCDEX rules provide no opportunity for:
- The oral examination of fact.
- Expert witnesses.
- Oral submissions at a hearing.
Accordingly, the DOCDEX rules do not have the ability to resolve any factual or legal issues raised by the claim. Furthermore, the DOCDEX rules indicate that the DOCDEX proceedings do not represent arbitral proceedings, and its decision is not an arbitral award.
A DOCDEX decision is not binding on any claimant or respondent unless each claimant and respondent agree in writing that the decision shall be contractually binding upon them.
The costs of the DOCDEX services
At the time of submitting a claim to DOCDEX, the claimant shall pay the fee detailed hereunder and which may vary from time to time based on the ICC decision:
- Where the amount in dispute does not exceed $1,000,000, the standard fee is $5,000, which includes the Centre’s administrative expenses and the appointed experts’ fees. For all amounts in dispute exceeding $1,000,000, the standard fee is $10,000.
- The Centre may charge an additional fee of up to 50% of the standard fee.
- Value-added tax (VAT) or charges of a similar nature at the prevailing rate (if any).
Payment shall be made by bank transfer to the account of the ICC, carrying the reference “DOCDEX case” as per the details mentioned in the appendix of the DOCDEX rules entitled “Fees and Costs.”