Talking Trade Finance

Compliance Alert! Regulated Entities Gear Up for the UK's Economic Crime Levy

Posted by Natalie Lake on Mar 23, 2023 9:09:48 AM

If your organisation is both supervised under the UK Money Laundering Regulations (“MLR”) and your UK Revenue exceeds £10.2 million per year, if you are not already, you will need to prepare for the forthcoming Economic Crime Levy (the “ECL”). The ECL aims to raise approximately £100 million per annum to help fund new and uplifted anti-money laundering and economic crime capabilities.[1]

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Topics: Economic Crime Levy

Transferring Risk in Trade Assets

Posted by Maria Capocci on Feb 10, 2023 12:36:57 PM

Posted by London trainee Pedro Leake-Bandeira and associate Maria Capocci

The original Bankers Association of Finance and Trade Master Participation Agreement (“BAFT MPA”) was launched in 2008 to enable market participants (with its focus on banking groups) to more easily enter into risk transfer agreements, by providing a standard form document that all participants would grow to know and understand.

At the most recent Sullivan trade finance webinar, Geoff Wynne covered the development of documentation for transferring risk through different forms of participation agreements and considered whether the BAFT MPA is always the best way.

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Topics: BAFT MPA

Understanding Export Controls in UK Sanctions Legislation Relating to Russia: Issues for Lenders

Posted by Jacqueline Cook on Dec 1, 2022 8:23:28 AM

Jacqueline Cook, Of Counsel and Senior Knowledge Development Lawyer in our London Trade  & Export Finance Practice, has written an article, "Understanding Export Controls in UK Sanctions Legislation Relating to Russia: Issues for Lenders," first published by Butterworths Journal of International Banking and Financial Law (JIBFL) in November 2022.

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Gates Opening for the Digitalisation of Trade Documents

Posted by Natalie Lake on Oct 21, 2022 11:30:33 AM

On 12 October 2022, The Electronic Trade Documents Bill was introduced into Parliament.

It is a watershed moment in English law, but no-one has anticipated it more than those working in international trade. The (sometimes painful) process of trying to get trade documents from location A to B has been the source of frustration for many, exacerbated by the many lockdowns during the COVID-19 pandemic. Those who have advocated heavily for digitalisation of trade have been faced with one overriding problem: the inability to possess an electronic trade document under English law.

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Topics: Trade Finance, Digitalisation

July Webinar 2022 - The value and problems of using an IPU (Irrevocable/Independent Payment Undertaking) in Trade Receivables Transactions

Posted by Geoff Wynne on Aug 9, 2022 9:07:13 AM

At the latest Trade & Export Finance webinar, partner Geoffrey Wynne delved into the topic of Irrevocable/Independent Payment Undertaking commonly referred to as an IPU. An IPU is a payment obligation usually given by the buyer of goods and services to the Seller, and not by a third party (e.g. guarantor) and not given to a third party (e.g. a financer).

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Topics: IPU, BPU, ePU, Irrevocable/Independent Payment Undertaking

Non-Payment Insurance Policies – Practical Drafting Tips for Policyholders

Posted by Marian Boyle on Jun 6, 2022 12:29:06 PM

In the latest edition of Sullivan's webinar series, Marian Boyle, Head of Insurance and Dispute Resolution at Sullivan's London office discussed the key clauses found in comprehensive non-payment insurance (NPI) policies. She gave practical advice for policyholders on what to look out for in NPI wordings and provided examples of how the duties NPI policies impose can impact on the operation of the underlying credit risk they insure.

NPI policies provide an indemnity in the event of non-payment for any reason (save for those expressly excluded). If appropriately drafted, NPI policies permit policyholders to manage risks and to expand their financing capacity/offering using these highly effective credit support instruments.

The legal landscape

While NPI policies are subject to general English contract law principles, they are also governed by a body of statutes and common law principles peculiar to insurance contracts. How these rules operate in practice is not always evident from a plain reading of the contract. Thus, when taking out NPI, understanding the legal framework within which all such policies operate is vital for ensuring that the risk transfer relied upon is as robust as possible.

As with other English contracts, any NPI policy must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably be available to the parties when they entered into the contract, would have understood the language of the contract to mean. Evidence about what a party subjectively intended, or understood the contract to mean, is not relevant.

The insuring clause

The insuring clause describes the risk that insurers will cover. It always needs to be read in conjunction with the policy exclusions (see below). It is important that it is clear when a loss will be considered to have occurred.

It is equally important to ensure that the trigger for insurers’ indemnity is appropriate for the financing transaction that is being covered. The trigger for loss in respect of non-payment under a term loan is very different from structures where the insured is participating between the direct lender and the policyholder. Similarly, if what is being insured are potential losses under a receivables purchase agreement, the loss trigger will need to be drafted differently.

Exclusion clauses set out the circumstances in which coverage will not be provided, even if losses would otherwise fall within the scope of the insuring clause. NPI policies might, for example, exclude cover where the non-payment is caused by a breach by the policyholder of some term of the financing agreement, or where the loss is caused by the fraudulent or illegal act of the policyholder.

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Topics: commercial insurance policies

The Electronic Trade Documents Bill - it’s on the agenda!

Posted by Jacqueline Cook on May 12, 2022 10:31:46 AM

Following the highly anticipated publication by the Law Commission of its Electronic Trade Documents Report and draft Electronic Trade Documents Bill on 16 March 2022[1], the Electronic Trade Documents Bill (the Bill) is now on the legislative agenda for the year ahead. This was one of thirty-eight bills referred to in the Queen’s Speech (delivered on 10 May 2022) and is part of the UK Government’s plan to prioritise the growth and strength of the economy. The Bill will put electronic trade documents on the same legal footing as paper documents, thereby resolving the prevailing legal blocker under English law preventing possession of an intangible asset. This will greatly enhance the digitalisation of trade under English law.

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Topics: Digitalisation, Electronic Trade Documents Bill

Interpreting your contract in the wake of Russian sanctions – Commercial questions to consider

Posted by Amanda Montano on May 11, 2022 10:12:44 AM

Given the recent expansion of the regulatory landscape in light of the ongoing events in Russia and Ukraine, namely the imposition of extensive sanctions on Russia (and certain Russian banks and nationals), there has been a lot written and published on the black letter terms of the sanctions themselves. This update focuses on the common “secondary issues”, these being the commercial questions that arise from the implementation of sanctions that are most likely to impact on parties’ contractual obligations.

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Topics: Force majeure, Russian sanctions, Frustration, Illegality

What is the Impact of the Sanctions Imposed by the UK Against Russia on Finance and Trade Finance Transactions?

Posted by Jacqueline Cook on Mar 18, 2022 10:42:55 AM

This post is a follow-up to our recent post "Ukraine in Crisis: What do the UK sanctions against Russia and Russian entities mean for your business? - A practical guide" on UK sanctions against Russia.

In light of Russia’s recent invasion of Ukraine, the international community has responded in new ways through packages of sanctions against the Russian state, Russian banks and named individuals. Amongst other things, UK measures cover a number of trade-related sanctions, namely in respect of energy-related goods or services, infrastructure-related goods, military goods and technical assistance, dual-use goods and technology transfers. Provision of financial sanctions or funds (as defined in the Sanctions and Anti-Money Laundering Act 2018) for such goods, services and technology is also prohibited.

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Topics: Russia, Ukraine, UK Sanctions

Ukraine in Crisis: What Do the UK Sanctions Against Russia and Russian Entities Mean for Your Business? – A Practical Guide

Posted by Jacqueline Cook on Mar 2, 2022 3:19:57 PM

Where are we today?

With sanctions being imposed by the international community on an almost daily basis on Russia (and certain Russian banks and nationals) since its threatened destabilisation and subsequent invasion of Ukraine on 24 February 2022, keeping up with the ever-changing position is a challenge. Both here in the UK and across the globe, numerous financial and economic sanctions, as well as extensive and novel trade sanctions, have been imposed, with more waiting in the wings, all with the goal of limiting Russian access to the international markets, restrict the functioning of international contracts and stopping the flow of money to the Russian state, certain financial institutions and some businesses.

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Topics: Russia, Ukraine, UK Sanctions

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About the Blog


Talking Trade Finance is here to provide you with all of the latest updates in the Trade & Export Finance Industry.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

Meet the Editor


fowler-holmes-1

Sam Fowler-Holmes is a partner in the Trade & Export Finance Group in Sullivan’s London office. He specialises in structured and unstructured trade, commodity and export finance, advising both financial institution and corporate clients on a range of financing products including pre-export financing, prepayment financing, letter of credit and payment instrument facilities and working capital and borrowing base financings. Sam is a regular speaker at the Sullivan trade and export finance seminars and is a member of the ITFA Emerging Leaders Committee.

 

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