By Rajan Dhami, Francesca Umicini-Clark and Simon Cook

On 10 September 2019, the International Chamber of Commerce (ICC) issued a much anticipated set of revisions to the Incoterms – the international commercial terms published to clarify the obligations of buyers and sellers in trade contracts, which will come into force on 1 January 2020. In a further attempt to adapt to current commercial practices and provide innovative solutions, Incoterms 2020 have introduced a number of significant changes.

The most notable changes include:

by Amanda Montano and Alexander Swayne

Sullivan is pleased to have been named "Best Trade Finance Law Firm" 2019 by leading trade finance publication Global Trade Review (GTR) at its annual Leaders in Trade awards, held on 2 May 2019 in London.

The Leaders in Trade awards highlight excellence in the trade, commodity, supply chain and export finance and fintech markets.

By Hannah Fearn, Geoffrey Wynne and Marian Boyle

Today the Prudential Regulation Authority (PRA) has published a Policy Statement (PS 8/19) and updated Supervisory Statement (17/13 “Credit Risk Mitigation”, which will come into force on 13 September 2019) in relation to the use of different types of guarantees as unfunded credit risk mitigation (CRM) for the purposes of calculating capital requirements under the Capital Requirements Regulation (575/2013) (CRR).

By Sam Fowler-Holmes and Fiona Luong

UK companies who are trading or are considering trading with Iran may now face potential criminal penalties for breaching the EU Blocking Statute, underscoring the need to carry out due diligence in order to best manage their risk profile. This includes:

• assessing whether any authorisations are required from either the US or EU in relation to current and future business activities (e.g. by obtaining the EU Commission’s authorisation to comply with specified US extraterritorial sanctions); and

• weighing up the risks associated with breaching US extraterritorial sanctions against those of breaching the EU Blocking Statute and updating internal policies, protocols, and business plans (where appropriate).

This may cause problems for parties who will be caught between US sanctions and UK/EU requirements.

by Amanda Montano and Judith Abanto

Kicking off the monthly Breakfast Seminar series for 2019, Sullivan’s London partner Mark Norris gave a presentation on the key compliance risks faced by trade and project finance practitioners.

Putting the need for compliance in context, he reported that the World Bank and the OECD estimate that bribery, tax evasion and corruption are responsible for revenue losses in the billions, particularly in poorer economies.

By Hannah Fearn

I recently had the pleasure of attending the 2019 BAFT Europe Bank to Bank Forum in London. The well-attended event included many highly informative panel talks covering a range of topics, but with a particular focus on the future of trade finance.

Highlights included a discussion on the challenges facing the digitisation of trade (including legal and regulatory hurdles) and insights into how banks manage liquidity in the era of instant payments. BAFT took advantage of technology to make the sessions as interactive as possible, with delegates able to use their phones to participate in live polls and Q&As.

While we are waiting on the LMA's Working Sub-Group on Transition Issues in Syndicated Loan Markets to produce draft provisions dealing with the transition to SONIA, their US counterpart, the Alternative Reference Rates Committee (ARRC) has already done so for SOFR, the US dollar risk free rate (RFR), in its recent consultation paper "Regarding More Robust LIBOR Fallback Contract Language for New Originations of LIBOR Syndicated Business Loans".

The ARRC's approach is likely to be influential for the LMA in relation to transitional drafting for USD (and potentially for other currencies as well in the interests of consistency). The highlights of the ARRC consultation paper include:

By Amanda Montano, Sullivan Associate and Fiona Luong, Sullivan Trainee

Having been instructed by BAFT to prepare the revised Master Participation Agreement, Sullivan’s London Trade Finance team gave a presentation on ‘All you need to know about the BAFT MPA’ at the firm’s September Seminar.

Attended by an audience of more than 100 financial institutions and participants in the trade finance market, Geoff Wynne and Hannah Fearn talked about the key changes and implications of the new MPA.

by Hannah Fearn, Sullivan Managing Associate and Fiona Luong, Sullivan Trainee

BAFT (the Bankers Association for Finance & Trade), together with ITFA (the International Trade and Forfaiting Association), established a working group to review and identify amendments to the original 2008 English law Master Participation Agreement (2008 MPA), to bring it in line with current market practice.