Icc Sanctions Guidance

ICC Issues Updated Guidance on Sanctions Clauses in Trade Finance

Guidance Highlights Tension Between Ensuring Compliance and Facilitating Legitimate Trade

Background

The International Chamber of Commerce (ICC) has issued an updated version of its Guidance Paper on the Use of Sanctions Clauses in Trade Finance-Related Instruments. The goal of this guidance is to assist banks and other parties involved in trade finance in understanding and complying with the complex and ever-evolving landscape of sanctions regulations.

Key Points

The updated guidance highlights the apparent tension between ensuring that an issuing bank is sufficiently protected from liability for violating sanctions laws and facilitating legitimate trade. The guidance notes that sanctions clauses are becoming more common in trade finance contracts, as banks seek to mitigate their legal and reputational risks.

However, the guidance also cautions that the use of overly broad or ambiguous sanctions clauses can create uncertainty and hinder the flow of legitimate trade. The guidance recommends that sanctions clauses should be tailored to the specific risks associated with the transaction and should be clear and concise.

Conclusion

The ICC's updated guidance provides valuable guidance for banks and other parties involved in trade finance on the use of sanctions clauses. By carefully considering the risks and benefits of such clauses, parties can help to ensure that they are compliant with sanctions laws while also facilitating legitimate trade.