Ortiginally published at https://www.doccredit.world/icc-opinions-why-has-usage-reduced/?ref=documentary-credit-world-newsletter
It is clearly evident that the number of queries submitted to the ICC Banking Commission has significantly reduced over the past several years.
No single factor has influenced this decrease, and it is more a confluence of several factors. Nevertheless, the core issue is not merely the lack of query submissions, but rather the underlying reason why practitioners appear increasingly reluctant to seek formal rulings. From a personal perspective, I believe several undercurrents are in motion.
Diminished ascendancy
For some years now, it has been increasingly apparent that the documentary credit, once the cornerstone of trade finance, is no longer the preferred instrument and dominant solution in many markets. A combination of evolving commercial practices, the proliferation of alternative financing mechanisms, and the drive for efficiency in global trade has contributed to its relative decline.
The growth of open account transactions, which now represents the preferred mode of settlement for a significant majority of international trade, is a key driver of this shift. Open account transactions offer a more straightforward, cost-effective means of settlement, particularly when buyers and sellers have established relationships built on trust and transparency. Unlike documentary credits, which require banks to act as intermediaries in ensuring compliance with documentary conditions under UCP 600, open account transactions allow goods to be shipped and paid for with minimal involvement from financial institutions in the document review process. This shift has been further reinforced by the rise of supply chain finance solutions, including factoring, reverse factoring, and invoice discounting which provide liquidity to suppliers while reducing reliance on traditional documentary credits.
Additionally, trade credit insurance has emerged as a widely used risk mitigation tool, allowing exporters to safeguard against non-payment risks without the administrative and documentary burden associated with documentary credits. This insurance-backed approach provides an alternative form of security to sellers, reducing the necessity of documentary credits in many transactions.
With fewer transactions supported by the documentary credit framework governed by UCP 600, the number of instances where discrepancies arise, and subsequently requiring resolution through ICC clarification, has naturally diminished. Historically, many disputes in trade finance have stemmed from the “rigid” documentary requirements of documentary credits, where discrepancies in documentation can lead to delays, refusals, and the need for ICC intervention. As usage declines, the volume of cases requiring interpretation or clarification of UCP 600 provisions has correspondingly decreased.
In essence, declining reliance on documentary credits and the concurrent rise of alternative financing mechanisms have led to a natural reduction in the volume of disputes requiring ICC clarification. As the landscape of trade finance continues to evolve, this trend is likely to persist, reinforcing the shift away from the documentary credit as the dominant instrument of international trade settlement.
From reduced usage emanates a natural decline in disputes requiring ICC clarification.
Risk appetite
Financial institutions are becoming increasingly conservative in their trade finance offerings, a trend driven in large part by heightened supervisory scrutiny. In recent years, regulatory requirements surrounding anti-money laundering (AML), know-your-customer (KYC), counter-terrorism financing (CTF), and economic sanctions compliance have become more stringent, necessitating enhanced due diligence processes in trade finance transactions.
Financial institutions are under growing pressure to ensure that transactions do not inadvertently facilitate illicit activities, leading them to adopt a risk-averse approach in structuring their trade finance products.
This heightened caution is particularly evident in the issuance of documentary credits. While documentary credits have traditionally been used to mitigate payment and performance risks in international trade, their effectiveness depends on the ability of financial institutions to manage operational and compliance risks. As a result, financial institutions are increasingly selective about the transactions they support, often declining to issue documentary credits for counterparties in high-risk jurisdictions where regulatory, political, or economic instability poses heightened exposure.
Moreover, when financial institutions do issue documentary credits, they frequently insert highly specific terms and conditions aimed at mitigating potential risks and minimising the likelihood of discrepancies. Documentary credits are, by nature, subject to compliance requirements under UCP 600, meaning that even minor inconsistencies in documentation can result in delays or non-payment. To prevent such irritants, financial institutions often impose additional stipulations on beneficiaries, requiring precise adherence to documentary requirements that leave little room for interpretation.
This cautious approach serves to pre-empt potential disputes by ensuring that only transactions with a high likelihood of smooth execution are supported. Financial institutions also engage in proactive risk mitigation by working closely with customers to structure transactions in a way that reduces uncertainty. Some financial institutions go a step further by requiring pre-approval of documents before submission, offering advisory services to exporters on best practices in document preparation, and even restricting the types of goods or counterparties they are willing to finance.
A natural consequence of these measures is a reduction in contentious situations requiring ICC intervention. In the past, a significant proportion of trade finance disputes arose from discrepancies in documentary credits, often requiring clarification or interpretation under UCP 600. However, as financial institutions become more selective in their trade finance portfolios and impose stricter terms to mitigate risk, the likelihood of such disputes arising has diminished.
In essence, the increasingly cautious stance of financial institutions, driven by regulatory pressures, risk aversion, and technological advancements, has resulted in a trade finance environment where fewer disputes emerge. With financial institutions imposing stricter pre-emptive controls and avoiding high-risk scenarios altogether, the necessity for ICC clarifications and dispute resolution mechanisms has naturally declined.
Diminished risk appetite results in fewer contentious situations needing ICC intervention.
Engagement
The ICC remains an authoritative body in the governance and interpretation of trade finance rules and practices, particularly with respect to UCP 600, ISBP, and related regulations. However, it is increasingly evident that its role as the primary “arbitrator” of trade finance disputes and clarifications may be gradually diminishing. The evolving landscape of trade finance, coupled with the decentralisation of expertise and the availability of alternative resources, has led many financial institutions to seek guidance outside the ICC framework.
A key factor in this shift is the growing internalisation of trade finance expertise within financial institutions. Historically, when a dispute or uncertainty arose concerning the interpretation of UCP 600, ISBP, or other ICC rules, institutions would often turn to the ICC for a formal Opinion. These ICC Opinions provided clarity, set industry precedents, and reinforced the ICC's position as the central authority in trade finance interpretation.
However, as financial institutions and corporates have built stronger in-house trade finance teams, including dedicated legal departments, compliance experts, and documentary credit specialists, there has been a growing preference for resolving ambiguities internally rather than seeking external ICC guidance.
Moreover, financial institutions often develop their own precedent-based frameworks, relying on past experiences to guide decision-making. With years of accumulated case studies, many financial institutions now maintain internal databases of previous trade finance disputes and their resolutions, allowing them to diagnose and treat similar situations without the need for ICC intervention. This approach not only expedites decision-making but also reduces reliance on external bodies for dispute resolution.
Another contributing factor is the increasing role of regional and local banking groups in setting trade finance standards within their jurisdictions. While the ICC provides global rules, trade finance practices may differ based on local regulatory requirements, banking customs, and regional risk considerations. Many institutions prefer to seek guidance from local trade finance associations, regulators, or banking consortia rather than approaching ICC for a formal Opinion, which may not fully account for the nuances of their specific market conditions.
The preference for informal peer discussions over formal ICC Opinions has also gained traction due to efficiency considerations. ICC Opinions require a structured submission process, often taking weeks or even months for a formal response. In fast-moving trade environments, financial institutions and corporates frequently seek quicker resolutions by consulting with counterparts in other institutions, discussing interpretations at trade finance conferences, or engaging in direct dialogue with experienced practitioners.
Additionally, the evolving regulatory landscape means that financial institutions must often prioritise compliance with local and international financial regulations over strict adherence to ICC interpretations. In cases where a regulatory requirement conflicts with an ICC standard or where local laws impose additional constraints, institutions tend to rely on their own legal teams or national trade finance bodies rather than pursuing ICC clarification.
Instead of turning to the ICC for an Opinion, many institutions now rely on internal precedent, informal peer discussions, or localised expertise.
Strategic avoidance
Anecdotal evidence suggests that trade finance practitioners may exhibit hesitation when it comes to submitting queries to the ICC for formal Opinions. This reluctance is often rooted in the recognition that once an ICC Opinion is issued, it carries persuasive authority that can extend beyond the immediate transaction in question. Financial institutions, aware of the weight these Opinions hold, may strategically opt against seeking clarification when there is real possibility that an adverse ruling could undermine their position, not only in the current dispute but also in future cases where a similar issue might arise.
This concern is particularly acute in cases where the circumstances are ambiguous or where the institution’s interpretation of UCP 600, ISBP, or other ICC rules is not firmly established as the dominant industry view. In such borderline cases, a financial institution faces the risk that an ICC Opinion could validate their counterparty’s stance, potentially setting a persuasive precedent that could weaken the institution’s ability to argue its position in subsequent transactions. Unlike informal discussions or internal interpretations, which remain within the domain of the institution’s own risk management framework, an ICC Opinion is published, widely disseminated, and referenced within the trade finance community. This makes it more difficult for an institution to take a different approach in future disputes, even when transaction-specific factors may justify doing so.
Beyond the direct impact on trade finance operations, the potential legal ramifications of an ICC Opinion also play a significant role in decision-making. Although ICC Opinions are not legally binding pronouncements, they are widely regarded as authoritative interpretations of trade finance rules and are frequently cited in dispute resolution proceedings, arbitration cases, and even in courts of law. Judges and arbitrators, especially those lacking deep expertise in trade finance, often rely on ICC guidance as a key reference point in determining how a given rule should be applied. Therefore, if an ICC Opinion were to confirm a position unfavourable to the financial institution, it could be used against them not only in commercial disputes but also in legal proceedings where the enforceability of payment obligations is at stake.
Additionally, financial institutions operate in a highly interconnected and competitive environment, where precedent-based decision-making plays a crucial role in mitigating risk. Once an ICC Opinion is finalised, it does not merely influence the institution that originally submitted the query, but it shapes industry expectations and can alter the balance of power in negotiations with counterparties. For example, if an ICC Opinion were to favour an exporter’s interpretation of a documentary requirement, banks processing similar transactions may face increased pressure to adopt a more lenient stance on document examination, potentially leading to a broader shift in trade finance practice.
Given these considerations, financial institutions may carefully weigh the potential consequences of seeking an ICC Opinion. In many instances, the risk of receiving an unfavourable ruling outweighs the benefits of obtaining official clarification, particularly when alternative means of resolving the issue, such as internal precedent, informal peer discussions, or bilateral negotiations with counterparties, are available. This calculated decision-making process is not merely about avoiding scrutiny; it is a strategic effort to maintain flexibility in interpreting trade finance rules while minimising exposure to interpretations that could constrain future decision-making.
Moreover, the perceived finality of an ICC Opinion adds to this hesitation. While an institution may internally justify a particular stance based on its current risk appetite, commercial strategy, or regulatory considerations, an ICC Opinion introduces a level of external authority that can be difficult to challenge. Even in cases where a financial institution believes it has a reasonable basis for rejecting a document or taking a particular position on a trade finance matter, the possibility of an ICC Opinion aligning with the counterparty’s argument introduces a level of uncertainty that an institution may prefer to avoid by refraining from formally seeking an Opinion.
Ultimately, while the ICC remains the preeminent authority on trade finance rules, the strategic avoidance of submitting queries reflects the growing sophistication of risk management within financial institutions. In an environment where precedent carries significant weight, the decision to eschew ICC clarification is often a conscious and calculated tactic to preserve interpretative flexibility, mitigate legal exposure, and maintain control over one’s own approach to trade finance dispute resolution.
Such calculated decision to avoid submitting a query can be driven by the knowledge that an ICC Opinion, once issued, can be used as persuasive guidance in future cases and even in courts of law.
Digitalisation
It is increasingly evident that technology is subtly, yet profoundly, reshaping the trade finance landscape. The traditional challenges associated with manual document processing, compliance checks, and trade finance rules interpretation are being addressed through the adoption of advanced digital solutions.
Financial institutions and corporates are increasingly integrating AI, blockchain, Optical Character Recognition, and rules-based automation into their trade finance operations. These technologies are fundamentally altering the way documentary credits and other trade finance instruments are handled, reducing both human error and the subjectivity inherent in manual document examination.
One of the most significant developments in this area is the incorporation of AI-driven trade finance platforms that streamline compliance and document scrutiny. Historically, trade finance has relied heavily on human expertise for document checking, with bank officers manually verifying whether shipping documents, invoices, and transport documents comply with the requirements of UCP 600 and ISBP. However, human involvement introduces the risk of errors, inconsistencies in interpretation, and delays in processing. AI-powered discrepancy detection tools now enable institutions to instantly identify potential issues, flagging non-compliant documents with greater accuracy and consistency than human checkers.
Furthermore, these advanced systems continuously learn from past transactions and discrepancies, refining their ability to detect errors over time. Unlike human examiners, who may apply subjective judgment in interpreting trade finance rules, AI systems operate based on predefined parameters aligned with UCP 600, ISBP, and institutional best practices. This significantly reduces disputes arising from inconsistent document examination, as AI applies standardised rules objectively, mitigating differences in human interpretation.
The adoption of electronic trade documentation has further streamlined processes, leading to a decline in disputes requiring ICC intervention. Digital trade finance solutions, such as e-Bills of Lading and electronic presentation of documents, eliminate many of the common issues associated with traditional paper-based trade. Manual errors, such as incorrect data entry, missing signatures, or formatting inconsistencies, are minimised when documents are generated and processed digitally. Additionally, digital platforms enable real-time validation and verification of trade documents, reducing the likelihood of errors that could later escalate into contentious disputes.
Blockchain technology is also playing a transformative role in trade finance by providing a transparent and immutable record of transactions. With blockchain-based trade networks, key stakeholders, including financial institutions, exporters, importers, and logistics providers, can access a shared, tamper-proof ledger that verifies the authenticity of trade documents in real time. This eliminates concerns over document fraud, discrepancies in record-keeping, and disputes over amendments or alterations. Since blockchain-based smart contracts execute transactions automatically based on pre-defined conditions, there is less reliance on human interpretation, further reducing the probability of disagreements that would necessitate ICC guidance.
Fintech platforms and trade digitisation initiatives have further decentralised expertise, reducing the necessity for ICC clarification. Many of these platforms are developed in collaboration with banking consortia and regulatory bodies, embedding rules-based decision-making that automatically enforces compliance with international trade finance standards. By integrating predefined ICC rules and institutional policies into digital workflows, these systems eliminate the ambiguity that often leads to disputes.
Moreover, these fintech-driven trade finance ecosystems often provide industry participants with peer-to-peer forums, knowledge-sharing platforms, and AI-powered advisory tools that help resolve trade finance uncertainties informally. Rather than seeking formal ICC guidance, institutions can rely on industry best practices shared through digital platforms, leveraging collective intelligence to address complex trade finance queries.
As digitalisation gains traction, the overall volume of disputes arising from documentary discrepancies, subjective interpretations, and human error is expected to decline. Financial institutions are moving toward automated workflows that apply trade finance rules with precision, reducing inconsistencies in document checking and compliance enforcement. This shift toward technology-driven trade finance processes results in fewer disputes escalating to the level where ICC intervention is required, reinforcing the trend toward a more self-sufficient, automated, and dispute-free trade finance ecosystem.
Digitalisation reduces human error and subjectivity, potentially resulting in fewer disputes escalating to the level where ICC input is sought.
Query filtering
The ICC Banking Commission’s transition to quarterly treatment of Opinions was designed to expedite responses to trade finance queries, ensuring that practitioners receive more timely guidance on the application of UCP 600, ISBP, and other ICC rules. Historically, delays in receiving official ICC Opinions had been cited as a deterrent to submitting queries, particularly in fast-paced trade environments where financial institutions and corporates required prompt resolutions to disputes and uncertainties. By increasing the frequency of Opinion issuance, the ICC sought to provide greater responsiveness and relevance to the evolving needs of the trade finance industry.
However, despite this shift toward more frequent rulings, the overall number of formal queries submitted to the ICC has continued to decline. This trend suggests that a growing number of issues are being resolved at earlier stages, either within financial institutions, through informal industry discussions, or via ICC National Committees before they reach the formal Banking Commission process. One likely explanation for this decline is that ICC National Committees, which serve as an intermediary between trade finance practitioners and the ICC’s Banking Commission, are exercising a more rigorous filtering process when determining which queries warrant escalation to the level of a formal Opinion.
National Committees may be identifying that many of the queries submitted by banks, corporates, and trade practitioners already fall within the scope of existing ICC guidance. Given that UCP 600, ISBP, and other trade finance rules are well established and widely interpreted in the industry, many of the issues raised may not introduce genuinely new challenges but instead seek affirmation of previously addressed principles. In such cases, National Committees may simply direct practitioners to existing ICC Opinions, ISBP provisions, or established best practices rather than forwarding the query for a new ruling. This ensures that only novel or complex cases that require deeper analysis and interpretation reach the Banking Commission for formal adjudication.
Another factor contributing to the decline in formal ICC queries is the assessment of whether an issue presents a sufficiently broad impact to justify an official Opinion. ICC Opinions are intended to provide clarity on matters that have industry-wide significance, setting guidance that can be applied broadly across multiple transactions and jurisdictions. If a query is deemed too narrow, too specific to a single transaction, or too dependent on individual circumstances, National Committees may determine that it does not warrant an official Opinion and instead provide an informal response or educational clarification.
This growing preference for informal handling of trade finance queries is reflective of an industry that increasingly values practical, case-specific guidance over the formality of a published Opinion. Many practitioners may find that an informal discussion with an ICC National Committee, participation in ICC trade finance events, or direct engagement with trade finance experts yields quicker and more actionable insights than waiting for a formal Opinion to be issued. In cases where a query is submitted not as part of a contentious dispute but rather as a request for clarification, National Committees may address the matter through workshops, circulars, or advisory communications rather than escalating it to the Banking Commission.
Furthermore, as financial institutions enhance their internal trade finance expertise and compliance frameworks, they are often able to interpret ICC rules without requiring an official Opinion. Financial institutions and corporates increasingly rely on their own internal trade finance specialists, legal teams, and compliance officers to interpret UCP 600 and ISBP provisions, often cross-referencing industry precedent and historical ICC rulings. In many cases, informal clarifications provided by ICC National Committees, peer institutions, or trade finance associations may be sufficient to resolve queries without the need for an official ruling.
The shift toward informal handling of trade finance queries also reflects the growing role of digitalisation in trade finance education and knowledge-sharing. Online trade finance forums, ICC webinars, and knowledge-sharing platforms provide an alternative means of obtaining expert insights, allowing practitioners to discuss interpretations of ICC rules without the need for formal submissions. This digital transformation enables greater accessibility to trade finance expertise, reducing reliance on official Opinions for routine clarifications.
In essence, the decline in formal ICC queries, despite the move to quarterly sessions to handle Opinions, suggests that trade finance practitioners are increasingly seeking and obtaining answers through alternative channels. National Committees, rather than automatically escalating every query, are applying a more selective approach, resolving many questions informally through educational clarifications or directing practitioners to existing guidance. This evolving dynamic underscores the trend toward a more self-sufficient trade finance ecosystem, where ICC expertise remains authoritative but is often accessed through informal, decentralised, and more immediate means.
Responses may be handled informally or as educational clarifications rather than formal Opinions.
Shifting environment
The rapid advancement of trade finance technology has fundamentally altered the landscape of document checking and compliance enforcement. AI-powered trade finance platforms, automated compliance screening, and blockchain-based trade networks have significantly reduced the scope for subjective interpretation, minimising the discrepancies that would previously have resulted in disputes requiring ICC clarification:
These innovations are enabling financial institutions to standardise trade finance processes, reducing the need for subjective human judgment and, consequently, the number of disputes that require ICC adjudication.
Refining the role of the ICC
While fewer queries are being submitted for formal ICC Opinions, this does not necessarily indicate a diminished role for the ICC. On the contrary, the ICC has proactively adapted to these changes by expanding its educational and advisory offerings, equipping trade finance professionals with the tools needed to resolve uncertainties without resorting to formal rulings.
The ICC’s extensive suite of training programmes, webinars, and knowledge resources, covering UCP 600, ISBP, trade digitisation, and emerging regulatory challenges, has empowered practitioners to independently interpret and apply trade finance rules with greater confidence. Additionally, ICC educational material and past Opinions allow institutions to reference existing interpretations without needing to submit new queries.
By providing pre-emptive guidance – much of it freely available at no cost – through these channels, the ICC is actively reducing the volume of disputes that reach the stage of requiring formal intervention. Rather than serving solely as a reactive arbitrator, the ICC is playing a more proactive educational role, ensuring that industry participants have the necessary knowledge to navigate trade finance complexities on their own.
The evolving landscape of trade finance query resolution suggests that the decline in ICC Opinions is not a sign of reduced relevance but rather an indication of industry-wide adaptation. Financial institutions, equipped with stronger internal expertise, enhanced technological capabilities, and access to peer-driven knowledge-sharing networks, are increasingly capable of resolving uncertainties without formal ICC involvement. At the same time, the ICC’s own strategic shift toward education and proactive guidance has enabled practitioners to access necessary clarifications before issues escalate into formal disputes.
As trade finance continues to modernise, these trends are likely to persist, reinforcing a more decentralised, technology-driven, and self-sufficient approach to trade finance rule interpretation. The ICC remains an authoritative voice, but the mechanisms through which trade finance professionals seek clarity have fundamentally evolved, reflecting a new era in global trade finance governance.
Where does this lead?
If the trend of reduced queries continues, it may encourage the ICC to re-think its Opinion Handling Procedure and Terms of Reference. Will the ICC need to evolve into a more dynamic, real-time advisory service?
The decline in formal opinions suggests that the ICC’s role in shaping trade finance interpretation is changing, whether by necessity or design.
Future role for the ICC in handling queries
As fewer queries are being submitted, the ICC could consider re-affirming its role as the ultimate authority in documentary credit interpretation.
Potential options may include more actively encouraging member banks and corporates to submit queries. This could be strengthened by highlighting past ICC Opinions and demonstrating their practical implications in real-world disputes, reinforcing their value to practitioners.
Additionally, ensuring that ICC Opinions remain easily accessible, widely publicised, and integrated into ongoing training for trade finance professionals could help maintain their relevance and encourage greater engagement. This will require measured decisions on broader availability and usage.
It may be that the current method of issuing formal Opinions in quarterly sessions no longer aligns with the way in which trade finance operates today. Consideration could be given to development of a more agile, real-time advisory service where technical experts can provide prompt, informal guidance on emerging trade issues before they escalate into disputes.
An alternative avenue to explore may be AI-driven trade finance assistance, integrating ICC guidance into digital trade finance platforms so that AI models can dynamically reference ICC Opinions and interpretations of UCP and ISBP. As trade finance moves towards digital platforms and AI-driven compliance, the ICC needs to ensure that its guidance remains central to these advancements. Steps could include forming partnerships with trade technology firms to embed ICC rules and interpretations within digital trade finance solutions. Developing API-based access to ICC guidance would allow financial institutions and corporates to integrate ICC interpretations directly into their internal systems.
Furthermore, establishing a case law-style repository could make past ICC Opinions more searchable and accessible, enabling financial institutions and corporates to easily reference how similar queries have been interpreted.
As already mentioned, it is understood that many practitioners hesitate to submit queries due to concerns over setting an unfavourable precedent. The ICC could introduce an anonymous query mechanism, allowing parties to submit concerns without directly associating them with their institution’s name. It might also offer non-binding preliminary views, enabling banks to assess whether pursuing a formal ICC Opinion would be beneficial before escalating a query. Additionally, fostering cross-institutional engagement through industry roundtables could provide a neutral forum for practitioners to discuss contentious issues before seeking an official Opinion.
If fewer queries are being submitted because practitioners feel they already have sufficient guidance, the ICC must ensure that its educational reach remains robust. This should involve expanding ICC’s training and certification programmes to emphasise the importance of seeking expert guidance. Developing interactive case studies that illustrate how past ICC Opinions have resolved significant trade finance disputes would further reinforce their value. Moreover, fostering closer engagement with fintech firms, regulators, and corporate trade teams would help ensure that the ICC’s role is recognised beyond traditional financial institutions.
Proactivity, digital integration, and remaining responsive to modern trade finance challenges, ensures continued relevance of the ICC in this space. By evolving its advisory services, embracing technology, and addressing barriers to query submissions, the ICC can ensure it remains the go-to institution for trade finance interpretation in a rapidly changing landscape.