Handling and/or Financing of Documents Under Export Documentary Credit - Terms and Conditions

Please take a moment to read through the Terms and Conditions.

1. Definitions: In these Terms and Conditions, the word “Bank” shall be a reference to DBS Bank Ltd. and the word “Company” shall be a reference to the beneficiary whose details are set out in the “Handling and/or Financing of Documents under Export Documentary Credit” application form (the “Form”). Words and expressions defined in the Form shall have the same meanings when used herein.
    
2. With Full Recourse Financing: In the event where the Company agrees that any financing, discounting or negotiation of the Documentary Credit at its request is made by the Bank (whether as a nominated bank or otherwise) on a with full recourse basis, the Company agrees that such financing, discounting or negotiation is made in the Financing Currency with full recourse (in the Financing Currency) to the Company under all circumstances, including (without limitation) where the Bank does not receive full repayment in the Financing Currency for its financing, discounting, or negotiation or any payment from the Issuing Bank on any of the following grounds:
    

   1. the insolvency, receivership or liquidation of the Issuing Bank or the seizure of the whole or substantially the whole of the assets of the Issuing Bank;

   2. war, strikes, revolts, change of government or local government, riots, terrorist activity or civil unrest in the country where the Issuing Bank has its place of business;

   3. the Issuing Bank is prohibited or restrained from discharging its payment obligation under the Documentary Credit by any order or directive of any court or tribunal having jurisdiction over it, or by any law, regulation, Sanction (as defined below), government decree, administrative rule or directive with which the Issuing Bank is to comply in connection with the goods shipped under the Documentary Credit or the underlying transactions or contracts relating to such goods;

   4. the non-payment is due to disputes arising out of the underlying contract between the buyer of the Goods (as defined below) and the Company or between the applicant of the Documentary Credit or any other related parties and the Company;

   5. the Documents (including any drafts) presented under the Documentary Credit do not comply with the terms of the Documentary Credit and the Bank has not received payment thereof from any other source;

   6. the Documents (including any drafts) presented to the Bank and found to be complying to the terms of the Documentary Credit are subsequently found to be forged, antedated, falsified, irregular, amended without due authorisation (whether by the Company or some other party) or to contain fraudulent misrepresentation (whether or not to the Company's knowledge) or if an allegation (whether substantiated or otherwise) is made to such an effect and the Issuing Bank has refused to accept the Documents (including any drafts) as a complying presentation for any payment or reimbursement to be made under the Documentary Credit;

   7. in the case only where the Financing Currency is different from the Documentary Credit Currency) the Documentary Credit Currency proceeds received from the Issuing Bank under the Documentary Credit at maturity cannot be converted and/or transferred, for any reason whatsoever (including, without limitation, due to law, regulation, governmental decree, administrative rule, guideline or directive), into the Financing Currency to repay the financing, discounting or negotiation of the Documentary Credit effected by the Bank together with interest thereon;

   8. in the case only where the Financing Currency is different from the Documentary Credit Currency) any loss is suffered by the Bank as a result of foreign exchange rate movements between the Financing Currency and the Documentary Credit Currency from the time of the Bank's financing, discounting or negotiation of the Documentary Credit to the maturity of the Documentary Credit; or

   9. (in the case only where the Documentary Credit Currency is the same currency as the Financing Currency) if an Extraordinary Event occurs. An “Extraordinary Event” shall mean any event which the Bank believes to have a material adverse effect in relation to the Documentary Credit, including without limitation:

      1. the imposition, enactment or passage of governmental decree, law, regulation, administrative rule, guideline or directive relating to payment obligations under the Documentary Credit;

      2. any form of exchange control restriction or requirement of whatsoever nature affecting the availability, convertibility, credit or transfers of currencies or funds;

      3. any form of debt or other moratorium on jurisdictions, individuals or entities;

      4. any devaluation, re-denomination or de-monetisation; and/or

      5. any form of restriction or requirement,
         which in the Bank's good faith opinion adversely alters or changes the rights or obligations which the Bank undertook upon negotiation of the Documentary Credit or which prohibits or restricts the transfer, conversion or exchange by the Issuing Bank of the amount of the currency for which any draft is drawn under the Documentary Credit.
         
         In such circumstances the Bank shall have the sole discretion to receive payment under the Documentary Credit in any alternative currency at such exchange rate as it may determine in its discretion. Provided that the Bank undertakes any such action in good faith, any such action shall be binding on the Company and the Company shall be liable for any additional loss, damages, costs, charges and/or expenses incurred by the Bank.

3. With No Recourse Financing: : In the event where the Company agrees that any financing, discounting or negotiation of the Documentary Credit at its request is made by the Bank (whether as a nominated bank or otherwise) on a with no recourse basis, the Company agrees that such financing, discounting or negotiation is made by the Bank with full recourse (in the Financing Currency) to the Company under all circumstances, including those listed in clause 2 above, but save that the Bank will have no recourse to the Company in the event that the Bank does not receive full repayment for its financing, discounting, or negotiation or any payment from the Issuing Bank solely on one or more of the following grounds:

   1. the insolvency, receivership or liquidation of the Issuing Bank or the seizure of the whole or substantially the whole of the assets of the Issuing Bank;

   2. war, strikes, revolts, change of government or local government, riots, terrorist activity or civil unrest in the country where the Issuing Bank has its place of business;

   3. the Documents (including any drafts) presented under the Documentary Credit do not comply with the terms of the Documentary Credit (other than due to reasons listed in sub-clause 2(f) above) and the Bank has not received payment thereof from any other source; or

   4. (in the case only where the Documentary Credit Currency is the same currency as the Financing Currency) the imposition, enactment or passage of any governmental decree, law, regulation, administrative rule, guideline or directive relating to payment obligations under the Documentary Credit, to which the Issuing Bank is subject to, prohibiting the transfer, conversion or exchange by the Issuing Bank of the amount of the currency for which any draft is drawn under the Documentary Credit.

   Notwithstanding any other term of this agreement, the Bank shall always have full recourse to the Company where:

   1. the Company has breached any term of this agreement or any of the representations given under clause 8 herein were untrue at the time of such representation; or

   2. (in the case where the Bank finances, discounts or negotiates a Documentary Credit prior to acceptance of such Documentary Credit) the Documents (including any drafts) presented under the Documentary Credit are subsequently determined by the Issuing Bank or any other relevant bank to not comply with the terms of the Documentary Credit for any reason.

4. With Hedging: In the event:

   1. the Financing Currency is different from the Documentary Credit Currency; and

   2. the Bank manages the relevant foreign exchange rate, currency convertibility and/or transferability risks on behalf of the Company or the Company enters with the Bank into any deliverable or non-deliverable foreign exchange or foreign exchange derivative transaction to hedge against fluctuations in the relevant foreign exchange rate, currency convertibility and/or transferability risks in respect of the Documentary Credit (a “Hedging Transaction”),

   the following clauses shall apply to the Company:

   1. if the Company has entered into a non-deliverable Hedging Transaction with the Bank, the Company agrees to indemnify the Bank against, and pay to the Bank on demand any short-fall if the proceeds in the Documentary Credit Currency received from the Issuing Bank under the Documentary Credit, after conversion into the Financing Currency at the exchange rate determined by the Bank (if any), are less than the amount in the Financing Currency the Bank would expect to receive to repay the financing, discounting or negotiation of the Documentary Credit effected by it together with interest thereon, and the Company authorises the Bank to debit any of the Company's accounts with the Bank for such short-fall;

   2. if the Company has entered into a deliverable Hedging Transaction with the Bank and the Company or the Bank may not be able to effect payment under such deliverable Hedging Transaction in the agreed currency, such Hedging Transaction will be settled on a non-deliverable basis in an alternate currency in accordance with the terms of such deliverable Hedging Transaction; and

   3. without prejudice to the Bank’s rights conferred in these Terms and Conditions, if payment from the Issuing Bank is not forthcoming due to the occurrence of any of the events in sub-paragraphs (a) to (f) of Clause 2 and the Bank has managed the relevant foreign exchange rate, currency convertibility and/or transferability risks on behalf of the Company, the Company agrees to pay to the Bank immediately on request an amount in the Documentary Credit Currency equivalent to the full amount payable under the Documentary Credit.

5. Without Hedging:

   1. In the event:

      1. the Financing Currency is different from the Documentary Credit Currency;

      2. the Bank agrees to the Company’s request that no Hedging Transaction will be required to be entered into by the Company and does not manage the relevant foreign exchange rate, currency convertibility and transferability risks on behalf of the Company; and

      3. the Documentary Credit Amount converted in the Financing Currency at any time at the exchange rate determined by the Bank is less than the amount in the Financing Currency of the financing, discounting or negotiation of the Documentary Credit effected by the Bank (such difference being the “Converted Shortfall Amount”),
         
         the Company shall, at the Bank's request, immediately on demand pay to the Bank an amount equal to the Converted Shortfall Amount, and the Company authorises the Bank to debit any of the Company's accounts with the Bank for such Converted Shortfall Amount. The Company may enter into a Hedging Transaction at any point in time or shall, at the Bank’s request, enter into a Hedging Transaction.

   2. Without prejudice to the provisions of paragraph 12 below, the Company agrees to indemnify the Bank against, and pay to the Bank on demand, any short-fall if the proceeds in the Documentary Credit Currency received from the Issuing Bank under the Documentary Credit, after conversion into the Financing Currency at the exchange rate determined by the Bank, are less than the amount in the Financing Currency the Bank would have expected to receive to repay the financing, discounting or negotiation of the Documentary Credit effected by it together with interest thereon, and the Company authorises the Bank to debit any of the Company's accounts with the Bank for such short-fall. If the proceeds in the Documentary Credit Currency received from the Issuing Bank under the Documentary Credit, after conversion into the Financing Currency at the exchange rate determined by the Bank, are more than the amount in the Financing Currency the Bank would have expected to receive to repay the financing, discounting or negotiation of the Documentary Credit effected by it together with interest thereon, the Bank shall repay to the Company such excess amount.

6. Indemnification: Without prejudice to the Bank’s rights conferred in these Terms and Conditions and in the event (i) the Financing Currency is different from the Documentary Credit Currency and (ii) the Bank does not manage the relevant foreign exchange rate, currency convertibility and/or transferability risks on behalf of the Company and (iii) the Bank does not receive full repayment in the Financing Currency for its financing, discounting, or negotiation or any payment from the Issuing Bank due to the occurrence of any of the events in sub-paragraph (g) of Clause 2, then regardless of whether the Company has entered into a Hedging Transaction with the Bank, the Company agrees to pay to the Bank an amount in the Financing Currency the Bank would expect to receive to repay the financing, discounting or negotiation of the Documentary Credit effected by it together with interest thereon, and the Company authorises the Bank to debit any of the Company's accounts with the Bank for such amount.

7. Security: Without prejudice to the Bank's rights conferred in these Terms and Conditions s or under general law and in consideration of the handling, financing, discounting or negotiation of the Documentary Credit provided by the Bank at the Company's request, the Company hereby irrevocably, absolutely and unconditionally:

   1. assigns as continuing security to the Bank all rights, title, interest and benefits belonging to the Company or are or may be due or owing to the Company arising out of or in connection with the Documentary Credit, free of any encumbrance (collectively, the “Proceeds”) and the Company irrevocably authorises the Bank to give notice of such assignment to the Issuing Bank; and

   2. pledges as continuing security to the Bank all bills of exchange, invoices, carriage documents or documents of title to the goods shipped in connection with the Documentary Credit (collectively, the “Documents”).

   Without prejudice to the Bank's other rights herein, in the event that the Company is in default of payment of any amount due from it, the Bank shall be entitled, without notice to the Company, to sell the goods shipped in connection with the Documentary Credit (the “Goods”) or any part thereof and apply the proceeds of sale in or towards payment of all the Company's indebtedness to the Bank.

8. Representations and Undertakings:
   At all times, the Company represents and warrants to the Bank that:

   1. it has not received any form of financing, discounting, negotiation or other accommodation in respect of the Documentary Credit from any other party;

   2. it has beneficial title to the Proceeds and the Documents;

   3. the Proceeds and the Documents are free from any security interest or encumbrance of any kind and the Company shall not at any time assign, transfer or create any security interest or encumbrance over it; 

   4. there is no dispute or potential dispute arising or which may arise under or in connection with the Documentary Credit or the underlying contract of sale that may compromise, reduce or extinguish the Company's rights thereunder (including, the amount of receivables payable to the Company);

   5. neither the Company nor any of its affiliates, nor any of its or their respective directors, officers or employees nor any persons acting on their behalf is a Restricted Party, has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority or is subject to any applicable limitation or restriction under Sanctions; and

   6. it will not make use of, or provide the benefit of, any funds received from, or services provided by, the Bank to any Restricted Parties, or conduct, permit or allow any business activity with any Restricted Parties or for business activities that are subject to Sanctions.

   In these Terms and Conditions
   
   "Restricted Party" means a person that is: (i) listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; (ii) located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organized under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or (iii) otherwise a target of Sanctions ("target of Sanctions" signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities).
   
   “Sanctions” means any economic or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by (i) the United States of America; (ii) the United Nations, (iii) the European Union; (iv) the United Kingdom; (v) Singapore and/or any sanctions regulations or laws administered by other governmental or regulatory bodies which are applicable to the Borrower, Issuing Bank or Lender (collectively, the “Sanctions Authorities”).
   
   "Sanctions List" means lists which are prescribed by governmental and/or regulatory authorities for purpose of Sanctions and include but not limited to lists maintained by the Office of Foreign Assets Control of the United States of America, the HM Treasury of the United Kingdom, the Monetary Authority of Singapore or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities.
   
   The Company undertakes that:

   1. it shall obtain or procure that any bills of lading required under the Documentary Credit will be blank endorsed or endorsed to the Bank's order as the Bank may direct or request; and

   2. it will endorse, and will obtain or procure any bill of exchange under the Documentary Credit to be endorsed in the Bank's favour or to the Bank's order as the Bank may direct or request.

9. Full Recourse: Without prejudice to clauses 2 and 3, the Company further confirms that the Bank’s recourse to the Company in respect of the financing received by it hereunder shall not be reduced or otherwise adversely affected by:

   1. the invalidity or unenforceability for any reason of any security or guarantee executed in favour of the Bank at any time as security or guarantee for the Company's obligations hereunder;

   2. any financing the Company has received in respect of the Documentary Credit or the underlying sale transaction from any other party including any bank or financial institution; or

   3. the creation of security or any agreement to create security or any disposal by the Company of the Proceeds or any Documentary Credit in favour of another party.

10. Handling of Documents:

    1. The Bank is authorised at its absolute discretion:

       1. to insure the Goods against all risks and to add the premiums and expenses of such insurance to the amount chargeable to the Company;

       2. to exercise its right of recourse against the Goods or any part thereof in priority to any other claims thereon and to sell such Goods or part thereof as may be necessary for payment of freight, insurance, ware house, dock and other charges, without prejudice to the Company's duty to repay any outstanding amount due to the Bank from such proceeds of sale;

       3. to land and store the Goods at any wharf or warehouse selected by the Bank and/or re-ship the same to any other port;

       4. to accept full or partial payment before maturity from the drawees and/or acceptors of any bills, or the consignees of the Goods, against delivery of the Goods (or part thereof) and/or the Documents; and

       5. to debit the Company's account with all monies due from the Company hereunder together with the amount of unaccepted or unpaid bills of exchange or advances against documents of title or other documents for which the Company is liable to the Bank or any deficiency arising after realization of the Goods.

    2. Having exercised due care in the selection of any correspondent bank to whom the abovementioned documents may be sent, the Bank shall not be responsible for any act, omission (including any failure to endorse or re-endorse bills of lading), default, suspension, insolvency or bankruptcy of any such correspondent or agent thereof, or for any delay in remittance, foreign exchange loss or loss of any Documents, item or proceeds of the same during transmission or in the course of collection by such correspondent or agent thereof. The Bank shall be responsible only for the Bank's own direct acts in relation to the foregoing.

    3. The Company further agrees to the following:

       1. to meet all charges incurred by the Bank or the Bank's correspondent or agent;

       2. not to hold the Bank or the Bank's correspondent or agent liable in the event that any of the Documents are lost, destroyed or delivered wrongly by the courier service company selected by the Bank or wrongly delivered by the postal office;

       3. the Bank is under no duty or responsibility to check the Documents unless the Bank agrees to check or negotiate such Documents and the Company shall not hold the Bank responsible nor is the Bank's right of recourse prejudiced in any way in the event that any discrepancies are not identified by the Bank, its employees or agents or in the event that the Documents are found by a court of law or tribunal to contain discrepancies, whether or not as a result of a wilful or negligent act or omission; and

       4. should any claim arise under any insurance, the Bank is authorised to recover the full amount thereof, the Company agrees to assign to the Bank the policy or policies for that purpose and to take all necessary steps to effect such assignment. The Bank may apply the proceeds to satisfy all sums and indebtedness due to it hereunder and in connection with the Documentary Credit.

    4. In the event that the Company instructs the Bank to check the Documents and to pay the Company upon receipt of the proceeds of the Documentary Credit from the Issuing Bank or nominated bank, the Bank should only be required to check such Documents based on its understanding and interpretation of the Uniform Customs and Practice for Documentary Credits (“UCP Rules”), ICC Publication No. 600 (“UCP 600”) (or any other versions of the UCP Rules as stipulated in the Documentary Credit) and international standard banking practice. The Bank should not be liable to the Company whether in contract, trust or otherwise should the Documents be rejected or payment refused by the Issuing Bank or nominated bank on the grounds that the Documents do not constitute a complying presentation, even if the discrepancies raised by the Issuing Bank or nominated bank are not similar to those raised by the Bank or if the Bank determines the Documents to be a complying presentation.

11. Further Assurance: The Company shall sign all documents, do all acts and render all assistance necessary to enable the Bank to perfect its security interest and recover all moneys due under the Documentary Credit by any means deemed expedient by the Bank, including co-operation in any litigation and/or arbitration (whether in the Company's name or jointly with the Bank) against the Issuing Bank, the buyer and/or any other party. Without prejudice to the generality of the foregoing, the Company shall at the Bank's request make available all documents the Bank deems necessary or desirable for such litigation and/or arbitration, as well as procure attendance of relevant witnesses for meetings and hearings.

12. Indemnity: The Company agrees to fully indemnify the Bank and hold the Bank harmless against all suits, proceedings, claims, damages, costs (including legal costs and disbursements), losses and expenses which may be brought or enforced against the Bank or incurred or become payable by the Bank in connection with the financing, discounting or negotiation of the Documentary Credit or arising from the Company's breach of any provision of these Terms and Conditions.

13. Receipt of Money: In the event the Company receives any money under the Documentary Credit or the underlying contract, the Company will immediately make payment to the Bank of all such sums and pending such payment, hold such money on trust for the Bank in a separate account.

14. Authority to Debit: The Company authorises the Bank to deduct, set-off or debit any of the Company's accounts with the Bank (whether in Singapore or elsewhere including the Bank's branches outside Singapore, and whether such accounts are held by the Company solely or jointly) or from any moneys payable to the Company by the Bank or at any of the Bank's branches outside Singapore for payment to the Bank in advance of all costs, charges, discounts, interests, commission, expenses and fees payable to the Bank pursuant to the financing, discounting or negotiation of the Documentary Credit. Such advance payment shall be an absolute and unconditional payment and the Bank shall not be obliged, under any circumstances whatsoever, to refund the same to the Company.

15. Consent to Disclosure: the Bank may disclose any information relating to the Company, the Company's account, this financing and/or the Documentary Credit to: (a) any person to whom such disclosure is permitted or required under any law or regulation or rules (including under the Banking Act 1970) or pursuant to any court order, (b) any of the Bank's branches or offices, the Bank's holding company, subsidiaries and related corporations and their respective branches or offices; (c) any person in connection with a transfer or assignment or proposed transfer or assignment of the Bank's rights or obligations under these Terms and Conditions; (d) any person for the purposes of enforcing or protecting the Bank's rights or interests in relation to these Terms and Conditions; (e) any court, tribunal, regulatory, supervisory, governmental or quasi-governmental authority; (f) any person where the Bank in good faith deems it reasonable to make such disclosure.

16. No Third Party Rights: A person who is not party to these Terms and Conditions has no right under the Contracts (Rights of Third Parties) Act 2001 to enforce or enjoy the benefit of any terms under these Terms and Conditions.

17. UCP: These Terms and Conditions and any handling of Documents under the Documentary Credit shall be subject to the provisions of the Uniform Customs and Practice for Documentary Credits that are applicable to the Documentary Credit as at the date of the financing, discounting or negotiation of the Documentary Credit.

18. Governing Law and Jurisdiction: These Terms and Conditions shall be governed by and construed in accordance with the laws of Singapore. The courts of Singapore shall have exclusive jurisdiction to settle any dispute arising out of or in connection with these Terms and Conditions (a "Dispute").The Company agrees that the courts of Singapore are the most appropriate and convenient courts to settle Disputes and accordingly the Company will not argue to the contrary. This clause is for the Bank's benefit only and the Bank shall not be prevented from taking any proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Bank may take concurrent proceedings in any number of jurisdictions.