• International Commerce and Information Review
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• v.16 no.5
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• pp.87-114
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• 2014

The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. Historically, the commercial parties, particularly banks, have developed the techniques and methods for handling letters of credit in international trade finance. This practice has been standardized by the ICC (International Chamber of Commerce) by publishing the UCP in 1933 and subsequently updating it throughout the years. The ICC has developed and moulded the UCP by regular revisions, the current version being the UCP600. This latest version, called the UCP600, formally commenced on 1 July 2007. During the revision process, notice was taken of the considerable work that had been completed in creating the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 745. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit. It is the expectation of the Drafting Group and the Banking Commission that the application of the principles contained in the ISBP, including subsequent revisions thereof, will continue during the time UCP 600 is in force. This paper focuses on documents including various certificates, Packing List, Weight List, Beneficiary's Certificate, Analysiis, Inspection, Health, Phytosanitary, Quantity and Quality Certificates, Courier Receipts, Shipping Advice etc. and suggests some implications in the field.

• The Korean Journal of Air & Space Law and Policy
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• v.30 no.2
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• pp.155-176
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• 2015

Leasing is one of the main methods for Chinese airlines to introduce aircraft from overseas manufactures, and this method has been used for more than 30 years by Chinese airlines. Aircraft leasing in essence is a kind of financial transaction, through which lessors provide finance to lessees by means of the delivery of possession of the leased aircraft. At the time when China started to introduce aircraft through leasing some 30 years ago, the Chinese domestic laws were very insufficient to regulate these activities. Therefore, a construction process for the law of aircraft leasing was triggered then, and some fruit has been gained. By far, there are rules to adjust the aircraft activities in the aspects of contract, real right, default and bankruptcy remedies. However, as the improvement of any system must undergo a process of exploration, the law of aircraft leasing in China is still faced up with many challenges. Especially with the emergence and prosperous of domestic leasing industry, new transaction structures and models of aircraft leasing have emerged, which leaves new challenges to current legal system. On the basis of introducing the history and main contents of Chinese legal regime of aircraft leasing, this paper offers an analysis of achievements and challenges on present Chinese laws in the aspects of contract, real right and remedies.

• Asia-Pacific Journal of Business
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• v.12 no.1
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• pp.135-149
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• 2021

Purpose - I analyzes risk-to-performance evaluated in the market using data from sale and lease back. Specifically, I analyze from the perspective of financial institutions that purchase sale and lease back based on the cases of investment by ship investment companies and acquisition of ships. Design/methodology/approach - I use 49 sale and lease back data from 2017 to 2019 for empirical analysis. Findings - The main results of this paper are as follows. First, after sale and lease back of domestic ships, the average amount of sales by the leased shipping company is 25.1 billion won, the average amount of investment by the purchased financial institution is 14.6 billion won (60%) and the average length of the ship is nine years. In ship finance, sale and lease back is deemed to be appropriately used as a means of restructuring for a large amount of money. Second, the main risk factor for sale and lease back of domestic ships is credit risk and can be measured in VaR in practice. As a result of the empirical analysis, the average credit risk burden ratio is 9%. As a major risk factor, low creditworthiness of restructuring companies is the key. Third, as a result of measuring the profitability of financial institutions that purchase sale and lease back of domestic ships at a net current price, it has an average value of 300 million won, but the deviation by case is very large. Fourth, the risk adjusted performance of sale and lease back of domestic ships is 0.54 on average compared to the total risk capital, and 0.52 compared to the stock-risk capital, and as with profitability earlier, the deviation of each case is very large and misaligned. In order to boost the sale and lease back market for large and long-term assets, in order to overcome low profitability as a prerequisite for future participation of commercial purchased financial institutions, it is expected that purchase decisions based on expectations versus risk will be necessary. Research implications or Originality - The results of this paper are expected to broaden the understanding of sale and lease back and foster the ability to assess long-term risk and performance. Based on this, it is believed that rapid restructuring of companies through sale and lease back of large amounts of long-term assets will greatly increase the utility of the domestic financial market.

• Journal of Navigation and Port Research
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• v.46 no.4
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• pp.359-366
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• 2022

While the Forward Freight Agreement (FFA) has emerged as an effective hedging tool since early 1990, the basis risk and cash flow distortions have been addressed as obstacles to the active use of FFAs. This research analyses the basis risk of FFAs and provides a feasible suggestion to reduce it. Basis risk is divided into timing basis, route basis, size basis, and low liquidity basis. The timing basis is defined as the difference between the physical hire, fixed on the specific contract date and the FFA settlement price, calculated by averaging spot rates for a certain period. Timing basis is considered the worst in eroding the effectiveness of FFAs. This paper suggests a change of hire payment criterion from contract date to 15-day moving average, as a means of mitigating the basis risk, and analyzed the effectiveness through historical simulation. The result revealed that the change is effective in mitigating the timing basis. This study delivers a meaningful implication to shipping practice in that the change of hire payment criterion mitigates the basis risk and eventually activates the use of FFAs in the future.

• Journal of Korea Port Economic Association
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• v.36 no.2
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• pp.63-86
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• 2020

The tax lease scheme for ships is an advanced ship financing tool that generates tax benefits through accelerated depreciation of capital allowances and transferring them to the ship operator (leasee) via reductions in rental payments. The scheme was introduced by Japan in 1978 and by France in 1998 to support their shipping and shipbuilding industries. The size of tax benefits varies by country depending on the depreciation rate for ships, corporate tax rate, and the tax system on profits from the sale of ship. This study uses a virtual model of the Korean tax lease scheme for ships based on the French tax lease scheme. The size of tax benefits is calculated and compared to those in the French and Japanese tax lease schemes. According to the analysis, the size of the tax benefit was approximately 19% for France, 14% for Japan, and 12% for Korea. This is differentiated by the country's depreciation rate and corporate tax rate, which have the greatest impact on the size of tax benefits. For the Korean virtual model, if the tax benefits are distributed by the operator and the investor at the rate of 75:25, the operator is expected to enjoy tax benefits equivalent to about 9% of the ship price and the investor to enjoy 3%. Despite limited information and data regarding the tax lease scheme for ships, this study was the first attempt in Korea to design a virtual model of the Korean tax lease scheme based on some predictable assumptions. Therefore, a group of shipping, financing, and legal experts will follow up on more professional and practical reviews of the model in the near future. Hence, this study will serve as a small contribution to the early introduction of the Korean tax lease scheme for ships.