Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits

Effective date: 01 October 2008.

Changes made in URR 725


URR 725 should not be seen as a revision of URR 525. It is an updating process that has followed the same manner as the eUCP, i.e. to change the style to match that of UCP 600. The changes were approved by the ICC national committees at the ICC Banking Commission in April 2008.

These changes include the removal of capitalisation of terms and grammatical changes to match UCP 600 wording. As an example the (s) have been removed throughout the rules and the term honour has also been used to replace the phrase "pays, incurs a deferred payment undertaking, accepts draft(s)."

Article 1 has been changed to allow for express indication of the reimbursement authorization being subject to the rules: "...reimbursement authorization expressly indicates that it is subject to these rules". Due to this change and the wording in UCP 600 sub-article 13 (a), the previous SWIFT stance that a reimbursement authorization will automatically be subject to the version of URR in effect on the date of issue is no longer applicable. As with the MT700, issuers of an MT740 are required to indicate the applicable rules. In this case, URR LATEST VERSION or NOTURR. The use of NOTURR means that the rules stated in UCP 600 article 13 will apply.

Sub-article 6 (a) regarding the operative reimbursement authorization or amendment has been changed to reflect the UCP 600 position i.e., to remove all unnecessary reference to the circumstances where a mail confirmation to a teletransmission is sent. In all cases, the teletransmission is the operative instrument and any mail confirmation will be disregarded.

In sub-articles 6 (d) (iv) and 8 (b) the term "freely negotiable" has been changed to "credit available with any bank" so as to mirror the wording used in UCP 600 sub-article 6 (a).

A new sub-article 9 (g) has been added stating "A reimbursing bank is irrevocably bound to honour a reimbursement claim as of the time it issues the reimbursement undertaking." to reflect the same concept as UCP 600 sub-articles 7 (b) (issuing bank undertaking) and 8 (b) (confirming bank undertaking). The remaining sub-articles of article 9 have been renumbered to accommodate this inclusion. The same addition has been made in sub-article 9 (h) (iii), for amendments, to reflect the same concept as UCP 600 sub-article 10 (b).

In sub-article 11 (e) the reference to reserve or indemnity has been removed. Whether or not a claiming bank has paid under indemnity or reserve does not concern a reimbursing bank. The reimbursing bank is not involved in the examination of documents, the determination of compliance nor the manner of honour or negotiation of that presentation.

It may have escaped the notice of a number of practitioners that in URR 525 sub-article 11 (e) the word "honour" was used, even though it did not appear in UCP 500. In URR 725 sub-article 11 (e) that use of the word "honour" has not been changed as it was used in a more generic sense and not in the manner that the term "honour" is defined in UCP 600.

Articles 13 (Foreign Laws and Usages), 14 (Disclaimer on the Transmission of Messages) and 15 (Force Majeure) have been changed to align the wording with UCP 600.

Article 16 on charges has been aligned with the style of UCP 600 to create the rule that a reimbursing bank's charges are for the account of the issuing bank. This can, of course, be modified by the terms of the reimbursement authorization if such charges are to be for account of the beneficiary.