The challenge of developing a UCP supplement for electronic presentation has been a fascinating one. Given the problems surrounding the effort to draft URGETS (the Uniform Rules and Guide-lines for Electronic Trade and Settlement), I knew that this would not be a simple task. Change and adapting to the future never is. I believe that development of the supplement is a critical step for the financial services industry that will keep UCP relevant for the emerging ways that trade is being facilitated. I am also convinced that the financial services industry must meet this challenge head on and remain relevant or be disinter-mediated. Accordingly, I jumped at the opportunity to be part of the working group drafting this important work.


The working group, under the direction of Dan Taylor and Rene Müller, developed two principles that will shape the final outcome. These are:

1. Diversity, both of viewpoints and industry background; and

2. Urgency, to deliver a product quickly.

These principles led to a significant debate among working group members and national committees. They also spurred a drive to build on the feedback from national committees while staying true to a commitment to meet the future head on. As a result we developed and built on an interactive approach, which rapidly moved us close to consensus with helpful national committee feedback.

We are now down to a last few remaining issues to be resolved. We will finish this work over the next few months and the resulting version will be the final one presented for adoption by the ICC Banking Commission in November.

Pace of change

The remaining unresolved issues are not ones where we currently have the wrong answer and are searching for the right answer. For the most part they are choices that must be made to make sure the supplement is logical and coherent. Our decisions will be constrained by our desire to leave the spirit and effect of the current UCP intact for purely documentary presentations and to implement as little change as possible to accommodate electronic presentations.

We must also recognize that the pace of change in this field is swift and that we cannot predict where these changes will take us. We know that the future is unlikely to be what we predict but we also know the current environment is not sustainable. If we wait until the future has happened, others will set the standards used to deal with electronic presentation, and these others may not work for financial institutions. This is the background for our decisions.

The one option that isn't open to us is to do nothing - electronic shipping records, customs clearance and banking are upon us and we must adapt. New service providers for electronic trade facilitation are springing up, letter of credit volume as a percentage of total international trade is diminishing. Our co-chairmen keep reminding the working group to be pragmatic, to make the changes and be prepared to react quickly in the future if the unexpected occurs. This is good advice.

Unresolved issues

A number of the unresolved issues that we face are syntax related. How do we construct the sentences in the new eUCP to convey clearly and uniformly how a certain issue should be dealt with? I will not detail all of these issues here but I would like to outline some of the remaining ones to give a flavour of the challenges we face and hopefully to help others understand how and why we will arrive at the final wording.

I begin with an issue I believe to be resolved but one that keeps coming up in our discussions. I refer to the current draft of Articles 1 and 2 in the supplement. I remind readers that these Articles are still in draft form and they may still be changed before we present a text to the Banking Commission. At present, they state as follows:

"Article e1: Scope of the UCP Supplement for Electronic Presentation (eUCP)

a. The UCP Supplement for Electronic Presentation ('eUCP') is intended to supplement the Uniform Customs and Practice for Documentary Credits (1993 Revision ICC Publication No. 500, 'UCP') to accommodate presentation of electronic records alone or in combination with paper documents. b. The eUCP shall apply as a supplement to the UCP where it is incorporated into the text of the Credit.

c. A Credit must indicate the applicable version of the eUCP; otherwise it is subject to the version in effect on the date the Credit is issued, or, if made subject to eUCP by an amendment to the Credit, to the version in effect on the date of that amendment.

Article e2: Relationship of the eUCP to the UCP

a. A Credit subject to eUCP is also subject, without express incorporation, to the UCP.

b. With regard to application of this supplement, the eUCP shall prevail to the extent that it would produce a result different than the UCP."

These Articles make clear that invoking the supplement is a choice that will be made when the parties anticipate that part or all of the presentation will be an electronic presentation. But it is a choice they will make with the awareness that a completely documentary presentation can also be made under an eUCP credit.

The working group did not want the supplement to be added to the existing UCP without specific incorporation by the parties. We felt it would open the door for unanticipated electronic presentations when the parties and financial institutions may not be in a position to handle them and that this would result in the exclusion of eUCP Articles in a majority of credits. This wording also ensures that where an electronic presentation is anticipated, the parties will have the protection afforded by the supplementary Articles.

This type of incorporation may, in some circumstances, impose certain eUCP issues onto a purely documentary presentation made under the eUCP. This is more fully explored under Article 5e below. The working group believes that leaving the supplement as a choice for the parties is the appropriate option in today's world. In the future, most presentations will include an electronic element, and requiring a specific incorporation may not be the preferred solution.

Corrupted electronic records

An issue that the working group must return to is a determination as to whether the eUCP is sufficiently clear regarding the way parties deal with electronic records that cannot be processed because they are received in a corrupted form or contain viruses. This problem may make it impractical for the recipient to open the electronic records (messages). I had thought this matter was sufficiently dealt with under the eUCP in its definition of an "electronic record" including its required capability to be "received". These terms are defined as follows:

Article e3: Definitions

Article e3: Definitions

i. ... 'electronic record' means:

(a) a record created, generated, sent, communicated, received, or stored by electronic means; and,

(b) capable of being authenticated as to the identity of a sender and the source of the data content contained in an electronic record and whether it has remained complete and unaltered.

v. ...'received' means the time when an electronic record enters the information system of the recipient designated in the Credit in a format capable of being accepted by that system. Any acknowledgement of receipt does not imply acceptance or refusal of the electronic record."

I originally felt that if an electronic record failed to meet these tests, there was no presentation and thus a discrepancy. On reflection, this may not be as clear as I thought in the case, for example, when an electronic record contains a virus. The electronic record may be capable of entering the information system of the designated recipient, but the recipient may be forced to reject it because of the danger it presents to other data contained in his system. I believe this to be a high probability occurrence. We need to ensure sufficient clarity to enable recipients to deal with these situations.

Presentation and format

Presentation and format raise a number of issues that are yet to be fully resolved as evidenced by the feedback from ICC national committees. They were particularly concerned about the requirement that a party must refer to the relevant credit in cases of transferable credits. The discussions indicated that the working group also needs to determine if greater clarity can be provided regarding presentation issues where confirmed credits and freely negotiable credits are concerned.

It may well be the case that electronic presentation is not suitable for freely negotiable credits. A negotiating bank under a freely negotiable credit is an unknown entity, and the formats that are acceptable to that bank or a confirming bank cannot be predicted. We assume that such a bank would refuse nomination if it were unable to accept the required formats, but is this fair and is there another solution? The working group believes that the role of the advising bank will disappear as electronic presentation becomes more commonplace, but how should we handle matters in the interim?


The nature of electronic presentations that can come from many sources also presents the problem of linking the presentation to the relevant credit and assessing when presentation is complete. The eUCP deals with these issues by requiring linkages to the relevant credit and requiring a notice from the beneficiary when presentation is complete. Complications arise, however, when the credit is transferred and/or confirmed. We need to revisit this issue to ensure sufficient clarity.

Presentation under eUCP also presents a classic case of unintended consequences. The current draft of Article 5(c) states: "If a Credit allows for presentation of one or more electronic records, the beneficiary must provide a notice to the bank signifying when presentation is complete."

This combined with Article 2(b) above makes sense when there is at least one electronic record presented. If, however, the credit is issued under eUCP and allows for one or more electronic records or paper documents and only paper documents are presented, the consequence will be an addition to the requirement now in UCP. Additionally, this situation could arise when a credit calls for presentation of one electronic record and all other documents are presented as paper and the electronic record is not presented. In this case, the bank may not know that the presentation is complete unless the beneficiary tells it so.

This additional requirement for the beneficiary to present a notice when negotiation is complete may, in those circumstances, cause a difference in UCP and eUCP requirements. This was unintended. Will it result in unnecessary discrepancies? Many think this is a minor issue, others believe it significant. The working group needs to retain the intent of the eUCP for electronic presentations, and, if possible, eliminate the unintended consequences.

I remain confident that the working group, which has tackled a host of thorny issues, will be able to resolve these as well.I

Bill Cameron is General Manager, Trade Finance - Identrus Project, Canadian Imperial Bank of Commerce (CIBC), Toronto, Canada and is a member of the working group drafting the eUCP. His e-mail