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Copyright © International Chamber of Commerce (ICC). All rights reserved.
( Source of the document: ICC Digital Library )
by Dan Taylor
During the life of UCP 500, a number of developments influenced the revision of the rules which became UCP 600. These included the Position Papers issued by the Banking Commission in 1994, after UCP 500 became effective, to correct a number of misinterpretations; the determination of an “Original” document in the context of UCP 500 sub-article 20 (b); the creation of the Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits, ICC Publication No. 525, and the issuance in 1998 of the International Standby Practices (ISP98), ICC Publication No. 590. Perhaps even more important was the issuance by ICC of International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication No. 645, in 2003. Other ICC Banking Commission educational documents were issued on topics including “Examination of Documents, Waiver of Discrepancies and Notice under UCP 500” and “Transferable Credits and the UCP 500” (2002), as well as numerous Banking Commission Opinions.
The creation of the ISBP was greatly influenced by the addition in sub-article 13 (a) of UCP 500 of the phrase “Compliance of the stipulated documents on their face with the terms and conditions of the Credit shall be determined by international standard banking practice as reflected in these Articles”. In 1996, the IFSA issued a document titled “Standard Banking Practice for the Examination of Letter of Credit Documents”, which became widely utilized by banks around the world as an explanation of standard practices of banks in handling documents presented under letters of credit. ICC decided that standard practices actually went beyond those in the UCP itself and that there was value in creating such a document with more international acceptance. It then embarked on an effort to create the ISBP. (It is interesting to note that the introduction of the 1920 RAECC used the phrase “standard practice” in its introduction.)
In addition, during the life of UCP 500 there was a continuing move to the use of electronic documents. As a result, ICC released a supplement to the UCP for electronic presentations entitled eUCP. The eUCP addressed specifics related to how a bank would deal with the presentation of the equivalent of paper documents in electronic form in conjunction with the UCP. While not yet widely used, the eUCP created the framework for further developments away from paper documents.
The revision of UCP 500 had very simple goals; however, like most revisions, much more was changed than was originally envisioned. Perhaps the most important changes in UCP 600 were changes in style and language and the creation of separate articles for definitions and interpretations.
Changes of significance in UCP 500 were:
For a more comprehensive comparison of the changes from UCP 500 to UCP 600, see the Commentary on UCP 600 – Article-by-Article Analysis by the UCP 600 Drafting Group, ICC Publication No. 680.
UCP 600 became effective on 1 July 2007. In addition to the revision itself, the ISBP was revised to account for the changes in UCP 600 (ICC Publication No. 681), and the eUCP was updated to reflect the changes in style used in UCP 600.
ICC Publication No. 600
Application of UCP
The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600 (“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to which they may be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is subject to these rules. They are binding on all parties thereto unless expressly modified or excluded by the credit.
For the purpose of these rules:
Advising bank means the bank that advises the credit at the request of the issuing bank.
Applicant means the party on whose request the credit is issued.
Banking day means a day on which a bank is regularly open at the place at which an act subject to these rules is to be performed.
Beneficiary means the party in whose favour a credit is issued.
Complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice.
Confirmation means a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation.
Confirming bank means the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request.
Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation.
Issuing bank means the bank that issues a credit at the request of an applicant or on its own behalf.
Negotiation means the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.
Nominated bank means the bank with which the credit is available or any bank in the case of a credit available with any bank.
Presentation means either the delivery of documents under a credit to the issuing bank or nominated bank or the documents so delivered.
Presenter means a beneficiary, bank or other party that makes a presentation.
Where applicable, words in the singular include the plural and in the plural include the singular.
A credit is irrevocable even if there is no indication to that effect.
A document may be signed by handwriting, facsimile signature, perforated signature, stamp, symbol or any other mechanical or electronic method of authentication.
A requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or label on the document which appears to satisfy that requirement.
Branches of a bank in different countries are considered to be separate banks.
Terms such as “first class”, “well known”, “qualified”, “independent”, “official”, “competent” or “local” used to describe the issuer of a document allow any issuer except the beneficiary to issue that document.
Unless required to be used in a document, words such as “prompt”, “immediately” or “as soon as possible” will be disregarded.
The expression “on or about” or similar will be interpreted as a stipulation that an event is to occur during a period of five calendar days before until five calendar days after the specified date, both start and end dates included.
The words “to”, “until”, “till”, “from” and “between” when used to determine a period of shipment include the date or dates mentioned, and the words “before” and “after” exclude the date mentioned. The words “from” and “after” when used to determine a maturity date exclude the date mentioned.
The terms “first half ” and “second half ” of a month shall be construed respectively as the 1st to the 15th and the 16th to the last day of the month, all dates inclusive.
The terms “beginning”, “middle” and “end” of a month shall be construed respectively as the 1st to the 10th, the 11th to the 20th and the 21st to the last day of the month, all dates inclusive.
Credits v. Contracts
Documents v. Goods, Services or Performance
Banks deal with documents and not with goods, services or performance to which the documents may relate.
Availability, Expiry Date and Place for Presentation
Issuing Bank Undertaking
Confirming Bank Undertaking
Advising of Credits and Amendments
Teletransmitted and Pre-Advised Credits and Amendments
Bank-to-Bank Reimbursement Arrangements
Standard for Examination of Documents
Discrepant Documents, Waiver and Notice
Original Documents and Copies
Transport Document Covering at Least Two Different Modes of Transport
Bill of Lading
Non-Negotiable Sea Waybill
Charter Party Bill of Lading
Air Transport Document
Road, Rail or Inland Waterway Transport Documents
Courier Receipt, Post Receipt or Certificate of Posting
“On Deck”, “Shipper’s Load and Count”, “Said by Shipper to Contain” and Charges Additional to Freight
Clean Transport Document
A bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging. The word “clean” need not appear on a transport document, even if a credit has a requirement for that transport document to be “clean on board”.
Insurance Document and Coverage
Extension of Expiry Date or Last Day for Presentation
Tolerance in Credit Amount, Quantity and Unit Prices
Partial Drawings or Shipments
Instalment Drawings or Shipments
If a drawing or shipment by instalments within given periods is stipulated in the credit and any instalment is not drawn or shipped within the period allowed for that instalment, the credit ceases to be available for that and any subsequent instalment.
Hours of Presentation
A bank has no obligation to accept a presentation outside of its banking hours.
Disclaimer on Effectiveness of Documents
A bank assumes no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for the good faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee or the insurer of the goods or any other person.
Disclaimer on Transmission and Translation
A bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in the credit.
If a nominated bank determines that a presentation is complying and forwards the documents to the issuing bank or confirming bank, whether or not the nominated bank has honoured or negotiated, an issuing bank or confirming bank must honour or negotiate, or reimburse that nominated bank, even when the documents have been lost in transit between the nominated bank and the issuing bank or confirming bank, or between the confirming bank and the issuing bank.
A bank assumes no liability or responsibility for errors in translation or interpretation of technical terms and may transmit credit terms without translating them.
A bank assumes no liability or responsibility for the consequences arising out of the interruption of its business by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or any other causes beyond its control. [Page235:]
A bank will not, upon resumption of its business, honour or negotiate under a credit that expired during such interruption of its business.
Disclaimer for Acts of an Instructed Party
Assignment of Proceeds
The fact that a credit is not stated to be transferable shall not affect the right of the beneficiary to assign any proceeds to which it may be or may become entitled under the credit, in accordance with the provisions of applicable law. This article relates only to the assignment of proceeds and not to the assignment of the right to perform under the credit.
Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation (eUCP) Version 1.1
Scope of the eUCP
Relationship of the eUCP to the UCP
An eUCP credit must specify the formats in which electronic records are to be presented. If the format of the electronic record is not so specified, it may be presented in any format.
Notice of Refusal
Originals and Copies
Any requirement of the UCP or an eUCP credit for presentation of one or more originals or copies of an electronic record is satisfied by the presentation of one electronic record.
Date of Issuance
Unless an electronic record contains a specific date of issuance, the date on which it appears to have been sent by the issuer is deemed to be the date of issuance. The date of receipt will be deemed to be the date it was sent if no other date is apparent.[Page243:]
If an electronic record evidencing transport does not indicate a date of shipment or dispatch, the date of issuance of the electronic record will be deemed to be the date of shipment or dispatch. However, if the electronic record bears a notation that evidences the date of shipment or dispatch, the date of the notation will be deemed to be the date of shipment or dispatch. A notation showing additional data content need not be separately signed or otherwise authenticated.
Corruption of an Electronic Record After Presentation
Additional Disclaimer of Liability for Presentation of Electronic Records under eUCP
By satisfying itself as to the apparent authenticity of an electronic record, banks assume no liability for the identity of the sender, source of the information or its complete and unaltered character other than that which is apparent in the electronic record received by the use of a commercially acceptable data process for the receipt, authentication and identification of electronic records.