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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
The mode of presentation to the remitting bank, by or on behalf of the principal, of electronic records alone or in combination with paper documents, is outside the scope of the eURC.
The mode of presentation to the drawee, by the collecting or presenting bank, of electronic records alone or in combination with paper documents, is outside the scope of the eURC.
Where not defined or modified in the eURC, definitions given in URC 522 will continue to apply.
The precedent for including ‘Preliminary Considerations’ was established in ISBP, and with the preamble to DOCDEX. The preliminary considerations are listed on a separate page to the rules in order to provide a distinction between the two.
For reasons of transparency and clarity, it is considered to be entirely appropriate to provide guidance within the rules in the form of preliminary considerations. An alternative would have been to include the text within a foreword or an introduction.
However, whilst it is recognised that all participants to a transaction will always take note of the rules themselves, this cannot be considered to be the same for forewords or introductions, which do not always receive the same level of attention as rules. Accordingly, these provisions are included as ‘Preliminary Considerations’.
The mode of presentation to a bank and the mode for delivery of that presentation to the drawee are outside the scope of the rules.
This emphasises the statement within sub-article e2 (a) that the eURC is a supplement to the URC and provides clarification that definitions given in URC 522 will continue to be applicable.
Similar preliminary considerations have been listed in the eUCP Version 2.0 in order to create consistency between the two sets of rules.
a. A collection instruction should only indicate that it is subject to the Uniform Rules for Collections (URC 522) Supplement for Electronic Presentation (“eURC”) where a prior arrangement exists between the remitting bank and the collecting or presenting bank, for the presentation of electronic records alone or in combination with paper documents.
b. Such prior arrangement should include:
i. the format in which each electronic record will be issued and presented; and
ii. the place for presentation, to the collecting or presenting bank.
The eURC are rules that apply to an arrangement between the remitting bank and the collecting or presenting bank, for the presentation of electronic records alone or in combination with paper documents.
The rules are only workable if a prior arrangement has been put in place between the remitting bank and the collecting or presenting bank, for the presentation of electronic records alone or in combination with paper documents. This is an absolute pre-condition in order for the rules to be operative for an eURC collection instruction.
It is essential that any prior arrangement between the banks describe the required format of each electronic record (article e6 Format) and includes the place for presentation (sub-article e4 (a) (iv) Definitions).
URC 522 article 1 (Application of URC 522) stipulates that when the text of a collection instruction indicates that it is subject to URC 522, the rules are binding on all parties thereto. Symmetrically the same applies for eURC, in that the provisions of the eURC in a collection instruction that is subject to the eURC would be applicable to any person or bank that acted on that collection instruction to the extent of their role.
a. The eURC supplements the Uniform Rules for Collections (1995 Revision, ICC Publication No. 522) (“URC”) in order to accommodate presentation of electronic records alone or in combination with paper documents.
b. The eURC shall apply where a collection instruction indicates that it is subject to the eURC (“eURC collection instruction”).
c. This version is Version 1.0. An eURC collection instruction must indicate the applicable version of the eURC. If not indicated, it is subject to the version in effect on the date the eURC collection instruction is issued or, if made subject to the eURC by an amendment, the date of that amendment.
The formal title to this supplement is “Uniform Rules for Collections (URC 522) Supplement for Electronic Presentation (“eURC”)”. Because of the length of the title, the shorthand acronym “eURC” is appended.
This abbreviated form employs the usual prefix that is applied to electronic commerce whilst emphasising the connection with the Uniform Rules for Collection.
Although no specific form of reference to the eURC is mandated, in fact any reference that clearly indicates the eURC would be adequate, it is recommended that the term “eURC” be used for reasons of transparency and clarity.
As indicated by eURC sub-article e2 (a), the eURC acts as a supplement to URC 522. Although the rules do not include a definition of the word ‘supplement’, the intent is that, in practice, they function by reference to URC 522, and do not stand as a set of selfcontained rules, such as ISP98 or URDG 758.
The eURC contains only those requirements deemed necessary to expand or modify URC 522 in order to facilitate presentation of electronic records. Accordingly, it is an absolute necessity to read any eURC article in combination with the analogous URC 522 article.
eURC sub-article e3 (b) (Relationship of the eURC to the URC) provides clear direction on the inter-relationship of both sets of rules when the content may appear to differ.
eURC sub-article e2 (b) highlights that the eURC applies when a collection instruction ‘indicates that it is subject to the eURC’. As such, it is expected that an appropriate reference to applicability be apparent.
eURC sub-article e2 (c) makes it clear that the eURC is issued in ‘versions’, with the current version being Version 1.0. As a matter of good practice, it is always recommended that an eURC collection instruction indicate the exact applicable version, rather than leave it open to possible misinterpretation. Should a version number not be stated, sub-article e1 (c) clarifies that the credit would be subject to the latest version in effect on the date the eURC collection instruction is issued.
As further stated in this sub-article, in the event that a collection instruction is made subject to the eURC by means of an amendment, and such amendment has been accepted by all relevant parties, the collection instruction would then be subject to the latest version of the eURC in effect on the date of such amendment.
As stated above under ‘Version number’, the eURC makes allowances for a situation wherein a collection instruction subject to URC 522 may be amended to be subject to eURC in order to allow for the presentation of electronic records. To amend the collection instruction a presenter may make a simple statement that the condition of a collection instruction being subject to URC 522 is now replaced by subjectivity to eURC Version 1.0.
However, any such amendment requires careful scrutiny of the collection instruction before being issued. In view of the fact that the collection instruction would have been drafted subject to URC 522, then it is consequential that the conditions of the collection instruction were originally mandated upon the presentation of paper documents. As such, the introduction of electronic records requires close assessment in order to ensure there are no potential negative impacts towards the parties under the collection instruction.
As stated in eURC sub-article e2 (a), the rules will only apply when an electronic record is involved. This can be as part of a presentation consisting solely of electronic records, or as part of a mixed presentation with paper documents.
In view of the fact that the eURC is a supplement to URC, URC 522 sub-article 1 (a) (Application of URC 522) continues to apply, thereby allowing for modifications and exclusions to be made provided they are expressly stipulated in the collection instruction. This means that there is no need for an equivalent article within the eURC itself. Consequently, the content of eURC can be modified or excluded in the collection instruction, but no provision in a collection instruction should be deemed to modify or exclude an article in the eURC unless the collection instruction expressly so indicates.
a. An eURC collection instruction is also subject to the URC without express incorporation of the URC.
b. Where the eURC applies, its provisions shall prevail to the extent that they would produce a result different from the application of the URC.
c. Where an eURC collection instruction is issued but the presentation consists of only paper documents, the URC alone shall apply.
The interdependence between the eURC and URC 522 is clearly indicated in eURC sub-article e2 (a) (Scope of the eURC).
As a consequence of this correlation, eUCP article e3 goes on to clarify how such interdependence will work in practice.
As highlighted by eURC article e2, the intent of the eURC rules is that they function by reference to URC 522, and do not stand as a set of self-contained rules, such as ISP98 or URDG 758. Subarticle e3 (a) provides that there is no need to expressly incorporate URC 522 within an eURC collection instruction. Such collection instructions are automatically also subject to URC 522.
In view of the above, i.e. no need to expressly stipulate URC 522 in an eURC collection instruction, the content of URC 522 article 1 additionally refers to an eURC collection instruction. Sub-article e3 (b) clarifies that, in these circumstances, the provisions of eURC will prevail in the event of any ‘conflict’ with URC 522.
Whilst the above makes it clear that there is no actual need to provide specific reference in an eURC collection instruction to URC 522, it may well be considered as good practice and prudent to provide such reference, e.g. by stating that an eURC collection instruction is ‘also subject to URC 522’. This would provide transparency to all parties concerned and ensure that there is no doubt of the continued pertinence of URC 522.
a. Where the following terms are used in the URC, for the purpose of applying the URC to an electronic record presented under an eURC collection instruction, the term:
i. “advices” includes electronic records originating from a data processing system;
ii. “collection instruction” shall include an instruction originating from a data processing system;
iii. “document” shall include an electronic record;
iv. “place for presentation” of an electronic record means an electronic address of a data processing system;
v. “sign” and the like shall include an electronic signature;
vi. “superimposed” means data content whose supplementary character is apparent in an electronic record.
b. The following terms used in the eURC shall have the following meaning:
i. “data corruption” means any distortion or loss of data that renders the electronic record, as it was presented, unreadable in whole or in part;
ii. “data processing system” means a computerised or an electronic or any other automated means used to process and manipulate data, initiate an action or respond to data messages or performances in whole or in part;
iii. “electronic record” means data created, generated, sent, communicated, received or stored by electronic means including, where appropriate, all information logically associated with or otherwise linked together so as to become part of the record, whether generated contemporaneously or not, that is:
a. capable of being authenticated as to the apparent identity of a sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered, and
b. capable of being viewed to ensure that it represents the type and/or description of the electronic record listed on the eURC collection instruction;
iv. “electronic signature” means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person’s authentication of the electronic record;
v. “format” means the data organisation in which the electronic record is expressed or to which it refers;
vi. “paper document” means a document in a paper form;
vii. “presenter” means the principal or a party that makes a presentation on behalf of the principal;
viii. “received” means when an electronic record enters a data processing system, at the agreed place for presentation, in a format capable of being accepted by that system. Any acknowledgement of receipt generated by that system is not to be construed that the electronic record has been authenticated and/or viewed under the eURC collection instruction;
ix. “re-present” means to substitute or replace an electronic record already presented.
This article comprises of a number of terms used in the eURC. Some also appear in URC 522, whilst others appear solely in the eURC.
Article e4 is comprised of two distinct parts. In the first section, sub-article e4 (a), reference is made to terms that also appear in URC 522, but have a different meaning when applied to an electronic record presented under an eURC collection instruction. These include ‘advices’, ‘collection instruction’, ‘document’, ‘place for presentation’, ‘sign’, and ‘superimposed’.
Owing to the interdependence between URC 522 and eURC, it was clear that these URC 522 terms required ‘re-definition’ under the eURC in order to remain applicable.
The second section, sub-article e4 (b), defines terms used solely in the eURC. These include ‘data corruption’, ‘data processing system’, ‘electronic record’, ‘electronic signature’, ‘format’, ‘paper document’, ‘presenter’, ‘received’ and ‘re-present’.
The statements in the previous ‘ICC Guide to the eUCP’ (ICC Publication No. 639), although mentioned in relation to the eUCP, are equally applicable to the eURC, and are repeated below:
Not only are many of the terms that are defined in eUCP article e3 used in electronic commerce, they have also come to be used and even defined in the law relating to it. With respect to the law, as well as electronic commerce generally, there has been no intention to develop new doctrine or concepts. Any innovations in the definitions in the eUCP derive from the unique nature of the documentary credit. While every attempt has been made to align the definitions in these rules with those used in local law, many of the legal definitions now extant differ among themselves in formulation if not meaning. As a result, the eUCP definitions are modelled on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce, which is the most widely imitated in electronic commerce legislation.
Therefore, in working with the eUCP, it is necessary to consider each applicable legal system with respect to the eUCP definitions to determine:
• whether local law defers to a system of private rules such as the eUCP where the undertaking is subject to them, and,
• whether this deference extends to the internal definitions used in the eUCP even if they differ from those used in the definitional section of the law, and,
• whether there is any substantive conflict between the eUCP definitions and those contained in the local law.
In most cases, the law of electronic commerce reflects modern commercial law in permitting private rules to utilise particular definitions internally. Where the same term has differing meanings or where the same concept is given two different names—one in the law and a different one in a private rule—there is more likely to be confusion than conflict in applying local law. The confusion would result where local law embraces one definition but defers to the eUCP and permits use of a different definition internally in applying that practice.
For example, the term ‘document’ may have a different meaning under local electronic commerce law than in the eUCP. When applying local electronic commerce law, its own definition must be used, whereas in interpreting and applying the eUCP, the eUCP definition must be used. The only area identified to date as one for possible concern regarding conflict between the eUCP and local electronic commerce law relates to the degree of authenticity required for electronic records and the meaning to be attached to a requirement for an electronic signature.
Where there is a mandatory requirement under local electronic commerce law for a higher degree of authenticity than would be required under the eUCP, local electronic commerce law may impose additional requirements on an electronic presentation.
As to the liability for variations of local law, UCP 600 sub-article 37 (d) (Disclaimer for Acts of an Instructed Party) provides that the applicant would be required to indemnify the bank against any risks arising from such a local law other than the law to which the bank itself is subject where the credit is not made subject to that law.
eURC Definition
The term ‘advices includes electronic records originating from a data processing system.
General
eURC sub-article e4 (a) (i) appends to the meaning of ‘advices’ in URC 522 article 26 (Advices). eURC SUB-ARTICLE E4 (A) (II): ‘COLLECTION INSTRUCTION’
The term ‘collection instruction’ shall include an instruction originating from a data processing system.
eURC sub-article e4 (a) (ii) appends to the meaning of ‘collection instruction’ in URC 522 article 4 (Collection Instruction).
The term ‘document’ shall include an electronic record.
eURC sub-article e4 (a) (iii) adds the term ‘electronic record’ to the meaning of ‘document’ as it is used in URC 522 with respect to an eURC collection instruction.
Meaning of ‘document’ in URC 522
The term ‘document’ or a variation is used extensively in URC 522. The term ‘documents’ is defined in URC 522 sub-article 2 (b) and means ‘financial documents and/or commercial documents’ as further defined in URC 522 sub-articles 2 (b) (i) and (ii).
Paper
As used throughout URC 522, the term ‘document’ suggests format in a paper medium. Unless specifically allowed under the conditions of an eURC collection instruction, it is expected that all presentations under such a collection instruction be in a paper format.
Electronic Presentations
Many of the uses of the term ‘document’ in URC 522 are readily applicable to an electronic presentation because they focus on the data presented and not on the medium of presentation. As a result, extension of the term ‘document’ to an electronic record is relatively simple. The eURC sub-article e4 (a) (iii) approach does not, however, alter the fact under URC 522 that a paper document is required unless the collection instruction states otherwise where it is not supplemented by the eURC.
‘Document’ in electronic commerce law.
It is important that the impact of applicable local electronic commerce law always be taken into account. However, based upon the fact that the eURC definitions are modelled on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce, it is hoped that there will be no particular conflict with the eURC definition.
The term ‘place for presentation’ of an electronic record means an electronic address of a data processing system.
eURC sub-article e4 (a) (iv) extends the phrase ‘place for presentation’ in URC 522 to include an electronic address when referring to the place of presentation of an electronic record under an eURC collection instruction.
Meaning of ‘place for presentation’ in URC 522
URC 522 sub-article 4 (b) (iii) uses the phrase ‘domicile at which presentation is to be made’. Whilst this is not formally defined in URC 522, it implies the domicile or address of the drawee. URC 522 sub-article 4 (b) (iv) addresses the presenting bank. In URC 522, the phrase refers to an address at a physical location. URC 522 continues to apply. In respect of the place for presentation, the following sub-articles are applicable: URC 522 4 (b) (iv) (Collection Instruction), 4 (c) (i) (Collection Instruction), 5 (d) (Presentation), 5 (e) (Presentation), and 5 (f) (Presentation).
Transition to eURC Collection Instructions
Where the collection instruction requires or permits presentation of electronic records, their place of presentation will typically be to an electronic address and not a physical one. However, the collection instruction may require that the electronic record be contained on portable storage medium, in which case the electronic record may be presented to a physical address. The requirement in the eURC is for the place for presentation to have been established by way of a prior agreement. The collection instruction, as part of the presentation, should then be made to that agreed place. A collection instruction should not be sent without such an agreement being in place and should not be sent to any other place than that which has been agreed.
Electronic Address
Although there is no specific definition within the eURC, the term ‘electronic address’ signifies the precise electronic location or proprietary system to which an electronic record can be sent. It could include, inter alia, a URL, an email address, or an address on a dedicated system.
The term ‘sign’ and the like shall include an electronic signature.
eURC sub-article e4 (a) (v) adds ‘electronic signature’ to the meaning of the term ‘sign’ or its variations when used in URC 522 or in the collection instruction in connection with an electronic record presented under the eURC.
Role of Signature in Collection Practice
A signature identifies the person assuming responsibility for the document and indicates some form of assent to its content. Signatures are regarded as adding assurance of authenticity to a document and of the veracity of the representations contained in it. By signing a document, the person signing is personally engaged to some extent in a moral, if not a legal sense, in what the document represents. It should be noted that, under URC 522, the presenting bank is not responsible for the genuineness of any signature or for the authority of any signatory to sign.
Signing an Electronic Record
Unlike URC 522, the eURC defines ‘electronic signature’ in eURC sub-article e4 (b) (iv). It is ‘a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person’s authentication of the electronic record’. An electronic signature may be in the form of data that appears as the name of the signer, code, a key or acceptable digital signatures and public key cryptography.
Electronic signatures and local law
In order to have validity under local law, it is often necessary for certain paper documents to be signed. Some laws also define terms such as ‘sign’ and ‘signature’.
This has further advanced in recent terms with the formulation of electronic commerce laws, which now address electronic records and their method of authentication. As such, and in order to remain in line with existing law, most electronic commerce laws include definitions for terms such as ‘sign’ and ‘signature’.
It is important to note that the eURC takes a technology-agnostic view with respect to the type of technology that may be used in this respect.
eURC Definition:
The term ‘superimposed’ means data content whose supplementary character is apparent in an electronic record.
eURC sub-article e4 (a) (vi) uses the term ‘superimposed’ to describe the addition of information to an electronic record after it has been created.
Use in URC 522
The term ‘superimposed’ is not defined in URC 522. The term appears in URC 522 article 13 (Disclaimer on Effectiveness of Documents) to signify the imposition of conditions either physically on the document or by implication from the terms of another related document, contract, law, or custom.
The term ‘data corruption’ means any distortion or loss of data that renders the electronic record, as it was presented, unreadable in whole or in part.
The term ‘data corruption’ is not used in URC 522.
Meaning of ‘data corruption’
Data can be corrupted after having been received from the presenter. As a result, there could be a degree of unease regarding the possibility of the loss of data by a bank after an electronic record has been presented. Any problem with the record prior to receipt is the responsibility of the presenter whose obligation is to present the data to the place of presentation in the format required by the collection instruction.
The term ‘data processing system’ means a computerised or an electronic or any other automated means used to process and manipulate data, initiate an action or respond to data messages or performances in whole or in part.
Article e12 (Additional Disclaimer of Liability for Presentation of Electronic Records under eURC) refers to a ‘data processing system’. Any bank that engages in an eURC collection instruction is responsible for maintaining a data processing system. This responsibility is a fundamental precondition for using the eURC.
The term ‘data processing system’ is not used in URC 522.
Meaning of ‘data processing system’
The aim was to align definitions in eURC with those used in local law. However, many legal definitions differ among themselves in formulation if not meaning. As a result, the eURC definitions are modelled on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce, which is the most widely imitated in electronic commerce legislation. In working with eURC, it is necessary to consider each applicable legal system with respect to the eURC definitions. The UNCITRAL definition of ‘automated data processing’ has been adapted for these rules.
The term ‘electronic record’ means data created, generated, sent, communicated, received or stored by electronic means, including, where appropriate, all information logically associated with or otherwise linked together so as to become part of the record, whether generated contemporaneously or not, that is:
b. capable of being viewed to ensure that it represents the type and/or description of the electronic record listed on the eURC collection instruction
eURC sub-article e4 (b) (iii) defines “electronic record” as the term is used in the eURC.
A digital record is one that exists in digitised form only, whereas an electronic record also includes a copy of an original document that is stored in electronic form e.g. a scanned copy. The eURC definition of “electronic record” does appear to include a digitised record (‘data created...by electronic means’) but is broader than that.
The commentary to the UNCITRAL Model Law on Electronic Transferable Records states that the definition of ‘electronic transferable records’ is meant to include both functional electronic equivalents of paper records and digitised records.
Electronic commerce
In electronic commerce, data is grouped together into a unit. Although these units are often provided with designations such as ‘messages’, ‘files’ and ‘documents’, the term ‘electronic record’ has emerged as a common label to identify a grouping of data in one message, file, or document and to distinguish it from a paper document.
Document
Under the eURC, an electronic record is a type of document as provided in eURC sub-article e4
(a) (iii) (document). It is separate from a paper document, which is defined in eUCP sub-article e4
(b) (vi) (paper document). Under an eURC collection instruction, documents can consist of both paper documents and electronic records, but must consist of at least one electronic record.
Electronic
Although there is no definition of ‘electronic’ in the eURC, such term would, by its nature, exclude paper documents. It is essential to also note that by using the generic term ‘electronic’, the rules avoid linkage with any specific technology or platform, thereby ensuring that the rules remain technology-agnostic. As outlined in a previous publication, ‘ICC Guide to the eUCP’ (ICC Publication No. 639), the term ‘electronic’ has generally been distinguished from imaging, which involves a different process. However, with technological advances, the distinctions have become blurred. More on this subject is outlined below.
Telefaxes and Imaging
The eURC makes no reference to telefaxes. It was once thought that telefaxes could not be electronic records both for technological reasons and because there was an original paper document that generated the telefax. With technological advances, it is possible to generate a telefax on a computer and send it to another computer as an image.
As a result, it is impossible to categorically determine whether or not a telefax is an electronic record. If the issuing bank specifies the format of required or permitted electronic records, the problem will be avoided. Such a specification is especially important when document examination is automated since it would be difficult, if not impossible, to use a system to determine all of the required data elements from an image. If it does not do so, the presenter would probably be justified in presenting required electronic records by means of telefax and it would remain with the issuing bank to convince a court that they were not electronic records.
Formatting and Electronic Records
eURC article e6 (Format) requires an eURC collection instruction must indicate the format of each electronic record, implying that if the format of an electronic record is not indicated, it may be presented in any format. Accordingly, it can be presumed that provided a document is presented in the format stipulated in the eURC collection instruction, such document constitutes an electronic record. If the presenter states a specific format for a document to be presented under an eURC collection instruction and it is not a paper document, the document should be regarded as an electronic record for purposes of interpreting the eURC.
Authenticated, apparent identity, apparent source of data and integrity of the data
The eURC does not expressly define authenticate. It does, however, link the term to and embody its meaning for purposes of the eURC in its definition of ‘electronic record’. eURC Article e4 (b) (iii) indicates what it is necessary for transmitted electronic data to contain in order to become an electronic record under the eURC. The data must not only be received into the system of the bank but also authenticated as to:
• the apparent identity of the sender; and,
• the apparent source of the data contained in the record; and,
• is capable of being viewed to ensure that it represents the type and/or description of the electronic record listed on the eURC collection instruction.
The eURC does not require the electronic record to have been authenticated for it to become an electronic record, merely that it be capable of being authenticated. Whether it is actually authenticated is the responsibility of the bank. As long as the data is authenticatable, it is an electronic record for purposes of the eURC. Because of the technology involved in transmitting electronic records, it is possible for them to become unscrambled in transition and not to be complete when received or for an error to be introduced. It is expected that the bank will check the integrity of an electronic message.
Methods for Authentication
Current and evolving technology allows for numerous commercially reasonable techniques in order to authenticate an electronic record whilst applying the criteria in eURC sub-article e4 (b) (iii). The parties to the collection instruction must decide the level and amount of security to be used in authenticating a message. The UNCITRAL Model Law on Electronic Commerce provides an excellent guide to this process. Various national laws may also impose specific requirements for an electronic record to be authenticated.
Technology Neutral
The method of authentication used in the eURC is intended to be technology-agnostic and not to endorse any specific technology.
Capable of being viewed
eURC sub-article e4 (b) (iii) requires that in order to qualify as an electronic record for purposes of the eURC, data must be capable of being viewed. This requirement is intrinsically linked by the requirement in eURC article e6 (Format) that the collection instruction indicate the required format. If it does so, then the data sent in that format is presumed to be capable of being viewed.
Accordingly, the requirement that data be capable of being examined is only relevant when the presenter does not actually specify a format. In such circumstance, data may be sent in any format, but it must still be capable of being viewed. It would not be possible to claim that the presentation was effective if what was sent could not be read.
Obligation to maintain a data processing system
Although banks are not obligated to act on collection instructions subject to the eURC, they are required to maintain a data processing system for the receipt, authentication, and identification of electronic records. Such a system need not be state of the art, but it should be capable of performing those minimal functions of authentication considered commercially acceptable. Given the rapid pace of technological development, maintaining such standard will require regular review, analysis, and investment as techniques evolve. In any event, it is assumed that this is a natural process for any bank involved in international trade.
Electronic commerce law
The term ‘electronic record’ has been widely used and defined in statutory provisions relating to electronic commerce. The definition used in the eURC may differ in some respects from those used in these laws. To the extent that there may be any problem, it would centre on the concepts of ‘electronic signature’ and ‘authentication’, terms covered below, rather than the definition of the term ‘electronic record’ as it is used in the eURC.
The term ‘electronic signature’ means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person’s authentication of the electronic record.
eURC sub-article e4 (b) (iv) defines ‘electronic signature’ as data attached to an electronic record with the intent of identifying the signer and authenticating the record.
Significance
As provided in eURC sub-article e4 (b) (iv), signatures on required documents perform two separate functions in documentary credit practice:
• indicating the identity of the person signing, and,
• authenticating the document itself and the information contained in it.
Signatures under eURC
The eURC does not contain any substantive requirement that an electronic record contain an electronic signature. Its only reference to ‘electronic signature’ is contained in the explanation of ‘sign” in eURC sub-article e4 (a) (v), which indicates that the term as it appears in URC 522 also includes an electronic signature.
Signature in an electronic record
An electronic signature in an electronic record can take place by indication of the name of the signer, a code, key or acceptable digital signatures and public key cryptography given in a manner that appears to be intended to authenticate.
While the method of authenticating the document differs when it is electronic, ‘signing’ an electronic message serves the same functions as does signing a paper document. Current and evolving technology allows for numerous commercially reasonable techniques for digital signatures. The UNCITRAL Model Law on Electronic Commerce provides an excellent guide to this process. Various national laws may also impose specific requirements for digital signatures.
The definition given for ‘electronic signature’ is intended to be technology neutral and not to endorse any specific technology. Under eURC sub-article e4 (b) (iv), the name of the signer at the end of the data message would constitute an electronic signature if it appeared to be used to identify the signer and to authenticate the electronic record and its content.
Attached to or logically associated with an electronic record
eURC sub-article e4 (b) (iv) requires that the data consisting of the electronic signature be attached to the electronic record or closely associated with it. In most cases the electronic signature is enclosed in the envelope of the message or embedded within the electronic record itself. It must be associated with the message in such a manner as to indicate the identity of the signer.
The reference in eURC sub-article e4 (b) (iv) to the association or connection of the data with the electronic record in order to identify the signer and authenticate the record and its content goes only to the appearance of connectedness that can be implied from examining the electronic record on its face and not to the actual intention of the signer.
Local law may contain requirements that certain documents be signed in order to be effective. Such law often defines the terms ‘sign’ or ‘signature’.
One facet of the evolution of electronic commerce has been the extension of such laws to embrace electronic documents and to permit such documents to be authenticated in a manner that links with the nature of the document. As a result, many of electronic commerce laws contain a definition of these terms. Caution should be exercised in references to electronic signatures in law and practice to distinguish between a relatively simple ‘electronic signature’ and one with added precautions.
The latter has commonly been called a ‘digital signature’ for purposes of differentiation. When local law adopts the more restrictive notion of a digital signature, it may impose a requirement on an electronic signature not definitively contained in URC 522 or the collection instruction. Unless the collection instruction specifically provides, the use of the term ‘electronic signature’ in the eURC does not signify the requirement that any signature be by means of digital signature.
The term ‘format’ means the data organisation in which the electronic record is expressed or to which it refers.
eURC sub-article e4 (b) (v) defines ‘format’, a concept vital to the processing of electronic records.
Background.
There is no uniform or standard system by which data is organised, nor does there exist a common protocol by which data can be read or identified by data processing systems. As a result, it is only readable if the data processing system is able to recognise the manner in which the data is organised, or its format.
Not every data processing system can recognise every format into which data can be organised. Moreover, with the fast pace of technological development, many systems of organisation are regularly issued in successive versions. It is typical that the later versions are able to read earlier ones but that earlier ones are not able to read later ones.
Meanings of Format
The term ‘format’ is used in several senses. It can mean the protocol by which data is organised, the version of that format, or the shorthand name by which that protocol is recognised and described. There is no precise distinction between these approaches, and the manner in which it is intended they be used can normally be identified from the context in which they are used. Under the eURC, the format of each electronic record must be as previously arranged between the remitting bank and the collecting or presenting bank, as required by sub-article e1 (b).
Accessing data in readable form
The importance of a format lies in the ability of a data processing system to process data. If the format is not one that is recognised by the data processing system, the output is meaningless and said to be ‘unreadable’. This term implies that the data processing system cannot properly format the data in a manner that would provide meaning to a reader.
The term ‘paper document’ means a document in a paper form.
eURC sub-article e4 (b) (vi) refers to a document in a paper medium, the type of document which is expected to be presented under URC 522.
URC 522
URC 522 assumes that all ‘documents’ are in a paper medium.
Need for new term
By broadening the meaning of the term ‘document’ as it is used in URC 522 and in eURC subarticle e4 (a) (iii) (“document”), it became necessary to identify another term that permitted the distinction between paper and electronic records for the eURC. The term ‘paper document’ was chosen because it aptly and simply describes the traditional medium in which data was inscribed.
Printout from a computer, if presented, would be a paper document, whereas the presentation of a portable storage medium would not be. Consequently, the explanation of the sense in which the term ‘paper’ is used resorts to a reference to the ‘paper form’ in which the term was used and understood.
The term ‘received’ means the principal or a party that makes a presentation on behalf of the principal
Presenter is used in article e11 (Data Corruption of an Electronic Record). Electronic records will be initially presented by the presenter (principal or a party on behalf of the principal) to the remitting bank, and then by the remitting bank to the collecting or presenting bank. The act of presentation on behalf of the principal to the remitting bank is already covered by URC 522 subarticle 3 (a) (ii).
The term ‘received’ means when an electronic record enters a data processing system, at the agreed place for presentation, in a format capable of being accepted by that system. Any acknowledgement of receipt generated by that system is not to be construed that the electronic record has been authenticated and/or viewed under the eURC collection instruction
eURC sub-article e4 (b) (viii) defines ‘received’ when used with respect to an electronic record.
Significance in practice
Receipt is critical in collection presentations. Documents are not presented until they are received. It is possible to speak in terms of the receipt of a particular document or of a presentation. In regard to paper documents where they are presented in one lot, the two notions occur simultaneously.
With respect to the presentation of paper, a paper document is ‘received’ when it comes into the control of the bank. This step can occur when it is delivered to a clerk or to the mailroom. Once the document comes into the bank’s control, presentation has taken place and the bank assumes the risk of loss of the document.
Receipt of electronic records
Delivery of an electronic record will commonly be made electronically to the bank’s data processing system, so that the element of passing into the bank’s control is still present. There is, however, an additional element, namely that in order to meet the requirements of presentation the electronic record can be authenticated. In this case, mere acceptance into the bank’s system is not sufficient to constitute receipt of an electronic record that is transmitted electronically. As used in sub-article e4 (b) (viii) ‘acceptance’ means that the record can be authenticated, not that it has passed into the control of the bank’s system.
Non-Receipt
As with a paper document under the URC 522 and eURC, non-receipt of an electronic record means that it has not been presented. Non-receipt can occur if the record does not reach the bank’s systems or if it is not authenticated by those systems. As provided in eURC sub-article e7 (c) (Presentation), such a record is deemed not to have been presented.
Acknowledgments
Computer systems will, on occasion, automatically send out an acknowledgment to the sender that a message has entered the system. Such an acknowledgment does not necessarily imply that the electronic record has been received in the technical sense used in eURC sub-article e4 (b) (viii) since authentication may not have occurred at that time. In the event of a dispute about whether an electronic record was received, it could be a factor for which the significance would have to be assessed under local law.
The term ‘re-present’ means to substitute or replace an electronic record already presented.
The term ‘re-present’ is not used in URC 522.
Meaning of ‘re-present’
eURC article e11 (Data Corruption of an Electronic Record) uses the term ‘re-present’. In this context, the term means to substitute or replace an electronic record already presented.
The terms ‘authenticate’ and ‘authentication’, while used in the eURC, are not expressly defined.
Significance in paper documents
Authentication in the paper world is the process by which the validity of the representations and the paper documents containing them are ascertained. There are, necessarily, various levels of authentication.
Significance in electronic commerce
Authentication has a very different significance in electronic commerce. Because of the possibility of greater levels of authentication than are feasible in the paper world, and because of the unwillingness of participants to accept levels of risk that they normally accept for equivalent documents in the world of paper, there has been considerable attention in electronic commerce to authentication of data. As a result, various levels of authentication have arisen, some tied to specific technologies.
Uses of ‘authenticate’
Depending on the context, the expectations of the users, and what is commercially reasonable, the constitution of a minimally acceptable level of authentication not only varies, but also is linked to specific technologies.
eURC
The term ‘authenticate’ is used in the eURC in two different senses:
• In eURC sub-article e4 (b) (iii) (Electronic record), it means identifying the person sending a message and the source of the message.
• In eURC sub-article e4 (b) (iv) (Electronic signature), it means associating the person authenticating with the content of the message authenticated.
The eURC does not require the electronic record to have been authenticated for it to become an electronic record, merely that it be capable of being authenticated. Whether it is actually authenticated is the responsibility of the bank. As long as the data is authenticatable, it is an electronic record for purposes of the eURC. The eURC requires, in order to qualify as an electronic record for purposes of the eURC, that data must be able to be authenticated with respect to the apparent identity of the sender, must be able to be authenticated with respect to the apparent source of the data, and must be able to be authenticated with respect to its complete and unaltered character. As such, the parties to a collection instruction must decide on the level and amount of security used to authenticate the message. The UNCITRAL Model Law on Electronic Commerce, amongst others, provides a guide to this process. Various national laws may also impose specific requirements for an electronic record to be authenticated. As such, this should not be an issue for the rules.
Authentication under local law
Many of the laws that address electronic commerce define authentication, and some even tackle the issue of when and at what level it is required. While most such laws are technology-neutral and do not require a higher degree of authentication than would be required for the equivalent information in a paper medium, there are some that impose mandatory requirements of authentication for certain types of documents that are more rigorous than is required by the eURC.
Banks do not deal with the goods, services or performance to which an electronic record or paper document may relate.
The format ‘v’ is used in order to maintain consistency with existing rules such as UCP 600 and URBPO 745.
The structure of this article is aligned in order to follow the construction of URC 522 article 10 (Documents vs. Goods / Services / Performances).
Rationale for inclusion within eURC
URC 522 article 10 does not address electronic records. The addition of ‘electronic records’ in the eURC is a key difference. Whilst it is acknowledged that the definition of ‘documents’ includes ‘electronic records’, it is considered that this article provides required clarity and transparency.
a. An eURC collection instruction must indicate the format of each electronic record.
b. i. The format of each electronic record must be as previously arranged between the remitting bank and the collecting or presenting bank, as required by sub-article e1 (b).
ii. An electronic record received in a format that has not previously been agreed may be treated as not received, and the collecting or presenting bank must inform the remitting bank accordingly.
Format means the method by which a data processing system organises and reads data. eURC sub-article e4 (b) (v) (Definitions) defines the term ‘format’ as ‘the data organisation in which the electronic record is expressed or to which it refers’. eURC article e6 requires that the format of an electronic record be specified in eURC collection instruction and states the consequences if not so indicated. In view of the fact that data processing systems are unable to recognise each and every format into which data may be organised, it is important that any data be in a format that is readable by the relevant data processing system. As a result, it is essential that any related eURC collection instruction (or relevant amendment) indicate the required format.
The format of each electronic record must be as previously arranged between the remitting bank and the collecting or presenting bank, as required by sub-article e1 (b) (i) which refers to the existence of a required prior arrangement which should include the format in which each electronic record will be issued and presented.
The eURC is technology neutral and does not specify the use of any particular format. The format is to be stated in the eURC collection instruction in a manner that is readable by the data processing system to be used.
Format should not be confused with the form in which a paper document is laid out or printed or data is visually organised on a screen or printout. Format means the method by which the data processing system organises and reads the data.
With the ever-evolving change in technological development, many systems of organisation are regularly issued in successive versions. It is typical that the later versions are able to read earlier ones but that earlier ones are not able to read later ones. It is quite conceivable that an eURC collection instruction may indicate diverse formats for several documents. If the eURC collection instruction does not specify a format for a particular document, then such document may be presented in any format.
As mentioned above, it is essential that any related eURC collection instruction (or relevant amendment) indicate the required format. If not the, under eURC sub-article e6 (b) (ii), an electronic record received in a format that has not previously been agreed may be treated as not received. In addition to providing a sanction for failure to specify a format, the eURC implies that a bank must bear the risk of failure to read an electronic record presented in a required or permitted format.
In the event that an electronic record is received in a format that has not previously been agreed, the collecting or presenting bank must inform the remitting bank accordingly.
The eURC does not address the question of whether or not a transmission by telefax constitutes an electronic record. The question is too fact-specific to admit to a general answer. The technology originally behind telefaxes is not, strictly speaking, electronic communication of data but a system of imaging it. As a result, it would not be regarded as an electronic record.
More significantly, it would not be data that was originally formatted as an electronic record but that originated in a paper document that was imaged and transmitted, with the result that there existed a paper ‘original’ which may be accorded a certain priority.
However, technological developments have somewhat changed the scenario, and it is now possible to create an electronic record on a computer and to transmit it by telefax to another computer or to a telefax machine which prints on receipt. As a result, absent the characteristics of a given system, it is impossible to determine whether or not a telefax is an electronic record. Any confusion in an eURC collection instruction, however, would be avoided by specifying the format in which the electronic record must be presented. Such a specification would make it clear whether transmission by telefax was contemplated or feasible.
a. When electronic records alone are presented under an eURC collection instruction, these must be accessible to a collecting or presenting bank at the time the collecting or presenting bank receives the eURC collection
b. When electronic records, in combination with paper documents, are presented by the remitting bank under an eURC collection instruction, all the electronic records referred to in the eURC collection instruction must be accessible to the collecting or presenting bank at the time the collecting or presenting bank receives the eURC collection instruction enclosing the paper documents.
c. An electronic record that cannot be authenticated is deemed not to have been presented.
d. i. The remitting bank is responsible for ensuring that each presentation of an electronic record, and any presentation of paper documents, identifies the eURC collection instruction under which presentation is being made. For electronic records this may be by specific reference thereto in the electronic record itself, or in metadata attached or superimposed thereto, or by identification in the eURC collection instruction itself.
ii. Any electronic record or paper document not so identified may be treated as not received.
The eURC does not contain a definition of ‘presentation’. When applied to URC 522, it means either the delivery of documents under a collection instruction or the documents so delivered.
In view of the fact that documents presented with an eURC collection instruction are not examined, the concept of a ‘notice of completeness’, as required by the eUCP, is not appropriate for the eURC. Accordingly, eURC sub-article e7 (a) is deemed to be necessary in order to allow the banks to consider what has been presented as forming the documents attached to a collection instruction.
In the event that electronic records are presented in combination with paper documents, the electronic records must be accessible at the same time as the collecting or presenting bank receives the eURC collection instruction enclosing the paper documents. In accordance with sub-article e7 (b) it is, therefore, the responsibility of the remitting bank to ensure that all the electronic records referred to in the eURC collection instruction must be accessible to the collecting or presenting bank at the time the collecting or presenting bank receives the eURC collection instruction enclosing the paper documents.
The eURC requires a level of authentication of electronic records that differs from that required for paper documents. In neither case, however, is the bank required to look beyond the face of what is presented to ascertain the facts that are represented.
The nature of an electronic presentation requires a different manner of screening as to the apparent authenticity of the document. In an electronic milieu, the processing system performs a screening function that filters electronic records with respect to the apparent sender and with respect to whether the message is received in its entirety and integrity. The nature of this authentication is intimately linked to the nature of an electronic record and is discussed above in more detail in connection with the definition of “electronic record” under eURC sub-article e4 (b) (iii) (Definitions). eURC sub-article e7 (c) provides that where an electronic record has not been authenticated, it ‘is deemed not to have been presented.’
eURC sub-article e7 (d) (i) requires that each separate presentation identify the eURC collection instruction under which it is presented. Even though it imposes a requirement that is not normally contained in a collection instruction and would not normally be present in the document itself, this provision is necessary in order to avoid any potential confusion.
It should be noted that the eURC does not require that each paper document identify the collection instruction under which it is presented, only that a presentation do so. As a result, in the event of several paper documents being presented in one lot, it would be acceptable if the cover letter indicated the collection instruction under which the documents are presented.
Similarly, if electronic records are batched together and sent in an electronic envelope, the collection instruction may be identified in the message envelope. It should also be noted that eURC sub-article e7 (d) (i) does not require identification of the collection instruction in any particular manner such as by its number. Such a shorthand means of identification would naturally be the easiest means of identifying the collection instruction. It could, however, also be identified by other means. For example, giving the amount and date of the collection instruction may enable identification even without the collection instruction number. The crux is whether or not the bank would be able to identify the collection instruction based on the information provided in the normal course of its operations.
With regard to electronic records, the identification of the eURC collection instruction may be by specific reference thereto in the electronic record itself, or in metadata attached or superimposed thereto, or by identification in the eURC collection instruction itself.
When a bank cannot link an electronic record to the collection instruction to which it relates without further information from the presenter, eURC sub-article e6 (d) (ii) provides that it ‘may be treated as not received’. Although the bank is not required by the eURC under such circumstances to ask the presenter to identify the credit, it is very likely to do so, and would constitute good practice.
URC 522 allows for direct collections. Provided the collection instruction meets the requirements of URC 522 sub-article 4 (b) (Collection Instructions), the collecting bank is required to either decline to act according to the collection instruction (according to URC 522 sub-article 1 (c)) or to act in accordance therewith, including instructions relating to release of documents and advice of non-payment. This is unchanged for electronic records.
If a collecting or presenting bank receives an eURC collection instruction and issues an advice of non-payment and/or non-acceptance to the bank from which it received the collection instruction and does not receive instructions from such bank for the disposition of the electronic records, within 60 calendar days from the date the advice of non-payment and/or nonacceptance is given, the collecting or presenting bank may dispose of the electronic records in any manner deemed appropriate without any responsibility.
URC 522 sub-article 26 (a) covers ‘Form of Advice’; sub-article 26 (b) covers ‘Method of Advice’; sub-article 26 (c) (i) covers ‘Advice of Payment’; sub-article 26 (c) (ii) covers ‘Advice of Acceptance’; sub-article 26 (c) (iii) covers ‘Advice of Non-Payment and/or Non-Acceptance’.
As with all of article 26 (Advices), the first two paragraphs of URC 522 sub-article 26 (c) (iii) also apply to the eURC rules, i.e.,
• ‘The presenting bank should endeavour to ascertain the reasons for non-payment and/or non-acceptance and advise accordingly, without delay, the bank from which it received the collection instruction.’ and,
• ‘The presenting bank must send without delay advice of non-payment and/or advice of non-acceptance to the bank from which it received the collection instruction.’
In accordance with URC 522 sub-article 26 (c) (iii), if the presenting bank does not receive instructions from the remitting bank as to the further handling of the documents within 60 days after its advice of non-payment and/or non-acceptance, the documents may be returned to the bank from which the collection instruction was received without any further responsibility on the part of the presenting bank.
In accordance with eURC article e8, if a collecting or presenting bank does not receive instructions from the bank from which it received the collection instruction as to the disposition of electronic records within 60 calendar days after the date of its advice of non-payment and/or non-acceptance, the collecting or presenting bank may dispose of the electronic records in any manner deemed appropriate without any responsibility.
When settlement under an eURC collection instruction is due a number of days after the date of shipment or dispatch of the goods, or a number of days after any other date appearing in an electronic record, an eURC collection instruction must indicate the due date.
For reasons of clarity and transparency, an eURC collection instruction due a number of days after the date of shipment or dispatch of the goods, or a number of days after any other date appearing in an electronic record, must indicate the appropriate due date within the eURC collection instruction.
URC 522 article 6 (Sight/Acceptance) states that in the case of documents payable at a tenor other than sight, the presenting bank must, where acceptance is called for, make presentation for acceptance without delay, and where payment is called for, make presentation for payment not later than the appropriate maturity date.
a. An eURC collection instruction must indicate the manner in which electronic records may be accessed by the drawee.
b. When electronic records are presented in combination with paper documents, and one of those paper documents is a bill of exchange that is to be accepted by the drawee, the electronic records and paper documents are to be released against acceptance of the bill of exchange (D/A) and the eURC collection instruction must indicate the manner in which those electronic records may be accessed by the drawee.
eURC article e10 outlines that a collection instruction must state the manner in which electronic records may be accessed by the drawee. The word ‘manner’ throughout these rules can be defined as the way in which something is done or happens.
URC 522 sub-article 2 (a) (Definition of Collection) states that a ‘collection’ means the handling by banks of documents as defined in sub-article 2(b), in accordance with instructions received, in order to:
i. obtain payment and/or acceptance, or,
ii. deliver documents against payment and/or against acceptance, or,
iii. deliver documents on other terms and conditions.
During the drafting of the eURC rules it was debated whether or not to add a new delivery term D/DP (‘electronic records to be released against deferred payment’). It was decided that such a term is already covered by URC 522 sub-article 2 (a) (iii) (‘other terms and conditions’) and that no further reference within the eURC rules is required.
URC 522 article 7 (Release of Commercial Documents) states:
• ‘that collections should not contain bills of exchange payable at a future date with instructions that commercial documents are to be delivered against payment’ (sub-article 7 (a));
• ‘that if a collection contains a bill of exchange payable at a future date, the collection instruction should state whether the commercial documents are to be released to the drawee against acceptance (D/A) or against payment (D/P)’ (sub-article 7 (b));
• ‘that if a collection contains a bill of exchange payable at a future date and the collection instruction indicates that commercial documents are to be released against payment, documents will be released only against such payment and the collecting bank will not be responsible for any consequences arising out of any delay in the delivery of documents’ (subarticle 7 (c)).
In order for electronic records to be accessed by the drawee, the collection instruction must indicate the manner in which the electronic records should be accessed.
In the event that electronic records are presented in combination with a paper bill of exchange that is to be accepted by the drawee, the electronic records and paper documents are to be released against acceptance of the paper bill of exchange.
The concept of an electronic bill of exchange/draft is still evolving and, as such, is not specifically covered by this version of the rules. However, it is intended that sub-article e10 (a) cover a presentation including an electronic bill of exchange, and sub-article e10 (b) cover the situation in which there is a paper bill of exchange.
a. If an electronic record that has been received by a bank appears to have been corrupted, the remitting bank may inform the presenter, or the collecting or presenting bank may inform the remitting bank, and may request it to re-present the electronic record.
b. If a collecting or presenting bank makes such a request and the presenter or remitting bank does not re-present the electronic record within 30 calendar days, the collecting or presenting bank may treat the electronic record as not presented and may dispose of the electronic records in any manner deemed appropriate without any responsibility.
eURC article e11 provides an optional method by which a bank may recover data that has been corrupted after having been received. Electronic records will be initially presented by the presenter (principal or a party on behalf of the principal) to the remitting bank, and then by the remitting bank to the collecting or presenting bank. The rule reflects who should approach (inform) whom in this sequence of events. The chain of communication is that the collecting/ presenting bank will communicate with the remitting bank. The remitting bank may be able to resolve the issue with or without the intervention of the principal.
There is no rule in URC 522 for paper documents that are lost or rendered unreadable by a bank after they have been received. Because most banks have procedures in place that minimise the consequences of such loss, there is no perceived need for such a rule. These procedures can involve requesting a substitute document, or indemnifying the applicant for any harm that may result from a lost or missing document.
Whilst this works in the paper world owing to an understanding of the risks, there is not yet a similar comprehension in the electronic world. Accordingly, article e11 offers a method by which corrupted data may be re-presented.
A similarity can be recognised with the paper world, in that it is not unusual to approach a presenter for substitute paper documents. The process outlined by article e11 should prove beneficial to all parties, bearing in mind that it supports an efficient data substitution method.
The advantage of article e11 is that it operates without regard to fault or negligence and avoids entirely the difficult questions of liability and proof inherent in such concepts.
As stated above, the provisions of this article are a matter of recommendation and optional only. This approach need not necessarily be utilised by a bank, and a bank remains free to take any other measures they may consider to be necessary in order to mitigate any perceived losses due to the corruption of data while the record is within its control. Article e11 is based on the assumption that all electronic records are replaceable.
It must be clearly noted that this article only applies to the data corruption of an electronic record subsequent to presentation. Should a problem exist with an electronic record before presentation, this can only be the responsibility of the presenter to fix.
Neither the eURC nor article e11 define ‘corruption’. The term is intended to encompass any distortion or loss of data that renders the electronic record as it was presented unreadable in whole or part due to the data having become scrambled in an unrecoverable manner.
A bank that does not wish to take the approach to corruption of data provided in eURC article e11 may modify the eURC collection instruction to expressly state an alternative in the eURC collection instruction. On the other hand, it may elect to exclude it. However, this is not recommended and should not be regarded as an optimal approach.
Although the eURC permits mixed presentations of paper documents and electronic records, eUCP article e11 relates only to electronic records and not the loss or destruction of paper documents.
eURC article e11 uses the term ‘re-present’. As stated in eURC sub-article 3 (b) (ix), the term means: ‘to substitute or replace an electronic record already presented.’
eURC sub-article e11 (a) indicates that the request for replacement should be directed by a remitting bank to the presenter of an electronic record, or by a collecting or presenting bank to the remitting bank. It implies that the request must have been received by the presenter or collecting or presenting bank in order for the suspension to operate.
While eURC article e11 does not indicate the format of the request, it should identify the eURC collection instruction, identify the electronic record, contain a request that it be replaced, and indicate that the request is being made under eURC article e11.
Furthermore, although eURC article e11 does not expressly state when or how the request for replacement should be made, good banking practice in light of URC 522 sub-article 12 (a) (Disclaimer on Documents Received) would suggest that the request be made in the same manner, namely by telecommunication if available, and, if not, by other expeditious means and without delay once the corruption is discovered.
Although the corruption of the data occurred when the electronic record was in the control of the bank, a request for replacement under eURC article e11 has serious consequences if the record is not replaced. eURC sub-article e11 (b) provides that the failure to replace data within 30 calendar days after a request pursuant to eURC article e11 has been made is deemed to be a failure to present the electronic record. Because of the seriousness of this consequence, the time period is sufficiently reasonable to permit replacement, and all parties should be cautious about lessening this period, which may raise questions about its reasonableness.
a. By satisfying itself as to the apparent authenticity of an electronic record, a bank assumes 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 data processing system for the receipt, authentication, and identification of electronic records.
b. A bank assumes no liability or responsibility for the consequences arising out of the unavailability of a data processing system other than its own.
A disclaimer is a device by which risk is shifted from one entity to another. Where the disclaimer reflects the reasonable expectations of an industry, it is typically enforceable under applicable local law, even where it is stated in rules of practice as opposed to a bilateral contract. Due to the limited role of banks in collection practice, disclaimers have been used to limit their liability from the actions or omissions of others.
Disclaimers have sometimes been asserted to excuse the responsibility of a bank for its own negligence. While modern commercial law allows parties to allocate the risk of negligence up to but not including so-called gross negligence or wilful disregard for the consequences of one’s action or omission, most systems of local law require more specific and detailed provisions than those contained in URC 522 to achieve this result. The liabilities disclaimed in the eURC and URC 522 are the result of external systemic or third party actions, inactions, or risk.
eURC article e12 disclaims banks’ liability for any divergence from the realities represented in authenticated electronic records. Its effect is cumulative with those of URC 522 article 11 (Disclaimer for Acts of an Instructed Party), article 12 (Disclaimer on Documents Received), article 13 (Disclaimer on Effectiveness of Documents) and article 14 (Disclaimer on Delays, Loss in Transit and Translation).
URC 522 contains several disclaimers that are relevant to an eURC collection instruction. eURC article e12 by its title indicates that its disclaimer is additional to those contained in URC 522.
URC 522 article 11 (Disclaimer For Acts of an Instructed Party)
URC 522 article 11 disclaims the responsibility of instructing banks for the failure of other banks to carry out the principal’s instructions, even where the other bank is selected at the initiative of the instructing bank. It also provides that the instructing party is bound by and obligated to indemnify instructed parties against the consequences of the application of foreign laws and usages. Under the eURC, this provision would apply not only to collection law and commercial law in general, but also to the law of electronic commerce and the impact of local law on the eURC. For example, were the provisions of the eURC regarding the acceptability of a document as a ‘writing’ or of an authentication as a ‘signature’ not enforceable under local law, this risk would be borne by the principal and not the bank which is entitled to be indemnified by the principal for any damages as a result of the application of foreign laws and usages. The bank would be expected to assume the risk of the application of its own laws and usages, which would also include the law (or lack of it) of electronic commerce.
URC 522 article 12 (Disclaimer on Documents Received)
URC 522 article 12 indicates that banks must carefully check that documents received are in line with those stated in the collection instruction and, if not, inform the sending entity without delay. If a remitting bank chooses not to list the documents, it will not be in a position to dispute with a collecting bank as to what was or was not enclosed with the collection instruction. Subject to URC 522 sub-articles 5 (c) (Presentation), 12 (a) and 12 (b) (Disclaimer on Documents Received), banks will present documents as received without further examination.
URC 522 article 13 (Disclaimer on Effectiveness of Documents)
URC 522 article 13 disclaims banks’ liability for documents presented, the representations they contain, what they represent, and the actions or omissions of persons who present or issue them. This article disclaims any liability or responsibility for the documents presented, their legality or legal effect, the representations contained in them, or the persons who made them. Under eURC sub-article e4 (a) (iii) (Definitions), the term ‘documents’ would apply to an electronic record, making this disclaimer applicable to both paper documents and electronic records under the eURC.
URC 522 article 14 (Disclaimer on Delays, Loss in Transit and Translation)
URC 522 article 14 disclaims liability and responsibility for problems in forwarding data, including problems with telecommunication such as delay, mutilation, or error. This disclaimer disclaims any liability for the actions, failures, or omissions of third parties or their systems of transmission of messages. It would not excuse liability for consequences arising from the bank’s own systems, whether maintained by the bank directly or through the agency of a third party.
Given the system of disclaimers and the statement of independence in URC 522 article 10 (Documents vs. Goods / Services / Performances), it could be queried why additional protection is required in the eURC. Strictly speaking, the provisions of URC 522, properly interpreted, would be sufficient to establish the independent character of an eURC collection instruction and the role of the banks with regard to it.
Nevertheless, the eURC requires authentication of electronic records that is greater in degree, and arguably different in character, from a paper document, for example in:
• eURC sub-article e7 (c) (Presentation) (implying that a bank will authenticate an electronic record that is sent to it) and,
• eURC sub-article e4 (b) (iii) (Definition of “electronic record”) (indicating that an electronic record must be capable of being authenticated as to the apparent identity of the sender, the apparent source of the data contained in it, and its integrity).
Since this level of authentication is already greater than that undertaken with paper documents, could be increased even more by requirements for more security in the eURC collection instruction, and could be increased further in the future by technological developments, it was thought important to emphasise the limited role of authentication in the eURC process.
eURC article e12 refers to the use of a data processing system for the receipt, authentication, and identification of electronic records. In accordance with sub-article e4 (b) (ii), this means ‘a computerised or an electronic or any other automated means used to process and manipulate data, initiate an action or respond to data messages or performances in whole or in part.’ Any bank that engages in an eURC transaction is responsible for maintaining a data processing system. This responsibility is a fundamental precondition for using the eURC. A bank cannot excuse itself from responsibility for the failure to authenticate electronic records due to errors or inadequacies in its systems where those systems are not of the standard required to process such electronic records. This formulation also imposes on banks that engage in processing electronic collections the burden of upgrading their systems to keep them current.
eURC article e12 does not require a level of authentication that is extraordinary even if it were technically feasible. While some banks may choose to develop and market such systems, such a feature is a value-added aspect of their service and not a basis for the standard by which authentication is to be measured. The standard of eURC article e12 is only designed to assure that the system used is not outmoded.
The liabilities disclaimed in the eURC and URC 522 are the result of external systemic or third party actions, inactions, or risk. Reflecting the content of URBPO 750 article 14 (Unavailability of a Transaction Matching Application), eURC sub-article e12 (b) indicates that a bank does take on liability and responsibility for the unavailability of its own data processing system.
A bank assumes no liability or responsibility for the consequences arising out of the interruption of its business, including but not limited to its inability to access a data processing system, or a failure of equipment, software or communications network, caused by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, cyberattacks, or by any strikes or lockouts or any other causes, including failure of equipment, software or communications networks, beyond its control.
The term ‘force majeure’ is French in origin, literally meaning ‘greater force’. It refers to unexpected events, outside the control of the parties to an agreement, which prevent performance of part or all of the required contractual obligations.
States the force majeure events for which a bank assumes no liability or responsibility. URC 522 article 15 (Force Majeure) refers to ‘Acts of God, riots, civil commotions, insurrections, wars, or any other causes beyond their control or by strikes or lockouts.’
Acts of God relate to events caused by natural forces including for instance, earthquakes, floods, tornadoes, snowstorms, hurricanes, etc. In other words, it refers to events which are caused without any human interference and which could not be prevented.
Reflects the additional text that was included in URBPO 750 article 13 (Force Majeure). The concept of force majeure is the same as in other ICC rules but is extended to cover the inability of a bank to access a data processing system, or a failure of equipment, software or communications network.