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URC 522 - ICC Uniform Rules for COLLECTIONS
Supplement for Electronic Presentation (eURC) Version 1.0
On 6th June 2017, the ICC Banking Commission provided a press release announcing the launch of a Working Group to anticipate and accompany the digitalisation of trade finance. One core activity was to evaluate existing ICC rules in order to assess e-compatibility and ensure they are ‘e-compliant’, i.e. enabling banks to accept data vs. documents. It was identified that this was required in order to accommodate evolving practices and technologies.
A Drafting Group was established, co-chaired by David Meynell and Gary Collyer, with the initial aim of reviewing the e-compatibility of existing ICC rules. As a result of this review, a mandate was received from the ICC Banking Commission Executive Committee to:
• Update the existing version 1.1 of eUCP in order to ensure continued digital compatibility
• Draft eURC in order to ensure continued digital compatibility for presentation of electronic records under Collections.
The eRules have been intentionally developed with version numbers in order that they can be updated regularly without impacting upon other existing ICC rules, thereby reducing the time required to develop any potential identified revision.
The initial drafts of eUCP version 2.0 and eURC version 1.0 were sent to ICC National Committees (NC’s) on 25th September 2017, with a deadline of 27th November 2017 for response. At the request of a number of ICC NC’s, based upon a communications issue, it was decided to extend the deadline to 28th February 2018. Pursuant to feedback on the original drafts, work commenced on a 2nd draft, which was subsequently distributed to ICC NC’s on 20th March 2018, with a deadline of 25th May 2018 for response. A 3rd draft of the rules was sent out on 20th July 2018, providing a deadline of 28th September 2018 for response. The 4th of the rules was disseminated on 6th November 2018, indicating a deadline of 4th January 2019 for feedback. At that stage, and following a thorough review of all comments received to date, it was considered to be an appropriate time to draft a final version of the rules.
These were consequently sent to ICC NC’s on 31st January 2019, specifying that the deadline for voting would be 22nd March 2019. It is worth commenting that this timeframe was only 16 months after distribution of the original drafts and included an enforced 3-month extension, as mentioned above. During the course of the first four drafts, almost 2,000 comments were received from ICC NC’s. For the purposes of transparency and clarity, every comment received an individual response. As a valuable reference source, the ‘ICC Guide to the eUCP’ (ICC Publication No. 639) and the work of the authors, Professor James E. Byrne and Dan Taylor, has been gratefully acknowledged.
For the first time in the history of the ICC Banking Commission, a new approach was introduced for the ICC rules voting process, via the Simply Voting platform. This initiative provided an online voting system to be used for the approval of the revised eUCP and new eURC rules.
Each NC was requested to choose one designated representative with the right to cast the vote on its behalf and the platform was opened for voting from 11th until 22nd March 2019. NC’s were invited to vote on the revised eUCP and new eURC separately by choosing ‘YES’ or ‘NO’ to the following options:
• Does your National Committee approve the Uniform Customs and Practice for Documentary Credits (UCP 600) Supplement for Electronic Presentation (eUCP) Version 2.0?
• Does your National Committee approve the Uniform Rules for Collections (URC 522) Supplement for Electronic Presentation (eURC) Version 1.0?
• Votes received from 49 NC’s, plus one further NC vote after the voting deadline had passed.
• The eUCP received 100% approval with two countries abstaining.
• The eURC received 97.5% approval (on a weighted basis) with one county voting ‘no’ and two countries abstaining.
• Based upon the above, both sets of rules will come into force from 1st July 2019.
It was recognised in the introduction to the initial ICC Guide to the eUCP (ICC Publication no. 639) that the likely end of the evolution to electronic presentations is automated compliance checking systems in the documentary credit field. This is all too apparent when looking at evolving technology and digital trade finance, with the advent of the Internet of Things, Distributed Ledger Technology, Smart Contracts, Artificial Intelligence, and Machine Learning.
The content of the eRules will be continually monitored in order to ensure applicability. The support of trade practitioners will be an essential element moving forward. These rules provide many benefits in advancing the documentary credit in a digital environment and ensuring the continued relevance of this valuable instrument in mitigating trade risk.
Existing ICC rules, such as UCP 600 & URC 522, whilst being invaluable in a paper world, provide limited protection when applied to electronic transactions. It is inevitable that traditional trade instruments will, over time, inexorably move towards a mixed ecosystem of paper and digital, and, ultimately, to electronic records alone.
In this respect, it is important the market recognise that the new rules provide many benefits in advancing traditional trade solutions in a digital environment:
• Safeguarding applicability and guaranteeing relevance in a constantly evolving digital trade world
• Extending the mitigation of risk from a paper environment to the electronic milieu
• Explicitly and unambiguously supporting the usage of electronic records
• Conformity and congruence as opposed to divergent local, national and regional practice
• Shared understanding of terminologies and objectives
• Confidence in a set of independent and trusted contractual rules
• Uniformity, consistency and standardisation in customs and practice
• Enabling and supporting trade finance between regions and countries regardless of underlying economic and judicial structures
Development of the eRules would have been impossible without the ongoing support of the ICC Banking Commission Secretariat and individual ICC National Committees. Thank you to all involved, with specific acknowledgement to David Bischof, Olivier Paul, and Laura Straube. Particular thanks are given to the eRules Drafting Group, details of which are provided below. I also extend my gratitude to my co-chair, Gary Collyer. Without his input, this work would not have proved possible. Last, but far from least, a reminder that this publication would not be in existence were it not for the groundbreaking initial efforts of Jim Byrne and Dan Taylor.
DAVID MEYNELL, TradeLC Advisory / tradefinance.training
GARY COLLYER, Collyer Consulting / tradefinance.training
ABHISHEK VYAS , Associate Director, Trade & Supply Chain Products, ANZ, India
AHSAN AZIZ GM - Head International Compliance, Habib Bank Ltd, Pakistan
ALEXANDER ZELENOV, Advisor, Bank for Development and Foreign Economic Affairs, Russia
ATIF RAZA, Head of Trade Sales & Vice-Chair ICC UAE Banking Commission, Commercial Bank of Dubai, UAE
CHRISTIAN CAZENOVE, Global Head of Trade Finance Operations – Global Transaction Banking & Payment Services, Société Générale, France
DANIEL VIGNIAL, Global Head of Trade Products / Trade Finance, Credit Agricole, France
DAVID PELEGRIN, Global Trade & International Banking, Corporate & Investment Banking, BBVA, Spain
DAVID THOMPSON, Trade Finance Manager, Shell International Trading and Shipping Company Limited, UK
JAVIER ARIAS, Business Development Director, Santander, Spain
K. NIZARDEEN COO FIB, COO FIB, Malaysia / UAE & Vice-Chair ICC UAE Banking Commission
MARTINA JANSCHAK, Head of Trade Finance Advisory – Project Management, Siemens Financial Services GmbH, Germany
MICHAEL QUINN, Managing Director, Global Trade and Loan Products, JPMorgan, U.S.
PABLO NUNEZ, Global Head of Trade Solutions, Santander, Spain
RITA RICCI, Executive Global Trade Advisor – Trade Filière Competence Centre, BNP Paribas, Canada
TANGUY LOREAU, Head of Commodity Trade Finance Operations, Natixis, France
TAT YEEN YAP, Head of Product Management Asia, Trade Services & Finance, Société Générale, Singapore
YUN FEI LIU, Deputy General Manager of Global Trade Services Dept., Bank of China, China
ICC Banking Commission Senior Technical Advisor & Owner