Article

by Emily Comyn

The International Chamber of Shipping (ICS) is the international trade association for ship operators, representing all sectors and trades, including international containership operators. ICS membership comprises national shipowners' associations from 36 countries, many of which are also represented on their national ICC committees.

Transport interests and the UCP revision

Much of ICS's work is focused on the technical and regulatory activities of the International Maritime Organization (IMO), the specialized UN agency for maritime affairs, at which ICS has consultative status, providing industry advice on a wide range of maritime issues. However, the global nature of international shipping means that many of our interests, such as the maintenance of free trade and the promotion of a uniform business environment, are also aligned with those of ICC. ICS has, therefore, been a long-running member of the ICC Commission on Transport and Logistics (and its predecessor, the ICC Maritime Transport Commission). Of the many ICC issues in which we have been involved in recent years, the revision of the Uniform Customs and Practice for Documentary Credits (UCP) has been one of the most important.

Shipping is a major linchpin of the global economy, and the continuing expansion of world trade has served to make the UCP transport articles, which govern the relationship between documentary credits and trade procedures, increasingly important. ICS has, therefore, played an active role in the Banking Commission's consultation process, both through its membership of the Commission on Transport and Logistics, which contributed a number of consolidated comments on the transport articles, and through our national shipowners' associations, many of which participated in the discussions that took place at the national ICC committee level.

Some welcome improvements

Throughout the review process, ICS has sought to underline its support for the general direction of the UCP revision and to emphasize the importance of the updated articles accurately reflecting established transport industry practice. In many ways, the clearer and more consistent wording of UCP 600 is a marked improvement on its predecessor, and the decision to make some last minute adjustments to the language of the transport articles should also lead to a more seamless implementation of the new rules. However, as we explain in more detail below, a few of the shipping industry's practical and presentational concerns have, regrettably, remained unresolved.

For transport interests, one of the most hotly debated topics was the format of the transport articles. Many had hoped for a more wideranging debate about the need for maintaining individual provisions for the various documents, particularly with respect to the separate articles for port-to-port and multimodal shipments. For example, in some cases a bill of lading covering a port-to-port shipment may also cover the transport prior to loading and after discharge, and in this case such a document could also be considered a multimodal transport document. A number of clauses were also repeated under the different transport document articles, and a single article, with subclauses covering the additional requirements for specific types of documents, would have streamlined the UCP and avoided unnecessary repetition. However, despite calls for port-to-port bills of lading, through bills of lading and multimodal transport documents to be covered by one and the same article, the original format of separate articles has been maintained.

On the other hand, the individual articles have now been re-ordered, and this decision has been widely welcomed. The article covering the multimodal transport document (renamed as Transport Document Covering at Least Two Different Modes of Transport) has been moved to the front of the transport articles. This replaces the bill of lading as the primary transport article, meaning that the UCP rules now properly reflect the fact that most shipments today are multimodal, and it is therefore to be hoped that banks' staff will respond to this by starting to use the new multimodal article as the default article.

Other examples of the way in which the transport articles have been successfully modernized include the decision to amend the definition of "transhipment" for all the transport documents. The previous wording suggested that transhipped goods always moved directly from one ship to another, and failed to take account of actual industry practice whereby goods might also be transferred or temporarily stored ashore for a period of time between loading and unloading. The new definition, however, describes transhipment as the process of unloading from one vessel and reloading to another, thus accommodating different transhipment arrangements.

In addition, a number of improvements have resulted from some relatively simple adjustments to the wording. The new language in article 22 (Charter Party Bill of Lading), for instance, makes clear that a charter party bill of lading is a bill of lading which indicates it is subject to a charter party, and not one which just refers to a charter party, as was suggested by the previous wording. A clarification in article 27 (Clean Transport Document) that a clean bill of lading does not necessarily have to have the word "clean" written on it should also help avoid administrative disputes. In addition, deleting the references to the port of discharge in the bill of lading provisions in article 20 (Bill of Lading) have made the requirements easier to apply, given that the previous wording conflicted with normal practice of indicating a range of possible ports of discharge, rather than a particular one. The signature requirements have also been improved and clarified as a result of the review.

Outstanding practical concerns

However, despite these improvements, the shipping industry has a few outstanding concerns about apparent contradictions between the new UCP articles and current industry practice. Although these may appear to be minor points of differences in interpretation, there are concerns that they could cause major practical difficulties.

A case in point is the reference to "original documents" in article 17 (Original Documents and Copies). Despite opposition from transport interests, this article still requires the presentation of an original copy of each document stipulated in the credit, without any qualification. At first sight, it might seem unclear why this should prove particularly problematic. However, while there should be no difficulty in presenting original bills of lading or other transport documents, credits sometimes list other documents, such as class certificates, for which, to comply with various IMO Conventions and other legal instruments, the original must remain on board the ship at all times. In such case, the documents can, therefore, only be provided as copies, and there are understandable concerns that, because the UCP article does not contain any qualifying language, in some cases these requirements may prove impossible for shipping companies to meet in full.

Less important, perhaps, is the reference in article 21 (Non-Negotiable Sea Waybills), which refers to sets of multiple originals, even though only a single original is issued as a receipt for the goods.

These types of anomalies are unlikely to bring international trade grinding to a halt, but discrepancies between the theory of documentary credits and actual transport industry practice might lead to delays and create obstacles to the widespread implementation of the revised UCP. Even in the case of the option of multiple originals of waybills, which can just be ignored, including procedural or documentary demands that are impossible to meet, could lead to misunderstandings and subsequent delays.

Conclusion

Drafting by committee is always a difficult task, but the UCP revision seems to have been relatively successful at balancing the different, and at times competing, interests of a range of different stakeholders. In general terms, the transport articles are now clearer, more consistent and more closely aligned with modern transport industry practice. It will therefore be up to the different parties involved to ensure that these few outstanding practical concerns do not act as an obstacle to the implementation of the new transport articles, and that a pragmatic approach will help ensure the widespread implementation of UCP 600.

Emily Comyn is Adviser (Shipping Policy) at the International Chamber of Shipping in London, UK. Her email is Emily.Comyn@marisec.org