DC Insight

UCP 600 is several months old now, and practitioners are beginning to get the feel of it. There's inevitably a period of adjustment as new rules settle in, and some of the articles in this issue reflect continuing concerns. Mark Ford, in his lead, points to several of these, in particular that documentary credit users may have to work both with UCP 500 for L/Cs issued until 30 June 2007 and UCP 600 for L/Cs issued after that. He suggests it may be end 2007 before UCP 500 is phased out.

In his expert commentary, N.D. George pinpoints worries about article 35 concerning documents lost in transit and says that some bankers understand the article to say that an issuing bank must pay with no questions asked on receiving a message from the nominated bank stating that the presentation was complying and that the documents were forwarded but had been lost in transit. In a carefully thought-out piece, George dissects these arguments and concludes that these claims are highly exaggerated.

In the waning days of UCP 500, arguments are still going on about how to interpret certain clauses in those rules. This issue features a dialogue between two experienced practitioners, T.O. Lee and René Müller, about a letter of credit that called for a "master air waybill" and whether this permitted the presentation of an air transport document signed by a freight forwarder subject to the content of article 27. The dialogue illustrates why transport experts and banking experts don't always see eye-to-eye.

But UCP is not the only story in this issue. The ICC Banking Commission has voted to begin revising its Uniform Rules for Demand Guarantees (URDG). Andrea Hauptmann, a member of the URDG Drafting Group, lays out some of the key issues facing the Commission as it considers the revision. More on this in future issues.