UCP 600 - the sixth revision of the Uniform Customs and Practice for Documentary Credits since they first appeared more than sixty years ago - has been approved.

International Chamber of Commerce (ICC) National Committee members voted for the leaner, clearer and more applicable universal rules for documentary credits at the 24-25 October ICC Commission on Banking Technique and Practice held at BNP Paribas in Paris.

Wholesale review

The comprehensive review process has led to some substantial and significant changes.

With 39 articles, the sixth version of UCP is leaner than its predecessor, UCP500, which had 49 articles.

Structural changes

"One of the structural changes to the UCP is the introduction of articles covering definitions and interpretations," explains Technical Adviser to the ICC Commission on Banking Technique and Practice, Gary Collyer.

"In providing definitions of roles played by banks and the meaning of specific terms and events, UCP 600 avoids the necessity of repetitive text to explain their interpretation and application," he explains in his introduction to UCP 600.

"Similarly, the article covering interpretations aims to take the ambiguity out of vague or unclear language that appears in letters of credit and to provide a definitive elucidation of other characteristics of the UCP or the credit," he adds.

New aspects

Another aspect of the new rules that seeks to avoid ambiguity is the replacement of the term "reasonable time" with a specified number of five days for examining and determining compliance of documents.

The transport articles have been reworked too, with the aim of reducing or eliminating confusion over the identification of carriers and agents.

Spirit of UCP

In a foreword to the UCP 600, ICC Secretary General, Guy Sebban, says the latest revision remains in the spirit of the UCP when it was first introduced in 1934 "to alleviate the confusion caused by individual countries' promoting their own national rules on letter of credit practice".

"The UCP remain the most successful set of private rules for trade ever developed," he says, and he credits several experts and groups that contributed to the current revision.

Process and people

Participants in the three-year process to establish the latest rules for documentary credits included the UCP Drafting Group, which sifted through more than 5,000 individual comments before arriving at the consensus text presented in Paris.

The UCP Consulting Group, with 40 banking and transport industry experts individuals from 26 countries, was the advisory body reacting to and proposing changes to the various drafts. More than 400 members of the ICC Commission on Banking Technique and Practice suggested changes to the text.

ICC national committees worldwide actively garnered and consolidated comments from their members while practitioners in the transport and insurance industries were consulted, and their suggestions informed the final draft.

Supporting UCP 600

There are more changes to come in other documents to support the new rules, according to Collyer, who is mindful of the important role the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP) plays. It was developed for UCP 500.

"At the time UCP 600 is implemented in July 2007, there will be an updated version of the ISBP to bring its contents in line with the substance and style of the new rules, he says

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.