Outstanding DC’s being amended and made subject to UCP 600

DimitriScoufaridis · Post by **DimitriScoufaridis** » Tue Jul 03, 2007 1:00 am

An issuing bank from a neighboring country sent an amendment via MT 707 that also incorporated the following clause: “This LC is subject to UCP Publication No. 600 of ICC, 2007 Revision”. The DC had been issued in Jun. ’07. It is our opinion that any DC’s issued prior to July 1st and remaining outstanding will continue to be subject to UCP 500 and should not be amended. Your comments pls.

AbdulkaderBazara · Post by **AbdulkaderBazara** » Tue Jul 03, 2007 1:00 am

Dimitri,

Hope you are fine and doing well.

It is recommended that LCs issued under UCP 500 remain under this rule until they are liquidated as LCs are usually considered to be short term financing tools. However, as far as I know, there are no restrictions. As long as the amendment is not in conflict with other terms and conditions of the LC, I personally believe that there should not be an issue.

Best regards
Abdulkader

KimChristensen · Post by **KimChristensen** » Tue Jul 03, 2007 1:00 am

Dear Dimitri,

I agree fully with Abdulkader – and would like to add that you may want to check the intention of the issuing bank. Please bear in mind that most banks around the world have implemented IT-changes per 1 July – so there may just be some children's diseases … e.g. creating UCP 600 references where it should have been UCP 500 references ….

Best regards
Kim

DimitriScoufaridis · Post by **DimitriScoufaridis** » Tue Jul 03, 2007 1:00 am

Dear Abdulkader,

Thanks for your note. As you might have noticed I’m now based in Cairo and I’m doing fine.

In a recent symposium I attended on UCP 600, Vincent Maulella mentioned that that it would be chaotic if we start amending our credits to be subject to UCP 600 and I would agree with his view. You rightly mentioned about conflicting terms and conditions and a simple example is a reimbursement clause whereby payment is made provided dox are in full compliance with LC terms and conditions vs. a complying presentation under UCP 600.

Dear Kim,

I agree with you that there would be teething problems in the beginning. We have already seen two covering schedules coming from the same bank with one of them made subject to UCP 500 while the other is subjected to UCP 600!

Best regards
Dimitri

KimChristensen · Post by **KimChristensen** » Tue Jul 03, 2007 1:00 am

Dear Dimitri,

I am one of those people who truly believe that Vin Maulella is always right no matter what!

So I guess that I will “balance” the view by saying that no one knows what the real outcome – worst case scenario – of such amendment could be. I surely would not want to test that – so I am all in favour of letting UCP 500 credits stay UCP 500 credits.

My personal view however – and that one will surely kill me someday – is that in most cases there would be no difference whatsoever. Documents compliant under UCP 500 (including existing practice) would in 99.9 per cent of the cases also be compliant under UCP 600.

Best regards
Kim