eUCP -
Electronic Uniform Customs and
Practice
In just a few days, an
electronic supplement to ICC's
rules on documentary credits (UCP)
will come into force. This
first ever supplement to the
rules banks use to finance
trade will be effective from
midnight GMT on 31 March.
An electronic supplement to
the ICC rules on documentary
credits will be was discussed
by the ICC Banking Commission
at its semi-annual meeting in
Istanbul on 21-22 November
2000. The eUCP, as it has been
termed, would be a supplement
to the ICC's universally
recognized rules on letters of
credit, UCP 500. "The
market is looking to the ICC
for guidance on how to deal
with electronic
documents," says Dan
Taylor, Vice Chairman of the
Banking Commission.
UCP 500, used by banks
worldwide, deals essentially
with paper documents. But new
web sites are sprouting all
the time, claiming to provide
all the tools to complete
trade transactions online. ICC
believes that these
developments will accelerate,
and because they will, the
Commission has decided that it
is in the best interests of
the parties to have a UCP
flexible enough to handle
them. This amounts to nothing
less than a revolution in
trade finance.
Apart from the UCP, the
Banking Commission has
developed the Uniform Rules
for Collections (URC 522), the
Uniform Rules for Bank-to-Bank
Reimbursements under
Documentary Credits (URR 525)
and the Uniform Rules for
Demand Guarantees (URDG 458).
The Commission has been
traveling at least once a year
outside of its Paris
headquarters to demonstrate
how it does its job. Opening
its meetings to observers has
"allowed bankers and
exporters to have a better
understanding of how we reach
our decisions", said one
Commission source.
Linked to the latest
version of the rules, UCP 500,
the supplement will govern if
the parties specifically
incorporate it in their
credits. It will apply in
cases of part-electronic or
all-electronic presentations.
Where the eUCP is different
from the UCP in those cases,
the eUCP, if incorporated,
will prevail.
The 12 Articles of the eUCP
cover a range of issues -
including the format of
electronic records,
presentation, examination and,
most controversially,
corruption of an electronic
record. In the latter case, if
a bank receives an electronic
record that is corrupted - by
a virus or some other defect -
it may, at its discretion,
request that the electronic
record be re-presented.
The eUCP responds to the
growing numbers of documents -
including bills of lading,
certificates of origin,
insurance documents, etc. -
that are being presented in
electronic form. The UCP,
though it has some provisions
relating to electronic issues,
is essentially written for
paper documents.
Will the eUCP be widely
used? One commentator, Neil
Chantry of HSBC bank in London
and a member of the group that
drafted the supplement,
believes it will, though not
necessarily right away.
In an upcoming article for
the ICC
newletter DCInsight,
Chantry says that "in the
first two years of eUCP the
level of transactions using
these rules will be relatively
modest, although towards the
end of the second year there
will be a significant increase
in electronic presentations.
From the last half of the
second year until the end of
the fifth year, the use of
electronic documentation will
grow at an exponential
rate." He adds,
"After 10 years there
will be virtually no
paper-based trade
documentation."
One thing is sure: the
world of documentary credits
is about to change and, with
the eUCP, it will never be the
same again.
Copies of the eUCP can be
obtained from the ICC
Publishing online bookstore.
They may also be avialable
through your local bank.
Date Updated: March 27, 2007
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