Documentary credits go electronic
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| eUCP: from paper to electronic |
Paris, 16 November 2001 - ICC's rules governing documentary credits, used by banks worldwide to finance trade, now include an electronic supplement that caters for the growing number of documents that are presented electronically.
ICC's rules governing documentary credits, the Uniform Customs and Practice for Documentary Credits, were first developed more than 60 years ago. The current version, issued in 1993, is known as UCP 500.
A key article in the supplement covers corruption of an electronic record - when, for example a bank is unable to open an electronic document for technical reasons, such as a virus.
The article allows the bank to ask the sender to re-present the document within a maximum of 30 days. Should the sender not re-present the document by then, the document will be considered as not having been presented.
Ron Katz, ICC banking expert, said: "We are calling the rules eUCP. It is important to stress that they supplement the UCP rules and in no way replace them. They are to be used in conjunction with UCP 500. "
"All the articles of eUCP are consistent with the UCP. But they also take account of the fact that in the electronic world things are often done differently from the paper-based world." Mr Katz explained.
The rules themselves state: "Where the eUCP applies, its provisions shall prevail to the extent that they would produce a result different from the application of the UCP."
Mr Katz noted that the parties wishing to use eUCP will specifically have to incorporate it into the credit. However, a credit subject to the eUCP is also subject to the UCP without express incorporation of the UCP.
The eUCP contain a number of definitions of terms that have different meanings in the electronic and paper-based contexts. Terms such "appears on its face", "place for presentation" and "sign" - all common features of the UCP - are redefined to take account of the electronic environment.
According to Mr Katz, the eUCP fill a big gap in the market. He said: "The UCP have been the flagship of ICC since the 1930s. By anticipating the change to electronic credits, the eUCP maintain ICC's preeminence in the field of documentary credits."
The ICC Banking Commission approved the supplement at the beginning of November. To allow bankers and traders to familiarize themselves with its principles, eUCP will not come into force until 31 March 2002. In
January, ICC Publishing will put on sale a full text of the new rules.