UCP 600 To Arrive Soon!

The Uniform Customs and Practice for Documentary Credits (UCP), ICC Publication number 500, the currently operative document effective since January 1, 1994 that governs the use of LCs worldwide soon may give way for the brand new UCP 600. The ICC Banking Commission is now working on the process of revision which has been going on for the last three years. The final revision is expected to be completed in October. On Thursday 26 October, ICC Events will host a conference on the UCP 600 in Paris where the final seal of approval is likely to be put on UCP 600. What's new in UCP 600? The revision is expected to address some of the issues that continue to dog the documentary credits trade and UCP 600 it is sais, has new provisions which bankers, exporters and lawyers will need to know. Some of the issues like the definition of the term 'applicant', all credits being irrevocable as the default option, the tricky matter of 'drafts', clear definition of the term 'negotiation' (not resolved since 1933), and other issues that continue to baffle the experts may get a look-in this time. The changes proposed are as follows:

• The total length reduced to 39 articles rather than 49 as in UCP 500.
• A new section that brings all sundry definitions together at one place.
• Yet another attempt to define 'negotiation'.
• A replacement of the term 'reasonable time' with a definite number of days for examining and determining compliance of documents.
• Re-drafted transport articles aimed as resolving confusion over the identification of carriers and agents.

Some of the new articles in UCP 600 have adopted practices in International Standard Banking Practices (ISBP) and followed principles of International Standby Practices (ISP 98), besides providing new articles in examination, documentation and other aspects for issuing the letters of credit for companies involved in foreign trade. Hopefully, UCP 600 would be more user-friendly than its previous versions have been. In the meanwhile, if one happens to be a banker, and has anything to do with letters of credit, one should master ISBP simultaneously with the provisions of UCP 600. Training people will be a challenge to the banks, for several reasons. Firstly, the time available prior to the date if introduction of UCP 600 will be just a little over six months. Next, no published material, viz., comparison between UCP 500 and UCP 600, rationale for certain new provisions, modifications, revisions etc. is yet available for guidance. Trainers with complete mastery over UCP 500 and also a good grasp of UCP 600 are few and far between (remember that UCP 600 is not expected to be finalised before the end of October 2006). Keep visiting this site for further updates!